46 F. Supp. 3d 999
C.D. Cal.2014Background
- Pls Ades and Woolery filed a putative California class action on Mar 15, 2013 against Omni Hotels; Omni removed to federal court on diversity grounds.
- FAC asserts CIPA § 632.7 claims for unwarned recordings of inbound calls to Omni toll-free numbers in California from CA-area code calls.
- Plaintiffs allege Omni records calls without warning and has a policy of monitoring recordings without consent.
- Class period spans Mar 15, 2012–Mar 22, 2013, covering calls to an Omni call center in Omaha, Nebraska.
- Omni contends recordings were for quality purposes and that it cannot identify caller location; plaintiffs claim possible location-identification methods exist; Omni implemented automated warnings during the suit.
- Court denied Omni’s summary judgment motion, proceeding to the merits on choice of law and privacy issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for § 632.7 | California privacy interests control | Nebraska law may apply due to location of conduct | California law applies; choice-of-law favor California. |
| Dormant Commerce Clause | California statute applies to calls with CA nexus; not extraterritorial | Section 632.7 could burden interstate commerce | Statute does not impose strict scrutiny; incidental effects permissible. |
| Excessive damages and due process | Statutory damages per violation are permissible; no extra injury required | Damages may be constitutionally excessive or due process concerns | Damages at issue not shown to be constitutionally excessive at this stage. |
| Applicability of § 632.7 to call participants | Section 632.7 covers recipients under “receives” and “intercepts” | Argument for third-party-only interpretation | § 632.7 applies to parties to a call as to recording. |
| Injury requirement under § 632.7 | Violation itself is an injury; statutory damages accrue on violation | Injury required beyond privacy violation | Injury not prerequisite beyond statutory privacy violation. |
Key Cases Cited
- Kearney v. Salomon Smith Barney, Inc., 39 Cal.4th 95 (Cal. 2006) (governmental-interest analysis governs choice of law)
- Zephyr v. Saxon Mortg. Servs., Inc., 873 F. Supp. 2d 1223 (E.D. Cal. 2012) (privacy protection scope under § 632.7 broad; no service-monitoring exemption)
- Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144 (9th Cir. 2012) (dormant Commerce Clause framework for non-discriminatory statutes)
- Pike v. Bruce Church, Inc., 397 U.S. 137 (U.S. 1970) (balancing local benefits vs. interstate burdens)
- Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, 492 U.S. 257 (U.S. 1989) (Eighth Amendment damages framework; civil damages context)
- Lieberman v. KCOP Television, Inc., 110 Cal.App.4th 156 (Cal. App. 2003) (section 632 violation accrues at recording)
- Brown v. Defender Sec. Co., 2012 WL 5308964 (C.D. Cal. 2012) (section 632.7 applies to all communications, not limited to confidential ones)