Rojas v. HSBC Card Services

Filed 1/16/18; pub. order 2/9/18 (see end of opn.)

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

DALIA ROJAS, D071442

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2014-00023795-
CU-MC-NC)
HSBC CARD SERVICES INC. et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of San Diego County, Earl H.

Maas III, Judge. Reversed and remanded with directions.

Law Offices of Deborah L. Raymond and Deborah L. Raymond for Plaintiff and

Appellant.

Stroock & Stroock & Lavan, Julia B. Strickland and Shannon E. Dudic for

Defendants and Respondents.

In the underlying operative complaint, plaintiff Dalia Rojas pleaded two causes of

action against defendants HSBC Card Services Inc. and HSBC Technology & Services
(USA) Inc. (together HSBC) based on HSBC's alleged violations of Rojas's right to

privacy under the California Invasion of Privacy Act (Privacy Act), Penal Code

section 630 et seq.1 More specifically, Rojas alleged that HSBC intentionally recorded

certain of her confidential telephone conversations in violation of: section 632,

subdivision (a) (§ 632(a)), which prohibits one party to a telephone call from

intentionally recording a confidential communication without the knowledge or consent

of the other party; and section 632.7, subdivision (a) (§ 632.7(a)), which prohibits the

intentional recording of a communication using a cellular or cordless telephone.

Rojas appeals from a summary judgment in favor of HSBC. We agree with Rojas

that, because HSBC did not meet its initial burden under Code of Civil Procedure

section 437c, subdivision (p)(2), the trial court erred in granting HSBC's motion for

summary judgment. Accordingly, we will reverse the judgment and remand with

directions to enter an order denying HSBC's motion.

I.

FACTUAL AND PROCEDURAL BACKGROUND

" 'Because this case comes before us after the trial court granted a motion for

summary judgment, we take the facts from the record that was before the trial court when

it ruled on that motion.' " (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 716-

717.) We consider all the evidence in the moving and opposing papers, except evidence

to which objections were made and sustained, liberally construing and reasonably

1 Unless otherwise indicated, further undesignated statutory references are to the
Penal Code.

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deducing inferences from Rojas's evidence, resolving any doubts in the evidence in

Rojas's favor. (Id. at p. 717; Code Civ. Proc., § 437c, subd. (c).) For the most part, the

relevant facts are not in dispute.

From at least March 23, 2009, through May 1, 2012, HSBC employed a full-time

telephone call recording system.2 According to HSBC's counsel's argument (and thus,

we recognize, not evidence (Villacorta v. Cemex Cement, Inc. (2013) 221 Cal.App.4th

1425, 1433)), this system contained "equipment that was activated when an employee

placed a telephone call."3

During this time period, HSBC recorded 317 of Rojas's telephone conversations

from calls made to Rojas on an HSBC company telephone. Rojas's daughter, who was

employed by HSBC Card Services Inc., placed 316 of the calls, and Rojas's friend, who

was also an HSBC employee, placed one of the calls. In its "Electronic Monitoring and

Device Use" written policy in effect at the time, HSBC authorized its employees to use

company telephones for personal calls, expressly advising them in writing that their

"personal calls may be recorded." All 317 of the calls were Rojas's "private personal

telephone conversations"; and HSBC acknowledges that none involved HSBC business.

2 At that time, HSBC also used a part-time telephone recording system, but it is not
at issue in this appeal—except to the extent we can infer from its use that HSBC knew
how to record some, but not all, calls.

3 HSBC explains that, during the relevant time period, it used telephone recording
systems to record calls " 'to provide training and feedback [to employees], as well as
ensure compliance and quality service to our customers.' " Rojas does not question
HSBC's explanation for or stated business purpose of these systems; nor do we.

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 Based on the foregoing facts, Rojas sued HSBC for alleged violations of the

Privacy Act. Rojas's first amended complaint contains two causes of action against

HSBC.4 In the first, brought pursuant to section 632(a),5 Rojas alleges that HSBC

intentionally recorded her confidential telephone conversations without her knowledge or

consent. In the second, brought pursuant to section 632.7(a),6 Rojas alleges that HSBC

intentionally recorded certain of the telephone conversations in which she was using a

cordless or cellular telephone. In both causes of action, Rojas seeks statutory damages

and injunctive relief.7

HSBC brought a motion for summary judgment or, in the alternative, summary

adjudication of each cause of action. HSBC argued that both causes of action fail

4 The first amended complaint contains additional plaintiffs, names additional
defendants, and asserts additional causes of action. None of these parties or claims is at
issue in this appeal.

