KEY STUDIES AND ACTIVITIES

Impact Of Judiciary Budget-Challenges For The Court

As 2012 approached, a constrained budget climate for the Judiciary continued and Congress once again narrowly avoided a government shutdown. Final fiscal year allotments were approximately five percent below fiscal year 2011 allotments on a national basis. Throughout 2012, the Judiciary continued to exercise caution with its expenditures and aggressively pursued cost-containment measures as budget challenges were anticipated for the next several years to come. Locally, the FY 2012 appropriation resulted in a 10 percent reduction to the Court’s budget allotments, and the Court maintained its hiring freeze, with limited exceptions for critical positions.

Due to these budget conditions as well as anticipated FY 2013 shortfalls, the Court was forced to implement staff reductions in September and 24 court employees were involuntarily separated from service. In addition, several staff also accepted the early retirement/buy out offered by the Court.

FY 2013 Budgetary Shortfall

Based on the interim financial plan, the Court lost approximately $2.24 million in funding due to the national financial plan reduction. Additionally, the results of the 2011 Work Measurement Study, conducted by the Administrative Office of the U.S. Courts in order to determine the length of time that it takes the Clerk’s Office staff to perform each of its tasks, resulted in a new staffing formula that further reduced the Court’s funding. The Court lost an additional $5.4 million in funding due to the new staffing formula, which reflects the improved efficiency with which the Clerk’s Office is processing its work. The new staffing formula, in conjunction with the drop in filings, resulted in funding to the courts that is approximately 4.8 percent below FY12 allotments on a national basis. Funding for cyclical maintenance was reduced 80 percent below formula requirements, and funding for tenant alterations was eliminated altogether.

In the final days of 2012, with Congress having no budget agreement in sight to avoid sequestration, the Clerk of Court issued another memorandum providing instructions for the Court’s operations to continue in the event of sequestration taking place on January 2. The Court continued to limit purchases to essential supplies and services to reduce the financial impact of additional cuts to come.

District-Wide Call Center

In a continuing effort to improve customer service and streamline business processes, the Court established a new district-wide Call Center in 2012. The Call Center handles calls from the public for all of the Court’s five divisions, located in Los Angeles, Riverside, Santa Ana, Santa Barbara, and the San Fernando Valley.

A new call script, available in English and Spanish, provides automated information about obtaining free or low cost legal assistance, calendar and hearing matters, Court locations, attorneys, credit reporting and fraud, and fees. While automated service is accessible 24 hours a day, seven days a week, live operators are also available during regular court hours. The ability of the automated system to answer a large number of calls permits Call Center operators to attend to those customers who have more case-specific and intricate questions. Since the Call Center is centralized, it also ensures that the Court provides consistent information to the public, rather than answers that vary from division to division and frees up staff resources in the divisions to focus on operational tasks.

Due to the volume of information the Call Center provides to the public, the Court has reduced incoming calls answered by Operations staff by approximately 75 percent, a measure of the Call Center’s considerable labor savings for the Court. Staff members who used to answer calls in the divisional offices can now concentrate on the already heavy workload exacerbated by this year’s staff reductions.

Career Transition Center

The Judiciary’s budget shortfall, coupled with the Court’s decline in case filings and additional reductions resulting from the new staffing formula, created significant budget challenges for the Court not witnessed since 2005. On September 24, in response to the dire situation, the Court notified 24 employees that they would be involuntarily separated from service.

To assist the employees in moving forward, the Court established a Career Transition Center. The Center, which remained open for the duration of the displaced employees’ four-week notification period, provided training on topics such as résumé writing, using Microsoft Word and Excel, networking through social media, and improving interviewing skills. The Center made computers, faxes, phones, and other job search resources available to outgoing employees, and put them in direct contact with the Employee Assistance Program (EAP) offered through Federal Occupational Health, California’s Employment Development Department (EDD), and WorkSource job placement centers.

