Judge Holly J. Fujie, Case Number: 23STCV19517, Date: 2024-02-23 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

On August 16, 2023, Plaintiff Miguel Esparaza (“Plaintiff”) filed a complaint against Defendant Goldsilver, LLC for violation of the California Invasion of Privacy Act (“CIPA”), arising out of Defendant’s alleged installation of spyware to eavesdrop on Plaintiff’s private conversations.

On December 28, 2023, Defendant filed the instant motion. On February 8, 2024, Plaintiff filed an opposition. On February 15, 2024, Defendant filed a reply.

Defendant brings a Motion for Judgment on the Pleadings as to the entire complaint, arguing that there are no facts to sate a claim under California Penal Code sections 631 or 632.7. We deny Clark's September 1, 2016 and September 9, 2016 requests for judicial notice of a total of 10 federal court orders and opinions arising out of the Fernwood property litigation.

The Court DENIES the parties’ requests for judicial notice because the requested orders and opinions are not necessary to the resolution of the instant motion.

Defendant asserts that the alleged conduct is not prohibited by section 631 because this statute does not apply to internet communications. Defendant cites to the following cases in support: Williams v. What If Holdings, LLC (N.D. Cal., Dec. 22, 2022, No. C 22-03780 WHA) 2022 WL 17869275, at *2 (determining “the first clause of Section 631(a) concerns telephonic wiretapping specifically, which does not apply to the context of the internet”); In re Google Assistant Privacy Litigation (N.D. Cal. 2020) 457 F.Supp.3d 797, 825-26 (the first clause “expressly requires that the unauthorized connection be made with any telegraph or telephone wire, line, cable, or instrument”) (internal citations omitted).) Defendant also relies on the party exemption rule, where a party to a conversation cannot run afoul of eavesdropping on a communication to which they are a party. Additionally, Defendant argues that Plaintiff fails to state facts establishing that any alleged eavesdropping, or interception, occurred while the communication was “in transit.” Defendant explains that the creation of a transcript, such as the chat transcript alleged by Plaintiff, does not entail the interception of a communication. Defendant also claims that Plaintiff did not and cannot allege unlawful wiretapping (clause 1), interception (clause 2) or unlawful aiding conduct (clause 4).

In opposition, Plaintiff argues that the “surreptitious collection of user data to create targeted advertising has been recognized as actionable under CIPA.” (Opp. p. 10, fn 1.) Plaintiff cites to decisions in which he alleges a third-party provider software can be liable under section 631(a). (See Opp. p. 11-21.) Specifically, in Nationwide, Plaintiff states that the court pointed to the fact that “at least two federal District Courts have held that a software vendor hired by a party to a conversation, and acting for that party’s benefit, is not itself a party and therefore is not protected by the party exception.” (Valenzuela v. Nationwide Mutual Ins. Co., 2023 WL 5266033, at *7 (C.D. Cal. Aug. 14, 2023) (Frimpong, J.).) Plaintiff also argues that a smartphone is a telephone instrument within the meaning of the first clause, and that the statute focuses on the unauthorized connection, rather than the specific function of the device. Plaintiff asserts that the second clause applies to intercepted communications sent from or received at any place within California. Finally, Plaintiff claims the fourth clause is actionable against Defendant because it enabled the third party’s wrongdoing by embedding the chat provider’s software code into Defendant’s website without obtaining its users’ informed consent.

In reply, Defendant asserts that Plaintiff concedes that Defendant cannot be directly liable under the first three clauses of section 631 because it fails to address the argument that Defendant cannot wiretap its own conversation. As to derivative liability, Defendant argues that it cannot be derivatively liable because Plaintiff (1) fails to allege the requisite direct violation by third-party chat service provider, Zendesk; (2) alleges Zendesk operated as an extension of Defendant; and (3) fails to allege Defendant had the requisite mental state.

As to the requisite underlying violation, Defendant argues that Plaintiff did not use a telephone line, and the communications were limited to internet communications. Defendant also states that there are insufficient allegations to conclude that a third party intercepted Plaintiff’s messages in transit. Furthermore, Defendant states that Plaintiff impliedly consented to being recorded because recording would be reasonably expected with a text transmission. Defendant also points out that Plaintiff fails to allege any facts showing that Zendesk independently uses data from Defendant’s webchats to profit itself, rather the Complaint alleges that Zendesk operated as an extension of Defendant. Finally, Defendant asserts that Plaintiff fails to allege the requisite knowledge or intent requirement as there are no facts to show that Defendant intended to facilitate the violation.

