Hilton Tries for Second Time to Toss California Invasion of Privacy Act (CIPA) Class Action

Published On May 22, 2014 | By Jeff Landis | General, Litigation, Privacy
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Recently, Hilton moved for the second time to dismiss a putative class action brought against it under the California Invasion of Privacy Act (“CIPA”). In Young v. Hilton Worldwide, Inc. et al. Plaintiff alleged that he placed a call to Hilton’s 1-800 number from his cellular phone in order to update his credit card information, and Hilton recorded the conversation without his knowledge or consent. Young’s original complaint included two claims for relief, one under CIPA’s general provision prohibiting parties from recording communications without all parties’ consent, and the other under its provision relating specifically to cellular communications. Hilton moved to dismiss the complaint in March 2012 and the district court granted that motion in June 2012. Plaintiff appealed the decision only with respect to his claim regarding cellular communications. In March 2014, the Ninth Circuit reversed and remanded, holding that the district court improperly dismissed the entire complaint on grounds that did not apply to the cellular communication claim.

On remand, Hilton now seeks dismissal of plaintiff’s cellular phone communication claim on 5 different grounds:

First, Hilton argues that CIPA contains an express exemption for recordings made for customer service purposes. Specifically, Hilton points to the statute’s statement that it does not apply to “the use of any instrument, equipment, facility, or service furnished or used pursuant to [a/the] tariffs of a public utility.” According to Hilton, this includes recording for customer service purposes because at the time CIPA was enacted, any business that recorded employee’s conversations with customers could only do so by obtaining equipment that was regulated by a tariff filed with the California Public Utilities Commission—which continues to regulate this same practice today. To support its argument, Hilton pointed to numerous statements from CIPA’s legislative history stating that CIPA exempted the practice of “service observing” (another term for customer service).

Second, Hilton argues that § 632.7, which imposes a penalty on any person who without consent “intercepts or receives and intentionally records . . . a communication” where at least one party uses a cellular phone, does not apply to a recording by participants to a communication. Hilton argues that at the time § 632.7 was enacted, companies had not yet secured the radio frequencies over which cellular communications traveled, and thus the legislature’s intent with § 632.7 was to prohibit third parties who intentionally or inadvertently intercepted or received cellular communications (for example, by using a scanner) from recording them. Hilton argues that if this were not the case it would lead to the “absurd and unconstitutional” result that Hilton could record a customer calling from a pay phone, but could not record the same customer if he or she were calling from a cellular phone.

Third, Hilton argues that applying § 632.7 would violate the commerce clause. Specifically, Hilton argues that because it would be impossible for Hilton to tell where a particular caller was calling from, it would have no choice but to “conform [its] nationwide business practices to comply with California law,” and thus California’s minority rule would directly (and indirectly) regulate interstate commerce in violation of the commerce clause.

Fourth, Hilton argues that the complaint must be dismissed because plaintiff “fails to explain how the alleged recording of his telephone call caused him harm.” And that such injury in fact is required under § 632.7, because the penalty provision of that section states that only a person “who has been injured by a violation of this chapter” may bring an action.

Fifth, Hilton argues that plaintiff’s request for statutory damages of $5,000 per violation for thousands of potential class members who have suffered no damages renders his claim improper. According to Hilton, this is because such a request for aggregated penalty untethered to actual injury or damages undermines the superiority requirement for class actions. And such amounts would constitute “an excessive fine” imposed “without due process of law” in violation of the constitution.

Needless to say, plaintiff will counter Hilton’s arguments in his opposition. Regardless of the court decision, the case raises interesting questions that touch on a variety of legal doctrines. First and foremost among which may be whether and to what extent the plain meaning of a statute can or should be interpreted in light of the technology existing at the time the statute was enacted. The case also implicates issues of constitutional due process, the interstate commerce clause, class action superiority, and the injury-in-fact requirement.

Picture by Mark Fishcer picture from Flickr

About The Author

Jeff’s practice focuses on representing clients in litigation and government investigations, with a particular focus on defending companies in complex class action lawsuits. He also assists clients in responding to formal investigations and informal inquiries conducted by the FTC, DOJ and states’ Attorney General Offices. Jeff has extensive experience in all aspects of civil litigation, including serving as trial counsel for both plaintiffs and defendants in matters pending before judges, juries, and arbitration panels.

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