Articles from May 2021

In Silva v. Medic Ambulance Services, Inc., 9th Cir., No. 20-16135, memorandum 5/4/21 (unpublished mem. available here), the plaintiff, an Emergency Medical Technician, alleged in her state law complaint that her employer, Medic Ambulance Service, Inc. (“Medic”) violated California Labor Code § 226.7 and the Industrial Welfare Commission Wage Order by requiring her to remain on call during rest periods. Mem. at 1. Medic removed the action to the district court on the grounds that the Labor Management Relations Act (“LMRA”) completely preempted at least one of plaintiff’s claims and therefore presented a federal question. Id. at 2.

The plaintiff moved to remand. The district court denied the motion, reasoning that her claims were preempted because they “substantially depend on analysis of” the provisions of a collective bargaining agreement (“CBA”) that governed the terms of the plaintiff’s employment with Medic.  The plaintiff then appealed. The Ninth Circuit reversed, finding that Silva’s state law claims were not preempted because they were not substantially dependent on the CBA (i.e. she could prove them without resort to the CBA), and that the district court therefore lacked removal jurisdiction. The Ninth Circuit remanded the matter back to the district court with instructions to remand the action back to the state court.

What makes this case interesting is that the Emergency Ambulance Employee Safety and Preparedness Act, California Labor Code §§ 880, et seq. (“the Act”), became effective on December 19, 2019, before judgment was entered, potentially mooting plaintiff’s claim under section 226.7. Section 887 provides, in pertinent part, “[n]otwithstanding any provision of law to the contrary: (a) In order to maximize protection of public health and safety, emergency ambulance employees shall remain reachable by a portable communications device throughout the entirety of each work shift.” According to the concurring opinion, as a result of the Act, the plaintiff no longer had a viable statutory claim, there was no longer any “case or controversy,” and therefore plaintiff lacked Article III standing to pursue the appeal. Rawlinson, J. conc. at 1-3.

The majority of the justices did not reach the issue of whether section 887(a) eliminated plaintiff’s claim, finding it moot in light of its determination that “the federal courts lack subject matter jurisdiction over Silva’s claims.” Mem. at 4, n.1. This is important in a procedural sense since the district court never properly had subject matter jurisdiction over plaintiff’s claims, since they were never actually preempted by the LMRA. Remand is the proper remedy when a federal court lacks removal jurisdiction, not dismissal under Article III. 

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC

When Amazon customers activate their Alexa devices and purchase products using the service, those customers enter into arbitration agreements with Amazon. There is no dispute in B.F. v. Amazon.com, Inc., 9th Cir., No. 20-35359, memorandum 4/23/21 (“B.F.”) (unpublished mem. available here), that those arbitration agreements are valid between Amazon and the customers who purchased the devices; these individuals agreed to the arbitration agreement when they set up their Alexa devices. However, their children did not.

The plaintiffs in B.F. are 23 minor children who are suing Amazon through their respective parents as legal guardians. They allege that the Alexa devices in their homes recorded their confidential communications without their consent, in violation of the laws of eight states. The children did not buy and activate the Amazon accounts and Alexa services, and, as a result, they are non-signatories to the arbitration agreement.

Non-signatories are generally not bound by a contract’s arbitration clause because “a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Mem. at 2. An exception is “equitable estoppel.” As the court explained, “when a person ‘knowingly exploits’ a contract containing an arbitration clause, the person can be compelled to arbitrate despite having never signed the agreement.” Id. at 3.

So, did the children “knowingly exploit” their parents’ contracts containing arbitration provisions simply by using Alexa? The answer is “No,” says the Ninth Circuit. A non-signatory does not “knowingly exploit” a contract when they bring claims that “do not arise from the contract.” Mem. at 3-4. Here, the children brought state statutory claims that do not depend on their parents’ contracts with Amazon. Put another way, Amazon would owe the children the same legal duties under the statutes that were allegedly violated, whether the contracts existed or not. Id. at 4.

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC

Smith v. LoanMe, Inc., No. S260391 (April 1, 2010) (“Smith”) (slip op. available here) presents a familiar scenario—a person answers his or her cellular or cordless phone and hears a “beep” during a call. The caller then records the call without first seeking the receiving party’s consent. In Smith, a unanimous California Supreme Court interpreted Penal Code section 632.7 to prohibit parties to a call made between a cellular or cordless phone and another telephone device from intentionally recording the call without the consent of all parties to the communication. Slip op. at 26. Smith reversed an appellate court that held that section 632.7 only applied to third parties who intentionally recorded calls.

In Smith, the defendant had extended a loan to the plaintiff’s wife. In connection with the loan, one of the defendant’s employees called the phone number provided by the wife. The plaintiff answered the call on a cordless phone. Three seconds later, the defendant caused a “beep” tone to sound on the call and recorded the call. Smith told the defendant’s representative that his wife was not home and the call ended. Slip op. at 2.

The Court of Appeal found this conduct to be legal, holding that section 632.7 was unambiguous and only prohibited intentional recording of phone calls on cellular and cordless phones by third party eavesdroppers. The appellate decision turned on statutory construction. “The statute . . . requires that the interception or receipt of the [covered] communication be without the parties’ consent. But the parties to a phone call always consent to the receipt of their communications by each other — that is what it means to be a party to the call.” Slip op. at 3. The appellate court concluded that “parties to a phone call are incapable of violating section 632.7, because they do not intercept or receive each other’s communications without all parties’ consent.” Id. at 3-4.

The California Supreme Court allowed that section 632.7 could conceivably support the Court of Appeal’s interpretation, but found that the statute was ambiguous. Considering the context, legislative history, and public policy of section 362.7, the court came to the opposite conclusion—that section 326.7 does apply to parties to a phone call. Id. at 10-22.

In particular, Smith brought the interpretation of section 632.7 in line with section 632 (applying to landlines) and vindicated the legislature’s intent that section 326.7 provides a greater degree of privacy and security to persons who use cellular or cordless telephones. Section 632 already provided parties as well as nonparties from nonconsensual recording of “confidential communications.” Slip op. at 7. Smith held that the same protection should be afforded users of cellular and cordless phones. In addition, the legislature intended that users of cellular and radio telephone technology have greater privacy protections because such systems inherently have less of a guarantee of privacy than landline systems. Id. at 20. Section 632.7 extends the protections of the Invasion of Privacy Act even to non-confidential communications. Id. at 9-10.

Smith is also important because the appellate court’s decision was the first published opinion by a California appellate court to have specifically addressed whether section 632.7 applies to the intentional recording of a communication by a party. The majority of federal district courts hold that section 632.7 applies to parties to a call, but a minority aligns with Court of Appeal’s conclusion that the section only prohibits intentional recording of calls by third parties. Slip op. at 8-9. Had the California Supreme Court not granted review, federal courts could have followed the minority view, chipping away at the protections intended by the Invasion of Privacy Act.

Unresolved by Smith is whether a “beep” tone at the beginning of a phone call gives a person sufficient notice that their conversation is being recorded. Slip op. at 26. Given that a “beep” tone at the beginning of a telephone call has become ubiquitous, that will be an important issue for another day.

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC