Judicial Council of California Issues Opinion in People Vs. Monica Marie Martinez Case

SACRAMENTO, California, Aug. 25 -- The Judicial Council of California issued the following opinion (No. S267138) on Aug. 24, 2023:

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In the Supreme Court of California, Sixth Appellate District

THE PEOPLE, Plaintiff and Respondent, v. MONICA MARIE MARTINEZ, Defendant and Appellant.

Justice Kruger authored the opinion of the Court, in which Chief Justice Guerrero and Justices Corrigan, Liu, Groban, Jenkins, and Evans concurred.

Opinion of the Court by Kruger, J.

Since 1941, a Department of Insurance regulation has prohibited bail bond agents from entering agreements with jail inmates to be notified when individuals have recently been arrested and thus may be in need of bail bond services. (Cal. Code Regs., tit. 10, Sec. 2076.) The Court of Appeal in this case held the regulation facially invalid under the First Amendment. The court concluded that the regulation imposes burdens on the speech rights of bail bond agents that are not adequately justified by the state's interests in deterring abusive bail solicitation practices.

We now reverse. In invalidating the regulation, the Court of Appeal failed to consider the full range of interests at stake when a commercial bail bond agent engages the services of a jail inmate to gain private access to information about prospective clients. The state's interests in stemming this practice are not solely -- or even primarily -- about the manner in which bail bond agents solicit clients. The state's interests instead mainly concern the effects of these arrangements on sound jail administration and fair competition in the bail bond industry. Without foreclosing the possibility of as-applied challenges in other cases, we conclude the Court of Appeal erred in holding the regulation unconstitutional on its face.

I.

A.

When an individual is arrested and charged with a crime, bail may be set to help ensure the individual's appearance in court while allowing the individual to be released from jail in the interim. (See In re Humphrey (2021) 11 Cal.5th 135, 154 (Humphrey).)/1 To make bail, "an arrestee posts security -- in the form of cash, property, or (more often) a commercial bail bond -- which is forfeited if the arrestee later fails to appear in court." (Humphrey, at p. 142.)

"The vast majority of defendants who are released on bail in California rely on commercial bail bonds to secure their release." (Pretrial Detention Reform Workgroup, Pretrial Detention Reform: Recommendations to the Chief Justice (Oct. 2017) p. 9 <https://www.courts.ca.gov/documents/PDRReport20171023.pdf> [as of August 24, 2023].)/2 A commercial bail bond is a written agreement in which a licensed surety guarantees the defendant's appearance in court and promises to pay the full bail amount if the defendant fails to appear. (People v. Safety National Casualty Corp. (2016) 62 Cal.4th 703, 709.) "Commercial bail bonds are underwritten and issued by licensed bail agents who act as the appointed representatives of licensed surety insurance companies." (Pretrial Detention Reform, p. 29.) To obtain such a bond, the defendant (or someone acting on the defendant's behalf) pays the bail bond agent a nonrefundable premium for the service of providing the bond. (Id. at p. 30 [noting that the premium is typically 10 percent of the bail amount].)

Although the system of release on bail dates back centuries, the commercial bail bond industry is a relatively recent innovation, having first emerged in the latter part of the 19th century. (Baughman, The Bail Book: A Comprehensive Look at Bail in America's Criminal Justice System (2018) p. 164; see also, e.g., Holland v. Rosen (3d Cir. 2018) 895 F.3d 272, 293- 294 [citing additional sources].) In California, the industry was unregulated for several decades, until reports revealed abusive practices that had become widespread among bail bond businesses across the state. Reports indicated, for example, that bail bond agents commonly entered kickback schemes with police officers to gain information about potential clients; in return for notifying bail bond agents of criminal arrests, police officers would take a share of the bond premium once the agents had secured the prisoners' release. (See, e.g., Bail Broker Control Bill in Assembly, Oakland Tribune (Mar. 30, 1937) p. 5.) Other reports indicated that bail bond agents would agree to steer the prisoners to certain attorneys, who would, in turn, split legal fees with the agents and police officers involved in the schemes. (See, e.g., Bail Brokers Are Rapped As Bill Wins Okeh, Sacramento Bee (Mar. 30, 1937) p. 13.)

