Troyer v. The Yerba Mate Co., LLP et al, No. 3:2020cv06065 - Document 45 (N.D. Cal. 2021)

Court Description: Order GRANTING 35 LEAVE TO FILE AMENDED COMPLAINT Signed by Judge William Alsup. (whalc5, COURT STAFF) (Filed on 2/13/2021)
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Troyer v. The Yerba Mate Co., LLP et al Doc. 45 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 8 9 CASEY TROYER, as an individual and on behalf of all others similarly situated Case No. 3:20-cv-06065 WHA Plaintiff, 10 v. United States District Court Northern District of California 11 13 THE YERBA MATE CO., LLC, a limited liability company; GUAYAKI SUSTAINABLE RAINFOREST PRODUCTS, INC., 14 Defendants. 12 ORDER GRANTING LEAVE TO AMEND, DENYING MOTION TO STRIKE 15 16 17 INTRODUCTION In this wage-and-hour putative class action, plaintiff seeks leave to file a third amended 18 complaint after his second amended complaint was dismissed for failure to sufficiently plead a 19 violation of Section 632 of California’s Penal Code. Amendment is not futile because 20 plaintiff’s proposed amendment sufficiently pleads the claim. Therefore, the motion is 21 GRANTED. Additionally, defendants’ motion to strike the class allegations is DENIED. 22 23 STATEMENT In this putative class action, plaintiff Casey Troyer sues his former employer for 24 violations of California’s Labor Code, California’s Unfair Competition law, and Section 632 of 25 California’s Penal Code (Dkt. No. 20). His proposed pleading alleges that defendants have 26 engaged in “systemic illegal employment practices” by “(1) failing to provide meal periods and 27 rest breaks, (2) failing to pay all minimum and overtime wages, (3) failing to provide accurate 28 wage statements, (4) intentionally recording confidential conversations and communications by 1 and between employees without the knowledge or consent of those employees” (Dkt. No. 35-1 2 at ¶¶ 2–3). 3 4 confidential conversation in violation of Section 632. An order previously granted defendants’ 5 motion to dismiss this claim holding that the second amended complaint failed to plead facts 6 plausibly showing that any confidential communication actually took place (Dkt. No. 32). The 7 order did not rule on defendants’ alternative argument but invited plaintiff to move for leave to 8 amend and advised plaintiff that he “should affirmatively demonstrate how the proposed 9 amended complaint corrects the deficiencies identified in this order, as well as any other 10 United States District Court Northern District of California The only claim now at issue is that defendants intentionally recorded plaintiff’s deficiencies raised in defendants’ motion but not addressed herein” (id. at 3). 11 Plaintiff timely moves for leave to amend, alleging new facts in support of his Section 12 632 claim (Dkt. No. 35). Defendants oppose (Dkt. No. 36). This order follows full briefing 13 and argument held telephonically due to COVID-19. ANALYSIS 14 15 An amendment is futile if the complaint would fail to state a claim for relief. A 16 complaint must allege sufficient facts to state a facially plausible claim for relief. Ashcroft v. 17 Iqbal, 556 U.S. 662, 678 (2009). All well-pled factual allegations are taken as true and all 18 reasonable inferences are drawn in favor of the nonmoving party. Dahlia v. Rodriguez, 735 19 F.3d 1060, 1066 (9th Cir. 2013). 20 Section 632(a) of California’s Penal Code prohibits “intentionally, and without the 21 consent of all parties to a confidential communication, us[ing] an electronic amplifying or 22 recording device to eavesdrop upon or record the confidential communication.” Section 632(c) 23 defines a “confidential communication” as one 24 26 carried on in circumstances as may reasonably indicate that any party to the communication desires it to be confined to the parties thereto, but [not] a communication made in a public gathering . . . or in any other circumstance in which the parties to the communication may reasonably expect that the communication may be overheard or recorded. 27 This provision states an objective reasonableness standard: a conversation is confidential 25 28 under Section 632 “if a party to that conversation has an objectively reasonable expectation 2 1 that the conversation is not being overheard or recorded.” Flanagan v. Flanagan, 27 Cal. 4th 2 766, 776–77 (2002). “Intentional” means that “the person using the recording equipment does 3 so with the purpose or desire of recording a confidential conversation, or with the knowledge 4 to a substantial certainty that his use of the equipment will result in the recordation of a 5 confidential conversation.” People v. Superior Court, 70 Cal. 2d 123, 134 (1969). 6 7 sufficient facts plausibly showing (1) that plaintiff had a confidential conversation and that (2) 8 defendants either (a) intentionally recorded the conversation or (b) had knowledge to a 9 substantial certainty that their use of the surveillance device would record a confidential 10 11 United States District Court Northern District of California Defendants argue that the proposed amendment is futile because it fails to allege 12 13 conversation (Dkt. No. 36, at 2–4). Paragraphs 54–56 of the proposed amended complaint contain the relevant allegations (Dkt. No. 35-1, at ¶¶ 54–56): • There is at least one surveillance device mounted twelve to fourteen feet above floor 14 level near the entrance to the warehouse, placed at the direction of senior 15 management, which records conversations and the recordings are of a quality to 16 understand conversations in the workplace. 17 • Plaintiff was unaware this device recorded audio, there are no signs informing of the 18 presence of a listening device, and it was not reasonably apparent from ground level 19 that the device recorded audio. 20 • During the first two weeks of employment, plaintiff had a conversation with a 21 coworker at 6:00 a.m. at the warehouse, when no supervisors or managers had yet 22 arrived, and with no other employees close by, wherein he complained to his 23 coworker that certain working conditions imposed by defendants were dangerous. 24 • The surveillance device recorded this conversation. 25 • “Defendants, knowing that this conduct was unlawful and a violation of Plaintiff[’s] . 