Privacy decisions illustrate divergent approaches to statutory interpretation

Earlier this year, two opinions interpreting privacy rights statutes issued within hours of each other. One, decided by the U.S. Supreme Court, interpreted the Telephone Consumer Protection Act, 47 U.S.C. Section 227. The other, decided by the California Supreme Court, interpreted Section 632.7 of the California Invasion of Privacy Act, Cal. Penal Code Sections 630, et seq. An examination of how the two courts interpreted the statutes at issue illustrates their divergent approaches to statutory interpretation. The U.S. Supreme Court focuses on, and follows, the text of statutes. The California Supreme Court, on the other hand, gives short shrift to statutory language in favor of a results-driven focus on policy.

Facebook, Inc. v. Duguid

Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021), which arose from text messages allegedly sent to the wrong person, required the Supreme Court to interpret the definition of automatic telephone dialing system (aka an "autodialer") contained in the TCPA: "(1) The term "automatic telephone dialing system" means equipment which has the capacity -- (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers." 47 U.S.C. Section 227(a)(1).

The question before the Supreme Court was whether the definition covered equipment that can store and dial telephone numbers even if the equipment did not use a random or sequential number generator, as the 9th U.S. Circuit Court of Appeals had ruled below.

In a decision delivered by Justice Sonia Sotomayor and joined by all but one of the other justices, the Supreme Court held that "To qualify as an 'automatic telephone dialing system,' a device must have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator." To arrive at this interpretation, the Supreme Court relied on a plain reading of the statutory language, basic rules of English grammar, punctuation, and traditional, grammar-based canons of statutory construction. Justice Elena Kagan's famous 2015 observation at a discussion held at Harvard Law School -- "we're all textualists now" -- has certainly proven accurate.

Smith v. LoanMe, Inc.

About two hours after the U.S. Supreme Court issued Facebook, the California Supreme Court decided Smith v. LoanMe, Inc., 11 Cal. 5th 183 (2021), in an opinion by Chief Justice Tani Cantil-Sakauye with all other justices concurring. Though temporally close, the methods of statutory interpretation used in LoanMe could not be more different than that used in Facebook.

LoanMe interpreted California Penal Code Section 632.7, which regulates the recording of communications by cellular or cordless phones and is part of the California Invasion of Privacy Act. The case arose from a call made by LoanMe to Smith that LoanMe recorded without providing Smith with verbal notice of recording at the beginning of the call.

Section 632.7 provides: "Every person who, without the consent of all parties to a communication, intercepts or receives and intentionally records, or assists in the interception or reception and intentional recordation of, a communication transmitted between two cellular radio telephones, a cellular radio telephone and a landline telephone, two cordless telephones, a cordless telephone and a landline telephone, or a cordless telephone and a cellular radio telephone, shall be punished[.]" Cal. Penal Code Section637.2(a).

The issue in LoanMe was "whether section 632.7 applies to the parties to a communication prohibiting them from recording a covered communication without the consent of all participants, or whether the section is concerned only with recording by persons other than parties ... such as an individual who covertly intercepts a phone call and eavesdrops upon it."

The California Supreme Court began its analysis by stating that its task is to determine the Legislature's intent so as to effectuate the law's purpose, which involves applying the statute's "plain meaning unless a literal interpretation would result in absurd consequences the Legislature did not intend." (Citing Meza v. Portfolio Recovery Associates, LLC, 6 Cal. 5th 844 (2019) (cleaned up).)

But instead of applying that standard, the California Supreme Court actually first examined the "context of the statutory framework" as part of the California Invasion of Privacy Act. When the California Supreme Court eventually reached the actual language of Section 632.7, unlike in U.S. Supreme Court in Facebook, the California Supreme Court did not focus on the structure of the statute or apply rules of grammar or other canons of statutory construction. In fact, it did not mention the rules of grammar or sentence structure at all. Basic rules of grammar and the sentence structure of Section 632.7 compel, a single, unambiguous reading of the statute -- that "without the consent of all parties" applied to "intercepts or receives" and "intentionally records" as the Court of Appeal below had concluded. Because that natural reading of the statute did not comport with the California Supreme Court's policy preferences, the court resorted to a "more plausible" and "different interpretation" of Section 632.7 that "would read its consent language as directed at the recording component of the offense, with the section's 'consent or receives' phrasing specifying the circumstances in which a person may become privy to a covered communication."

