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Calif. Privacy Law Demands Class Discovery Reassessment

Law360 (December 9, 2020, 11:33 AM EST) —

Steven Katz
Steven Katz

It is well established in California that a plaintiff in a consumer or employment class action may discover the names and addresses of the putative class.[1] Although putative class members have a constitutional right to privacy,[2] any interest in preventing disclosure to third parties would be satisfied by advance notice[3] and an opportunity to object — a so-called opt-out notice. Express consent is not required.[4] 

The recent enactment of Proposition 24, or the California Privacy Rights Act — strengthening the rights of consumers and employees to affirmatively control the use of their private information — requires courts to permit consumers and employees greater say in whether class action plaintiffs, and their lawyers, can obtain their private information.

The seminal decisions permitting class contact discovery after opt-out notice — Pioneer Electronics (USA) Inc. v. Superior Court[5] for consumer class actions, and Belaire-West Landscaping Inc. v. Superior Court[6] for employee class actions — were both decided by the California Supreme Court and the California Court of Appeal’s Second Appellate District, respectively, in 2007. A dozen years later, the state Legislature enacted the California Consumer Privacy Act to strengthen privacy protections for consumers and employees.

The CCPA requires businesses to “inform consumers as to the categories of personal information to be collected and the purposes for which the categories of personal information shall be used,” and prevents them from “us[ing] personal information collected for additional purposes without providing the consumer with notice consistent with this section.”[7] 

“Consumer” is a term of art under the law — it “means a natural person who is a California resident,” including an employee.[8] “Personal information” specifically includes employment-related information[9] such as name, postal address, email address or other similar identifiers.[10]

Proposition 24, enacted in November, amended and strengthened the CCPA. Section 3(A)(8) of the proposition states that, besides consumers the “privacy interests of employees and independent contractors should also be protected.”

It added a new provision preventing employers from retaliating against employees who exercise their rights to restrict the use of their private information,[11] and recodified the provision that exempts employers from liability under the CCPA only if employee information “is collected and used by the business solely within the context of the natural person’s role or former role as a job applicant [or] an employee.”[12]

Under the CCPA and Proposition 24, a consumer or employee is entitled to notice about the uses to which private information shall be put before handing over that information. A business cannot collect information for other purposes, and then after the fact give employees or consumers opt-out notice about a new use of the information,[13] because providing information for a use disclosed when provided is the equivalent of opt-in consent. In light of Proposition 24 and the CCPA, only opt-in notice suffices.

In 2007, when Pioneer Electronics and Belaire-West were decided, there were no statutory protections limiting disclosure of employee information — just the loose calculus of common law privacy interests articulated by the California Supreme Court in 1994 in Hill v. National Collegiate Athletic Association[14] and its progeny.

As the California Supreme Court acknowledged in Williams v. Superior Court in 2017, Pioneer Electronics and Belaire-West both found that, regarding contact information sought by a putative class action plaintiff seeking to redress common claims, “the second Hill requirement, a reasonable expectation of privacy in the particular circumstances, is not met.”[15] 

Pioneer Electronics concluded that disclosing contact information of consumers “involved no serious invasion of privacy” because it “involves no revelation of personal or business secrets, intimate activities, or similar private information, and threatens no undue intrusion into one’s personal life, such as mass-marketing efforts or unsolicited sales pitches.”[16] Belaire-West adopted the same rationale.[17]

Pioneer Electronics’ and Belaire-West’s analyses in 2007 about the “reasonable expectation of privacy in the particular circumstances” must be reassessed, given Proposition 24’s popular ratification and strengthening of the CCPA more than a decade after the two cases.

First, the CCPA, as amended by Proposition 24, represents the Legislature’s own reassessment of the basic privacy considerations involved. Shortly after passage of the original act, California Supreme Court Justice Mariano-Florentino Cuéllar sounded a note of caution about future case law developments that would limit employee privacy following enactment of the CCPA.[18]

Second, passage of Proposition 24 shows that the people have adopted — and strengthened — the Legislature’s reassessment. It was passed by a large 12% margin in an election that saw the largest voter turnout in the state in half a century. 

A sizeable majority of California residents expect that any private information — including contact information — will not be used or disclosed for any purpose not disclosed when they first volunteered that information. It cannot be reasonably assumed that consumers or employees expect less protection for private information when a private, self-deputized litigant demands it be turned over.

Steven B. Katz is a partner at Constangy Brooks Smith & Prophete LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] See, e.g., Pioneer Electronics (USA), Inc. v. Superior Court , 40 Cal.4th 360 (2007) (consumer class action); Belaire-West Landscaping, Inc. v. Superior Court, 149 Cal.App.4th 554 (2007) (employment class action).

[2] Hill v. National Collegiate Athletic Ass’n , 7 Cal.4th 1 (1994).

[3] Federal courts in the state take the view that state rulings requiring advance notice are not binding on them, and sometimes decloine to order any form of advance notice, relying instead on protective orders that limit the use of contact information. See, e.g., Pizana v. Sanmedica International, LLC , No. 118CV00644DADSKO, 2020 WL 6075846, at *5 (E.D. Cal., Oct. 15, 2020).

[4] Pioneer Electronics, 40 Cal.4th at 373; Belaire-West, 149 Cal.App.4th at 560-62.

[5] 40 Cal.4th 360 (2007).

[6] 149 Cal.App.4th 554 (2007).

[7] Cal. Civ. Code § 1798.100(b).

[8] Cal. Civ. Code § 1798.140(g). 

[9] Cal. Civ. Code § 1798.140[o][1][I].

[10] Cal. Civ. Code § 1798.140(o)(1)(A).

[11] Cal. Civ. Code § 1798.125(a)(1)(E) (“A business shall not discriminate . . . by . . . [r]etaliating against an employee, applicant for employment, or independent contractor . . . for exercising their rights under this title.”).

[12] Cal. Civ. Code § 1798.145(m)(1)(A) (formerly codified at § 1798.145[h][1][A]).

[13] Although a consumer or employee may withdraw consent for further use of information freely given after prior disclosure by exercising a right to “opt-out” of further use. See Cal. Civ. Code § 1798.120.

[14] 7 Cal.4th 1 (1994).

[15] Williams v. Superior Court , 3 Cal.5th 531, 554 (2017).

[16] Pioneer Electronics, 40 Cal.4th at 373.

[17] Belaire-West, 149 Cal.App.4th at 561-62 (“[T]he information, while personal, was not particularly sensitive, as it was contact information, not medical or financial details.”).

[18] See Troester v. Starbucks Corp. , 5 Cal.5th 829, 852 (2018) (Cuellar, J., concurring).

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