Montantes v. Inventure Foods

Full title: Vanessa Montantes v. Inventure Foods

Court: UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Date published: Jul 2, 2014

Case No. CV-14-1128-MWF (RZx) (C.D. Cal. Jul. 2, 2014)

Opinion

Case No. CV-14-1128-MWF (RZx)

07-02-2014

Vanessa Montantes v. Inventure Foods

The Honorable MICHAEL W. FITZGERALD, U.S. District Judge

CIVIL MINUTES—GENERAL

Present: Deputy Clerk:
Rita Sanchez Court Reporter:
Not Reported Attorneys Present for Plaintiff:
None Present Attorneys Present for Defendant:
None Present Proceedings (In Chambers): ORDER DENYING MOTION TO DISMISS PLAINTIFF'S COMPLAINT [7]

Before the Court is the Motion to Dismiss (the "Motion") filed on April 21, 2014 by Defendant Inventure Foods ("Inventure"). (Docket No. 7). The Court has read and considered the papers, and a hearing was held on June 9, 2014. For the reasons set forth below, the Motion is DENIED.

Plaintiff Vanessa Montantes filed the class action Complaint initiating this action on February 13, 2014. (Docket No. 1). Plaintiff alleges that, on August 21, 2013, she called Inventure from her wireless cell phone and spoke to a customer service representative. (Compl. ¶ 7). Unbeknownst to her and pursuant to company policy, Inventure recorded the phone call. (Id. ¶¶ 8-9). Plaintiff alleges that the same surreptitious telephone conversation recording has happened to tens of thousands of other California residents. (Id. ¶ 14).

The Complaint seeks damages and injunctive relief for violations of section 632.7 of the California Penal Code, which prohibits recording communications involving cordless or cellular telephones without the consent of the parties to the communication. Request for Judicial Notice

Defendant filed a Request for Judicial Notice ("Def.'s Request," Docket No. 702) along with its Motion, requesting judicial notice of the following documents:

1. A letter dated August 23, 1991, from Michael S. Sands to Assembly Members Phil Isenberg and Llyod Connelly enclosing an article from the Sacramento Bee (Def.'s Request Ex. 1);

2. Assemblyman Lloyd Connelly's Statement of Intent for AB 2465 (Def.'s Request Ex. 2);

3. A letter dated July 31, 1967 from Assemblyman Jesse Unruh to Governor Reagan (Def.'s Request Ex. 3); and

4. A press release dated March 1, 1967, from Assembly Speaker Jesse Unruh (Def.'s Request Ex. 4).

The Court may take judicial notice of a fact "that is not subject to reasonable dispute because it (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). Courts often take judicial notice of legislative history of state statutes. See, e.g., Chaker v. Crogan, 428 F.3d 1215, 1223 n.8 (9th Cir. 2005) (taking notice of a state statute's legislative history); Louis v. McCormick & Schmick Rest. Corp., 460 F. Supp. 2d 1153, 1155 n.4 (C.D. Cal. 2006) (taking judicial notice of portions of legislative history and opinion letters issued by federal and state regulatory agencies). Courts may also take judicial notice of press releases. In re Am. Apparel, Inc. Shareholder Litig., 855 F. Supp. 2d 1043, 1062 (C.D. Cal. 2012). Accordingly, the Court takes judicial notice of these documents.

Plaintiff also filed a Request for Judicial Notice ("Pl.'s Request," Docket No. 9-1) along with its Opposition, requesting judicial notice of the following documents:

1. A copy of Brown v. U.S. Money Reserve, Inc., No. 2:13-cv-05139-ABC-E (C.D. Cal. Oct. 8, 2013) (Pl.'s Request Ex. 1);

2. A copy of Swanlund v. MathTutorDVD.com, No. 5:13-cv-01021-JGB-SP (C.D. Cal. Oct. 15, 2013) (Pl.'s Request Ex. 2);

3. A copy of Sentz v. Euromarket Designs, Inc., No. 5:13-cv-00487-VAP-SP (C.D. Cal. May 16, 2013) (Pl.'s Request Ex. 3).

Courts also take judicial notice of "proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue." United States v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992); see also Bryant v. Carleson, 444 F.2d 353, 357 (9th Cir. 1971) (taking judicial notice of proceedings and filings in other courts). Therefore, the Court takes judicial notice of Plaintiff's documents. Motion to Dismiss

In ruling on the Motion under Rule 12(b)(6), the Court follows Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). "To survive a motion to dismiss, a complaint must contain sufficient factual matter . . . to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570. "All allegations of material fact in the complaint are taken as true and construed in the light most favorable to the plaintiff." Williams v. Gerber Prods. Co., 552 F.3d 934, 937 (9th Cir. 2008) (holding that a plaintiff had plausibly stated that a label referring to a product containing no fruit juice as "fruit juice snacks" may be misleading to a reasonable consumer).