These revelations prompted calls for reform and increased oversight over the burgeoning commercial bail industry. The Legislature responded by enacting the Bail Bond Regulatory Act of 1937, which established a framework for industry regulation. (Stats. 1937, ch. 653, pp. 1797-1800; Stats. 1937, ch. 654, pp. 1800-1804; see McDonough v. Goodcell (1939) 13 Cal.2d 741, 743.) The Act requires every person engaged in the bail bond business to secure a license from the Insurance Commissioner. (See Ins. Code, Sec.Sec. 1800, 1802.) The Act further vests the Insurance Commissioner with the authority to "make reasonable rules necessary, advisable, or convenient" for the regulation of bail licensees. (Id., Sec. 1812.)

In 1941, following further investigations into the bail industry, the Insurance Commissioner promulgated a slate of regulations governing the conduct of bail licensees. (Cal. Dept. of Insurance, Rules & Regulations Governing Bail Bond Transactions, Ruling No. 21 (Dec. 1, 1941) (Ruling No. 21).) Those regulations, many of which remain in force in substantially similar form today, prohibit bail licensees from, among other practices: engaging unlicensed persons to solicit or negotiate bail on the licensed agent's behalf (Cal. Code Regs., tit. 10, Sec. 2068); entering bail agreements in advance of the commission of an offense or an arrest (id., Sec. 2070); referring arrestees to defense attorneys (id., Sec. 2071); soliciting bail in certain places, like jails and courthouses (id., Sec. 2074); and charging rates or fees that differ from those that appear in rate schedules that licensees must file with the Department of Insurance (id., Sec. 2082). (See Ruling No. 21, supra, Sects. 19, 23, 27, 35-36, 38.) Another later-added regulation prohibits bail bond agents from directly soliciting arrestees unless the agent has received a bona fide request for bail services from the arrestee or other specified individuals acting on the arrestee's behalf. (See Cal. Code Regs., tit. 10, Sec. 2079.1; see id., Sec. 2079.)

The provision at issue in this case, California Code of Regulations, title 10, section 2076 (section 2076), was added as part of the initial 1941 slate of regulations. (See Ruling No. 21, supra, Sect. 37.) Section 2076, as presently in force, provides in full: "No bail licensee shall, for any purpose, directly or indirectly, enter into an arrangement of any kind or have any understanding with a law enforcement officer, newspaper employee, messenger service or any of its employees, a trusty in a jail, any other person incarcerated in a jail, or with any other persons, to inform or notify any licensee (except in direct answer to a question relating to the public records concerning a specific person named by the licensees in the request for information), directly or indirectly, of: [Sect.] (a) The existence of a criminal complaint; [Sect.] (b) The fact of an arrest; or [Sect.] (c) The fact that an arrest of any person is impending or contemplated; [Sect.] (d) Any information pertaining to the matters set forth in (a) to (c) hereof or the persons involved therein."/3 Section 1814 of the Insurance Code makes the violation of a rule promulgated by the Insurance Commissioner, including section 2076, an offense chargeable either as a misdemeanor or a felony.

B.

In 2015, the Santa Clara County District Attorney charged defendant Monica Marie Martinez with seven felony counts of violating section 2076./4 The complaint alleged that on seven different dates in 2014, Martinez "enter[ed] into an agreement and ha[d] an understanding with a person incarcerated in jail, to inform and notify defendant, a bail licensee, of the fact of an arrest." Martinez demurred. Among other things, she argued that section 2076 violates her right to freedom of speech under the First Amendment to the United States Constitution and article 2, section 2(a) of the California Constitution. The trial court overruled the demurrer. Martinez subsequently pleaded no contest to one of the counts in the complaint, and the prosecution agreed to dismiss the remaining six. The court suspended imposition of sentence and placed Martinez on probation for three years. The court also ordered that she serve four months in custody in the county jail, and it promised to reduce the offense to a misdemeanor if she successfully completed one year of probation. (See Pen. Code, Sec. 17.)

Martinez appealed her conviction after obtaining a certificate of probable cause. (See Pen. Code, Sec. 1237.5; Cal. Rules of Court, rule 8.304(b)(1).) On appeal, a divided court agreed with Martinez that section 2076 is facially unconstitutional and reversed the conviction. (People v. Martinez (2020) 59 Cal.App.5th 280, 290 (Martinez).)

