Mirkarimi v. Nevada Property 1 LLC et al

Filing 40

ORDER Denying as moot Defendant's 7 Motion to Dismiss for Failure to State a Claim; Denying 15 Motion to Dismiss; and Denying 15 Motion to strike class action allegations without prejudice. Defendant has twenty (20) days from the filing of this order to answer Plaintiff's First Amended Complaint. Signed by Judge Barry Ted Moskowitz on 7/15/2013. (rlu)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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SASAN MIRKARIMI, individually
and on behalf of all others similarly
situated,
v.

Case No. 12cv2160-BTM-DHB
ORDER DENYING
DEFENDANT’S MOTION TO
DISMISS AND DENYING
DEFENDANT’S MOTION TO
STRIKE CLASS
ALLEGATIONS

Plaintiff,

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NEVADA PROPERTY 1 LLC, a
Delaware limited liability company
d/b/a THE COSMOPOLITAN
HOTEL OF LAS VEGAS, and DOES
1-50, inclusive,
Defendants.

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On October 9, 2012, Defendant Nevada Property 1 LLC, d/b/a The
Cosmopolitan Hotel of Las Vegas (“The Cosmopolitan” or “Defendant”), filed a
motion to dismiss Plaintiff’s First Amended Complaint (“FAC”), or in the alternative,
to strike the class allegations. (ECF No. 15.) For the reasons below, Defendant’s
motions are hereby DENIED. Defendant also filed an earlier motion to dismiss on
September 7, 2012, prior to Plaintiff filing his FAC (ECF No. 7), which is DENIED
as moot.

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I. BACKGROUND
On September 25, 2012, Plaintiff Sasan Mirkarimi (“Plaintiff”) filed the FAC
against The Cosmopolitan and DOE defendants, on behalf of himself and all others
similarly situated. Plaintiff resides in San Diego County, while Defendant owns and
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operates The Cosmopolitan Hotel in Las Vegas. (FAC ¶¶ 2-3.) Originally filed in state

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court, Defendant removed the action to federal court on August 31, 2012, in

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accordance with the Class Action Fairness Act of 2005.

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Plaintiff alleges that during the twelve months preceding the complaint,

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Defendant recorded telephone communications between the Plaintiff and Defendant.

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(FAC ¶ 5.)

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conversations were being recorded. (FAC ¶ 6.) During the conversations at issue,

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Plaintiff alleges he disclosed personal information, including his credit card number,

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security code, and expiration date, as well as his billing address. (FAC ¶ 5.)

Plaintiff alleges that Defendant did not notify Plaintiff that the

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Plaintiff’s FAC asserts that Defendant’s actions violated California Penal Code

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§ 630 et seq., also known as the California Invasion of Privacy Act (“CIPA”). Plaintiff

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seeks statutory damages, injunctive relief, and attorneys’ fees.

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II. LEGAL STANDARD

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A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be

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granted only where a plaintiff's complaint lacks a “cognizable legal theory” or

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sufficient facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dept.,

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901 F.2d 696, 699 (9th Cir. 1988). When reviewing a motion to dismiss, the

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allegations of material fact in plaintiff’s complaint are taken as true and construed in

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the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. Symington, 51

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F.3d 1480, 1484 (9th Cir. 1995).

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Although detailed factual allegations are not required, factual allegations “must

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be enough to raise a right to relief above the speculative level.” Bell Atlantic v.

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Twombly, 550 U.S. 544, 555 (2007). “A plaintiff’s obligation to prove the ‘grounds’

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of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a

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formulaic recitation of the elements of a cause of action will not do.” Id. “[W]here the

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well-pleaded facts do not permit the court to infer more than the mere possibility of

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misconduct, the complaint has alleged–but it has not show[n]–that the pleader is
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entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation

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marks omitted).

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III. DISCUSSION

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Defendant moves to dismiss Plaintiff’s FAC on the grounds that Plaintiff did not

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have an “objectively reasonable expectation” that his conversations would not be

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recorded. In the alternative, Defendant moves to strike the class allegations on the

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grounds that: (1) the statutory damages the class members seek require individualized

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determinations of fact which defeat the possibility of class certification; and (2) the

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class lacks superiority.

