“Show us what ya' got!” For decades, the Federal Rules of Civil Procedure have embraced this mantra by requiring parties to disclose important basic information at the outset of litigation. In a shift that could amount to a huge change in standard discovery process, California will move to a similar model next month, as SB 235 becomes effective on January 1, 2024.

Governor Gavin Newsom recently signed SB 235, amending two sections of the Code of Civil Procedure. The more significant of the two changes requires parties in most California civil actions to provide initial disclosures upon demand, under Code Civ. Proc.,§ 2016.090.¹

This initial disclosure scheme is intended to reduce litigation expenses and facilitate early resolution by requiring litigants to disclose at the outset of litigation the factual bases for allegations and/or defenses set out in their initial filings. This should bring early light to unsupported claims, helping parties avoid the many months (sometimes years) usually required to reach the same stage through traditional discovery. Robust initial disclosures could also dramatically impact the parties' own early evaluation of the strengths and weaknesses of their entire case. At their best, these rules will streamline actions, leading to early resolution.

On the other hand, initial disclosures could simply become just one more task in a lengthy discovery process. The new law fails to include any safeguards that would prevent parties from demanding initial disclosures and up to four supplemental disclosures while still propounding all regular discovery requests too.

Though one could see an experienced party or practitioner using these extra tools to hone in on efficient prosecution or defense of their matter, it's also not hard to imagine that all of these 'bites at the apple' could actually result in a less efficient, expensive, jumbled mess.

California’s New Initial Disclosure Process

Existing California law does not require any initial disclosures; they are optional unless stipulated by the parties and ordered by the Court. (Code Civ. Proc., § 2016.090.)

Now, we can anticipate a massive shift towards initial disclosures. Effective January 1, 2024, in most newly-filed civil cases,² parties are required to provide initial disclosures “within 60 days of a demand by any party to the action.” Parties can stipulate around the initial disclosure procedure, or choose not to make a demand. However, if any party makes a demand, then all represented parties in the matter must participate.

A party’s initial disclosures must be verified and based on information reasonably available to the party at the time of the response. Importantly, a disclosing party cannot withhold its initial disclosures (1) on the grounds that it has not fully investigated the case, (2) because it challenges the sufficiency of the other party’s disclosures, or (3) because the other party has not made its initial disclosures.

The initial disclosures must include the following:

(a) Names and contact information of all persons likely to have discoverable information (along with the subjects of that information) that the disclosing party may use to support their claims or defenses, or that is relevant to the subject matter of the action or any court order on a motion made in the action, except for impeachment witnesses and expert witnesses (Code Civ. Proc., § 2016.090(a)(1)(A));

(b) A copy, or a description by category and location, of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control that may be used to support claims or affirmative defenses, or that is relevant to the subject matter of the action or any court order on a motion made in the action, except for impeachment evidence (Code Civ. Proc., § 2016.090(a)(1)(B));

(c) Any contractual agreement and insurance policy under which an insurance company may be liable to satisfy, in whole or in part, a judgment entered in the action or to indemnify/reimburse for payments made to satisfy the judgment (Code Civ. Proc., § 2016.090(a)(1)(C)); and

(d) Any contractual agreements and insurance policies under which a person may be liable to satisfy, in whole or in part, a judgment entered in the action or to indemnify/reimburse for payments made to satisfy the judgment. (Code Civ. Proc., § 2016.090(a)(1)(B).)

A party may propound supplemental demands for later-acquired information. A party can make a supplemental demand twice before the initial setting of a trial date and up to one more time after the initial setting of a trial date. The Court may, with good cause, grant leave to a party to propound one additional supplemental demand.

SB 235 allows a party to move to compel disclosure when a party refuses to respond with initial disclosures, or where such disclosures are inadequate. The new law does not expressly articulate a meet and confer requirement before the filing of a motion to compel. However, because the new code fits within the greater discovery structure (see Civil Discovery Act, commencing at Code Civ. Proc., § 2016.010, et seq.) as articulated, it appears that such a motion will need to be supported by a standard meet and confer declaration (Code Civ. Proc., § 2016.040), and the moving party may be entitled to sanctions. (Code Civ. Proc., §§ 2023.010(d), 2023.020, 2023.030.)

Finally, a critical limitation of the new law is that the initial disclosure procedures do not apply to parties not represented by counsel—meaning that, unrepresented parties cannot demand or respond to initial disclosures, but may still receive other represented parties’ initial disclosures in multi-party litigation, as represented parties must serve all involved. (Code Civ. Proc., § 2016.090(c).)

Takeaways

SB 235 is currently set to sunset on January 1, 2027. In the long run, parties and their counsel may find value in the use of initial disclosures. After kicking it around for a while, we can certainly expect to be able to suggest improvements to the scheme, if the legislature determines to keep it in place after this three year test run.

For now, current strategic considerations include:

• Immediate Deadline: Will there be a race to courthouse this month? A very time sensitive task is to determine if there are complaints in the hopper that need to be filed before January 1st to avoid the SB 235 requirements. Or do we file after January 1st to take advantage of them?
• Demand Timing: Are parties willing to wait 60 days for responses to initial disclosures? The 60-day window to respond to initial disclosures is four times longer than 14-day window under the federal rules. Using regular California discovery rules, a party can obtain similar information by propounding written discovery and receiving responses within 30 days.
• Layering: What is the best approach to the multiple opportunities within SB 235 and traditional discovery to seek information from opposing parties? The answer will no doubt be case dependent, but initial disclosures should be considered in the discovery plan. Since the initial disclosures will not count against the normal cap on the number of certain regular discovery requests, some matters may strongly favor use of initial disclosures demands.

In summary, there is plenty to think about, and some of it needs our attention right away. While the Legislature hopes that all litigants will embrace the “show us what ya’ got!” motto, the true effectiveness of the SB 235 will take some time to see as litigants grapple with it in the new year and beyond.

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¹ The other change increases certain discovery sanctions from $250 to $1,000 under Code Civ. Proc., § 2023.050.

² Initial disclosures are not required in unlawful detainer actions, small claims, family law and probate proceedings, or actions entitled to preference under Code Civ. Proc., § 36.