BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  May 5, 2015
          Counsel:               Gabriel Caswell


                         ASSEMBLY COMMITTEE ON PUBLIC SAFETY


                                  Bill Quirk, Chair





          AB  
                         925 (Low) - As Amended  April 13, 2015




          SUMMARY:  Exempts non-confidential communications between a  
          person or business and a current or former customer regarding  
          their business relationship from any illegal non-consensual  
          recording prohibitions.   Specifically, this bill:  Provides an  
          exception to the prohibition of calling a mobile phone and  
          intentionally recording a telephonic communication without the  
          consent of both parties for all non-confidential communications  
          between a person or business and a current or former customer of  
          the person or business, or a person reasonably believed to be a  
          current or former customer, regarding their business  
          relationship, including, but not limited to, communications  
          regarding billing, provisioning, maintaining, or operating the  
          product or service provided by the person or business.

          EXISTING LAW:  

          1)States that the Legislature hereby declares that advances 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  








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            a free and civilized society.  The Legislature by this chapter  
            intends to protect the right of privacy of the people of this  
            state.  The Legislature recognizes that law enforcement  
            agencies have a legitimate need to employ modern listening  
            devices and techniques in the investigation of criminal  
            conduct and the apprehension of lawbreakers. Therefore, it is  
            not the intent of the Legislature to place greater restraints  
            on the use of listening devices and techniques by law  
            enforcement agencies than existed prior to the effective date  
            of this chapter.  (Pen. Code,  630.)

          2)Provides that every person who, without the consent of all  
            parties to a communication, intercepts or receives and  
            intentionally records, or assists in the interception or  
            reception and intentional recordation of, a communication  
            transmitted between two cellular radio telephones, a cellular  
            radio telephone and a landline telephone, two cordless  
            telephones, a cordless telephone and a landline telephone, or  
            a cordless telephone and a cellular radio telephone, shall be  
            punished by a fine not exceeding two thousand five hundred  
            dollars ($2,500), or by imprisonment in a county jail not  
            exceeding one year, or in the state prison, or by both that  
            fine and imprisonment. If the person has been convicted  
            previously of a violation of specified unauthorized recording  
            sections, the person shall be punished by a fine not exceeding  
            ten thousand dollars ($10,000), by imprisonment in a county  
            jail not exceeding one year, or in the state prison, or by  
            both that fine and imprisonment.  (Pen. Code,  632.7.)   
            Exempts the following from these provisions:  

             a)   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 are for the purpose of construction,  
               maintenance, conduct, or operation of the services and  
               facilities of the public utility.

             b)   The use of any instrument, equipment, facility, or  
               service furnished and used pursuant to the tariffs of the  
               public utility.

             c)   Any telephonic communication system used for  








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               communication exclusively within a state, county, city and  
               county, or city correctional facility.

          3)Provides that every person who, intentionally and without the  
            consent of all parties to a confidential communication, by  
            means of any electronic amplifying or recording device,  
            eavesdrops upon or records the confidential communication,  
            whether the communication is carried on among the parties in  
            the presence of one another or by means of a telegraph,  
            telephone, or other device, except a radio, shall be punished  
            by a fine not exceeding two thousand five hundred dollars  
            ($2,500), or imprisonment in the county jail not exceeding one  
            year, or in the state prison, or by both that fine and  
            imprisonment. If the person has previously been convicted of a  
            violation of specified eavesdropping sections, the person  
            shall be punished by a fine not exceeding ten thousand dollars  
            ($10,000), by imprisonment in the county jail not exceeding  
            one year, or in the state prison, or by both that fine and  
            imprisonment.  (Pen. Code,  632.)  

             a)   Specifies that the term "person" includes an individual,  
               business association, partnership, corporation, limited  
               liability company, or other legal entity, and an individual  
               acting or purporting to act for or on behalf of any  
               government or subdivision thereof, whether federal, state,  
               or local, but excludes an individual known by all parties  
               to a confidential communication to be overhearing or  
               recording the communication.  (Pen. Code,  632, subd.  
               (b).)  

             b)   States that the term "confidential communication"  
               includes any communication carried on in circumstances as  
               may reasonably indicate that any party to the communication  
               desires it to be confined to the parties thereto, but  
               excludes a communication made in a public gathering or in  
               any legislative, judicial, executive or administrative  
               proceeding open to the public, or in any other circumstance  
               in which the parties to the communication may reasonably  
               expect that the communication may be overheard or recorded.  
                (Pen. Code,  632, subd. (c).)  
              