Inventure argues that the Complaint must be dismissed for three reasons: first , because § 632.7 does not apply to calls that are simply received at their intended destination, rather than intercepted or received in transit; second , because the Complaint fails to allege the type of phone Inventure used to receive recorded calls; and third , because the Complaint fails to allege that Inventure knew that the calls it recorded came from cellular or wireless phones.

Interpretation of "Receive"

Inventure argues that § 632.7 is ambiguous, and its application should be limited to defendants who intercept or receive wireless signals in transit using a device such as a scanner, rather than those who simply receive and record the content of wireless communications at their intended destination.

In answering questions of state law, this Court is bound by the decisions of the California Supreme Court. When the California Supreme Court has not spoken on a particular issue, the Court must determine what result the Supreme Court would reach based on state appellate court opinions, statutes, and treatises. Vernon v. City of L.A., 27 F.3d 1385, 1391 (9th Cir. 1994) (citing cases).

Statutory interpretation "begins with the statutory text, and ends there as well if the text is unambiguous." McDonald v. Sun Oil Co., 548 F.3d 774, 780 (9th Cir. 2008). Under Section 632.7,

[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.]

Cal. Penal Code § 632.7(a). The text of § 632.7 unambiguously includes a person who "receives" a protected "communication," whether or not the communication is received while in transit or at its destination. "Communication" is defined to include "communications transmitted by voice, data, or image, including facsimile." Id. § 632.7(c)(3).

Inventure argues that the statute is ambiguous because the term "receive" can refer to both receipt of wireless signals in transit and receipt of the content of the communication at its destination. (Mot. at 7). The fact that the term encompasses both receipt in transit and receipt at the destination does not render the term ambiguous; rather, it simply means that the term has a broad meaning.

Furthermore, Inventure's suggestion that the term "receive" includes only the use of a scanner to intercept or receive wireless signals in transit renders the term "receive" redundant, since use of a scanner to intentionally "receive" wireless signals in transit is the functional equivalent of "intercepting" those signals. See Simpson v. Vantage Hospitality Grp., Inc., No. 12-cv-4814-YGR, 2012 WL 6025772, at *6 (N.D. Cal. Dec. 4, 2012) ("Because the inclusion of 'receives' is presumed to have been purposeful, the Court must apply the statute as written and using the term's plain (and broad) meaning.").

Inventure argues that interpreting the term "receive" in accordance with its plain meaning would lead to an absurd result, because the term "communication" includes data and image communications, which are necessarily recorded upon receipt. Hence, Inventure argues, using the plain and broad meaning of "receive" would subject to liability any party who receives any image, data, or facsimile on a cell phone, even if the party was the intended recipient of the communication. This argument fails because the statute also requires that the recording be "without the consent of all parties." Cal. Penal Code § 632.7(a). A party who has sent a communication such as an image or facsimile that is necessarily recorded upon receipt has certainly consented to that recording by the intended recipient.

Inventure also argues that use of the term "transmitted" in the statutory phrase "receives and intentionally records . . . a communication transmitted between" certain devices, id. (emphasis added), indicates the legislature's intent to punish only recordation that occurs during transmission, rather than following transmission. But the term "transmitted" is not so limiting, because even after transmission is complete the communication may be said to have been "transmitted" between the covered devices.

Inventure further argues that the rule of lenity supports its interpretation of § 632.7. The rule of lenity only applies, however, when the Court is faced with multiple reasonable interpretations of a penal statute. See People v. Overstreet, 42 Cal. 3d 891, 896, 231 Cal. Rptr. 213 (1986) (reasoning that a statute should be construed "as favorably to the defendant as its language and the circumstance of its application reasonably permit"). The rule does not apply here, where Inventure suggests an interpretation that is not reasonably permitted by the statutory language.

Because § 632.7 unambiguously includes the receiving and recording of communications like those alleged in the Complaint, it is unnecessary to consider Inventure's arguments based on the legislative history of the statute and other extrinsic sources of legislative intent.