Through the Court’s Bar Advisory Board membership, network communities and supportive partnerships with the Los Angeles Bankruptcy Forum, the Central District of Consumer Bankruptcy Attorney Association and others, the Career Transition Center was able to provide access to over 20 industry-specific job openings at a variety of law firms and trustee offices. Positions included Case Processing Clerk, Bankruptcy Legal Assistant, Calendar Clerk, Administrative Assistant, and Legal File Clerk. Several displaced employees successfully competed for these positions.

City Of San Bernardino Files Chapter 9

On August 1, 2012, the City of San Bernardino filed a chapter 9 bankruptcy petition. Chief Judge Alex Kozinski of the United States Court of Appeals for the Ninth Circuit designated the Honorable Meredith A. Jury to preside over the case.

The Executive Team of the Clerk’s Office and Riverside Division staff coordinated with the many other agencies involved in a filing of this magnitude. The Court worked closely with officials in the City of San Bernardino, attorneys, the Ninth Circuit, and federal agency heads to prepare for processing the case, as well as handle the public interest generated by the filing.

Representatives from the Clerk’s Office met with Court Security Officers and the U.S. Marshals Service to discuss security measures and strategies to manage the flow of traffic in the Riverside Division. As a result of these meetings, the Riverside Division increased security, designated a separate check-in station on the first floor for court appearances, and prepared Judge Jury’s courtroom with a closed circuit feed to other courtrooms and videoconference rooms. The Court also established a plan to ensure the expeditious processing of requests for transcripts and audio recordings in this matter.

A new web page dedicated to the City of San Bernardino was developed for the Court website, and a Public Information Officer (PIO) was selected at the Riverside Division to streamline communication about the case. Along with the PIO contact information, the Court posted special courtroom instructions, hearing dates, important case documents, and transcript/audio instructions on its City of San Bernardino webpage for attorneys, media, and the public.

Central District Noticing Procedures Save Judiciary $1.65 Million In 2012

For the second consecutive year, the U.S. Bankruptcy Court for the Central District of California achieved the lowest Bankruptcy Noticing Center (BNC) costs per case in the nation. The Central District’s low BNC costs yielded approximately $1.65 million in savings to the Federal Judiciary in 2012, and have saved approximately $3.65 million since 2011. These savings were the direct result of the Court’s policies and practices related to Electronic Bankruptcy Noticing (EBN). EBN allows court notices to be transmitted electronically to registered users who receive electronic notices the same day they are produced, and they are accessible around-the-clock.

The Central District’s substantial savings are the result of several ongoing initiatives to reduce noticing costs. District-wide policies to streamline notices, particularly entered orders, have resulted in notices that consist of the fewest possible pages, yet retain all essential information. The Court no longer requires that Proof of Service pages be attached to orders, and BNC orders are now served only on parties who are entitled to service but are not registered to use the Court’s Electronic Case Filing (ECF) system. The Court has also instituted district-wide policies to limit recipients of orders to only those legally required to receive them.

Through publications and bar meetings, the Court has undertaken an aggressive outreach campaign to enroll attorneys, panel trustees, creditors, et al. in EBN, so they receive notices electronically. As a result of these efforts, the Central District has the highest percentage of creditors (41 percent) who receive electronic notices in lieu of paper notices. A prominent link to EBN on the Court’s website encourages creditors to sign up for this electronic noticing service.

The Court obtained consent from the U.S. Trustee to receive almost all documents electronically, by way of Notice of Electronic Filing (NEF), including orders and notices the Court is required to serve. Also, more than 90 percent of attorneys in the district receive notices via NEF.

Finally, the Court’s Calendaring Information and Orders program (CIAO!) only sends BNC orders to the debtor and the debtor’s attorney, if the attorney is not registered to use ECF; in adversary proceedings, only parties that are not registered to use ECF receive orders. Where possible, the Court also combines orders and related notices in a single mailing, thereby reducing mail costs.