The Differences Between the Interpretive Methods

The U.S. Supreme Court in Facebook and the California Supreme Court in LoanMe both said that they would use similar methods to interpret the statutes at issue by looking to the text. Indeed, the Supreme Court started its analysis with "[w]e begin with the text[,]" while the California Supreme Court began with "[w]e first examine the text[.]" However, once those words were written, the two courts diverged in their analysis.

True to its word, the U.S. Supreme Court did, in fact, begin with the text of the autodialer definition, describing the structure of the statute as "a list of verbs followed by a modifying clause." It then applied "conventional rules of grammar" and "the series-qualifier canon" which provides that the modifier at the end of a series normally applies to the entire series. This led to the conclusion that "using a random or sequential number generator" qualifies both "store" and "produce" rather than just "produce" because it would be odd to apply the modifier only to a portion of the "cohesive preceding clause." The court then examined punctuation, and noted that the comma in the autodialer definition before the qualifier further suggests that Congress intended the qualifier to apply equally to both "store" and "produce."

The U.S. Supreme Court looked to the statutory context for confirmation, noting that the TCPA's prohibitions targeted a particular type of telemarketing that "risks dialing emergency lines randomly or tying up all the sequentially numbered lines at a single entity," and pointing out that expanding the definition of autodialer "would take a chainsaw" to the problems the TCPA was meant to address while "Congress meant to use a scalpel." The court then disagreed with Duguid's appeal to the "sense" of the text because it could not "overcome the clear commands of [the] text and the statutory context." The court finally rejected Duguid's appeal to Congress' "broad privacy-protection goals" and policy arguments, pointing out that they do not provide "justification for eschewing the best reading of" the text.

In contrast, the California Supreme Court did not actually start with the text of Section 632.7(a) as it said it would. Instead, the court first examined the context of Section 632.7 as part of the California Invasion of Privacy Act. Indeed, before even turning to the text of Section 632.7, it examined Section 632, which was enacted 25 years earlier, and Sections 632.5 and 632.6, which were enacted years earlier.

Only then did the California Supreme Court quote the text of Section 632.7(a), but it still did not analyze that text by applying rules of grammar, punctuation or canons of statutory interpretation. Instead, the California Supreme Court stated that the California Court of Appeal's interpretation of Section 632.7(a) departed from the majority view of the federal district courts that have considered the statute, noting that some federal district courts found the statute unambiguous while others found the text ambiguous but still applicable to parties to the call, while a minority position in the federal district courts agreed that Section 632.7(a) applied only to non-parties. Of course, what varied federal district courts think Section 632.7(a) means has nothing to do with how the California Supreme Court should interpret the text of the statute. The California Supreme Court then turned to Flanagan v. Flanagan, 27 Cal. 4th 766 (2002), an opinion that it had issued almost 20 years earlier that interpreted Section 632(c) of the California Invasion of Privacy Act and mentioned Section 632.7 only in dicta, to point out that the California Invasion of Privacy Act is "a coherent statutory scheme."

Only then, did the California Supreme Court turn to the actual language of Section 632.7, "focusing upon its phrasing" and reading it in the "context" that the court subjectively decided to frame it. Unlike the Supreme Court in Facebook, the court did not examine objective markers of statutory meaning, such as grammar, sentence structure, or punctuation. Nor did it apply any canons of statutory interpretation. Instead, it repeated the Court of Appeal's interpretation and simply stated that "[a] different interpretation of section 632.7(a) would read its consent language as directed to the recording component of the offense, with the section's 'intercepts or receives' phrasing specifying the circumstances in which a person may become privy to a covered communication." The California Supreme Court concluded that this different interpretation was "the more plausible reading of Section 632.7(a)" explaining that "[w]ithin section 632.7(a), the interception or receipt of a covered communication is not so much a discrete subject of consent as it is a description of the circumstances in which the prohibited act of recordation without proper consent may occur."