5 Section 632(a) precludes "[a] person" from "intentionally and without the consent
of all parties to a confidential communication[] us[ing] a[] . . . recording device to . . .
record the confidential communication . . . carried on . . . by means of a . . .
telephone . . . ."

6 Section 632.7(a) precludes "[a] person" from, "without the consent of all parties to
a communication, intercept[ing] or receiv[ing] and intentionally record[ing] . . . a
communication transmitted between . . . a cellular radio telephone and a landline
telephone . . . [or] a cordless telephone and a landline telephone . . . ."

7 Although sections 632(a) and 632.7(a) provide only for criminal penalties,
section 637.2 provides the following civil remedies: Subdivision (a) allows for a civil
penalty of $5,000 "per violation" for each violation of section 632(a) and 632.7(a), or
three times the actual amount of damages, if any (§ 637.2, subd. (a)); and subdivision (b)
allows for injunctive relief to "restrain any violation" of section 632(a) or
section 632.7(a) (§ 637.2, subd. (b)).

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because, as a matter of law, HSBC did not intentionally record any of Rojas's telephone

calls.8 According to HSBC, even though it acknowledged recording the 317 telephone

conversations, because HSBC did not intend to record each specific conversation at

issue, Rojas could not establish that HSBC had the requisite intent for purposes of

violating section 632(a) or section 632.7(a). (Citing People v. Superior Court (Smith)

(1969) 70 Cal.2d 123 (Smith).)

Rojas opposed the motion. With regard to the issue whether HSBC intentionally

recorded the telephone calls, Rojas argued both that HSBC had not met its initial burden,

but even if it did, that there were triable issues of material fact. HSBC replied to Rojas's

opposition.

Following oral argument, the trial court took the matter under submission,

ultimately granting HSBC's motion for summary judgment. The court entered judgment

in favor of HSBC, and Rojas timely appealed.

II.

STANDARDS OF APPELLATE REVIEW

Because the trial court's judgment is " 'presumed correct,' " Rojas (as the

appellant) has the burden of establishing reversible error. (Denham v. Superior Court

8 HSBC's motion raised other arguments as well. However, because we will be
concluding that HSBC did not meet its initial burden of establishing that it did not
"intentionally" record the calls for purposes of sections 632(a) and 632.7(a)—a necessary
element in each of Rojas's causes of action against HSBC (see fns. 5 and 6, ante)—the
resolution of those issues will not affect the disposition of the appeal. Thus, we neither
reach nor express an opinion on them.

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(1970) 2 Cal.3d 557, 564; Swigart v. Bruno (2017) 13 Cal.App.5th 529, 535 (Swigart)

[appeal from defense summary judgment].)

We review de novo an order granting summary judgment. (Aguilar v. Atlantic

Richfield Co. (2001) 25 Cal.4th 826, 860 (Aguilar).) As a practical matter, " ' "we assume

the role of a trial court and apply the same rules and standards which govern a trial court's

determination of a motion for summary judgment." ' " (Swigart, supra, 13 Cal.App.5th at

p. 536.) In doing so, we consider all of the admissible evidence and reasonable

inferences therefrom in a light most favorable to Rojas (as the opposing party). (Aguilar,

at p. 843.)

A defendant like HSBC is entitled to a summary judgment on the basis that the

"action has no merit" (Code Civ. Proc., § 437c, subd. (a)) only where the court is able to

determine from the evidence presented that "there is no triable issue as to any material

fact and that the moving party is entitled to a judgment as a matter of law" (id., subd. (c)).

A cause of action "has no merit" if one or more of the elements of the cause of action

cannot be established or an affirmative defense to the cause of action can be established.

(Id., subd. (o).)

Thus, the moving defendant has the ultimate burden of persuasion that one or

more elements of the cause of action at issue "cannot be established" or that "there is a

complete defense to the cause of action." (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar,

supra, 25 Cal.4th at pp. 849, 850, 853-854.) In attempting to achieve this goal, the

defendant has the initial burden of production to make a prima facie showing of the

nonexistence of any triable issue of material fact. (Aguilar, at p. 850.) If the defendant

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meets this burden, then the burden of production shifts to the plaintiff to establish the

existence of a triable issue of material fact. (Id. at pp. 850-851.)