             c)   Provides that except as proof in an action or  








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               prosecution for violation of this section, no evidence  
               obtained as a result of eavesdropping upon or recording a  
               confidential communication in violation of this section  
               shall be admissible in any judicial, administrative,  
               legislative, or other proceeding.  (Pen. Code,  632, subd.  
               (d).)  

             d)   States that this section does not apply to:  (Pen. Code,  
                632, subd. (e).)

               i)     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 

               ii)    To the use of any instrument, equipment, facility,  
                 or service furnished and used pursuant to the tariffs of  
                 a public utility; or 

               iii)   To any telephonic communication system used for  
                 communication exclusively within a state, county, city  
                 and county, or city correctional facility.

             e)   Provides that this section does not apply to the use of  
               hearing aids and similar devices, by persons afflicted with  
               impaired hearing, for the purpose of overcoming the  
               impairment to permit the hearing of sounds ordinarily  
               audible to the human ear.  (Pen. Code,  632, (f).)  

          FISCAL EFFECT:  Unknown

          COMMENTS:  

          1)Author's Statement:  According to the author, "The legislature  
            initially enacted CIPA in 1967 and amongst its provisions,  
            made it illegal to intentionally intercept or record  
            confidential communications by means of a telegraph, telephone  
            or other device under Penal Code 632.  With the advent and  
            proliferation of cellular and cordless telephones, the  
            legislature updated CIPA by enacting Penal Code 632.7 which  








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            applies to mobile phones.  Specifically, it ensured that  
            communications conducted with a cellular device are not  
            intentionally recorded without consent of the parties.  But  
            unlike Penal Code 632, this section does not distinguish  
            between confidential and non-confidential calls.  As such,  
            courts have been compelled by the plain language of Penal Code  
            632.7 to require consent prior to recording any portion of all  
            calls made to persons on a mobile phone, regardless of whether  
            confidential information is discussed.  

            "Unfortunately, this has led to illogical outcomes where calls  
            to customers are legal if they are on a land line but not if  
            they're on a mobile phone.  We have recently seen a number of  
            examples of lawsuits filed based on entirely routine and  
            benign conduct. For example, one class action alleged a  
            violation of 632.7 based on the recording of a conversation  
            where the answering party stated that the caller had dialed  
            the wrong number and the call ends before any recording  
            disclosure is given. Although the conversation lasted only a  
            few seconds and contained no confidential or private  
            information, plaintiffs sought extensive damages under Section  
            632.7.

            "AB 925 seeks to harmonize Penal Code 632 and 632.7 by  
            creating a very narrow exception for these non-confidential  
            calls.  It only intends to capture the brief non-confidential  
            communication between a business and a customer prior to  
            providing the recording disclosure.  Practically, this would  
            include an introductory conversation to identify the parties  
            and purpose of the call.  

            "This bill will not remove the CIPA requirement to obtain the  
            consent of a party prior to recording a confidential  
            communication.  AB 925's limited language cleans up the  
            arbitrary distinction between land lines and mobile phones for  
            a very distinct type of call."

          2)Creates Inconsistent Definitions of Confidential  
            Communications:   The author argues that this bill corrects an  
            inconsistency in the law between land lines and mobile phones.  
             California Penal Code  632 was passed in 1967.  That section  
            specifies that confidential communications cannot be recorded  








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            without the consent of both parties to the communication.   
            Pen. Code,  632, subd. (c) defines a "confidential  
            communication" as follows:  

               The term "confidential communication" includes any  
               communication carried on in circumstances as may reasonably  
               indicate that any party to the communication desires it to  
               be confined to the parties thereto, but excludes a  
               communication made in a public gathering or in any  
               legislative, judicial, executive or administrative  
               proceeding open to the public, or in any other circumstance  
               in which the parties to the communication may reasonably  
               expect that the communication may be overheard or recorded.  
                

            California Penal Code,  632.7 was passed in 1992 as a  
            companion piece to the original statute.  Penal Code,  632.7  
            applies generally to mobile phones, and cordless land lines.   
            This section does not make a distinction between confidential  
            or non-confidential communications and merely states that all  
            communications between persons on these devices may not be  
            recorded without the consent of both parties to the  
            communication.  

            This bill seeks to apply an exception to the prohibition  
            against eavesdropping in Penal Code,  632.7 for  
            communications from businesses to current and former customers  
            which are "non-confidential."  The bill applies a new  
            definition for content to communications that are  
            non-confidential in nature.  Unlike the Penal Code  632  
            definition, the proposed definition is much more specific in  
            terms of what information is deemed non-confidential.  The  
            bill proposes the following language as non-confidential and  
            subject to recording without the consent of consumers.  The  
            definition includes communications:

               "regarding their business relationship, including, but not  
               limited to, communications regarding billing, provisioning,  
               maintaining, or operating the product or service provided  
               by the person or business."










