Faulkner v. ADT And The Landscape For CIPA Class Actions

Last week the Ninth Circuit ruled on the issue of whether a business can be held liable under the California Invasion of Privacy Act, Cal. Penal Code § 632 ("CIPA") for monitoring or recording its own customer service telephone calls in the ordinary course of business. Faulkner v. ADT, 2013 U.S. App. LEXIS 1108 (9th Cir. January 17, 2013). In February 2011, John Faulkner brought a putative class action suit against ADT in California state court and in March 2011 the case was removed to federal court on diversity grounds. Faulkner alleged that he called his security provider, ADT, to dispute a charge. After being transferred to ADT's technical line, he began hearing periodic "beeping" sounds during the conversation. When he inquired about the sounds he was told that the telephone conversation was being recorded by ADT. Faulkner told the ADT representative that he had not previously been told that the conversation was being recorded and that he did not wish to continue the conversation if the recording continued. The representative advised Faulkner to contact the customer service line to discuss the issue. Faulkner called the customer service line, where he asked to speak with a representative on a line that was not being recorded. That representative informed Faulkner that it was the company's policy to record telephone calls and advised Faulkner to end the call if he did not wish to be recorded, which he did. Faulkner subsequently filed a claim against ADT claiming that his call with ADT was a confidential communication under CIPA and that ADT violated his privacy rights under that statute by recording his call to the company without first obtaining his consent.1

In May 2011, the federal district court granted ADT's motion to dismiss, ruling that plaintiff failed to plead an "objectively reasonable expectation" that his customer service call with ADT was not being recorded or overheard. Dismissing the complaint with prejudice, the trial court concluded that Faulker had not and could not allege plausible circumstances that "would support an expectation of privacy in such a call." An appeal to the Ninth Circuit followed.

On appeal, the Ninth Circuit expressed grave doubts about plaintiff's CIPA claims but remanded nonetheless - in what it called an "overabundance of caution" to allow plaintiff to amend his complaint in attempt to meet federal pleading standards. In so doing, the appellate panel intimated that it agreed with the district...