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Strangers in a Strange Land - In California, Bumblebees, Crabs and Snails are Fishes and a General Partnership May Soon be a Corporation
Friday, April 5, 2024

In California, some things are not what they seem.  Here, a bumblebee, a crab or snail can be a fish, but a goldfish may not be a fish.  See California Believes Clams, Crabs and Bumblebees Are Fish, Does It Now Believe That Joshua Trees Are A Type Of Asparagus?  Now, a bill is pending in the California legislature which threatens even more violence to the common understanding of words.

I previously wrote about AB 2432 (Gabriel).  At the time of that post, the bill would have allowed a judge to impose enhanced penalties on corporations convicted an offense under the Penal Code.  Oddly, the bill would have exposed only California corporations to the risk of enhanced penalties.  See California Legislator Proposes To Enhance Criminal Fines For California, But Not Delaware, Business Entities.  It is unclear why the author thought California corporations, but not Delaware corporations, deserved additional penalties.

"Curiouser and curiouser"

Matters became curiouser and curiouser earlier this week when the bill was amended.  As amended, the bill now defines a "corporation" as "an entity, other than a natural person, that is capable under the laws of any state of suing, being sued, owning property, entering into a contract, or employing a person".    As a result, a general partnership formed under California's Uniform Partnership Act of 1994 would be a corporation.   Cal. Corp. Code § 16201 ("A partnership is an entity distinct from its partners.") and Cal. Code Civ. Proc. § 369.5(a) ("A partnership or other unincorporated association, whether organized for profit or not, may sue and be sued in the name it has assumed or by which it is known".).  

Restitution is to Fine As Hot is to Ice*

Another oddity in the bill is its oxymoronic use of the term "restitution fine".   The recent amendment requires a court to impose a "a separate and additional restitution fine, unless it finds a compelling and extraordinary reason for not doing so and states those reasons on record".  The bill does allow the court to determine the amount of the "restitution fine" but requires that the fine be "commensurate with the seriousness of the offense".  If a corporation is convicted of a felony, the fine must not be less than $100,000 and if a corporation is convicted of a misdemeanor, the fine must not be less than $1,000.   However, restitution, unlike a fine, is not a punitive remedy.  Clark v. Superior Court, 50 Cal. 4th 605, 614 (2010).  "The word 'restitution' means the return of money or other property obtained through an improper means to the person from whom the property was taken".  Id.  The "restitution fine" authorized by AB 2432 is not restitutionary because the amount of the fine is unrelated to the amount of money or value of property obtained.  Further, a significant portion of the fine is required to be paid to the prosecuting agency and not the person from whom money or property was taken.

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*See Wm. Shakespeare, A Midsummer Night's Dream, Act 5, Sc. 1 ("That is hot ice and wondrous strange snow.").

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