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            The new definition includes quite a wide range of  
            communications that would likely be deemed confidential under  
            the existing definition as applied to wired telephones under  
            the 1967 definition.  Specifically, communications regarding  
            billing information would likely contain information related  
            to account balances, personal information, social security  
            numbers, account histories, and credit report information.   
            Additionally information regarding "provisioning, maintaining,  
            and operating" could easily contain information such as the  
            health history or customers if they are speaking with their  
            health insurance provider.  The author and proponents have  
            argued that the new proposed definition is narrowly tailored,  
            however they specifically say that the non-confidential  
            communication "includes" but is "not limited to" the specific  
            examples they provide.                  

          3)Wireless Land Lines:  This bill seeks to amend California  
            Penal Code  632.7.   Pen. Code,  632.7 not only covers  
            mobile telephones, but it also covers all wireless telephones,  
            including those that are connected to a land line.   
          
          4)Possible One-Way Application:  The opponents of the proposed  
            legislation argue that this bill is applied in a one-way  
            fashion.  The exception to the eavesdropping requirement would  
            apply to a person or business who is contacting a current or  
            former customer.  However, the current or former customer  
            would still be subject to criminal penalties for recording  
            conversations with the business without the consent of both  
            parties.  Opponents have argued that businesses will be in  
            possession of all recordings and that many businesses have  
            selectively released recordings in the past that assist them  
            in litigation, but withhold recordings of customers that would  
            further the consumer's arguments.  The language of the  
            legislation is vague on this issue, and if it is not the  
            author's intent that the bill only apply in a one-way manner  
            then additional clarifying language should be added.  
          
          5)Argument in Support:  According to TechAmerica, "Originally  
            enacted in 1967, the [California Invasion of Privacy Act  
            (CIPA)] made it illegal to intentionally intercept or record  
            confidential communications by means of a telegraph,  
            telephone, or other device under Penal Code 632.  However,  








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            with the advent and proliferation of cellular telephones, the  
            legislature attempted to update the CIPA by enacting Penal  
            code 632.7 which applies specifically to mobile phones.   
            Unfortunately, while mobile devices were added to the Penal  
            Code to ensure that communications conducted with a cellular  
            telephone were applied similarly to landlines, code section  
            632.7 failed to distinguish between confidential and  
            non-confidential calls.  As such, courts have been compelled  
            by the plain language of Penal Code 632.7 to require consent  
            prior to recording "any" portion of "all" calls made to  
            persons on a mobile phone, regardless of whether confidential  
            information is discussed.  
            
            "As a result, this distinction has led to a number of lawsuits  
            based on whether an innocuous business service call is placed  
            to a customer on a landline or a mobile phone.  AB 925 seeks  
            to harmonize Penal Code 632 and 632.7 by creating a very  
            narrow exception for non-confidential communication between a  
            business and a customer prior to providing the recording  
            disclosure.  This bill will not remove the CIPA requirement to  
            obtain the consent of a party prior to recording a  
            confidential communication."

          6)Argument in Opposition:  According to the Consumer Attorneys  
            of California, "AB 925 would reverse long standing privacy  
            protection law to allow businesses and individuals to secretly  
            record phone conversations with current or former customers  
            without their knowledge or consent.

            "AB 925 robs California citizens of the important right to  
            know when someone records their telephone calls.  This bill  
            extinguishes what Assemblyman Jesse M. Unruh advocated for  
            decades ago: all party consent in California.  In 1967, the  
            California Legislature enacted a broad, protective  
            invasion-of-privacy statute in response to what it viewed as a  
            serious and increasing threat to the confidentiality of  
            private communications resulting from then recent advances in  
            science and technology that had led to the development of new  
            devices and techniques for eavesdropping upon and recording  
            such private communications. (Stats.1967, ch. 1509,  1, pp.  
            3584-3588, enacting Pen.Code,  630-637.2). In 1992, AB 2465  
            (Connelly) added  632.7 to the penal code to expand these  








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            privacy protections to include cellular telephones. This  
            legislative intent is even more applicable in today's world as  
            privacy and information protections are of the highest concern  
            to consumers.





            "This bill contradicts well-established, decades old law that  
            has been unanimously affirmed by the California Supreme Court.  
            Current law requires that all parties to a phone conversation  
            consent to the recording of the conversation. Penal Code   
            632.7. This is commonly referred to as "two-party consent."  
            The "California Supreme Court unanimously held:


               "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."  
               Kearney v. Salomon Smith Barney, Inc. 39 Cal.4th 95, 125  
               (2006).


