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7 UNITED STATES DISTRICT COURT 8 9 SOUTHERN DISTRICT OF CALIFORNIA

10 ANNA LERMAN, on behalf of herself and CASE NO. 19cv638-LAB (BLM) 11 others similarly situated, ORDER DENYING MOTION TO Plaintiff, 12 DISMISS [Dkt. 7] vs. 13 SWAROVSKI NORTH AMERICA 14 LIMITED, et al. 15 Defendants. 16 Currently before the Court is the Swarovski Defendants’ Motion to Dismiss. Dkt. 17 7. For the reasons below, that motion is DENIED. 18 The background of this case is straightforward. In January 2019, Plaintiff Anna 19 Lerman placed two telephone calls to Swarovski’s customer-service line. During those 20 calls, she spoke with a live Swarovski representative to obtain information about her 21 online merchandise purchase and to change an expected delivery date. Although the 22 company representative provided no disclaimer that the calls might be recorded, Lerman 23 alleges that the company nonetheless recorded her calls without consent, in violation of 24 California Penal Code § 632.7. In fact, according to the complaint, Swarovski has 25 company-wide policy of recording all inbound consumer telephone calls without providing 26 notice, which is why Lerman has brought this suit as a putative class action. Swarovski 27 now moves to dismiss the case, arguing that Lerman cannot state a claim under section 28 632.7. 1 As relevant here, section 632.7 imposes liability on anyone who “without the 2 consent of all parties to a communication, intercepts or receives and intentionally records 3 . . . a communication transmitted between two cellular radio telephones, a cellular radio 4 telephone and a landline telephone, two cordless telephones, a cordless telephone and 5 a landline telephone, or a cordless telephone and a cellular radio telephone . . . .”1 6 Crafty defendants have played up the ambiguity of section 632.7 for years. In 7 Brown v. Defender Security Co.,

(C. D. Cal. 2012), for example, the 8 defendant argued the statute’s use of the word “intercept” suggests that the prohibition 9 against surreptitious recording should apply only to third-party interceptors and not to 10 known call participants. The court rejected that argument, finding that the “clear and 11 unambiguous” language of the statute—which applies to anyone who “intercepts or 12 receives” a call—also prohibited unconsented recordings by call participants. Id. at *5. 13 The Brown court found it important that section 632.7 uses the terms “receives” and 14 “intercepts” disjunctively, “which suggests that these terms are meant to apply to distinct 15 kinds of conduct. Id. While “intercepts” may apply to an unknown party secretly 16 accessing the conversation, “receives” is “naturally read to refer to something other than 17 access to a conversation by an unknown interloper.” Id. 18 Another district court reached the same result. In Simpson v. Best W. Intern., Inc., 19

(N.D. Cal. 2012), the court disagreed with Brown’s conclusion that the 20 section 632.7’s language clearly and unambiguously applied to known call participants. 21 But looking to the legislative history, the court nonetheless reached the same conclusion, 22 holding that the statute’s prohibition against surreptitious recording applied to known call 23 participants and third parties alike. See

at *8–9 (“[T]he Legislature intended to extend 24 the protections against recording landline conversations—which applied to parties—to 25 26 1 In addition to these criminal penalties, section 632.7’s twin provision—California Penal 27 Code § 637.2—allows plaintiffs to recover civil damages of $5,000 per violation, which is 28 the basis of Lerman’s damages claim here. 1 cellular communications. Interpreting § 632.7 to only apply to third parties would defeat 2 the Legislature's intent.”). 3 The argument Swarovski advances here is a bit more nuanced. It doesn’t argue 4 that section 632.7 applies only to third-party interceptors, an argument that is largely 5 foreclosed by the weight of persuasive precedent. Instead its argument goes something 6 like this: section 632.7 prohibits recording “without consent” only where a party “intercepts 7 or receives and intentionally records” that communication. In Swarovski’s view, the 8 phrase “without consent” modifies both “intercepts or receives” and “intentionally 9 records.” So here, even if Lerman didn’t consent to Swarovski recording the call, she 10 necessarily consented to the company receiving the call by virtue of her placing the call, 11 and thus Swarovski cannot be liable. 12 Swarovski’s construction, although creative, falls flat here. The most natural 13 reading of the statute suggests that “intercepts or receives and intentionally records” 14 refers to a single, combined act for which consent is needed. Consent to a defendant 15 receiving a call does not then automatically give that defendant a hall pass to record the 16 call. The reality, as Lerman correctly points out, is that a person cannot record a call 17 without access to that call—that is, without either intercepting or receiving the call. To 18 read the statute as requiring consent to both the reception of the call and the recording of 19 the call would be to twist the plain language of the statute past its breaking point. 20 But even assuming for the sake of argument that the language was ambiguous, 21 the Court couldn’t adopt Swarovski’s reading because it would frustrate the statute’s 22 purpose. See Bob Jones Univ. v. United States,

(1983) (“It is a well- 23 established canon of statutory construction that a court should go beyond the literal 24 language of a statute if reliance on that language would defeat the plain purpose of the 25 statute.”). California has a “strong and continuing interest in . . . prohibiting the recording 26 of telephone conversations without the knowledge or consent of all parties to the 27 conversation.” Kearney v. Salomon Smith Barney, Inc.,

(2006) 28 (emphasis in original). That interest in preventing surreptitious recordings extends fully 1 || to out-of-state companies like Swarovski. /d. at 126 (“If businesses could maintain a 2 || regular practice of secretly recording all telephone conversations with their California 3 || clients or customers in which the business employee is located outside of California, that 4 || practice would represent a significant inroad into the privacy interest that the statute was 5 || intended to protect.”). Under Swarovski’s reading, any customer-service call made to a 6 || business—or any call to anyone, for that matter—could be recorded by the recipient 7 || because the dialer necessarily consented to the other party “receiving” the call. Perhaps 8 || California would prefer that arrangement, but that’s a decision to be made by its 9 || legislature, not by this Court.? 10 In short, the Court finds Swarovski’s interpretation of section 632.7 creative but 11 || unpersuasive. As pled, Lerman’s complaint states a valid claim for violation of section 12 || 632.7. Swarovski’s motion to dismiss is DENIED. Dkt. 7. 13 IT IS SO ORDERED. 14 || Dated: September 10, 2019 (tm / A {4 WY 15 HONORABLE LARRY ALAN BURNS 16 Chief United States District Judge 17 18 19 20 21 22 23 24 Given that Swarovski’s proposed construction is just a variation on the decade-old 25 || argument that section 632.7 applies only to third-party interceptors, the Court is breaking no new ground here. As another district court has noted, “if the California legislature 26 || intended the statute not to . . . reach [call participants], it has been on notice of court opinions to the contrary for several years, and has done nothing, though there are 27 numerous ways to make that limitation plain.” Gamez v. Hilton Grand Vacations Inc., 2g ||

, at *3 (C.D. Cal. 2018).