26 . . right to privacy and a violation of California Penal Code § 630, et seq., did intrude 27 on Plaintiff[’s] . . . right privacy by knowingly and/or negligently and/or intentionally 28 engaging in the aforementioned recording/eavesdropping activities.” 3 1 2 Section 632, or acted “negligently and/or intentionally,” are disregarded because they are 3 conclusions. Nonetheless, the well-pled factual allegations plausibly state a claim that 4 defendants operated the surveillance device with substantial certainty that it would record a 5 confidential conversation, and that plaintiff had a reasonable expectation of privacy in the 6 recorded conversation. 7 As to confidentiality, on these facts, plaintiff plausibly had a reasonable expectation of 8 privacy in the recorded conversation. He spoke only to his coworker, with no one else present, 9 complaining about dangerous working conditions, and he did not know, and had no reason to 10 11 United States District Court Northern District of California The allegations that defendants acted “knowing” that their conduct was a violation of know, that the device recorded audio as well as video. Defendants cite to Reynolds v. City & County of San Francisco, 576 Fed. App’x 698 (9th 12 Cir. 2014), for the proposition that an employee necessarily does not have a reasonable 13 expectation of privacy in a conversation had in the presence of an apparent video surveillance 14 device in an open, shared workplace. Reynolds is distinguishable. There, our court of appeals 15 held that an employee did not have a reasonable expectation of privacy in a telephone call he 16 made at his desk in “a shared open workspace, during a time of day when others were likely to 17 be present.” Id. at 703. Here, the proposed complaint alleges the conversation took place at 18 6:00 a.m. between only plaintiff and his coworker, with no one else nearby. 19 Defendants also cite to Med. Lab. Mgmt. Consultants v. American Broadcasting 20 Companies, Inc., 306 F.3d 806 (9th Cir. 2002). That decision is inapposite because it applied 21 “Arizona law [which] offers more limited protection against the electronic interception of oral 22 communications” than California law. Id. at 816. 23 Reduced to its essentials, defendants’ position is that, as a matter of law, an employee 24 does not have a reasonable expectation that his conversation is not being recorded when the 25 conversation is (1) in a shared workplace, and (2) in the presence of an obvious camera (even 26 though he has no reason to believe the camera also records audio). The California Supreme 27 Court has held that “in the workplace, as elsewhere, the reasonableness of a person’s 28 expectation of visual and aural privacy depends not only on who might have been able to 4 1 observe the subject interaction, but on the identity of the claimed intruder and the means of the 2 intrusion.” Sanders v. American Broadcasting Companies, Inc., 20 Cal. 4th 907, 923 (1999). 3 The intruder in Sanders was a member of the public, not the proprietor of the workplace. But 4 the bottom line is the same: that an employee’s conversation may be visually observable by 5 his coworkers or even a camera in an open workspace does not necessarily defeat his 6 reasonable expectation that the conversation is not being aurally recorded. See id. at 917–18. 7 A reasonable expectation of privacy is a fact-dependent inquiry unsuited for disposition on a 8 motion to dismiss. See id. at 911. At this stage, on these facts, plaintiff has plausibly alleged 9 that he had a reasonable expectation that his conversation was not being recorded. United States District Court Northern District of California 10 The allegations also reasonably support an inference that defendants knew to a 11 substantial certainty that the device would record a confidential conversation. An alternative, 12 innocuous explanation for the device is that it was for security at the warehouse, not for 13 recording employees’ confidential conversations in the workplace. But that explanation is 14 undermined by the fact that defendants did not inform employees like plaintiff that the device 15 records audio, in addition to video. The pleading standard is relaxed as to defendants’ 16 understanding with regard to their use of the surveillance device because that is a matter 17 exclusively within defendants’ knowledge. See Moore v. Kayport Package Exp., Inc., 885 18 F.2d 531, 540 (9th Cir. 1989). Again, at this stage, where all factual allegations are accepted 19 as true, and all reasonable inferences drawn in favor of plaintiff, the allegations plausibly state 20 a claim under Section 632. 21 Defendants also argue that leave to amend should be denied because plaintiff has failed 22 to state this claim three times already. Because the proposed amended complaint cures the 23 prior deficiencies, this contention is unpersuasive; there is no hard-and-fast rule a plaintiff is 24 limited to three tries. 25 Defendants argue that allowing plaintiff’s amendment will unfairly prejudice them 26 because they will be forced to file another motion to dismiss. No further Rule 12 motion 27 practice will be allowed since this motion practice has already served that purpose. Defendants 28 may bring a motion for summary judgment after a reasonable period of discovery. 5 1 Defendants previously moved, as an alternative to dismissal, to strike the class 2 allegations as to the Section 632 claim (Dkt. No. 24). Plaintiff’s proposed third amended 3 complaint sufficiently states a claim under Section 632. Issues about the viability of this claim 4 for class treatment, and the proposed class, should be addressed in a motion pursuant to FRCP 5 23, after a reasonable period of discovery. Therefore, the motion to strike the class allegations 6 is denied. CONCLUSION 7 8 United States District Court Northern District of California 9 Plaintiff’s proposed amended complaint sufficiently states a claim upon which relief can be granted as to his claim under Section 632 of California’s Penal Code. Therefore, his motion 10 for leave to file a third amended complaint is GRANTED. Defendants’ motion to strike is 11 DENIED. Plaintiff shall file his third amended complaint within seven days of this order. The 12 answer is due in 14 calendar days thereafter. 13 14 IT IS SO ORDERED. 15 16 Dated: February 13, 2021 17 18 WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 6