Applying these concepts in our de novo review of the grant of a summary

judgment, therefore, we first must determine whether HSBC's initial showing establishes

an entitlement to judgment in HSBC's favor. (Aguilar, supra, 25 Cal.4th at p. 850;

Swigart, supra, 13 Cal.App.5th at p. 536.) If so, we then determine whether Rojas's

responsive showing establishes a triable issue of material fact. (Aguilar, at pp. 850-851;

Swigart, at p. 536.)

In interpreting the statutes at issue, as with all statutory interpretation, we attempt

"to ascertain and effectuate the law's intended purpose." (Weatherford v. City of San

Rafael (2017) 2 Cal.5th 1241, 1246.) We begin by giving the statutory language its

"ordinary meaning," construing it in context and keeping in mind "the overarching

structure of the statutory scheme." (Ibid.) Statutory interpretation is considered de novo.

(Id. at p. 1247.)

III.

DISCUSSION

To establish a violation of either section 632(a) or section 632.7(a), in addition to

other elements, both statutes require a showing that HSBC "intentionally" recorded the

confidential telephone calls at issue. (Italics added; see fns. 5 and 6, ante.) The issue on

appeal is whether, for purposes of determining a potential violation of section 632(a) or

section 632.7(a), as a matter of law, HSBC did not intentionally record the telephone

calls to which Rojas was a party.

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 HSBC attempted to meet its initial burden on summary judgment by establishing

that Rojas could not show that HSBC intentionally recorded the calls. At times HSBC

argues that it did not intend to record any specific call that, in fact, contained Rojas's

confidential communications, and at times HSBC argues that it did not intend to record

any specific call between Rojas and her daughter. Based on HSBC's actions and the

statutory language at issue, however, neither position is defensible. Consistent with her

position in the trial court, Rojas argues that, because HSBC was using, and knew it was

using, a full-time telephone call recording system that recorded all calls during the period

of time when HSBC recorded the 317 conversations at issue, HSBC intentionally

recorded the calls that contained Rojas's confidential communications—in violation of

both section 632(a) and section 632.7(a).

In enacting the Privacy Act in 1967, the Legislature made the following findings:

"[A]dvances in science and technology have led to the development of new
devices and techniques for the purpose of eavesdropping upon private
communications and that the invasion of privacy resulting from the
continual and increasing use of such devices and techniques has created a
serious threat to the free exercise of personal liberties and cannot be
tolerated in a free and civilized society." (§ 630; Stats. 1967, ch. 1509,
p. 3584, § 1.)

Even more helpful to our analysis, in 1967 the Legislature declared its original intent,

which was "to protect the right of privacy of the people of this state." (§ 630; Stats. 1967,

ch. 1509, p. 3584, § 1.) Thirty-five years later, the California Supreme Court described

the objective of the Privacy Act as follows: "The purpose of the act was to protect the

right of privacy by, among other things, requiring that all parties consent to a recording of

their conversation." (Flanagan v. Flanagan (2002) 27 Cal.4th 766, 769; compare id. at

8
p. 768 [prior to Privacy Act, "laws . . . permitted the recording of telephone conversations

with the consent of one party to the conversation"].)

In ruling on HSBC's motion, the trial court was presented with the following facts:

HSBC recorded (and maintained the recordings of) 317 confidential telephone calls in

which Rojas was a party; these recordings were made by a full-time telephone call

recording system that was always in operation, recording all calls made from the

designated HSBC company telephone; HSBC knew that its full-time recording system

was "recording every phone call" on any designated telephone; with the full-time system,

HSBC recorded the telephone calls "absolutely on purpose"; and HSBC authorized its

employees to use company telephones for personal calls, expressly advising them that

their "personal calls may be recorded."

Despite this evidence, none of which HSBC disputed, HSBC contends that it did

not "intentionally"—for purposes of sections 632(a) and 632.7(a)—record the 317 calls at

issue. According to HSBC, "the mere act of HSBC installing a recording device on

company phones and 'by chance' recording non-work related calls between [Rojas] and

[her d]aughter does not satisfy the 'intentional' requirement of [s]ections 632 and 632.7."

We disagree. HSBC relies on Smith, supra, 70 Cal.2d 123, and People v. Buchanan

(1972) 26 Cal.App.3d 274 (Buchanan)—neither of which supports HSBC's position.