            "Under Penal Code  632.7, conversations can be recorded;  
            however, a party cannot secretly record the conversation  
            without first informing all parties that the conversation is  
            being recorded so a person has the opportunity to end the call  
            and avoid invasion of privacy.  Businesses currently comply by  
            simply announcing at the beginning of the call, "this call may  
            be recorded." This routine announcement is sufficient to  
            establish notice and consent for the recording or monitoring  
            of the conversation. 


            "AB 925 will allow businesses to secretly record telephone  
            calls and selectively use these recordings when it benefits  
            their business, not the consumer. In 2006, California Supreme  
            Court discussed this very issue in Kearney.









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               "Companies may utilize such undisclosed recording to  
               further their economic interests-perhaps in selectively  
               disclosing recordings when disclosure serves the company's  
               interest, but not volunteering the recordings' existence  
               (or quickly destroying them) when they would be detrimental  
               to the company."  Id. at 124.





            "For example, if a hotel and its guest dispute the room price  
            or other terms of a reservation and the customer's  
            recollection is correct, the business could decide not to  
            produce the recording and the customer would not object since  
            the customer has no knowledge that the conversation was ever  
            recorded. On the other hand, if the business's recollection is  
            correct, it could produce produce the recording since it now  
            benefits the company's financial interest. 





            "Lenders and debt collection companies have the most to gain  
            as AB 925 will allow them to legally record calls, without  
            consent, to hold customers to "their word" when it benefits  
            them. These companies have been the subject of much of the  
            litigation in this area. Most if not all of these calls  
            involved personal and confidential financial information. Many  
            debt collection companies have engaged in such practices, and  
            under current law customers whose calls are recorded without  
            their consent have a right bring suit. AB 925 would  
            effectively legalize this practice leaving consumers no remedy  
            for this invasion of privacy and at risk for additional harm  
            that may follow.  










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             "Without informing consumers that their conversation is  
            recorded, consumers are left in the dark as to what personal,  
            private information is collected or how it is used.  They have  
            no knowledge that their transactional details are being  
            recorded, which can and often does include private financial,  
            personal, and sometimes even HIPPA protected medical  
            information. For example, 1-800 Contacts illegally recorded,  
            without notification or warning, their customer's confidential  
            medical, financial, billing, and address information. Anyone  
            who accessed this information would be able to access the  
            customer's medical record.  In another similar case, the  
            plaintiff discussed his erectile dysfunction with Humana and  
            they secretly recorded the call without his consent.  The  
                                                             court found that "defendant's line of business and the  
            sensitive medical information that is likely to be discussed  
            between Defendant's representatives and its customers"  
            supported plaintiff's claim. Perea v. Humana Pharmacy, Case  
            No. 12-1881-JST (ANx) (C.D. Cal. 2013).  Under AB 925, this  
            practice would be legalized without any knowledge of the  
            consumer. 


            "Under AB 925, not only would consumers be unaware that the  
            call is being recorded, but they also have no way of knowing  
            who would have access to their information.  Although  
            consumers may believe that they are dealing with a business in  
            California, many businesses now outsource customer service  
            functions to third-party call centers that may be located  
            elsewhere in the United States or in other countries. Not only  
            will customers unknowingly allow their credit card or other  
            personal information to be recorded by the company they are  
            doing business with, they may also be giving their information  
            to an unknown outsourced third-party."


             
           7)Prior Legislation:  AB 2465 (Connelly), Statutes of 1992,  
            Chapter 298, created Pen. Code,  637.2 which prohibited the  
            recording of communications on wireless telephones and mobile  








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            phones as specified.  


          REGISTERED SUPPORT / OPPOSITION:

          Support
          
          California Chamber of Commerce 
          TechAmerica 

          Opposition
          
          American Civil Liberties Union 
          California Advocates for Nursing Home Reform 
          California Alliance for Retired Americans 
          California Competes 
          California Federation of Teachers 
          California Nurses Association 
          California Rural Legal Assistance Foundation
          Communication Workers of America, AFL-CIO District 9  
          Consumer Action 
          Consumer Attorneys of California
          Consumer Federation of California  
          Consumer Watchdog 
          Consumers for Auto Reliability and Safety 
          Consumers Union 
          Courage Campaign 
          Elder Financial Protection Network
          Electronic Frontier Foundation 
          Older Women's League 
          Privacy Rights Clearinghouse 
          Public Advocates Inc. 
          United Fruit and Commercial Workers 
          University of San Diego Center for Public Interest Law 
          Utility Reform Network 
          World Privacy Forum 

          Analysis Prepared  
          by:              Gabriel Caswell / PUB. S. / (916) 319-3744











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