Clerk Of Court Appointed To Bankruptcy Clerks Advisory Group And Human Resources Advisory Council

The appointment of Clerk of Court Kathleen J. Campbell to the Bankruptcy Clerks Advisory Group (BCAG) was announced in a memorandum from the Director of the Administrative Office of the U.S. Courts on January 12, 2012. Ms. Campbell was one of four new clerks across the nation appointed by Administrative Office Director Thomas F. Hogan to replace four previous members of the BCAG who had concluded their terms. The group provides advice to the Administrative Office on issues affecting the administration of the bankruptcy system with respect to the bankruptcy clerk’s offices and provides input on the development of recommendations to the Judicial Conference. The group has regular meetings by telephone conference, in addition to two in-person meetings each year. Ms. Campbell serves on the BCAG as the circuit representative for all bankruptcy courts in the Ninth Circuit.

On January 20, 2012, Director Hogan also announced the appointment of Ms. Campbell to the Human Resources Advisory Council (HRAC). The HRAC provides advice to the Administrative Office on “the needs and views of unit constituents concerning crosscutting, Judiciary-wide human resources matters, including operational personnel management, core and supplemental benefits administration, training, work measurement, employee relations, fair employment practices, and statistics.” The group meets every spring and fall of each year in Washington, DC.

Transcription Services Project

In May 2012, the Clerk’s Office initiated the Transcription Services Project, compiling a list of authorized professional organizations that can provide transcription services for bankruptcy and adversary proceedings to the Court and the public. Benefits of the project include an increased quality of service, a higher number of providers, competitive pricing for all stakeholders and reduced labor costs for the Court. After consulting with the Administrative Office of the U.S. Courts and with courts in other districts to determine the criteria authorized providers would have to meet, the team created a Request for Proposal (RFP) seeking qualified organizations.

A subcommittee of Operations staff helped determine what the new transcription policies and procedures will be, and the Clerk’s Office helped create a new methodology for seeking and identifying qualified organizations by using a RFP. The Clerk’s Office has also ensured that authorized organizations understand they are not entering into a contract with the Court. By researching current policies and procedures and consulting with the Administrative Office, the project team determined the necessary steps to authorize organizations from which the Court and public may purchase transcription services. New policies, procedures, and an authorized list are scheduled to be implemented in 2013.

Bankruptcy Operational Practices Forum 2012

Ten representatives from the Clerk’s Office and chambers participated in the 2012 Bankruptcy Operational Practices Forum held in Atlanta, Georgia from August 21 through August 22. The forum provides an opportunity for all bankruptcy courts to come together to learn about best practices and receive an overview of upcoming changes to CM/ECF and CM/ECF Next Generation.

Topics of interest this year included the future of telecommunications in the Judiciary, shared administrative services, social networking, the Pro Se Pathfinder Project, Bankruptcy Noticing Center savings measures, and IT strategies. Jeffrey Cozad, Judge Zurzolo’s law clerk and a member of the Bankruptcy Noticing Work Group, represented the Court at a panel discussion about initiatives and ways to help reduce BNC costs. A demonstration of the coming attractions of CM/ECF version 5 gave the participants a sneak preview of the changes in this new CM/ECF release. Participants also learned about programs from other courts which allow the electronic filing of proofs of claim. Another highlight was an informative presentation from supervisors of different courts demonstrating the CM Assist program, which helps effectively assign quality control functions and measure staff’s efficiency.

The forum also offered opportunities for the participating courts to come up with interesting topics for discussion in breakout sessions. In addition to attending these informative breakout sessions, representatives from the Central District had an opportunity to network, discuss issues, and exchange ideas with their counterparts in other courts. They also provided their recommendations to the Court on topics that would help promote technology development and work improvement.