In Smith, a criminal case, the issue was whether certain tape recorded

conversations were obtained in violation of former section 653j, the predecessor to

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section 632 under consideration here.9 (Smith, supra, 70 Cal.2d at p. 125.) Hoping to

expose the source of certain business losses caused by an internal "leak," the defendant

business owner hired a private investigator to install a voice-activated tape recorder that

would record all conversations, including telephone conversations, in the defendant's

offices. (Id. at p. 126.) After the investigator purchased and installed the tape recording

equipment as directed by the defendant, the investigator began testing it. (Ibid.) The

results of the testing included conversations that were recorded both automatically (i.e.,

noise-activated) and manually. (Ibid.) As events developed, defendant was charged with

a crime, the tapes were potential evidence, and it was the defendant who contended that

the tape recordings were made in violation of the applicable statute.10 (Smith, at pp. 126-

127.) As in the present case, the conversations were deemed to be confidential, and the

only issue on appeal was whether the investigator "intentionally" recorded them. (Id. at

pp. 127, 131.)

9 The language involving intent in former section 653j, subdivision (a), is the same
as in section 632(a). (Smith, supra, 70 Cal.2d at p. 131, fn. 7.) Former section 653j,
subdivision (a) precluded anyone " 'not a party to the communication' " from
" 'intentionally and without the consent of any party to a confidential communication' "
from " 'record[ing] a confidential communication' " " 'by means of any electronic
amplifying or recording device.' " (Smith, at p. 131, fn. 7, italics added; compare
§ 632(a) [fn. 5, ante].)

10 The defendant sought to exclude the recordings from evidence at his criminal trial.
(Smith, supra, 70 Cal.2d at p. 125.) Former section 653j, subdivision (d) provided that
any evidence obtained in violation of former subdivision (a) is inadmissible in court.
Current section 632, subdivision (d) contains a similar prohibition against the
admissibility of evidence obtained in violation of section 632(a).

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 The Supreme Court began its analysis by rejecting the defendant's statutory

interpretation that "intent to record" meant just putting the recording equipment in

operation. (Smith, supra, 70 Cal.2d at p. 132.) Rather, "the mere intent to activate a tape

recorder which subsequently 'by chance' records a confidential communication" is

insufficient to constitute an offense. (Id. at p. 133.) Emphasizing that the recordings

were made as part of the testing of the recording system, the court explained, "it is not the

purpose of the statute to punish a person who intends to make a recording but only a

person who intends to make a recording of a confidential communication." (Id. at

p. 133.)

In remanding the matter to the trial court to determine whether the investigator

intentionally recorded the confidential communication,11 our high court provided the

following guidance: "[T]he recording of a confidential conversation is intentional if the

person using the recording equipment does so with the purpose or desire of recording a

confidential conversation, or with the knowledge to a substantial certainty that his use of

the equipment will result in the recordation of a confidential conversation." (Smith,

supra, 70 Cal.2d at p. 134, italics added; accord, Marich v. MGM/UA

Telecommunications, Inc. (2003) 113 Cal.App.4th 415, 421, 428-430 (Marich).) The

court's concern was that the statute "provide[] effective protection against 'eavesdroppers'

without penalizing the innocent use of recording equipment." (Smith, at p. 134.) Almost

11 The remand was necessary, because generally determination of the issue whether
"a person possessed the requisite intent [under the Privacy Act] is 'a question of fact.' "
(Smith, supra, 70 Cal.2d at p. 134, italics added.)

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a decade later, the Supreme Court summarized its conclusion in Smith as follows:

Former section 653j, subdivision (a) "required an intent to record a confidential

communication, rather than simply an intent to turn on a recording apparatus which

happened to record a confidential communication." (Estate of Kramme (1978) 20 Cal.3d

567, 572, fn. 5.)

Under this standard, HSBC did not meet its initial burden of establishing, as a

matter of law, that it lacked the requisite intent to trigger a violation of section 632(a) or

section 632.7(a). Contrary to the defendant in Smith, HSBC did not merely record

confidential communications while testing its recording equipment; in the language of the

Smith opinion, the 317 calls at issue here were not recorded " 'by chance' " or

"innocent[ly]." (Smith, supra, 70 Cal.2d at pp. 133, 134.) HSBC knew that it was

recording—and, indeed, purposefully was recording—all of the calls, having previously

told its employees that they were authorized to use HSBC telephones for personal use and

that their personal calls might be recorded. On this record, HSBC did not establish, as a

matter of law, that for purposes of the Privacy Act HSBC did not intentionally record the

317 calls at issue. Stated differently, on this record, a reasonable trier of fact could find

that HSBC had the requisite intent under sections 632(a) and 632.7(a).