Notably, the California Supreme Court never so much as acknowledged that it was actually rewriting Section 632.7(a) as:

"Every person who, without the consent of all parties to a communication, intercepts or receives and intentionally records, or assists in the interception or reception and intentional recordation of, a communication transmitted between two cellular radio telephones, a cellular radio telephone and a landline telephone, two cordless telephones, a cordless telephone and a landline telephone, or a cordless telephone and a cellular radio telephone shall be punished[.]"

In other words, the words "intercepts or receives and" as well as the words "interception or reception and" in Section 632.7(a) mean absolutely nothing under the California Supreme Court's interpretation. Nor did the court acknowledge that reading words out of a statute violates a fundamental rule of statutory construction, the rule that courts must avoid a construction of a statute which would render some words meaningless and mere surplusage. See Hughes Elec. Corp., 120 Cal. App. 4th 251, 259 n.18 (2004). Indeed, the California Supreme Court itself had said that it would "giv[e] significance to every word, phrase, sentence, and part of an act," but clearly did not.

Following this sleight of hand, the California Supreme Court concluded that this was "the most sensible reading of section 632.7(a)" but that the language was not so clear as to be unambiguous. Therefore, the California Supreme Court looked to the legislative history, seeking confirmation bias to support its interpretation even though "one might infer [from the history] that the prospect of invasions of privacy by third parties was front and center in legislator's minds as they considered the bill." Ultimately, the California Supreme Court bolstered its broad interpretation of Section 632.7 by asserting that it was "better aligned" with the policy of protecting privacy.

Several conclusions can be drawn by contrasting the U.S. Supreme Court's interpretation of the definition of autodialer in the TCPA with the California Supreme Court's interpretation of Section 632.7(a) of the California Invasion of Privacy Act. First, the U.S. Supreme Court actually focuses on the text of the statutes it is interpreting, while the California Supreme Court does not appear overly concerned the statute's actual text. Second, the U.S. Supreme Court applies the rules of grammar, punctuation and canon's of statutory interpretation in determining the meaning of statutory text, while the California Supreme Court ignores these and instead tries to divine the "sense" of the statute's text from its language and context within the statutory scheme. Third, the U.S. Supreme Court does not allow generalized policy or legislative intent considerations to override that meaning of a statute's text, while the California Supreme Court does. These differences in interpretation mean that when reading a United States statute, there is a decent chance of being able to determine its meaning from the text alone, while the meaning of a California statute cannot practically be determined without knowledge of the statute's context, the legislative history and California's generalized policy goals.

The Implications of California Supreme Court's Method

The statutory interpretation method used by the Smith v. LoanMe may be an anomaly resulting from how the case was presented to the California Supreme Court. Smith presented the issue as whether Penal Code Section 632.7 always excluded recording by parties which may have led the California Supreme Court to believe that it did not have to focus on the text of the statute and what elements were required for a violation, but could instead decide the issue on policy grounds. If, however, LoanMe does exemplify the interpretive method that will be used by the California Supreme Court in future cases, that raises significant due process and fairness issues.

Section 632.7 is a penal statute. Violations can result in criminal sentences of imprisonment of up to one year and a fine of $2,500. Cal. Penal Code Section 632.7(a). In addition, the penalty in a civil action is $5,000 per violation. Cal. Penal Code Section 637.2(a). Yet the California Supreme Court appears to have interpreted the statute in a manner inconsistent with its text.

The U.S. Supreme Court has held that "[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice" of both "the conduct that will subject him to punishment" and "the severity of the penalty that a State may impose." BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574 (1996). Fair notice requires that a defendant be able to tell, in advance, based on objectively identifiable standards, what conduct can give rise to criminal or civil sanction. Grayned v. City of Rockford, 408 U.S. 104, 108 (1972). Indeed, the California Supreme Court has previously stated that "fundamental fairness dictates that before a law subjects persons to such significant sanctions, criminal or civil, it should give 'fair notice' ... in language that the common world will understand, of what the law intends to do[.]" People ex rel. Lungren v. Superior Court, 14 Cal. 4th 294, 316 (1996). If a person cannot read a California statute and determine what it means without researching the policy behind it and its legislative history, then the statute provides no fair notice or fundamental fairness. LoanMe's interpretive method of glossing over a statute's text to divine the sense of the statute diminishes the chances of Californians receiving fair notice of what the law requires. 

The views expressed herein of those of the authors and not of Baker McKenzie or any of its clients.