At the outset, the Court of Appeal considered the applicable standard of constitutional scrutiny: whether section 2076 was subject to the strict scrutiny typically applicable to content-based speech regulations, as Martinez argued, or instead subject to the intermediate scrutiny applicable to commercial speech regulations, as the People argued. The court agreed with Martinez that the regulation was content-based but ultimately did not decide whether strict scrutiny applied because, in the court's view, the regulation failed even intermediate scrutiny. (Martinez, supra, 59 Cal.App.5th at pp. 303, 305-307, citing Central Hudson Gas & Electric Corp. v. Public Service Commission of New York (1980) 447 U.S. 557 (Central Hudson).) The court acknowledged that the People had identified substantial state interests underlying section 2076. The court cited, in particular, the state's interests in deterring bail bond agents from engaging in forms of arrestee solicitation prohibited by other provisions of California law. (Martinez, at pp. 307-311; see, e.g., Cal. Code Regs., tit. 10, Sec. 2079.1 [prohibiting bail bond agents from directly soliciting arrestees who have not requested their services]; Pen. Code, Sec. 160 [prohibiting agents from employing inmates to solicit arrestees on the agents' behalf].) But in the court's view, the People failed to adduce sufficient empirical or anecdotal evidence to show that section 2076 "directly and materially advance[d]" the state's interests in deterring unlawful solicitation practices, as intermediate scrutiny under Central Hudson requires. (Martinez, at p. 312 & fn. 14.)/5

Justice Grover dissented. (Martinez, supra, 59 Cal.App.5th at p. 314 (dis. opn. of Grover, J.).) In contrast to the majority, which focused on the state's interest in deterring unlawful solicitation of arrestees, Justice Grover instead focused on the state's "substantial interest[s]" in "prevent[ing] unfair competition among licensed bail agents" and in "maintaining professional and ethical standards." (Id. at p. 315 (dis. opn. of Grover, J.).) In Justice Grover's view, section 2076 directly advances those interests by "restricting bail licensees' access to . . . insider information" permitting "the wholesale identification of people with imminent bail needs." (Martinez, at p. 315 (dis. opn. of Grover, J.).) Justice Grover reasoned, "By restricting bail licensees' access to that insider information, the regulation directly prevents unfair competition among licensed bail agents. Restricting licensees' access to wholesale identifying information also directly advances the state's interest in protecting arrestees from intrusive conduct. Further, the regulation is not unduly restrictive in light of the state's interests, as it does not prohibit agreements to obtain public records regarding persons already known to and identified by a bail agent." (Ibid.) "Seeing no constitutional impediment to enforcing California Code of Regulations, title 10, section 2076," Justice Grover would have affirmed./6 (Martinez, at p. 316 (dis. opn. of Grover, J.).)

We granted review to consider the issue.

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Footnotes:

1/ In Humphrey, we held that it is unconstitutional to detain defendants before trial solely because they lack the financial resources to make bail and that accordingly, "courts must consider an arrestee's ability to pay alongside the efficacy of less restrictive alternatives when setting bail." (Humphrey, supra, 11 Cal.5th at p. 152.)

2/ All Internet citations in this opinion are archived by year, docket number, and case name at <http://www.courts.ca.gov/38324.htm>.

3/ The current regulation is essentially the same in substance as the version originally promulgated in 1941 (see Ruling No. 21, supra, Sect. 37), except that the original version did not include the public records exception, which was added in 1977 (Cal. Reg. Notice Register 77, No. 38 (Sept. 17, 1977) p. 1741).

4/ In various places in the record, Martinez is also referred to as Monica Milla or Monica Marie Milla. To remain consistent with the charging documents and the Court of Appeal's opinion, however, we will refer to her as Martinez.

5/ Martinez also raised two other constitutional arguments: that section 2076 is unconstitutionally vague on its face and that it is unconstitutionally overbroad. The Court of Appeal rejected the first (Martinez, supra, 59 Cal.App.5th at p. 297), and, in light of its conclusion that section 2076 was an invalid contentbased regulation, declined to address the second (Martinez, at pp. 290, 313). Martinez has not pressed either of these arguments before this court, and we express no view on them.

6/ Justice Grover also would have rejected Martinez's vagueness and overbreadth challenges. (See fn. 5, ante.)

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Original text here: https://www.courts.ca.gov/opinions/documents/S267138.PDF