Monday, April 28, 2014

FYI: Cal App Ct Upholds Denial of Class Cert in Call Recording Case Under California Penal Code § 632

Friday, February 28, 2014


The California Court of Appeal, Second District, recently affirmed a trial court’s denial of class certification in an action challenging the defendant’s alleged failure to inform its customers that outbound calls were being recorded.

In so ruling, the Court held that there was no per se violation of California Penal Code § 632 (“section 632”), which prohibits the recording of confidential communications without the consent of all parties to the communication, as section 632 requires an individual plaintiff to have an objectively reasonable expectation that a phone call will not be recorded.

Therefore, the Court held that “determining whether an individual plaintiff had an objectively reasonable expectation that his or her telephone conversation would not be recorded is a question of fact subject to individualized proof.”

A copy of the opinion is available at:  http://www.courts.ca.gov/opinions/documents/B244769.PDF

The plaintiff putative class representative (“Plaintiff”) had an insurance policy with an insurer (“Insurer”).  Over a three year period, Plaintiff called Insurer approximately 12 times to renew her policy or to make a claim.  During each inbound call, Plaintiff was advised the call was being recorded for quality assurance purposes.

Plaintiff also received several calls from Insurer which were recorded.  However, Plaintiff was never advised that the calls were recorded.

As a result of the Insurer’s failure to disclose that outbound calls to Plaintiff were recorded, Plaintiff filed a putative class action alleging statutory invasion of privacy under California Penal Code § 632.

Section 632(a) states:

Every person who, intentionally and without the consent of all parties to a confidential communication, by means of any electronic amplifying or recording device, eavesdrops upon or records the confidential communication, whether the communication is carried on among the parties in the presence of one another or by means of a telegraph, telephone, or other device, except a radio, shall be punished…

Section 632(c) defines a confidential communication as:

any communication carried on in circumstances as may reasonably indicate that any party to the communication desires it to be confined to the parties thereto, but excludes a communication made in a public gathering or in any legislative, judicial, executive or administrative proceeding open to the public, or in any other circumstance in which the parties to the communication may reasonably expect that the communication may be overheard or recorded.

Pursuant to Penal Code § 637.2, Plaintiff filed a putative class action lawsuit seeking statutory penalties of $5,000 for each alleged violation, and sought recovery of all attorneys’ fees and costs. 

Plaintiff moved for class certification defining the putative class as “all persons within the state of California who received telephone calls from employees, agents or representatives of Insurer … and whose telephone calls were recorded without warning from July 13, 2006 to October 27, 2009.”  Plaintiff claimed there were common questions of fact and law predominated because: (1) Insurer was the only defendant; (2) Insurer’s policy was to record all outbound calls placed by its sales group; (3) outbound calls were not preceded by an automated warning that the call would be recorded; and (4) prior to 2009, Insurer did not direct its sales group to advise customers it was recording outbound calls.

In opposition, Insurer argued that class treatment is not appropriate for a section 632 claim such claims present multiple individual factual issues.  Specifically, Insurer argued that each individual putative class member had a unique experience with Insurer including the relationship of the individual with Insurer, the number of times the individual heard the automatic disclosure when placing a call to the Insurer, and the individual’s experience with other companies that monitor calls for quality assurances.  The Insurer also claimed that Plaintiff raised additional fact questions as to what type of phone received the Insurer’s calls, as section 632 does not apply to cell phones or cordless phones. 

The trial court ruled that an individualized inquiry was necessary to determine whether each putative class member had an objectively reasonable expectation that his or her phone calls were not being recorded by Insurer. Furthermore, the trial court held there needed to be an individual inquiry as to what type of phone was used by each class member. Therefore, the trial court denied Plaintiff’s request for class certification and Plaintiff appealed. 

On appeal, Plaintiff argued there were common questions of law and fact to support class certification.  As you may recall, “a class action cannot be maintained where each member’s right to recover depends on facts peculiar to his case…because… the community of interest requirement is not satisfied if every member of the alleged class would be required to litigate numerous and substantial questions during his individual right to recover.” Caro v. Procter & Gamble Co. (1993) 18 Cal. App. 4th 644, 667-668. The Court proceeded to examine whether common questions of law and fact predominated over individualized ones.

The Court began its analysis by examining the language of section 632 and focused its attention on defining the term “confidential communication.” The Court concluded a conversation is “confidential under section 632 if a party to that conversation has an objectively reasonable expectation that a conversation is not being overheard or communicated.” Flanagan v. Flanagan (2002) 27 Cal.4th 766, 775.

Plaintiff argued that liability is established by showing there was no notification that the communication was being recorded. Put another way, Plaintiff contended that recording of any conversation without advising the other party was a per se violation of section 632.   Thus under Plaintiff’s view, there was no need to have each class member individually prove his or her objectively reasonable expectation that a phone call was not being recorded. 

The Court disagreed with Plaintiff, noting that nothing  “in the language of section 632 or case law interpreting a ‘confidential communication’ suggests recording a conversation without advising the other party constitutes a per se violation of the statue.”  Thus, the Court held there needed to be an individual determination to decide what each putative class member’s objectively reasonable expectation was regarding whether a phone call was being recorded.

In addition, the Court stated that a jury could reach different conclusions concerning different putative class members, as one putative class member may have had limited experience with the Insurer and was not aware all calls were recorded, while another putative class member may have an extensive relationship with the Insurer and understood all calls were recorded.  The Court also noted that due process gives Insurer the right to cross-examine each putative class member regarding those experiences that may affect the reasonableness of an individual’s alleged confidentiality expectation.

Therefore, the Court affirmed the trial court’s ruling that the requirements for a class certification were not met.



Eric Tsai
McGinnis Wutscher Beiramee LLP
 
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