California Court Finds for Consumers in Unlawful Collection Case Against Cashcall
California consumers brought a class action lawsuit claims against CashCall, Inc., consumer finance company, alleging CashCall secretly monitored their telephone conversations with CashCall employees without the consumer's knowledge or consent. The consumers alleged violations of California Penal Codes 631 and 632 of the Invasion of Privacy Act. In essence, Cashcall was monitoring telephone calls during their attempts to collect debts.
The California Appellate Court said a lower court judge was wrong in denying two of consumer's claims against Cashcall. So, Cashcall will now be forced to litigate further and defend against those claims.
The Court's Holding
First, the California Appellate Court said that:
"In Flanagan v. Flanagan, (2002) 27 Cal.4th 766 [117 Cal. Rptr. 2d 574, 41 P.3d 575], our Supreme Court held [Penal Code] section 632 protects an individual's right to know who is listening to a telephone conversation. Consistent with this holding, we conclude the statute applies even if the unannounced listener is employed by the same corporate entity as the known participant in the conversation."
Simply, put, the Appellate Court held that for purposes of determining who must give consent, the corporation is not a single unit and all participants to the telephone conversation must give consent before the conversation may be monitored.
Second, the California Appellate Court said:
"triable factual issues exist on whether the alleged telephone conversations were "confidential communication[s]" within the meaning of [Penal Code] section 632 and whether plaintiffs had objectively reasonable expectations that their conversations would not be secretly monitored."
Simply put, that means a jury will get to decide if Cashcall violated California law by secretly monitoring "confidential communications."
Third, the California Appellate Court said:
"we cannot accept CashCall's argument that it provided adequate notice as a matter of law. First, even assuming CashCall's argument is correct that each plaintiff heard [*39] the warning message "at the outset" of his or her "borrower/lender relationship" with CashCall, this fact does not establish as a matter of law plaintiffs were adequately warned that subsequent calls would be monitored...The evidence further raises factual issues as to whether all inbound callers received the message."
Simply put, that means a jury will get to decide if Cashcall provided adequate notice that the telephone calls may be monitored.
The California Appellate Court rejected Cashcall's arguments based on an unpublished Ninth Circuit decision in another Fair Debt Collection Practices Act case. Thomasson v. G.C. Services, 321 Fed. Appx. 557 (9th Cir. 2008).
Background
CashCall is a finance company that provides unsecured loans to consumers. Plaintiffs' complaint alleged that each of the plaintiffs borrowed money from CashCall, and, in making the loans and collecting delinquent payments on those loans, CashCall "secretly" monitored and eavesdropped on telephone conversations between CashCall employees and plaintiffs, including conversations pertaining to "sensitive financial information." Plaintiffs alleged CashCall conducted the "illegal monitoring ... for the purpose of assisting [CashCall] in its collection efforts" without the "knowledge or consent" of plaintiffs or the class members. Plaintiffs further alleged CashCall's "corporate representative has admitted under oath that as a regular part of its ongoing daily business practices, [CashCall] monitors, eavesdrops on, or otherwise makes unauthorized connections to a number of collection calls with alleged debtors."
During the relevant times, consumers applied for loans from CashCall by applying online or by calling one of CashCall's advertised toll-free numbers and speaking to a CashCall representative. All borrowers, including online applicants, must call CashCall and speak to a CashCall representative to complete their loan application. All members of the class are or were CashCall borrowers.
In essence, the consumers allege Cashcall supervisors monitored these telephone calls without informing consumers the calls may be monitored. If Cashcall is found to have violated the law, the lawsuit seeks to have the company pay California consumers $5,000 for each violation. See California Penal Code ยง 637.2.
