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Call Recording By Out-of-State Businesses: CA Supreme Court Applies California Consent Requirement
Businesses that record customer calls should consider the implications of a recent California Supreme Court ruling that applies the California 'all parties' consent requirement to such recording, even when the business making the recording is located outside of California. On July 13, 2006, the California Supreme Court, in Kearney v. Salomon Smith Barney, Inc., 2006 Cal. LEXIS 8362 (Cal. 2006), unanimously ruled that businesses operating outside of California cannot, under California's privacy laws, tape-record telephone conversations with persons in California without their consent, even if the tape-recording is legal under the laws of the state or country in which the business is located.
Kearney involved two California residents who had brokerage accounts with Citigroup Global Markets, Inc., formerly Salomon Smith Barney, Inc. ('SSB'). The California residents placed telephone calls to, and received telephone calls from, various individual brokers in SSB's office in Atlanta. The brokers tape-recorded these telephone calls without informing the California residents. The recording was lawful under Georgia law, which permits tape-recording of telephone conversations with the consent of only one party to the conversation. The California residents sued SSB, claiming, among other things, that SSB violated '632 of the California Penal Code, which makes the recording of telephone conversations without the consent of 'all parties' to the conversation a misdemeanor crime. Section 637.2 of the Penal Code authorizes a civil cause of action for violation of '632 and other privacy provisions and permits awards of $5000 or three times actual damages, whichever is greater.
Analysis
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