Judge: Anne Richardson, Case: 23STCV22458, Date: 2024-04-15 Tentative Ruling

Case Number: 23STCV22458    Hearing Date: April 15, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. Background

A. Pleadings

Plaintiff Miguel A. Licea (Licea) sues Defendant Rack Room Shoes, Inc. (RR Shoes) pursuant to a September 18, 2023, Complaint alleging claims of (1) Violations of the California Invasion of Privacy Act (Cal. Penal Code § 631) and (2) Violations of the California Invasion of Privacy Act (Cal. Penal Code § 632.7).

The claims arise from the following allegations. RR Shoes secretly enables and allows a third-party spyware company (Freshworks) to eavesdrop on the private conversations of everyone who communicates through the chat feature at https://www.rackroomshoes.com/ (the Website). Freshworks, the third-party spyware company, then exploits and monetizes that data by sharing it with other third parties, who use the private chat data to bombard the unsuspecting visitor with targeted marketing. Within the last year, Plaintiff visited RR Shoes’ Website, sharing personal data and personally identifying information with RR Shoes via the Website chat feature on Plaintiff’s smart phone. RR Shoes failed to inform Plaintiff that RR Shoes was secretly allowing, aiding, and abetting Freshworks to intercept and eavesdrop on the conversations during transmission, or that Freshworks provided data from such transcripts to Meta (formerly Facebook) through integration with Meta software.

B. Motion Before the Court

On November 29, 2023, RR Shoes filed a demurrer to the Complaint’s two causes of action.

On April 2, 2024, Plaintiff Licea filed an opposition to RR Shoes’ demurrer.

On April 8, 2024, RR Shoes filed a reply to Plaintiff’s opposition.

RR Shoes’ demurrer is now before the Court.

II. Demurrer Request for Judicial Notice

A. Demurrer Request for Judicial Notice

The Court denies judicial notice of three pleadings filed by Plaintiff Licea in other actions and of a screenshot of RR Shoes’ website.

The pleadings for other actions are not relevant to the sufficiency of the instant pleadings or the Court’s analysis of the relevant controlling authorities. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 (Lockyer) [“[A] precondition to the taking of judicial notice in either its mandatory or permissive form” is that the “matter to be judicially noticed [is] be relevant to a material issue”].)

The screenshot of the RR Shoes website is extrinsic evidence not on the face of the pleadings or attached to the pleadings. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Kirwan) [demurrer challenges face of the pleadings]; Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94 (Blackwell) [face of pleadings includes exhibits to pleading].) Nor is the screenshot the type of evidence subject to judicial notice. (Evid. Code, § 452, subd. (h).)

B. Opposition Request for Judicial Notice

The Court denies judicial notice of court orders made in other actions arising from similar pleadings and issues relating to Penal Code sections 631 and 632.7. Those orders are not relevant to the sufficiency of the instant pleadings or the Court’s analysis of the relevant controlling authorities. (Lockyer, supra, 24 Cal.4th at p. 422, fn. 2.)

C. Reply Request for Judicial Notice

The Court denies judicial notice of court orders made in other actions arising from similar pleadings and issues relating to Penal Code sections 631 and 632.7. Those orders are not relevant to the sufficiency of the instant pleadings or the Court’s analysis of the relevant controlling authorities. (Lockyer, supra, 24 Cal.4th at p. 422, fn. 2.)

III. Demurrer Evidentiary Objections

Opposition Objections to Demurrer’s Request for Judicial Notice

Objections: MOOT. (See Section II.A. discussion supra.)

IV. Demurrer Discussion

A. Legal Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; see Code Civ. Proc., § 430.10, subd. (e).)

To sufficiently allege a cause of action, a complaint must allege all the ultimate facts—that is, the facts needed to establish each element of the cause of action pleaded. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 212, superseded by statute as stated in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.) “[E]ach evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)

In testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-67.) Courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228, disapproved on other grounds, Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1162.) A demurrer, however, “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

A demurrer may only be used to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Kirwan, supra, 39 Cal.3d at p. 318.) The face of the complaint includes exhibits attached to the complaint. (Blackwell, supra, 189 Cal.App.3d at p. 94.) If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence. (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447, superseded by statute on other grounds as stated in White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 521.)

