Court Hangs Up on Call Monitoring Class Action

Adding to recent decisions tightening the requirements for class certification, a California appellate court recently upheld decertification of a class alleging improper monitoring of a company's telephone calls with consumers. The case, Kight v. CashCall, Inc., provides guidance for future litigation against the growing number of companies that have been sued in California for allegedly recording phone calls without consent.

The Kight plaintiffs alleged that CashCall monitored telephone conversations "without the consent of all parties," in violation of California Penal Code section 632. After the trial court initially certified a class on that claim, the appellate court ruled (in reversing summary judgment for CashCall) that "whether there exists a reasonable expectation that no one is secretly listening to a phone conversation" depends on "numerous specific factors."

Perhaps seeing the silver lining in that decision, CashCall successfully moved to decertify the class, on the ground that the individualized issues necessary to determine whether each putative class member had an "objectively reasonable expectation of privacy" meant that individual issues would predominate. The appellate court agreed, and cited to the California Supreme Court's recent decision in Duran and a number of other recent cases affirming the importance of the predominance requirement and a defendant's right to challenge individual issues.

In affirming decertification of the class, the Court of Appeal validated an argument made by defendants in recent call recording cases: whether a consumer has a reasonable belief in confidentiality is an individualized issue. Depending on the circumstances, defendants may now be able to defeat class certification in these cases because of the significant number of individual issues that could factor into a putative class member's reasonable belief in the confidentiality of a phone call. These factors include who initiated the call, the call history between the consumer and the company, the length of the relationship between the parties, and the "nature and timing of any recorded disclosures." The decision may also impact defendants outside of the call-recording cases, as it confirmed both the importance of predominance of common issues and the real possibility of getting classes decertified in California when facts or law change after an initial certification decision.

© Arnold & Porter Kaye Scholer LLP 2014 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.