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Appeals Court Rejects Privacy Class Action Suit Over Unauthorized Call Recordings

The California Court of Appeal, Second Appellate District, recently gave much needed attention to the surge in class action lawsuits brought under California statutes that prohibit the unauthorized recording of telephone conversations. In the Feb. 21 opinion in Hataishi v. First American Home Buyers Protection Corp., the court affirmed the trial court’s refusal to certify a putative class, concluding that whether a particular recorded communication is “confidential” requires an individualized inquiry.

California’s Invasion of Privacy Act (CIPA), California Penal Code § 630, exists to “to protect the right of privacy of the people of this state.” In 630, the California Legislature declared that with the advent of new devices and technology used “for the purposes of eavesdropping upon private communications,” the resulting invasion of privacy from the “use of such devices and techniques has created a serious threat to the free exercise of personal liabilities and cannot be tolerated in a free and civilized society.” Id. Various sections of the CIPA make it illegal, for example, to wiretap (§631), to eavesdrop (monitor) and record telephonic communications (§632) or to record without consent cell phone communications (§632.7).

According to the opinion in Hataishi, in May 2008 and May 2009, the plaintiff received outbound calls from First American’s sales group, which issued and marketed warranty plans for residential appliances in various states, including California. Both calls were recorded and the plaintiff was not given the disclosure that the calls would be recorded or monitored. First American did not have a practice of providing a call disclosure to advise customers that outbound calls would be recorded, a practice First American remedied thereafter.

The plaintiff filed a civil action and sought class certification. The trial court denied the motion, because the objectively reasonable standard for determining “confidentiality” of any particular call “will vary depending on [his or her] past experiences with [the caller], including the number of calls the individual previously made to [the caller] in which he or she was advised that the call would be monitored or recorded.” The plaintiff attempted to amend her complaint to address concerns regarding the “confidential” requirement, a statutory element not present when the call recording involves mobile phones (§ 632.7). The trial court refused to permit the plaintiff to amend the claim.

In affirming the decision, the Court of Appeal explained that a communication is “confidential” for purposes of § 632 if the party has an objectively reasonable expectation that the conversation is not being overheard or recorded. To establish that an outbound call was subject to § 632, putative class members’ expectations must be objectively reasonable. Relevant criteria includes (1) the length of the customer relationship; (2) the plaintiffs’ prior experiences with calls to or from the defendant including the number of calls and whether those calls included a recording/monitoring disclaimer; and (3) the plaintiffs’ prior experiences with other companies wherein they were provided the recording/monitoring disclaimer. These are individualized inquiries that preclude the certification of the plaintiff’s class claims.

Applying a similar analysis to § 632.7 claims, the Court of Appeal held that the amendment would have been futile as it related to class certification because “the trier of fact must first determine what type of telephone was used to receive the call. That determination, as the trial court found, will require an individualized call-by-call inquiry.”

Hatisihi provides strong authority to counter the rash of call recording class actions brought under CIPA. Plaintiffs may encounter difficulty in pursuing purported claims for invasion of privacy beyond the demurrer, motion to dismiss, or summary judgment stage.

Numerous federal and state privacy laws apply to the use of telephonic and digital communications. To maintain compliance, companies should ensure that adequate privacy and security practices and procedures are in place to protect employee and consumer data.

To read the opinion, click here.

Cyber, Privacy & Data Security

Cyber, Privacy & Data Security