B. Analysis

1. Demurrer, Complaint, First Cause of Action, Violations of the California Invasion of Privacy Act (Cal. Penal Code § 631): OVERRULED.

a. Relevant Law

Penal Code section 631 subdivision (a) provides, in full, as follows: “Any person who, by means of any machine, instrument, or contrivance, or in any other manner, [1] intentionally taps, or makes any unauthorized connection, whether physically, electrically, acoustically, inductively, or otherwise, with any telegraph or telephone wire, line, cable, or instrument, including the wire, line, cable, or instrument of any internal telephonic communication system, or who [2] willfully and without the consent of all parties to the communication, or in any unauthorized manner, reads, or attempts to read, or to learn the contents or meaning of any message, report, or communication while the same is in transit or passing over any wire, line, or cable, or is being sent from, or received at any place within this state; or who [3] uses, or attempts to use, in any manner, or for any purpose, or to communicate in any way, any information so obtained, or who [4] aids, agrees with, employs, or conspires with any person or persons to unlawfully do, or permit, or cause to be done any of the acts or things mentioned above in this section, is punishable by a fine not exceeding two thousand five hundred dollars ($2,500), or by imprisonment in the county jail not exceeding one year, or by imprisonment pursuant to subdivision (h) of Section 1170, or by both a fine and imprisonment in the county jail or pursuant to subdivision (h) of Section 1170.”

b. Complaint’s Allegations

The Complaint’s first cause of action alleges that RR Shoes violated Penal Code section 631, subdivision (a), by “‘aiding, abetting, and conspiring’ with both [Freshworks] and Meta/Facebook to intercept, eavesdrop upon, learn, share, and monetize the contents of [RR Shoes’] chat conversations” over the internet by “secretly allowing, aiding, and abetting [Freshworks] to intercept and eavesdrop on … conversations [between Plaintiff Licea and RR Shoes] during transmission, or that [Freshworks] provided data from such transcripts to Meta through ‘integration’ with Meta software.” (Complaint, ¶¶ 25, 28.) The communications are alleged to have been initiated by Plaintiff Licea from his cellular telephone (smart phone) through the use of a web browser that connected to RR Shoes’s website. (Complaint, ¶ 23.)

Presumably the pleadings incorporate the allegations preceding the first cause of action by reference although the first pleaded count does not explicitly so state.

c. Parties’ Arguments

The parties’ arguments center on whether (1) Plaintiff had a diminished expectation of privacy in the communications at issue, undercutting both counts, (2) service providers cannot wiretap under section 631, subdivision (a), (3) the Complaint sufficiently alleges aiding and abetting, and (4) whether the Complaint states liability against Freshworks. (Demurrer, pp. 13-21; Opp’n, pp. 10-21.)

d. Court’s Determination

The Court finds in favor of Plaintiffs.

The Complaint sufficiently alleges that Freshworks, by use of some electronic software, willfully and without Plaintiff’s consent learned the contents of Plaintiff’s online telephony communications with RR Shoes, which were sent from or received in California by Plaintiff Licea. (Complaint, ¶¶ 10-11, 20-27, 30-32.) Such allegations support a Penal Code section 631, subdivision (a), claim based on prong “[2]” in the Relevant Law above.

The Complaint sufficiently alleges that Freshworks shared or communicated with Meta the information sourced from the Licea-RR Shoes communications. (Complaint, ¶¶ 21, 25.) Such allegations support a Penal Code section 631, subdivision (a) claim based on prong “[3]” in the Relevant Law above.

The Complaint sufficiently alleges that RR Shoes allowed and even paid Freshworks to employ electronic means to learn the contents of the Licea-RR Shoes online communications. (Complaint, ¶¶ 10, 25-26.) Such allegations support a Penal Code section 631, subdivision (a) claim based on prong “[4]” in the Relevant Law above.

The Complaint thus facially alleges section 631 liability against Freshworks based on prong “[2]” and “[3]” in the Relevant Law above and alleges section 631 liability against RR Shoes based on prong [4] in the Relevant Law above.

RR Shoes’ argument that Freshworks was a mere extension of RR Shoes and was thus essentially a party to the communication is unavailing. Whether software providers are third parties under California’s eavesdropping statute, or mere tools used by websites, turns on whether the third party is being used more like a tape recorder used by one party (deemed not to be eavesdropping) or a friend listening in on another extension (deemed to be eavesdropping prohibited by the act). (See Ribas v. Clark (1985) 38 Cal.3d 355, 361-362.) Here, the Complaint alleges that Freshworks not only recorded the contents of the Licea-RR Shoes telephony communications, but also shared that information with Meta. Such allegations go beyond mere recordation and undercut the party exception argument.

