Unreported / Non-Citable
Background
This consolidated putative class action alleges that Google recorded plaintiffs' customer service calls with non-parties—Verizon, Uber, and Discover—in violation of Sections 631(a), 632(a), and 637.5 of the California Invasion of Privacy Act (CIPA). Google moved to compel arbitration for three named plaintiffs—Paolo Roméo Samaco, Chelsea Marquez, and India Price—pursuant to arbitration agreements each plaintiff formed with the respective non-party. There was no dispute that Samaco agreed to Verizon's Customer Agreement, Marquez agreed to Uber's Rider Terms of Use, and Price ultimately conceded she agreed to Discover's Personal Loan agreement, each of which contains an arbitration clause and incorporates the non-party's privacy policy by reference.
Google argued it could enforce these arbitration agreements as a nonsignatory under California's equitable estoppel doctrine, which applies in two circumstances: (1) when a signatory's claims are intimately founded in and intertwined with the underlying contract, or (2) when the signatory alleges substantially interdependent and concerted misconduct by the nonsignatory and a signatory founded in the obligations of the underlying agreement. Plaintiffs countered that their CIPA claims do not require reference to the agreements because lack of consent is an affirmative defense, not an element of their claims, and thus their claims are fully viable without interpreting the contracts containing arbitration provisions.
The Court’s Holding
The court granted Google's motion to compel arbitration, holding that both prongs of California's equitable estoppel doctrine apply. First, plaintiffs' CIPA claims are intimately founded in and intertwined with their agreements with Verizon, Uber, and Discover because consent is an element of each CIPA claim—not an affirmative defense—and consent cannot be determined without reference to the non-parties' privacy policies, which are incorporated by reference into the agreements containing arbitration clauses. The court surveyed Ninth Circuit and district court authority, including Atkins v. Amplitude, Perry-Hudson v. Twilio, and Smith v. YETI Coolers, concluding that the statutory text of CIPA places lack of consent in the definition of the proscribed conduct, California jury instructions place the burden on plaintiffs to prove lack of consent, and Calhoun v. Google did not hold otherwise. Because the privacy policies are incorporated into the arbitration agreements, the claims depend on interpreting contracts containing arbitration provisions.
Second, the court held that plaintiffs allege substantially interdependent and concerted misconduct by Google and the non-parties. The operative complaint alleges the non-parties contracted with Google to listen in on conversations through Google's Cloud Contact Center AI product, paid Google for the service, and that Google would not have listened to the calls absent those agreements. The claims against Google depend on showing an absence of consent in the privacy policies governing plaintiffs' calls with the non-parties, satisfying the second prong of equitable estoppel. The court stayed the case as to Samaco, Marquez, and Price pending arbitration and ordered joint status reports every 180 days.
Key Takeaways
- Consent is an element of CIPA claims under Sections 631(a), 632(a), and 637.5, not an affirmative defense, because the statutory text includes lack of consent in the initial definition of proscribed conduct and California jury instructions place the burden of proof on plaintiffs.
- A nonsignatory to an arbitration agreement can compel arbitration under California equitable estoppel when a signatory's claims are intimately founded in and intertwined with the contract containing the arbitration clause, including incorporated documents such as privacy policies.
- Equitable estoppel also applies when a plaintiff alleges interdependent and concerted misconduct by a nonsignatory and a signatory, and the claims depend on the obligations of the underlying agreement.
- Plaintiffs' CIPA claims against Google required interpretation of the non-parties' privacy policies to determine consent, and because those policies are incorporated into agreements with arbitration clauses, the claims are intertwined with those agreements.
- The court stayed the action as to the three plaintiffs compelled to arbitrate and required periodic joint status reports on the arbitration proceedings.
Why It Matters
This decision clarifies that consent is an element of CIPA claims in the Northern District of California, resolving a split suggested by Brown v. Google and aligning with the weight of authority in Atkins, Perry-Hudson, and Smith. By holding that privacy policies incorporated into service agreements are part of the contractual framework for determining consent, the ruling enables nonsignatory technology providers like Google to compel arbitration based on agreements between consumers and the businesses they called.
The decision reinforces the broad reach of equitable estoppel in the Ninth Circuit for compelling arbitration where statutory privacy claims depend on the terms of contracts containing arbitration clauses, particularly in the context of AI-driven customer service recording.