United States: California's Call Recording Class Actions: Upping The Game For Class Action Plaintiffs

Last Updated: October 13 2014
Article by Joel D. Siegel and Paul Kakuske

In recent years, the California Invasion of Privacy Act (CIPA) (Cal. Penal Code §§ 630-637.5) has spurred class action litigation related to the monitoring and recording of customer calls. The defendants in these actions are typically customer facing companies that routinely record customer service calls, but are alleged not to have advised that the calls "may be recorded for quality assurance."

Under CIPA, plaintiffs can seek statutory damages of US$5,000 per violation or three times the amount of actual damages, whichever is greater. Because of the number of calls involved in day-to-day business activities and the possibility that one person may experience multiple "violations," CIPA can result in a very large class award. Faced with such staggering potential damages, some companies have settled these class actions for millions of dollars.1

In a recent published decision, however, the California Court of Appeal may have sounded the death knell for these types of class actions. In Hataishi v. First American, 223 Cal. App. 4th 1454 (2nd Dist. 2014), the Second District Court of Appeal affirmed the trial court's denial of a class certification motion, holding that individualized issues predominated.

First American, the defendant in Hataishi, used a call recording system that plaintiff claimed recorded both inbound and outbound calls. While all inbound callers automatically received a notice that the call may be recorded, plaintiff alleged that no automatic notice was played for outbound calls. The original named plaintiff in Hataishi filed a class action complaint in 2009, alleging that he received multiple "outbound" telephone calls from First American that were recorded, without being notified that the call "may be recorded for quality assurance purposes."

Plaintiff asserted a single cause of action for violation of California Penal Code section 632, which prohibits the non-consensual recording of telephone calls if the caller has a "reasonable expectation of privacy." Plaintiff alleged that First American placed over 200,000 "outbound" calls at issue. Plaintiff sought the CIPA statutory penalty of US$5,000 for each of those calls.

Following extensive discovery, and an initial round of class certification briefing, the original named plaintiff was disqualified after First American's investigation discovered that he was married to a lawyer at the plaintiff's law firm. That lawyer was later sanctioned for refusing to testify at deposition. Although plaintiff's counsel was able to procure a new named plaintiff, the trial court ultimately denied the plaintiff's motion for class certification in August 2012.

The Second District Court of Appeal affirmed that denial, agreeing with First American's argument that the "reasonableness" of a specific caller's expectations with regard to call recording is highly individualized and idiosyncratic and that First American had a due process right to cross-examine each individual caller. The Court held that each plaintiff's objectively reasonable expectations would turn on individualized inquiries, including the length of the class member's experience with First American, whether the class member had ever been notified that their calls with First American may be recorded and each class member's experience with other businesses that record or monitor calls.

First American, and the Court, used plaintiff's own unique circumstances as an example. The evidence revealed that she had made approximately a dozen calls to First American during which she was told that the call "may be monitored or recorded." This set her apart, for purposes of assessing the reasonableness of her expectations, from other customers who never heard the disclosure or heard it only a few times. The Court likewise found that the plaintiff's prior experience with other businesses—the "dozens and dozens and dozens" of telephone calls where she understood her call could be recorded or monitored for quality assurance—could support a jury finding that she lacked an objectively reasonable expectation that her calls with First American would not be recorded.

The Court acknowledged that a different class member may have different "objectively reasonable expectations" depending on their experiences. Thus, individualized issues predominated, precluding certification of a class.

The plaintiff attempted to eliminate the "individualized issues" involved in a Section 632 claim by adding a claim under Penal Code section 632.7, which applies to the non-consensual recording of calls on a cell phone or cordless phone. The Court refused to allow the plaintiff to add such a claim because she failed to make a formal motion to amend at the trial level. Nevertheless, the Court concluded that a Section 632.7 claim would still have required individualized inquiries. Plaintiff would have been required to determine whether a landline, cellular or cordless telephone had been used to receive the subject call, and a call-by-call inquiry would have been required to make that determination. Although the Court did not reach the issue, many of the factors that rendered the "reasonable expectation" inquiry (in a Section 632 claim) individualized would also render the "consent" inquiry (in a Section 632.7 claim) just as individualized as well. That is, a caller who reasonably expected his or her call to be recorded, but participated in the call anyway, implicitly "consented" to the recording.

The Hataishi ruling effectively relegates the remaining individual lawsuit to "small claims" status, with the named plaintiff seeking only US$10,000 (US$5,000 times two allegedly recorded telephone calls).

Joel Siegel, partner at Dentons, together with Paul M. Kakuske, have successfully defended multiple call recording class actions in both state and federal court, including First American in Hataishi v. First American, Case No. B244769, (2d Dist. Feb 21, 2014) and Pitney Bowes in Anagnostellis v. Pitney Bowes, Case No. 12-CV-00239 (C.D. Cal. Mar. 5, 2013).

Footnote

1 Andrew Scurria, Capital One Pays $3M To Escape Eavesdropping Class Action (March 25, 2014).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
24 Jan 2018, Seminar, San Francisco, United States

Dentons will host our Fourth Annual Courageous Counsel Leadership Institute in January, centered on the theme "Cultivating Innovation."

24 Jan 2018, Seminar, New York, United States

Dentons will host our Fourth Annual Courageous Counsel Leadership Institute in January, centered on the theme "Cultivating Innovation."

31 Jan 2018, Seminar, Singapore, Singapore

Dentons Rodyk Academy is pleased to present a series of Breakfast Seminars covering various domains of IP, IP in tax planning, as well as Data Privacy.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions