California Call Recording Class Actions: Present and Future – Part I9 Feb, 2016 By: Yosef Mahmood, Ana Tagvoryan, Blank Rome LLP
For the first four decades of its existence, California’s call recording statute, the California Invasion of Privacy Act (CIPA), received relatively little attention. During the past several years, however, enterprising plaintiffs’ attorneys have seized on it as an implement to file hundreds of putative class action lawsuits against consumer-facing businesses. The essential allegation of these lawsuits is that the company violated the law by failing to disclose at the outset of each and every customer service call that the calls were routinely recorded or monitored.
The first wave of CIPA class actions focused on Section 632, the section of the statute governing confidential communications over telephone. By its express language, Section 632 only applies to the recording or monitoring of “confidential communications” without consent. Since 2011, when the California Appellate Court first established in Kight v. CashCall Inc. (also known as CashCall II) that whether or not a communication is confidential is “generally a question of fact that may depend on numerous specific factors,” no federal court has certified a Section 632 class. Indeed, the last case to have certified such a class appears to have been the CashCall trial court in 2009, a class the court later decertified in light of CashCall II.
Since the 2011 decision, at least four courts, at both the state and federal level, have addressed the question of certification of a Section 632 class and all four courts have denied certification based on individual issues predominating, including: the 2014 Kight v. CashCall Inc. case (also known as CashCall III), which affirmed the trial court’s order decertifying a Section 632 class; Haitashi v. First American Home Buyers Protection Corp. (2014), (relying on CashCall II to affirm the trial court’s denial of class certification as individual issues regarding the “threshold question of confidentiality” would predominate); Torres v. Nutrisystem Inc. (2013), (relying on CashCall II in holding that “to determine whether each class member had an expectation of confidentiality would require a detailed factual inquiry into the circumstances of each call.”); and Quesada v. Banc of America Investment Services Inc. (2013), (denying certification of Section 632 class based on lack of commonality).
Recognizing the inability to certify a class under Section 632, the plaintiffs’ bar has refocused its prosecution of CIPA class actions under Section 632.7, the provision applicable to communications made over radio, such as wireless cellular phones. Section 632.7, by contrast, does not include an express confidentiality requirement and courts have generally declined to read one into the statute. As a result, the plaintiffs’ bar has gained some limited traction with this approach, most notably in achieving class certification in September 2014 in Ades et al. v. Omni Hotels, which is pending in the Central District of California. However, whether Section 632.7 is truly an appropriate vehicle for a class action remains unclear.
While plaintiffs have been prosecuting CIPA claims under Section 632.7 for a several years now, the legal landscape has been slow to develop. Given the smaller putative class size when only “wireless” numbers are involved, risk-averse defendants have largely opted to settle. Further, given the potential threat that any per-capita settlement number would increase upon certification, few defendants have yet had the courage to test whether 632.7 claims can be certified. Nonetheless, Section 632.7 claims are working their way through courts and during the next several years, the major impediments to certification under 632.7 will likely be decided at the appellate level.
Although there is hope on the horizon that courts at the appellate level will start developing the contour of some common-sense limitations on certification of Section 632.7 classes in the near future, for the time being, businesses are best advised to provide clear disclosure of call recording practices and to otherwise obtain customer consent to monitor or record all customer-facing communications.
For more on Section 632.7 classes and claims, look for Part II of this story in the March issue of The DRMA Voice.
Ana Tagvoryan and Yosef Mahmood are attorneys with Blank Rome LLP, based in Los Angeles.