Receiving Phone

The Complaint does not explicitly allege the type of telephone used by Inventure to receive calls from Montantes and other putative class members. Inventure argues that the Complaint fails to state a claim under § 632.7 for this reason.

The plain text of § 632.7 suggests that an exclusive list of five types of calls are included: a communication transmitted between (1) two cellular radio telephones, (2) a cellular radio telephone and a landline telephone, (3) two cordless telephones, (4) a cordless telephone and a landline telephone, or (5) a cordless telephone and a cellular radio telephone. According to this list of included types of telephones, the communication must have a cellular radio or cordless telephone on one side, and a cellular radio, cordless, or landline telephone on the other side. While the Complaint alleges that Montantes used a cellular telephone, which satisfies the requirement for one side of the communication, the Complaint does not explicitly allege that Inventure used a cellular radio, cordless, or landline telephone on the other side of the communication. Inventure argues that it may have used Voice-Over Internet Protocol ("VoIP") technology, rather than a cellular radio, cordless, or landline telephone. Significantly, it is not clear that computer-based VoIP technology is not a "landline telephone" within the meaning of § 632.7. See Roberts v. Wyndham Int'l, Inc., No. 12-cv-5180 PSG, 2012 WL 6001459, at *4 & n.46 (N.D. Cal. Nov. 30, 2012) (citing the definition of "interconnected Voice over Internet protocol (VoIP) service" found in 47 C.F.R. § 9.3). Nevertheless, it appears from the plain text of the statute that use of one of these three types of telephones—howsoever broadly defined—is an element of a claim under § 632.7.

Montantes argues that several cases interpreting § 632.7 have held that any communication involving a cellular or cordless phone comes within the purview of the statute. She cites only district court cases, which are not binding on this Court. She does not argue against the plain language of the statute, which contemplates communications between specific types of telephones.

The California Supreme Court has not yet ruled on whether use of a cellular radio, cordless, or landline telephone by the party making a call to or receiving a call from a cellular radio or cordless telephone is an element of a § 632.7 violation. Nevertheless, courts interpreting the provision have relied on Flanagan v. Flanagan, 27 Cal. 4th 766, 117 Cal. Rptr. 2d 574 (2002), in which the California Supreme Court summarized § 632.7 as covering any "intentional interception or recording of a communication involving a cellular phone or a cordless phone." Id. at 776, cited in McCabe v. Six Continents Hotels, No. 12-cv-04818 NC, 2014 WL 465750, at *3-4 (N.D. Cal. Feb. 3, 2014); Roberts v. Wyndham Int'l, Inc., No. 12-cv-5180 PSG, 2012 WL 6001459, at *4 (N.D. Cal. Nov. 30, 2012).

Flanagan did not, however, consider whether a particular type of device must be used on both sides of the communication in order for the communication to fall within the ambit of the statute. In fact, Flanagan did not interpret or apply § 632.7 at all. It merely cited to § 632.7 in support of its assertion that the California legislature had taken notice and responded to "privacy issues raised by the increased use of cellular and cordless telephones" and "the problem of protecting the privacy of parties to calls involving cellular or cordless telephones." Flanagan, 27 Cal. 4th at 775-76. The court's brief summary of the law's effect cannot be taken as its conclusive interpretation of the statute. The court's description also did not include the statutory language that the recordation must be "without the consent of all parties to a communication," but certainly it cannot be argued that Flanagan stands for the proposition that even a calls recorded with the consent of all parties would violate the statute. Flanagan, put simply, is silent as to the issue at hand here.

In the absence of guiding authority from the California Supreme Court, this Court looks to decisions of the California Court of Appeal as persuasive authority on the interpretation of California statutes. A recent decision of the California Court of Appeal supports a plain-language reading of § 632.7 to include the requirement that only types of phones listed in the statute are included.

In Hataishi v. First American Home Buyers Protection Corp., 223 Cal. App. 4th 1454, 168 Cal. Rptr. 3d 262 (2014), the court of appeal affirmed the trial court's denial of class certification in a class action alleging surreptitious recording of confidential communications in violation of § 632 of the California Penal Code. The trial court had ruled that individual factual questions predominated, which defeated class certification. Id. at 1468. The plaintiff, on appeal, argued that amendment of the complaint to add a claim under § 632.7 would ameliorate the need for individualized proof, since there is no need to determine, for purposes of § 632.7, the content of each communication or each class member's expectation of confidentiality. Id. at 1468-69. The court of appeal rejected this argument on two bases: first, the plaintiff had not filed a formal motion to amend, and second, § 632.7 also requires individualized proof. Id. at 1469. The court of appeal held that individualized proof is required under § 632.7 to "determine what type of telephone was used to receive the subject call." Id.

