California Supreme Court Rules on Fishing for Plaintiffs in Class Actions

OK, this could be pretty important.  The Cal Supremes this morning issued the ruling in Pioneer Electronics v. Superior Court.  I previously blogged on this here.  Kimberly A. Kralowec, whose UCLPractioner.com, presents analysis from the plaintiff perspective, posted here and here shortly after the arguments.  Today's ruling is not good for the defense.

More after the jump.

The background is this: California’s Constitution, Article I, section 1, creates a fundamental right to privacy.  In consumer litigation, particularly that involving the Consumer Legal Remedies Act, class actions and the Unfair Competition Law, there is always a tension between plaintiffs' discovery demands on the one hand and privacy rights on the other: plaintiffs will seek as much information as they can get on other consumers’ like (or similar) transactions, while defendants will resist this discovery, in part by asserting the privacy rights of the other consumers.

Here’s what happened in Pioneer Electronics: 

Then named plaintiff purchased a DVD player which he felt was defective, and filed a consumer class action against Pioneer.  In discovery, Pioneer provided information about complaints it had received concerning this player.  The plaintiff sought identifying information about the consumers who had complained.  Pioneer resisted on the basis of consumers’ privacy rights.

The trial court ordered Pioneer to inform the complaining consumers, by letter, about the lawsuit, the plaintiff’s request for identifying information in order to contact them, their right to object to release of that information, and that failure to respond would be treated as consent to release of the information.  The Court of Appeal cited cases indicating that the right to privacy included “the right to be left alone,” and held that the letter would have to go to consumers from a neutral, and that the consumers could not be contacted unless they affirmatively consented to the contact.

Now, in a unanimous decision, the Supreme Court has reversed the Court of Appeal, holding that the trial court did not abuse its discretion, and the Court of Appeal's approach

"was too strict and failed to consider the nature of the privacy invasion involved here and apply a balancing test that weighs the various competing interests, as outlined in our case law."

The court held that the consumers  had a reduced expectation of privacy because they had already disclosed their personal information to Pioneer in their complaints.  It held that disclosure of names and addresses was not a "very serious" invasion of priacy, as the information was not "particularly sensitive," as compared to financial or medical information. 

So far, not too surprising, and fairly fact-specific.  But then, in turning to the balancing test required by Valley Bank of Nevada v. Superior Court  (1975) 15 Cal.3d 652 and Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, the court (a)  held that no balancing was required, because Pioneer had "failed to demonstrate a reasonable expectation of privacy or would suffer a serious invasion of privacy," and (b)  went on to conduct the supposedly unnecessary balancing anyway.

And upon balancing the interests, the Court looked at the importance of the discovery of the identity and location of persons having discoverable information;  the unfairness of Pioneer alone having the contact information;  and the importance of consumer rights litigation.

Thus, said the Court, the consumers who had complained had "no reasonable expectation of any greater degree of privacy" than that their privacy would be protected by the type of opt-out mailing the trial court ordered.  And the trial court's order posed "no serious invasion of their privacy interests."

More analysis of this coming soon.  I think there are occasions, and consumer information, that can be distinguished.  But my goodness, you can't call this a defense win.

Comments

[Greg Taylor]

What's perhaps most discouraging is that the opinion explicitly recognizes that it's about fishing for plaintiffs. The last paragraph before the conclusion:

"Similarly, amicus curiae Consumer Attorneys of California notes that the Court of Appeal’s ruling, by preventing or substantially delaying identification of witnesses and potential class members, could make it more difficult to obtain class certification, thereby reducing the effectiveness of class actions as a means to provide relief in consumer protection cases."

In other words, it's hard to have a lawsuit if you don't have an upset customer that knows that he wants to sue!

[michael walsh]

I disagree with Greg Taylor's view 100%. This case was not about fishing for plaintiffs. It was about seeking facts and evidence from class members to whom the defense already had access. You can't certify a class without witnesses and evidence, and it is the rare case indeed where that burden can be met solely with one plaintiff's declaration and the admissions made by the defense. We, as plaintiffs lawyers, are constantly battling for access to witnesses. Witnesses and evidence are crucial. This decision does nothing more than level the playing field for plaintiffs and defendants.

I'd be willing to bet a fancy lunch that Greg has used the privacy excuse more than once to try to withhold names and addresses of putative class members that his firm, his investigator or his client has already interviewed about the case. If he hasn't, he might be the only defense lawyer who hasn't used that dirty trick.

[Greg Taylor]

Michael, thanks for your response. Without admitting to any "dirty tricks," I will agree to take you to a fancy lunch just because I enjoy your blog, find it useful, and would like to pay you back. And I'd like to meet you.

