94 F. Supp. 3d 1141
C.D. Cal.2015Background
- Plaintiff Justin Maghen submitted an online refinance lead through LendingTree and agreed to LendingTree’s Terms of Use, which disclosed that network lenders may contact him and that communications may be recorded.
- Quicken Loans, a LendingTree network lender, emailed Maghen a pre-call notice that communications with Quicken may be recorded, and then placed a phone call in which the Quicken agent stated calls are recorded for quality assurance; Maghen responded “Okay.”
- The initial call briefly disconnected; when reconnected the agent did not repeat the recording notice, the call was transferred within Quicken, and the transferee confirmed he was recording later in the call, after which Maghen terminated the call stating he was uncomfortable proceeding.
- Maghen filed a putative class action under California Penal Code § 632.7 alleging unlawful recording of cellular telephone calls without consent.
- Quicken moved for summary judgment arguing (1) Maghen consented to recording and (2) a statutory “service‑observing” exemption to the California Invasion of Privacy Act (CIPA) applies; the court resolved the motion on consent grounds and declined to read a service‑observing exemption into § 632.7.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Maghen consented to the recording of his telephone calls | Maghen contends prior website acceptance is insufficient and businesses must warn at the outset of each call; reconnection/transfer vitiated any prior consent | Quicken argues consent was given via LendingTree Terms of Use, pre-call email, and verbal notice at start of call; brief disconnection/transfer did not negate consent | Court held Maghen consented (agreement to Terms + verbal acknowledgment), so no § 632.7 violation |
| Whether a verbal warning must be repeated after a brief disconnection or upon transfer | Argued a new warning was required after reconnection and transfer | Argued the interruption was part of the same conversation and warnings given earlier were sufficient | Court found a brief disconnection and internal transfer did not negate prior consent; no new warning required |
| Whether a plaintiff can revoke consent mid-call such that earlier consent is invalid | Plaintiff asserted his later statement of discomfort should defeat consent | Defendant asserted belated withdrawal does not negate prior valid consent for that conversation | Court rejected belated withdrawal as negating prior consent |
| Whether CIPA contains a broad “service‑observing” exemption | Plaintiff opposed reading such an exemption into the statute | Defendant urged legislative history and asserted modern recording practices create ambiguity warranting an exemption | Court declined to infer a service‑observing exemption; denied summary judgment on that theory |
Key Cases Cited
- Kearney v. Salomon Smith Barney, Inc., 39 Cal.4th 95 (Kearney recognizes that advising parties at the outset that calls will be recorded can avoid CIPA liability)
- Kight v. CashCall, Inc., 200 Cal.App.4th 1377 (rejects a business telephone monitoring exception to CIPA)
- Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (canon that statutory text controls when unambiguous)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden-shifting framework)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (summary judgment requires viewing evidence in the light most favorable to nonmoving party)