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California Call Recording Class Actions: Present and Future – Part II

4 Mar, 2016 By: Yosef Mahmood, Ana Tagvoryan, Blank Rome LLP

(To read Part I of this two-part series, please click here: Blank Rome, DRMA Voice February)

As plaintiffs have run into greater difficulty certifying call-recording class actions under Section 632 of California’s Invasion of Privacy Act (CIPA), they have begun shifting their focus to another portion of CIPA: Section 632.7, the provision applicable to communications made over radio, such as wireless cellular phones. While plaintiffs have gained some traction with this tact, most notably in achieving class certification in September 2014 in Ades et al. v. Omni Hotels (pending in the Central District of California), there are clear issues with pursuing a call recording action under this provision as opposed to Section 632.

Of primary significance is the third-party requirement – namely that the statute was only intended to apply to those communications covertly intercepted by unauthorized third parties. While there has been not yet been a significant appellate decision on this point, there are several factors suggesting that this will be Section 632.7’s undoing. First, the plain language of the statute can reasonably be interpreted as imposing liability upon only third parties who intercept or receive a call involving others – and that the law does not apply to the actual parties to the call. The legislative history of the statute is unequivocally focused on third-party interlopers; an intent to regulate the conduct of the actual parties to the communication is absent. Otherwise, Section 632, which punishes the intentional recording of confidential communications by a party to the otherwise consensual communication, could not be harmonized with Section 632.7, which punishes the intentional recording of wireless communications, regardless of whether the information is confidential.

In Young v. Hilton Worldwide Inc. the only Ninth Circuit Court of Appeals jurist to opine on this issue was Judge Motz, who found the majority’s decision overturning the district court’s dismissal of the 632.7 claim and remanding it, premature, because it decided a question not adequately briefed before the district court. The underlying briefing sought clarity from the California Supreme Court as to whether Section 632.7 applies only when calls are secretly recorded by unauthorized third parties, as opposed to the intended call recipient. However, no such question was certified to the California Supreme Court and, consequently, a lack of clarity persists. On remand, the district court again found that Section 632.7 applies to third-party recording.

Recently, in Granina v. Eddie Bauer LLC, a California trial court harmonized in a well-reasoned decision what appears to be an inconsistency between Sections 632 and 632.7, finding that a person cannot be liable under Section 632.7 unless he or she intercepted or received a communication without consent and intentionally recorded the communication without consent. The court found this holding to be consistent with the legislative history of Sections 632.5, 632.6, and 632.7, all of which apply to wireless communications over radio frequencies/waves, and not wire-based public switched networks.

Recent legislative efforts have also sought to clarify the intended effect of Section 632.7 – namely California Assembly Bill 925, which was introduced in February 2015. The proposed amendment recognized the original legislative intent behind Section 632.7 and permitted “service observing” by businesses. However, the bill died in committee in May 2015.

Expansion to Other Jurisdictions

Perhaps surprisingly, the class challenges posed to businesses by California’s privacy laws have not yet surfaced in a meaningful way in the other handful of “all-party consent” states. One hurdle involves the choice of law conflicts arising when the parties to the subject communication sit in states with competing privacy laws. In Kearney v. Salomon Smith Barney Inc., the California Supreme Court controversially held that CIPA could be used to impose civil liability on businesses resident in one-party consent states.

Notwithstanding the choice of law issue, Illinois, in particular, may prove a new hunting ground given the recent rewriting of its eavesdropping laws. The new statute, 720 ILCS 5/14-2, that went into effect about a year ago, prohibits recording a conversation without the consent of all parties when the recording is made “surreptitiously” and at least one party to the conversation has a “reasonable expectation” of privacy. It is unclear how courts would interpret this statute. And although there is no fixed damages provision, as with CIPA, the civil remedies afforded to injured parties include actual and punitive damages.

Pennsylvania’s analogous eavesdropping law also expressly provides for civil liability, through a shifting of attorneys’ fees, and, like CIPA, contains a fixed damages clause. The exception from liability is vaguely articulated to exist where speakers do not have an “expectation that such communication is not subject to interception under circumstances justifying such expectation.” Florida is another jurisdiction to watch, as it has similar vaguely defined laws regarding call recording practices.

Given this uncertain and developing area of privacy law, businesses are well advised to avoid entanglement with these statutes altogether through clear disclosure of call recording practices and otherwise obtaining customer consent to monitor or record all customer-facing communications.

Yosef Mahmood and Ana Tagvoryan are attorneys with Blank Rome LLP, based in Los Angeles.

About the Author: Yosef Mahmood

Yosef Mahmood

About the Author: Ana Tagvoryan

Ana Tagvoryan

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