The Legislature enacted the Invasion of Privacy Act “to protect the right of privacy of the people of this state.” (Tavernetti v. Superior Court (1978) 22 Cal.3d 187, 193.) California Penal Code section 631(a), “prescribes criminal penalties for three distinct and mutually independent patterns of conduct: intentional wiretapping, wilfully attempting to learn the contents or meaning of a communication in transit over a wire, and attempting to use or communicate information obtained as a result of engaging in either of the previous two activities.” (Id. at p. 192.) Section 631(a) creates four avenues for relief:

(1) where a person “by means of any machine, instrument, or contrivance, or in any other manner, intentionally taps, or makes any unauthorized connection ... with any telegraph or telephone wire, line, cable, or instrument”;

(2) where a person “willfully and without 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”;

(3) where a person “uses, or attempts to use, in any manner, or for any purpose, or to communicate in any way, any information so obtained”; and

(4) where a person “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.”

(Swarts v. Home Depot, Inc. (N.D. Cal., Aug. 30, 2023, No. 23-CV-0995-JST) 2023 WL 5615453, at *5.)

As to the first clause, “[c]ourts have uniformly interpreted this clause as applying only to communications transmitted over telephones and not those transmitted over the internet. See Williams v. What If Holdings, LLC, No. C 22-03780 WHA, 2022 WL 17869275, at *2 (N.D. Cal. Dec. 22, 2022) (determining “the first clause of Section 631(a) concerns telephonic wiretapping specifically and does not apply to the context of the internet”).” (Swarts, 2023 WL 5615453, at *6.) Plaintiff alleges that he “visited Defendant’s website [and] shared personal data and personally identifying information with Defendant via the website chat feature… us[ing] a smart phone.” (Compl. ¶ 23.) The Court finds this to be insufficient as the Court disagrees with Plaintiff’s assertion that a smartphone is a telephone instrument within the meaning of the first clause. In Swarts, the court rejected the plaintiff’s argument that “CIPA’s plain language envisions broad application to evolving technology and its interpretation should be broadly construed to cover a wide range of privacy concerns.” (Swarts, 2023 WL 5615453, at *6.) The court reasoned that this argument “ha[d] been consistently rejected by numerous courts, and the Court s[aw] no reason to depart from the plain terms of the statute.” (Id.) Thus, the Court finds that Plaintiff fails to allege a claim under clause one of section 631(a).

As to the second clause, “[t]his statute has three requirements relevant here: (1) the absence of consent; (2) the party exception; and (3) the ‘while ... in transit’ requirement.” (Valenzuela v. Keurig Green Mountain, Inc. (N.D. Cal., May 24, 2023, No. 22-CV-09042-JSC) 2023 WL 3707181, at *3.) Plaintiff alleges that “Defendant did not obtain Plaintiff’s effective consent for the preceding intrusions, nor did Plaintiff know at the time of the conversation of Defendant’s conduct.” (Compl. ¶ 26.) The Court finds that Plaintiff sufficiently pleads lack of consent. Defendant fails to establish that there was consent as a matter of law; Defendant states: “parties to a written communication over the internet ‘may reasonably expect that the communication may be overheard or recorded,’ Cal. Penal Code § 632(c).” (Reply p. 4.) This is insufficient to prove that Plaintiff impliedly consented.

In considering whether Defendant is exempted from liability as a party to the communication, the Valenzuela court explained: “the question is whether the unnamed ‘third-party’ here is a third-party eavesdropper (like Clark in Ribas) or a tape-recorder in Defendant’s control (as in Rogers). Put another way, the question is whether the third party has ‘the capability to use its record of the interaction for [another] purpose.’ [Citation.]” (Valenzuela v. Keurig Green Mountain, Inc. (N.D. Cal., May 24, 2023, No. 22-CV-09042-JSC) 2023 WL 3707181, at *4.) There are no facts to show that Zendesk used the recordings for another purpose, rather it appears that its services were solely for Defendant’s benefit and within Defendant’s control. Thus, Plaintiff fails to establish an eavesdropper existed and fails to state a claim under section 631(a)’s second clause.

