California Supreme Court Makes It Easier For Class Action Plaintiffs To Obtain Pre-Certification Access To Contact Information Of Potential Class Members

The California Supreme Court's recent opinion in Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th 360, although rendered in a consumer products liability case, is already resulting in rulings making it easier for plaintiffs in employment class actions to obtain access to prospective class members before a class is certified. Employers should be aware that, unless the lower courts carefully read Pioneer Electronics and apply it within its proper scope, the plaintiffs' bar will have effectively unhindered access to the names and addresses of your employees.

The California Constitution guarantees the privacy of all citizens. Cal. Const., Art. I, 1. This guarantee extends, for example, to the information contained in an employee's personnel file, including the employee's home address and phone number(s). At the same time, it is common for plaintiffs in employment class actions to seek such information, so that they can search for witnesses to support their claim. They have a right to do so, as long as no privacy interests are threatened. See, e.g. Atari, Inc. v. Superior Court (1985) 166 Cal.App.3d 867.

Where privacy rights are threatened, prospective class members have to be given the opportunity to object to the disclosure of their private information. At issue in Pioneer Electronics is the form of that notice: "opt-in" notice versus "opt-out" notice. An opt-in form of notice asks employees affirmatively to consent to the disclosure of their private information, and construes silence as a refusal to consent. An opt-out form does exactly the reverse. It asks employees to affirmatively object to disclosure, and construes silence as consent. The California Supreme Court previously had approved both forms of notice, albeit under different circumstances. Colonial Life & Accident Ins. Co. v. Superior Court (1982) 31 Cal.3d 785 (opt-in) and Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d (opt-out).

The Court of Appeals in Pioneer Electronics attempted to settle this debate, holding that opt-out notice was never adequate to protect privacy interests. The Supreme Court disagreed, restoring the unsettled status quo.

The Court of Appeal Rejects Opt-Out Privacy Notice in Pioneer Electronics

Patrick Olmstead purchased a DVD player from Pioneer Electronics. Claiming the product was defective because it could not play certain kinds of discs, Olmstead sued Pioneer for himself and on behalf of a prospective class of consumers who bought the same product. In discovery, Pioneer produced records of 700 to 800 complaints it received from purchasers about the very same defect alleged by Olmstead. Pioneer redacted from the records the consumers' names and contact information (addresses and telephone numbers). Olmstead moved to compel Pioneer to produce un-redacted copies of the records and to disclose the identifying information of each consumer who complained. Pioneer opposed the motion, asserting the right to privacy of the consumers under the California Constitution. Weighing the consumers' privacy interests against the plaintiff's interests in the disclosures, the trial court ordered Pioneer to send each of the complaining consumers an opt-out privacy notice.

Pioneer appealed the trial court's order. The Second District of the Court of Appeal1 held that the consumers could not be deemed to have waived their constitutional right to privacy in their contact information unless they received actual notice of the need and opportunity to assert that right. The court held that the letter, which did not require an affirmative response, was inadequate to assure actual notice to the consumer. The court reasoned that because no ongoing relationship existed between Pioneer and its complaining customers, it was unlikely they could be expected to open and read a letter from the company. The court noted that no safeguards existed to warn the consumers not to throw away the letter as "junk mail," or against the prospect that the mail did not get delivered. For these reasons, the Court of...