18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 407 dismissing the action against Wolfsdorf without also giving notice to Wolfsdorf’s clients. For these reasons, the Court of Appeal affirmed the trial court’s judgment dismissing the class action. Smith, et al. v. Loanme Inc., 2021 Cal. LEXIS 2248 (Cal. April 1, 2021). Plaintiff brought a putative class action alleging that Defendant violated Penal Code, § 632.7, when it intentionally recorded a brief phone call to his home without his consent. Plaintiff sought to represent a class consisting of all persons in California whose inbound and outbound telephone conversations involving their cellular or cordless telephones were recorded without their consent by Defendant. The parties agreed to a bifurcated bench trial for the trial court to decide whether Plaintiff consented to having the phone call recorded by continuing the conversation after Defendant activated the “beep” tone. Id. at *5. After listening to the call, the trial court agreed with Defendant that the tone gave Plaintiff adequate notice that the call was being recorded and therefore it entered judgment in Defendant’s favor. When Plaintiff sought review, the Court of Appeal did not delve into the consent issue decided by the trial court. Instead, the Court of Appeal requested supplemental briefing regarding whether § 632.7 prohibits a party from intentionally recording a communication transmitted to or from a cellular or cordless phone, or whether it forbid only the intentional recording of such communications by persons other than parties. The Court of Appeal ultimately concluded that § 632.7 prohibited only third-party eavesdroppers from intentionally recording telephonic communications involving at least one cellular or cordless telephone. Conversely, the Court of Appeal determined that § 632.7 does not prohibit the participants in a phone call from intentionally recording it. Therefore, the Court of Appel affirmed the judgment of the trial court on this basis. On Plaintiff’s further appeal to the Supreme Court of California, it reversed. The Supreme Court held that because § 632.7 prohibited parties as well as non-parties from intentionally recording a communication transmitted between a cellular or cordless telephone and another device without the consent of all parties to the communication, the Court of Appeal erred when it held to the contrary. Looking to the legislative history and the public policy surrounding § 632.7, the Supreme Court concluded that these considerations supported a reading § 632.7 as a general prohibition against the intentional recording of a covered communication without the consent of all parties, regardless of whether the recording is performed by a party to the communication or by someone else. The Supreme Court further determined that although § 632.7 did not apply when all parties to a communication used landline phones, it reasoned that no absurdity resulted from its interpretation of § 632, because § 632.7 often would apply to such a conversation and some portion of the statutory scheme would provide for liability regardless of the type of telephone used to receive a call. Additionally, the Supreme Court held that the rule of lenity did not apply as Defendant urged because the legislative intent was not uncertain in this case. Because the Court of Appeal did not address Defendant’s argument that its activation of a beep tone gave Plaintiff notice that the conversation was being recorded, and that by remaining on the call, Plaintiff consented to having the call recorded, the Supreme Court reversed the judgment of the Court of Appeal and remanded for further proceedings. Styleform IT. v. Facebook, Inc., 2021 Cal. Super LEXIS 1 (Cal. Super. Ct. Jan. 12, 2021). Plaintiff filed a second-amended complaint (“SAC”) alleging claims based on the Racketeering Influenced and Corrupt Organizations Act ("RICO") as well as an Unfair Competition Law ("UCL"). Defendants had previously brought a statute of limitations challenge to Plaintiff’s First Amended Complaint ("FAC") by way of demurrer. In response to that demurrer, Plaintiff did not argue that the claims in the FAC related back to the claims in the complaint. The Court sustained the demurrer with leave to amend without analyzing any potential relation-back issue. Defendants then renewed the statute of limitations demurrer to the new causes of action in the SAC. The parties agreed that the remaining claims, i.e. , two RICO causes of action and a UCL cause of action were subject to four-year statutes of limitations. This time Plaintiff argued that the causes of action in the SAC related back to the claims in the complaint. However, Defendants asserted that Plaintiff forfeited the relation-back argument by failing to argue that the claims in the FAC related back to the claims in the complaint. The Court rejected Defendants’ argument as to forfeiture of the argument. It found that Plaintiff could raise any appropriate legal argument regarding the timeliness of the operative SAC, which had not been subject to any prior proceedings in the action. Further, because the complaint was filed less than four years after the accrual date that Defendants had derived from the SAC, the Court denied Defendants’ statute of limitations challenge to the SAC. Likewise, the Court rejected Defendants’ argument that the claims did not relate back because Plaintiff did not allege sufficient facts to support the elements of a civil RICO claim in the original complaint. Defendants suggested that the complaint and SAC did not refer to the same instrumentality because the complaint, which did not contain a