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April 2016

San Francisco Attorneys Defeat Class Certification in Case Involving Illegal Phone Call Recording

Gordon & Rees San Francisco partners Fletcher Alford and David Jordan, along with senior counsel Dan Kubasak, recently defeated class certification in a hotly-contested case involving claims of allegedly illegal recording of telephone calls. 

The team of attorneys represented a Bay Area computer supply company whose clients include Boeing, the federal government, and many defense contractors. For years, the company had a policy of requiring or encouraging its employees to record their telephone calls with customers, without advising customers the calls were being recorded. The client was not aware of California Penal Code section 632 et seq., which states that recording or eavesdropping upon a confidential communication without the consent of all parties to the conversation is not only a crime but also gives rise to an action for civil penalties of $5,000.00 per violation.

The controversy began when the client fired several of its sales employees, and those employees then went to work for the client’s competitor. Represented by non-Gordon & Rees counsel, the client sued its former employees and their new employer for theft of trade secrets. That case was bitterly contested, and ended in a jury verdict against the client. Apparently seeking revenge, the former employees the client had unsuccessfully sued then “blew the whistle” on the client’s unlawful call recording practices and encouraged a number of the client’s customers to bring the class action lawsuit. 

During litigation, the former employees produced hundreds of electronic files consisting of recorded calls, and it appeared that thousands—if not tens of thousands—of additional calls had been unlawfully recorded. 

The Gordon & Rees team took the depositions of the class reps and the former employees, grilling them to expose their personal biases as well as non-common issues regarding the client’s call-recording practices. The class counsel was very aggressive, discovery was highly contentious, and there were multiple motions to compel. The team also contacted the employers of the class reps, obtaining declarations from them attesting to the non-confidential nature of their use of company telephones.

After a great deal of discovery, extensive briefing, and lengthy oral argument, the Court issued an order denying the motion for class certification. 

Gordon & Rees’s team continues to defend the individual claims of the named representatives, but believes these claims have little value now that certification has been denied.

Fletcher C. Alford
David L. Jordan