RR Shoes’ expectation of privacy argument is also unavailing. Section 631 does not exist in a vacuum. It specifically relates to wrongful interceptions of communications. As noted by the opposition, “a person may reasonably expect privacy against the electronic recording of a communication, even though he or she had no reasonable expectation as to the confidentiality of the communication’s contents.” (Sanders v. American Broadcasting Companies, Inc. (1999) 20 Cal.4th 907, 915.) Even the fact that Plaintiff may be a tester litigant is irrelevant for expectation of privacy from recordation. (See Havens Realty Corp. v. Coleman (1982) 455 U.S. 363, 364 [“That the tester may have approached the real estate agent fully expecting that he would receive false information, and without any intention of buying or renting a home, does not negate the fact of injury within the meaning of § 804(d)”].)

RR Shoes’ demurrer is thus OVERRULED as to the Complaint’s first cause of action.

2. Demurrer, Complaint, Second Cause of Action, Violations of the California Invasion of Privacy Act (Cal. Penal Code § 632.7): OVERRULED.

a. Relevant Law

“Every person who, without the consent of all of the parties to a communication, intercepts or receives and intentionally records, or assists in the interception or reception and intentional recordation of, a communication transmitted between two cellular radio telephones, a cellular radio telephone and a landline telephone, two cordless telephones, a cordless telephone and a landline telephone, or a cordless telephone and a cellular radio telephone, shall be punished by a fine not exceeding two thousand five hundred dollars ($2,500), or by imprisonment in a county jail not exceeding one year, or in the state prison, or by both that fine and imprisonment.” (Pen. Code, § 632.7, subd. (a).)

b. Complaint’s Allegations

The Complaint’s second cause of action alleges that RR Shoes violated Penal Code section 632.7 by “record[ing] telephony communication [of Plaintiff Licea] without the consent of all parties to the communication,” as previously alleged in the Complaint. (Complaint, ¶¶ 37-38.)

c. Parties’ Arguments

The parties’ papers dispute whether the telephony communications alleged in the Complaint are the type of calls at issue in Penal Code section 632.7 and whether use of internet can amount to use of telephonic lines. (Demurrer, pp. 21-25; Opp’n, pp. 21-23.)

RR Shoes also raises its reasonable expectation of privacy argument in relation to this cause of action, but the Court has discussed and disposed of that argument in relation to the first cause of action above. (Demurrer, pp. 13-15.)

d. Court’s Determination

The Court finds in favor of Plaintiff Licea.

In Flanagan v. Flanagan (2002) 27 Cal.4th 766, 776, the California Supreme Court stated that section 632.7 prohibited the “intentional interception or recording of a communication involving a cellular phone or a cordless phone.”

Penal Code section 632.7, subdivision (c)(3) clarifies that a “‘communication’ includes, but is not limited to, communications transmitted by voice, data, or image, including facsimile,” italics added.

In Gruber v. Yelp, Inc. (2020) 55 Cal.App.5th 591, 613, the court of appeal reversed a trial court’s grant of summary judgment made on the ground that the website’s telecommunication device—Voice over Internet Protocol, also called IP telephony or VoIP—was not governed by section 632.7. The court of appeal adopted the reasoning of nonbinding federal cases declining to decide as a matter of law whether section 632.7 governs a defendant’s use of VoIP technology, holding that the issue warranted further factual development before a ruling could be made. (Ibid.)

Based on these authorities, and without contrary direction from the court of appeal on this issue, the Court cannot say as a matter of law, that the use of a smart phone for the purpose of transmitting a communication in the form of data on RR Shoes’ website, is not a communication for the purposes of section 632.7. As applied to the pleadings here, the Court cannot say that the use of RR Shoes’ chat function on their website is not the type of communication contemplated in section 632.7. The Complaint alleges that, as with VoIP, chats like those on RR Shoes’ website are a kind of telephony technology (Complaint, ¶¶ 23-24, 35-37) and thus would qualify as communications contemplated in section 632.7.

RR Shoes’ demurrer is thus OVERRULED as to the Complaint’s second cause of action. 

V. Conclusion

Defendant Rack Room Shoes, Inc.’s Demurrer to Plaintiff’s Complaint is OVERRULED.