HSBC's other authority, Buchanan, supra, 26 Cal.App.3d 274, is equally

unavailing. There, a switchboard operator "inadvertently" overheard a telephone

conversation during the "moment[]" in time that she was required to stay on the line to

ensure a proper connection. (Id., at p. 281.) Under such circumstances, the appellate

court had little difficulty concluding that the operator did not intentionally eavesdrop on a

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telephone call in violation of the Privacy Act. (Id. at p. 288.) In contrast, there is nothing

inadvertent or momentary about HSBC recording the 317 telephone calls at issue here;

HSBC was purposefully recording all of the calls on the telephone lines from which the

317 communications at issue were recorded.

A considerable portion of HSBC's brief focuses on HSBC's disclosures to Rojas's

daughter regarding HSBC's practice of recording calls, Rojas's daughter's knowledge of

HSBC's company policy of recording calls, and Rojas's knowledge that the 317 calls

were being placed to her from HSBC telephones.12 Such a showing, even assuming it is

uncontested, does not conclusively establish a lack of intent for purposes of

section 632(a) or section 632.7(a).

For the foregoing reasons, HSBC did not meet its burden of establishing as a

matter of law that it did not have "knowledge to a substantial certainty that [its] use of the

equipment w[ould] result in the recordation of a confidential conversation" of an

employee and a third party like Rojas. (Smith, supra, 70 Cal.2d at p. 134, quoted in

Marich, supra, 113 Cal.App.4th at pp. 421, 428.) HSBC purposefully used a full-time

recording system to record all of the calls on certain telephone lines. Unlike the

12 For example, HSBC suggests that "the recordings were merely incidental and
caused by [Rojas's d]aughter's improper use of HSBC's company phone." HSBC does
not explain what it means by "improper use" of the phone, since its written policy
authorized its employees to use company telephones for personal calls, expressly
advising them that their "personal calls may be recorded." Moreover, HSBC does not
explain how Rojas's daughter's use of the telephone affects Rojas's claim, since Rojas
was not subject to HSBC's policies on employee telephone use. The uncontested facts on
this record are that, regardless of what Rojas's daughter may have known or consented to,
Rojas never knew about or consented to the recording of any telephone calls.

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authorities on which HSBC relies, the 317 confidential communications at issue here

were not, as a matter law, recorded either " 'by chance' " or "innocent[ly]" as in Smith, at

pages 133, 134 or "inadvertently" or "momentarily" as in Buchanan, supra, 26

Cal.App.3d at page 281. The trial court thus erred in ruling that HSBC met its initial

burden and, accordingly, in granting HSBC's summary judgment motion.

DISPOSITION

The judgment is reversed, and on remand the trial court is directed to enter an

order denying HSBC's motion for summary judgment or, in the alternative, summary

adjudication of Rojas's first amended complaint. Rojas is entitled to her costs on appeal.

(Cal. Rules of Court, rule 8.278(a)(2).)

IRION, J.

WE CONCUR:

HUFFMAN, Acting P. J.

DATO, J.

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Filed 2/9/18
CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

DALIA ROJAS, D071442

Plaintiff and Appellant,

v. (Super. Ct. No. 37-2014-00023795-
CU-MC-NC)
HSBC CARD SERVICES INC. et al.,
ORDER CERTIFYING REQUEST
Defendants and Respondents. FOR PUBLICATION

THE COURT:

The opinion in this case filed January 16, 2018 was not certified for publication.
It appearing the opinion meets the standards for publication specified in California Rules
of Court, rule 8.1105(c), the requests pursuant to California Rules of Court, rule
8.1120(a), for publication are GRANTED.

IT IS HEREBY CERTIFIED that the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c); and

ORDERED that the words "Not to Be Published in the Official Reports" appearing
on page one of said opinion be deleted and the opinion herein be published in the Official
Reports.

HUFFMAN, Acting P. J.

Copies to: All parties

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