Call recording class actions

Things are looking up for companies and businesses accused of violating Californians' privacy rights by recording telephone calls without consent. Plaintiffs have had a hard time certifying class actions under Penal Code Section 632 of the California Invasion of Privacy Act (CIPA) due to the difficulty of proving on a class-wide basis that a communication is confidential. Plaintiffs have therefore focused on Penal Code Section 632.7, which applies to certain wireless and cellphone communications but does not, by its express terms, have a confidentiality requirement. Since cellphones are by definition mobile, plaintiffs bringing such claims must prove that the calls were made or received in California, and have turned to cell site location data to meet that burden. But the 11th U.S. Circuit Court of Appeals' recent decision in United States v. Davis (June 11, 2014), will make it more difficult for plaintiffs to use such a strategy.

The Law

CIPA lawsuits, typically filed as class actions, seek damages for each telephone call recorded without informing the callers at the outset of the call that the call may be monitored or recorded. They have resulted in multi-million dollar settlements, even in the absence of the disclosure of any confidential information and even though no one has suffered any harm or actual damages.

Section 632 prohibits the intentional recording of "confidential communications" without consent. Confidential communications are defined as those "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 any other circumstance in which the parties to the communication may reasonably expect that the communication may be overheard or recorded." (Emphasis added).

Section 632.7, on the other hand, which is not limited to confidential communications, prohibits intercepting or receiving and recording communications transmitted between certain types of phones, which some courts have applied to recording conversations involving at least one cellphone or cordless phone.

Recent California case law makes it more difficult for plaintiffs to certify classes under Section 632 because of the requirement that the communications be "confidential." In Hataishi v. First American Home Buyer Protection Corp., 223 Cal. App. 4th 1454, 1470 (2014), the state Court of Appeal confirmed that whether a communication is confidential under Section 632 requires an individualized inquiry making such claims not suitable for class treatment. The decision has created quite a stir among privacy rights lawyers, including a concerted but ultimately unsuccessful effort by the plaintiffs' bar to have Hataishi depublished. In addition, recent disclosures regarding eavesdropping by the National Security Agency raise the question of whether anyone can have a reasonable expectation of privacy in telephone communications. As a result, most lawsuits currently proceed under Section 632.7.

However, Section 632.7 does have other hurdles to class certification. For instance, CIPA does not apply to calls that were not made or received in California. See Kearney v. Salomon Smith Barney Inc., 39 Cal. 4th 95, 104 (2006). The use of cellphones and other technology (e.g., Skype), not to mention phone number portability, now make it virtually impossible to determine the location of the individual at the time of the subject call by using the area code as a proxy for location. As a result, many plaintiffs turn to cell site location information to show that the location of class members can easily be determined on a class-wide basis. Until now, the privacy expectations that cellphone subscribers have in such information has been hotly contested.

The Davis Decision

In Davis, the 11th Circuit held that cell site location information obtained without a warrant violated the defendant's Fourth Amendment rights because such information is within the subscriber's reasonable expectation of privacy. The court looked to the privacy theory first mentioned in Olmstead v. United States, 277 U.S. 438 (1928), holding that interception of communications can run afoul of the Fourth Amendment even in the absence of physical trespass - e.g., wiretapping that does not physically penetrate the defendant's home or residence.

While the 11th Circuit drew upon United States v. Jones, 32 S.Ct. 945 (2012), a case involving whether a GPS tracking device concealed on a suspect's car was unconstitutional, the court made several distinctions. Importantly, the court found that "even one point of cell site location data can be within a reasonable expectation of privacy," rendering cell site location data more like "communications data" than "GPS information." In short, cell site location data is inherently private and warrants privacy protection even in the absence of aggregation of multiple points of data which may "expose that which would otherwise be private." The court noted that "[t]here is a reasonable privacy interest in being near the home of a lover, or a dispensary of medication, or a place of worship, or a house of ill repute."

Additionally, the 11th Circuit rejected the government's argument that the defendant gave up his reasonable expectation of privacy by exposing his cell site location to his service provider when he placed or received calls. The court reasoned that because it was unlikely that cellphone customers even knew that their providers collect and store such historical information, the information was not voluntarily shared in any meaningful way. Indeed, the court pointed out the prosecutor had stated to the jury that the defendant "probably had no idea that by bringing their cell phones with them ... they were allowing their cell service provider ... to follow their movements."

The Implications

Davis will likely diminish a plaintiff's ability to gather and use cell site location information to certify a Section 632.7 class because that information, according to the 11th Circuit, is private and protected.

Without cell site location, plaintiffs will have no way of determining whether a class member was physically present in California at the time the subject call was made. If a class member was not in California, then the subject call should not be covered by CIPA. This poses a significant hurdle plaintiffs considering these cases almost always involve a cellphone on one end. Without such information, an individual analysis must be conducted of every class member's calls to determine their location at the time the call was made. Indeed, plaintiffs' attorneys who practice in this area are aware of the vital nature of cell site location information and often send out preservation letters to wireless service providers at the outset of litigation.

Davis also should make it much more difficult for plaintiffs to obtain cell site location information without the explicit consent of class members, which will likely be difficult to obtain. It is unclear at this point if service providers may demand express consent from each class members before responding to a subpoena. Such a process would likely be cumbersome and expensive and would likely prolong the already protracted nature of class action litigation. Further, defense lawyers seeking to quash subpoenas for cell site location information may argue that such information is private and protected.

With that said, it is important to note that Davis is in the context of a criminal case from an out-of-circuit courts, and it's unclear whether California state and federal courts will apply Davis to the area of call recording class actions or how service providers will react to California court orders or subpoenas to disclose cell site location information. In any event, how California courts will react to Davis is certainly something that privacy practitioners will be looking out for in the future.

Edward D. Totino is a partner in DLA Piper LLP's Los Angeles office. He can be reached at edward.totino@dlapiper.com.

Monica D. Scott is an associate in DLA Piper LLP's Los Angeles office. She can be reached at monica.scott@dlapiper.com.