While Montantes argues that this language is dicta, it appears that the court of appeal's interpretation of § 632.7 was an alternative basis for denial of the plaintiff's request for leave to amend the complaint. Under California law, "when a decision is based on two separate grounds, neither is dictum; rather, each ground is equally valid and constitutes an alternative holding in support of the judgment." Varshock v. Cal. Dep't of Forestry & Fire Protection, 194 Cal. App. 4th 635, 646 n.7, 125 Cal. Rptr. 3d 141 (2011) (citation omitted) (citing King v. Pauly, 159 Cal. 549, 554-55, 115 P. 210 (1911)).

The court of appeal's determination that individualized proof is needed under § 632.7 was based solely on the fact that the "type of telephone . . . used to receive the subject call" is an element of proof that must be made out in a claim under § 632.7. Hataishi, 223 Cal. App. 4th at 1469. The court of appeal has, therefore, determined that the type of telephone used on both sides of recorded communications must be proven.

While the Complaint does not allege any facts relating to this element of the claim under § 632.7, a complaint need not necessarily set forth facts supporting every element of a claim in order to survive a motion to dismiss under Rule 12(b)(6). Rule 8 requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). While Twombly and Iqbal enhanced the standard of Rule 8 to require that complaints set forth a claim for relief that is plausible on its face, it stopped short of requiring complaints to set forth a prima facie case.

In Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002), the Supreme Court explicitly held that it is not necessary for a complaint in an employment discrimination case to contain specific facts establishing a prima facie case. Id. at 515. It based its holding both on the language of Rule 8 and the Supreme Court's interpretation of the Rule in Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957).

In overruling Conley, however, the Twombly Court stated that Swierkiewicz remains good law. Twombly, 555 U.S. at 569-70. The Twombly Court clarified that Swierkiewicz did not change the law of pleading, but only rejected a heightened pleading standard. Similarly, the Twombly Court did not "require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face." Id. at 570.

Lower courts and treatises agree that a Rule 12(b)(6) need not be granted solely because a complaint fails to plead facts supporting each element of a claim. See Lynn v. Sheet Metal Workers' Int'l Ass'n, 804 F.2d 1472, 1482 (9th Cir. 1986) (holding that a minor, technical failure to plead an element of exhaustion of administrative remedies would not defeat a claim where the defendants "had fair notice of the nature of [the plaintiff's claim . . . and were able to litigate fully the exhaustion issue"); Vazguez v. Bank of Am., N.A., No. 13-cv-02902-JST, 2013 WL 6001924, at *6 (N.D. Cal. Nov. 12, 2013) (not necessary to plead every element of a legal agency relationship in order to plead that agency relationship exists); Prathaftakis v. Stiff, No. 1:08cv0120 AWI DLB, 2008 WL 506047, at *1 (E.D. Cal. Feb. 22, 2008) (although "a complaint must give fair notice and state the elements of the claim plainly and succinctly," the complaint "need not outline all elements of a claim" (citing Jones v. Cmty. Redev. Agency, 733 F.2d 646, 649 (9th Cir. 1984); Walker v. S. Cent. Bell Tel. Co., 904 F.2d 275, 277 (5th Cir. 1990); Lewis v. ACB Bus. Serv., Inc., 135 F.3d 389, 405-06 (6th Cir. 1998)); 2-12 J. Moore, Moore's Federal Practice—Civil § 12.36[1] (3d ed. 2008) (recognizing that a pleading that does not contain allegations of each element of the claim may not be "so material that the pleading should be dismissed under Rule 12(b)(6)"); 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216 (3d ed. rev. 2014) ("A reading of Garcia, Conley, Swierkiewicz, and a host of other cases . . . suggests that the complaint, and other relief-claiming pleadings need not state with precision all of the elements that are necessary to give rise to a legal basis for recovery as long as fair notice of the nature of the action is provided to the opposing party." (footnote omitted)).