Financial Manager James Sandino Works In Washington, D.C. Through Court/Administrative Office Exchange Program

From September 2011 through April 2012, Financial Manager James Sandino lived and worked in Washington, D.C. through one of the exchange programs offered by the Administrative Office of the U.S. Courts (AO). Mr. Sandino applied and was selected for a temporary assignment in D.C., where he worked on the Judiciary Integrated Financial Management System (JIFMS) project. He and three fellow participants in the program assisted in the development of JIFMS, a new system that will reconcile the Judiciary’s multiple accounting applications, making work processes and reporting easier for AO and court employees.

Debtor ID Program

The Debtor ID Program, developed in 2011, addresses several common abuses of bankruptcy in which non-attorneys file cases on behalf of debtors. Some bankruptcy petition preparers (BPPs) have engaged in fraudulent practices, such as filing bankruptcy in a debtor’s name without that debtor’s knowledge, changing information on petitions in the presence of clerks, charging clients far more than the maximum amount of $200 recommended by the Office of the U.S. Trustee, and failing to disclose their own involvement in a filing. In order to assist one client at another’s expense, some BPPs have also filed bankruptcy to slow a foreclosure action that has no connection to the named debtor.

Under the Debtor ID Program, when someone other than a debtor files, the Court keeps a copy of the photo ID presented in order to determine who controlled the filing. The program, adopted by the Northern and San Fernando Valley Divisions in 2011, expanded to the Riverside Division in 2012. In July 2012, the web-based application Third-Party Filer Tracker went live. Developed by IT staff in collaboration with San Fernando Valley Operations staff, the program collects data about and tracks the activity of BPPs and other third-party filers throughout the Central District.

Judges' Opinions Posted Through GPO Website

On April 16, 2012, the Court began participating in a pilot program to post judges’ written opinions to the searchable website of the U.S. Government Printing Office (GPO). All courts were directed to begin using the GPO website to post written opinions before the end of September 2012, so that written opinions from all federal courts throughout the nation would be gathered at a single, searchable website. The written opinions of Central District bankruptcy judges had previously been available on the Court’s website, but since April, judges’ opinions have also been flagged when docketed in CM/ECF and subsequently posted to the GPO website.

Local Bankruptcy Rules And Forms Updated

The Court completed a comprehensive review and update of its Local Bankruptcy Rules (LBRs) and Court Manual during 2012. New order processing requirements for lodging orders were introduced, as follows: the need for a proof of service and judge’s copy of lodged orders was eliminated; a notice of lodgment is now required for orders where the motion was opposed; and service of orders has been limited to fewer parties, thereby reducing both court labor when reviewing orders and the Judiciary’s Bankruptcy Noticing Center expenses. LBRs and portions of LBRs that were repetitive of the Bankruptcy Code, Federal Rules of Bankruptcy Procedure (FRBP), or another LBR were eliminated. Latin phrases were replaced with plain English and language was made more consistent with the FRBP and other LBRs. Heavily used procedures were clarified and emphasized, such as proofs of service, status conference orders, pretrial stipulations, and case conversions. Addressing changes in technology, the term “papers” was replaced with “documents.” The LBRs were posted on December 19, 2012, and made effective on January 2, 2013. The Court Manual was thoroughly reviewed and updated to reflect the LBR changes, and to enhance instructions.

Additional LBR forms for individual chapter 11 cases were introduced in 2012. Since June 2011, a total of 15 LBR forms for individual chapter 11 cases have been made available in an effort to simplify the process and reduce legal expenses in these cases. The forms were developed with extensive input from the local bar.

In addition, the Court posted 80 revised LBR forms that included an updated proof of service as well as other non-substantive formatting changes. The Court developed and utilized a Forms Style Guide to standardize text and format the forms to be compatible with CM/ECF. The revised forms are PDF fillable and can also be saved using the free Adobe Reader software. In the background, these forms were converted from WordPerfect to Word as part of the Court’s transition to one word processing software. In early 2013, all LBR form orders were updated to remove the proof of service to comply with the new order processing requirements.