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A. Motion to Dismiss

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Under CIPA, a party may be held liable “who, intentionally and without the

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consent of all parties to a confidential communication, by means of any electronic

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amplifying or recording device, eavesdrops upon or records the confidential

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communication . . . .” Cal. Penal Code § 632(a). A “confidential communication”

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includes “any communication carried on in circumstances as may reasonably indicate

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that any party to the communication desires it to be confined to the parties thereto . .

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. .” Cal. Penal Code § 632(c). CIPA excludes, however, “any other circumstance in

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which the parties to the communication may reasonably expect that the communication

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may be overheard or recorded.” Id.

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The California Supreme Court has held that “a conversation is confidential under

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section 632 if a party to that conversation has an objectively reasonable expectation

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that the conversation is not being overheard or recorded.” Flanagan v. Flanagan, 27

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Cal. 4th 766, 777 (2002) (emphasis added). Furthermore, confidentiality requires

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“nothing more than the existence of a reasonable expectation by one of the parties that

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no one is listening in or overhearing the conversation.” Flanagan, 27 Cal. 4th at 772-73

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(citing Frio v. Superior Court, 2003 Cal. App. 3d 1480, 1488 (1988)) (internal
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quotations omitted).

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Defendant argues that Plaintiff fails to allege an objectively reasonable

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expectation that his conversations with Defendant were “confidential communications”

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that would not be overheard or recorded. Because billing information would have to

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be shared with other employees, Defendant contends that the nature of the conversation

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was such that the Plaintiff could not have reasonably expected it to be confidential.

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In Flanagan, the California Supreme Court settled an appellate court split over

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whether a party’s understanding of “confidential communication” required either an

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additional belief that the information would not be divulged at a later time to third

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parties, or merely the expectation that the conversation was not being simultaneously

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disseminated to an unannounced second observer. See O’Laskey v. Sortino, 224 Cal.

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App. 3d 241 (1990); Frio, 2003 Cal. App. 3d 1480. The court noted the Legislature’s

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concern with protecting all conversations from eavesdropping, not just those where a

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party wanted to keep the content secret. Flanagan, 27 Cal. 4th at 776. Therefore, the

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court adopted the Frio interpretation of “confidential communication,” holding that

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CIPA prohibited the nonconsensual recording of conversations regardless of the

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content of the conversation or any expectation that the conversation may later be

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conveyed to a third party. Id. at 775-76.1

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Defendant’s argument regarding the nature of the conversation being one which

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necessitates sharing to third parties fails to align with the California Supreme Court’s

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interpretation of the law. As the Flanagan court stated, confidentiality under CIPA

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extends to a conversation regardless of whether information will be shared to a third

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party. Thus, regardless of the fact that credit card information needs to be shared

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among employees, so long as Plaintiff can demonstrate an objectively reasonable

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expectation that his conversation was not being overheard, he has a proper claim under

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The California Supreme Court restated its interpretation of CIPA in Kearney v. Salomon
Smith Barney, Inc., 39 Cal. 4th 95, 125 (2006), holding, “Thus, we believe that California must be
viewed as having a strong and continuing interest in the full and vigorous application of the provisions
of section 632 prohibiting the recording of telephone conversations without the knowledge or consent
of all parties to the conversation.”
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CIPA.

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Defendant next argues that the legislative history and prior court decisions

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exempt the type of conversation at issue from CIPA because it was the type of service-

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observing practice the Legislature deemed to be in the public’s best interest. See Sajfr

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v. BBG Commc’ns, Inc., 2012 WL 398991, at *6 (S.D. Cal. Jan. 10, 2012) (noting that

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service-observing is permissible as an exemption from § 632 of CIPA). However, the

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statutory language seems to specify that only “public utilit[ies] engaged in the business

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of providing communications services and facilities” are exempted from CIPA. Cal.

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Penal Code § 632(e).2 Whether the “service observing” exception applies involves a

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factual determination that Defendant was in fact engaged in such conduct in this case.

