Calif. Law Does Not Bar Recording of Cell Phone Calls by Participants, Federal Court Rules

by Ballard Spahr LLP
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A California federal court recently ruled that the state’s call recording statute does not apply to cell phone call participants. This decision should help companies that record consumer calls for monitoring purposes defeat class actions brought under the statute.

At issue in Young v. Hilton Worldwide Inc., et al. was the scope of Section 632.7 of the California Invasion of Privacy Act (CIPA), which applies to any person “who without the consent of all parties to a communication, intercepts or receives and intentionally records” (emphasis added) a call involving a wireless telephone. CIPA penalties are draconian, with violations potentially yielding damages of $5,000 per violation or triple the amount of actual damages, whichever is greater. Such penalties, together with several prior court decisions concluding that Section 632.7 applies to call participants because each party “receives a call,” have resulted in numerous class action lawsuits against companies that routinely record cell phone calls for monitoring purposes.

The plaintiff in Young alleged that Hilton violated Section 632.7 when it recorded a cell phone call he made to a customer service center to update his credit card information. In granting Hilton’s motion for judgment on the pleadings, the court accepted the defendants’ argument that, in enacting Section 632.7, the California Legislature was concerned about third-party interception of calls. According to the court, “[t]he statutory scheme makes it clear that [this section] refer[s] to the actual interception or reception of these radio signals by third parties and do[es] not restrict the parties to a call from recording those calls.” The court further observed that to the extent Hilton “received” the plaintiff’s call, it “had permission” to receive the call, and “service observing recordings are exempted.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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