Wednesday, February 26, 2014

Thus Ends a Cottage Industry...

Hataishi v. First American Home Buyers Protection Corp., No. B244769 (D2d3 Feb 21, 2014)

The court of appeal affirms the denial of class certification in a case alleging class-wide violations of Penal Code § 632, which prohibits the intentional recording of a “confidential communication” without the consent of all parties to the communication. The ruling is significant, particularly given that Penal Code
§ 637.2(a)(1) permits $5,000 in statutory damages per recording, the potential class-wide exposure in these cases can be enormous. 

Here, plaintiff alleged that, although inbound calls she made to defendant were preceded with the familiar “this call may be recorded” warning, outbound calls that defendant placed to her were not. Under prior case law, the relevant standard is whether the plaintiff had an objectively reasonable expectation that the call was not being recorded, a question of fact, and the defendant’s failure to include a warning is not a violation per se. Instead, prior cases address various factors that go to the reasonableness of the plaintiff’s expectation—whether the call was initiated by the consumer or whether a corporate employee telephoned a customer, the length of the customer-business relationship, the customer’s prior experiences with business communications, and the nature and timing of any recorded disclosures. These factors can potentially vary significantly on a plaintiff-by-plaintiff basis. 

For instance, plaintiff in this case testified that she had a five-year relationship with the defendant, she had made at least a dozen inbound calls where she received a warning that the call might be recorded, she had never objected to any recording, and she had participated in “dozens and dozens and dozens” of telephone calls with other companies where she understood her call could be recorded or monitored. Consequently, her objectively reasonable expectations could differ significantly from those of other customers whose calls were recorded without warning. There was thus substantial evidence to support the trial court’s conclusion that a community of interest in common questions was lacking.


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