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If the recording was “service observing,” then the Court will have to determine whether

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such a recording is exempted from section 632. See, e.g., Knight v. CashCall Inc., 200

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Cal. App. 4th 1377, 1395 (2011) (noting that the “service observing” exception did not

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apply to a finance company). Resolution of this issue on the bare record before the

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Court would be premature.

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Furthermore, the Ninth Circuit recently noted that, if adequately pled, a caller

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asked to disclose private or potentially private information could have an objectively

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reasonable expectation that the conversation is confidential. Faulkner v. ADT Sec.

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Servs., Inc., 706 F.3d 1017, 1020 n.2 (9th Cir. 2013). Although the court in Faulkner

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ultimately affirmed the district court’s order granting defendant’s motion to dismiss,

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the plaintiff in that case never alleged disclosure of private information. Rather, the

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Ninth Circuit determined that the plaintiff’s claim lacked the necessary details

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regarding the nature of the parties and the circumstances of the call. Id. The Plaintiff

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in this case, however, alleges that he shared his credit card number, expiration date,

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Cal. Penal Code § 632(e) reads in full: “This section does not apply (1) to any public utility
engaged in the business of providing communications services and facilities, or to the officers,
employees, or agents thereof, where the acts otherwise prohibited by this section are for the purpose
of construction, maintenance, conduct or operation of the services and facilities of the public utility,
or (2) to the use of any instrument, equipment, facility, or service furnished and used pursuant to the
tariffs of a public utility, or (3) to any telephonic communication system used for communication
exclusively within a state, county, city and county, or city correctional facility.”
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billing address, and security code. Certainly this qualifies as potential private

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information.

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Finally, “[w]hether the Plaintiff has an objectively reasonable expectation is

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generally a question of fact.” Knight, 200 Cal. App. 4th at 1396. See also Vera v.

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O’Keefe, No. 10CV1422, 2012 WL 3263930, at *4 (S.D. Cal. Aug. 9, 2012) (noting

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that a plaintiff’s reasonable expectation of privacy is a question of fact for the jury to

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decide). Given that Plaintiff alleges disclosure of private information and that a

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determination regarding Plaintiff’s reasonable expectation is arguably a question of

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fact, the Court DENIES Defendant’s motion to dismiss for failure to state a claim.

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B. Motion to Strike Class

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Alternatively, Defendant moves to strike the class allegations from the FAC.

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Dismissal of a class at the pleading stage is rare because “the class determination

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generally involves considerations that are enmeshed in the factual and legal issues

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comprising the plaintiff’s cause of action.” Gen. Tel. Co. Of the Sw. v. Falcon, 457

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U.S. 147, 160 (1982) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978))

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(internal quotations omitted). Whether or not discovery is warranted for a class to

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proceed to class certification is within the sound discretion of the court. Kamm v.

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California City Dev. Co., 509 F.2d 205, 209 (9th Cir. 1975).

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Defendant argues that, in order to determine whether each class member had a

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reasonable expectation of confidentiality, each caller’s conversation must be analyzed

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individually. However, the Court declines to adjudicate class certification issues at this

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stage. Rather, this matter is proper after appropriate time for briefing and discovery has

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occurred. See generally Brazil v. Dell Inc., 2008 WL 4912050, at *4 (N.D. Cal. 2008)

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(refusing to adjudicate on the issue of class certification before it had been briefed);

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7AA Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure Civil §

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1785.3 (3d ed. 2013) (noting that the court’s determination on class certification should

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rely on more information than simply the complaint). Therefore, the Court DENIES
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Defendant’s motion to strike Plaintiff’s class allegations.

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III. CONCLUSION

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For the reasons discussed above, Defendant’s motion to dismiss is DENIED.

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Defendant’s motion to strike class action allegations is DENIED without prejudice.

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As stated previously, Defendant’s motion to dismiss filed September 7, 2012, is

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DENIED as moot. Defendant has twenty (20) days from the filing of this order to

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answer Plaintiff’s FAC.

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IT IS SO ORDERED.
DATED: July 15, 2013

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BARRY TED MOSKOWITZ, Chief Judge
United States District Court

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