On April 1, 2021, the California Supreme Court clarified in Smith v. LoanMe, Inc. that California's recording consent statute is violated not only when a non-party intercepts and records a call, but also when one of the parties to the call records it without the other party's consent. California Penal Code Section 632.7 criminalizes intercepting or receiving and intentionally recording a telephonic communication "without the consent of all parties to a communication." The statute applies to communications as long as one party uses a cellular or cordless telephone and provides both a criminal penalty and a civil cause of action.
In LoanMe, the personal loan company LoanMe had recorded an 18-second phone call with the plaintiff, Jeremiah Smith. In the case below, the Court of Appeals concluded that Section 632.7 applies only to nonparties and does not forbid a party to the call from recording it without the other party's consent. Under the Court of Appeals' reasoning, "the parties to a phone call always consent to the receipt of their communications by each other-that is what it means to be a party to the call."
The California Supreme Court reversed the Court of Appeals in a 7-0 decision, reading the statute to prohibit any party from recording a call without the other party's consent. The Supreme Court concluded that its interpretation "reflects the most sensible reading of the statutory text, is consistent with the relevant legislative history, and advances the Legislature's apparent intent by protecting privacy in covered communications." The court explained that while communicating private information always risks betrayal of confidence by the other party, from a privacy perspective, repeating private information secondhand is quite different from recording the information for potential dissemination to countless recipients.
Employers that routinely record their employees' telephone calls or electronic communications should take note, as should businesses and service industry professionals that offer products or customer service via telephone calls. Interestingly, while Section 632.7 applies only to communications between two devices, the Supreme Court's interpretation of the language could potentially apply to other sections requiring all-party consent in a multi-device call or video conference. In other words, the interpretation may apply not only to telephone calls, but also to meetings, webinars, or performances hosted via Zoom or other videoconferencing platforms when an individual calls in using a cell phone.
The court's opinion tees up interesting factual questions about what constitutes consent to be recorded. The court suggested that in some situations, consent may be implied, such as when sending faxes or text messages (which are by definition recorded). Also, in remanding the Smith case to the Court of Appeals, the California Supreme Court left open the possibility that an audible "beep" or perhaps a visible "Recording" icon could provide notice that a communication was being recorded and that, by continuing a communication, other parties implicitly consented to being recorded.
Practically speaking, parties who want to record a telephone call or electronic communication should either get consent from all parties or have a reliable system to determine whether parties are calling in from a one-party state or an all-party state. Otherwise, parties may face criminal penalties or potential civil suits (and even class actions like that in LoanMe) for failing to obtain consent from all parties.
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