As to Plaintiff’s satisfaction of the timing requirement for interception, the Valenzuela court expressly rejected Plaintiff’s argument that the second clause applies to intercepted communications sent from or received at any place within California. The court explained: “ ‘while’ is the critical word. The statute applies to messages intercepted ‘while the same ... is being sent from, or received at any place within this state.’ ‘While’ implies the interception must occur contemporaneous with the sending or receipt of the message. Thus, Plaintiff cannot avoid the simultaneity argument merely because she sends or receives a message in California.” (Valenzuela, 2023 WL 3707181, at *6.) Thus, the Complaint fails to state a claim under the second clause of section 631(a).

As to the third clause, “[a] violation under the third clause of § 631(a) is contingent upon a finding of a violation of the first or second clause of § 631(a).” (Swarts, 2023 WL 5615453, at *6.) Since Plaintiff fails to allege a claim under the first or second clause of section 631(a), his claim under the third clause necessarily fails.

Plaintiff’s claim under the fourth clause also fails because he fails to allege the requisite underlying violation by Zendesk.

Defendant argues that Plaintiff’s section 632.7 claim fails because the alleged communication is not prohibited by section 632.7, which regulates communications between two telephones. Defendant explains that Plaintiff’s utilization of his smartphone’s integrated computer that enabled web browsing to communicate with Goldsilver is not within the scope of the statute. Defendant explains that section 632.7 only applies to the specifically enumerated permutations of phone communications, and not to internet chat communications.

In opposition, Plaintiff argues that the Complaint sufficiently alleges a claim under section 632.7 because the undefined term “landline telephone” may be broadly construed to include communications transmitted by “data,” “image,” or “facsimile.” Plaintiff requests that the Court follow Adler v. Community.com, Inc., 2021 WL 4805435 (C.D. Cal. Aug. 2, 2021) (Blumenfeld, J.), where there was no analysis as to the precise communication device used by the defendants to transmit text messages to the plaintiffs. There, the plaintiffs received automated messages from the defendant, likely generated by a computer. Accordingly, Plaintiff concludes that phone communications are not necessary for the application of this statute. Plaintiff also argues that Defendant’s reference to Plaintiff’s other lawsuits constitutes improper character evidence that is prejudicial to Plaintiff, and that there is no prohibition against suing multiple parties in different lawsuits for separate and distinct CIPA violations.

In reply, Defendant reasserts his arguments made in the moving papers — that Plaintiff’s section 632.7 claim fails because (1) that section applies only to communications between two telephones; (2) he impliedly consented to any recording; and (3) Goldsilver lacked the necessary mens rea.

[e]very person who, without the consent of all parties to a communication, intercepts or receives and intentionally records ... 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 [guilty of a crime.]

(Valenzuela, 2023 WL 3707181, at *6.) In Valenzuela, the court dismissed Plaintiff’s claim under this statute because “Plaintiff fail[ed] to allege how Defendant receive[ed] the messages sent via its chat feature.” (Id.) The court reasoned: “No plausible allegation exists here that Defendant received Plaintiff’s message on a ‘cellular radio telephone,’ a ‘landline telephone,’ or a ‘cordless telephone[.]’” (Id.) Plaintiff requests that the Court broadly construe the undefined term “landline telephone,” but the Valenzuela court rejected a similar argument, stating: “Plaintiff again invites the Court to engage in statutory re-writing to update § 632.7 for the internet era by interpreting ‘landline’ broadly. But that is not this Court’s role. The statute has clear terms. These allegations do not fall within them.” (Id.) Like the plaintiff in Valenzuela, here, Plaintiff argues that internet communications should be covered within the statute’s “voice, data, or image, including facsimile” definition of “communications.” However, the Valenzuela court referenced that provision, explaining that it only defines communications and “does not modify the devices regulated under § 632.7,” rather “§ 632.7 unambiguously limits its reach to communications between various types of telephones.” (Valenzuela, 2023 WL 3707181, at *6.) The Court finds that Plaintiff fails to make a sufficient argument that “the statute contemplates internet communications between a smart phone and an unspecified device on Defendant’s end.” (Id.) Thus, Plaintiff’s claim under section 632.7 fails as a matter of law.

Plaintiff requests leave to amend but fails to set forth an example of how he would amend the Complaint. While the Court does not find it likely that Plaintiff will be able to successfully amend any of his claims, the Court will not deny leave to amend without a full briefing on Plaintiffs’ potential amendments.

In sum, the Motion for Judgment on the Pleadings is GRANTED, with twenty days leave to amend. Plaintiff should be aware that if he is unable to overcome the deficiencies in his pleading in any first amended complaint, the Court will consider sustaining a demurrer thereto without leave to amend.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court