Don't my clients have an obligation to assert third-party privacy objections? Whether or not plaintiffs' lawyers find it works to their detriment in certain circumstances, the customers and employees of California businesses have an expectation that their state constitutional privacy rights are protected. Voluntarily giving out private information could subject my clients to liability from their customers and employees. Even if I think that I'd like to give you the information, I'd rather that my client be compelled to do so by a court so they have a defense to a privacy violation claim.

[michael walsh]

Good points, Greg. However, I would expect that, under those circumstances, when the privacy rights of those people are being safeguarded by the defense, those same defense counsel are not themselves violating the privacy of the class members by seeking information and statements from them. If that is happening, the underlying validity of that argument is destroyed.

[Greg Taylor]

I don't think that's right, Michael. The consumers voluntarily disclosed their private information when they bought the product. Businesses collect private information from clients, consumers, and employees to use it (in a manner consistent with privacy rights and expectations, of course), not to just sit on it forever.

Here's a true-life example, and you tell me if this is a violation of my privacy rights: I bought a sport coat and three pair of socks from Brooks Brothers in South Coast Plaza. A week after that, I get a phone call from Brooks Brothers at the mall telling me that my jacket has been tailored and is ready to be picked up. I go pick up the jacket and at that time return the socks I bought the previous week because they're the wrong color. A week after that, a Brooks Brothers customer service rep from their corporate office calls me to ask if see what the problem was with the socks. I say that there was nothing wrong with the socks, other than that they were the wrong color, and why do you ask? "We just want to be sure that you were satisfied with the Brooks Brothers product. You are free to return it for any reason, of course, but if you found the socks substandard for some reason we like to know so that we can address it." "Quite satisfied, thank you." "Glad to hear it. Bye bye."

Did they violate my privacy by calling me to ask about the socks? When I gave them my mobile phone number I expected that they would use it to notify me when my jacket was ready, not to call me about suggestions on improving their socks.

I think that they did not violate my privacy rights. I voluntarily gave them my private information when I bought their stuff, and them calling me about my other transaction was not improper. If I'm wrong, tell me and you can represent me and the class (though I suppose that the fact that I've gone on record in this blog comment that I think they were within their rights might make me a less-than-ideal representative).

Now a hypothetical: Suppose that that someone sues Brooks Brothers alleging that their socks are weak-elastic "quitters." Plaintiff's counsel demands the customer service logs relating to socks, complete with the names and numbers of anyone that called customer service or that customer service called to discuss socks. Don't I have an expectation that Brooks Brothers won't give out my name and number? And just because I'd prefer that they not give my number to plaintiff's counsel, or anyone else, doesn't mean that they were wrong to call me about the socks.

[michael walsh]

Ah, but (1) the defense lawyer who make those arguments against my clients in these class actions aren't having the business call to see if the class member is satisfied. They are asking these people to sit down and give statements that will be used against them in court. It would be more akin to your client giving you the information and you sending your investigator to their door to ask "you haven't really had problems with your socks, have you?" and having the class member give them a quick, "no, go away." But moreover, (2) those people are percipient witnesses. Percipient witnesses do not have privacy rights to their identity being disclosed in litigation. It's like having someone witness an accident in front of their house and telling one side what they saw, and then having an expectation of privacy to prevent the other side from knowing who they are and what they said.

[Greg Taylor]

But even if you think such a contact is improper as a litigation tactic, it is not a privacy violation, which is what your last comment said.

[michael walsh]

That's true; it's not a privacy argument anymore, but only because of Pioneer Electronics. The entire privacy argument was premised upon the so-called "right to be left alone." That means that if we were to protect these people by securing their right not to be bothered by attorneys (or their agents) from one side, they likewise should not have been bothered by attorneys (or their agents) from the other side. It was never a valid argument to claim that the defense was protecting the right to be left alone while, concurrently, the defense was not leaving these witnesses alone.

[Greg Taylor]

I think the argument would be better characterized as a "right to be left alone by people that I haven't agreed can contact me." Kind of like anti-spam and telemarketing laws--when your insurance company calls you to sell you more insurance, or for any other reason, it's not prohibited telemarketing because you gave them your information when you bought the first policy from from them (at least I think that's the case--I've never actually looked at any of these statutes). As much as the plaintiffs' lawyer believes he's on the consumer's side, from a privacy perspective, the plaintiffs' lawyer is still a stranger to the consumer in a way that the defendant is not, and that's why the privacy argument was, at the very least, non-frivolous.

But Pioneer Electronics appears to stand for the proposition that though there is a privacy invasion, it is not serious, and is outweighed by other factors.