Although the Ninth Circuit has held that "a pleading must give fair notice and state the elements of the claim plainly and succinctly," Jones, 733 F.2d at 649, it subsequently pulled away from a strict rule that a complaint must plead all elements of the claim. In Lynn, the Circuit noted that under the "strict reading" suggested by Jones, the complaint at issue had failed to plead exhaustion of remedies for the particular claim under review. Nevertheless, the court reasoned, "the purpose of the pleadings is to provide the opposing party with fair notice of the claim against it," and the defendant had been provided with fair notice and a chance to fully litigate the issue. Lynn, 804 F.2d at 1482. Furthermore, it is not clear that the rule in Jones survived Swierkiewicz.

Here, the allegations in the Complaint give Inventure fair notice of the claims made by Montantes and the putative class. The Complaint alleges violation of § 632.7, and thus implicitly alleges that Inventure used a type of telephone that would subject it to liability under § 632.7. Inventure will be free, of course, to present any evidence that its conduct does not fall under the statute's prohibition, and the Court will be able to determine on summary judgment whether the type of device Inventure used to take calls from its customers could fall within the statute as a matter of law.

Furthermore, even if the Court were to grant the Motion, Inventure would not benefit, because Montantes would only have to allege, "On information and belief, Inventure answered the call using a cellular radio, cordless, or landline telephone." Twombly and Iqbal did not call into question the practice of pleading facts on information and belief "where the facts are peculiarly within the possession and control of the defendant, or where the belief is based on factual information that makes the inference of culpability plausible." Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010). Montantes cannot be expected to know at this time what time of phone was used to answer her call; that information is peculiarly within the possession and control of Inventure.

The critical question under Twombly and Iqbal is plausibility. Here, it is eminently plausible under the specific facts alleged in the Complaint that Inventure received the subject calls using a cellular radio, cordless, or landline telephone, as required under § 632.7, especially if "landline" is ultimately interpreted to include VoIP technology. Accordingly, the Motion cannot be granted on this basis.

Intent that Caller Used a Cellular or Wireless Phone

Inventure argues that the intent element of § 632.7 applies to the types of telephones used; that is, that a person who records a phone call is not liable unless he or she knew that the recorded call came from a wireless telephone. In support of this argument, Inventure cites People v. Superior Court of Los Angeles, 70 Cal. 2d 123, 74 Cal. Rptr. 294 (1969), in which the California Supreme Court held that the state-of-mind element of § 632 of the California Penal Code required not only intent to record of the communication, but also intent that the recorded communication be confidential. Id. at 133. The court reasoned,

Fairly read, the statute does not isolate the actor's intent from the object to which it is directed, namely the confidential communication; the two are inextricably bound together. Thus the statute imposes criminal liability on a person "who, intentionally and without the consent of a party to a

confidential communication . . . eavesdrops upon or records a confidential communication . . . ."

Id. (alterations in original). Separating the intent from the confidentiality of the communication "would produce results at once unreasonable and inconsistent with legislative purpose." Id. at 132.

Section 632.7 is easily distinguishable from § 632; in fact, the differences between the two statutes' use of the term "intentionally" underscores the fact that the legislature intended for the state-of-mind requirement to operate differently. The term "intentionally" in § 632 syntactically attaches to the entire actus reus phrase: "intentionally . . . eavesdrops upon or records the confidential communication." In contrast, under § 632.7, liability attaches to a person who "intercepts or receives and intentionally records" certain communications. It is only the recording that must be intentional under the plain language of § 632.7.

Furthermore, it would be unreasonable to limit the reach of § 632.7 to the very improbable circumstances in which a defendant intended only to record calls from wireless telephones. All courts to interpret § 632.7 have agreed that the defendant need not have intercepted the communication to be liable, but may be liable as the intended recipient who surreptitiously records the communication. A party who records a call that it merely receives would have no reason to distinguish between different types of telephones used to make the call. In fact, the plain language of the statute would encompass recording a call from a landline telephone, so long as a wireless telephone was used to receive the call. It is unlikely that the legislature intended that such a broadly worded statute would apply to a person who receives calls from a number of sources and intends, for whatever reason, to record only wireless calls, and not to a person who intends to record calls without regard for their origin. It appears that no court has applied the interpretation Inventure seeks. The Court will not interpose such an improbable interpretation in the absence of some guidance from California courts. Conclusion

The Motion is DENIED. Inventure's Answer is due on or before July 21, 2014.

IT IS SO ORDERED.