Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-02925/USCOURTS-casd-3_13-cv-02925-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

GEORGE STOBA, et al.,

Plaintiffs,

Case No. 13-cv-2925-BAS(NLS)

ORDER:

(1) GRANTING IN PART AND

DENYING IN PART TWC’S

MOTION TO DISMISS; AND

(2) GRANTING SAVEOLOGY’S

AND ELEPHANT’S MOTIONS TO

DISMISS

[ECF Nos. 2, 3, 4]

v.

SAVEOLOGY.COM, LLC, et al.,

Defendants.

On October 8, 2013, Plaintiffs George Stoba and Daphne Stoba commenced this

action for alleged unlawful recordings or monitoring of telephone calls. Thereafter,

Defendants Saveology.com, LLC (“Saveology”), Elephant Group, Inc. (“Elephant”),

and Time Warner Cable (“TWC”) removed this action to federal court. Defendants

now each separately movesto dismiss under Federal Rule of Civil Procedure 12(b)(6). 

Plaintiffs oppose.

The Court finds this motion suitable for determination on the papers submitted

and without oral argument. See Civ. L.R. 7.1(d.1). For the following reasons, the

Court GRANTS IN PART and DENIES IN PART TWC’s motion to dismiss, and

GRANTS Saveology’s and Elephant’s motions to dismiss.

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I. BACKGROUND

According to the complaint, on November 25, 2012, Mr. Stoba conducted an

internetsearch using the term“Time Warner Cable,” and Ms. Stoba subsequently made

a telephone call to Defendants. (Compl. ¶ 19.) During Ms. Stoba’s telephone call, she

“provided her confidential information, including, but not limited to her telephone

number, address, and email address.” (Id.) Shortly thereafter, Plaintiffs allege that

Defendants called Ms. Stoba “in an attempt to sell Time Warner Cable service . . . ,

during which the male caller stated that [sic] ‘Hi, this is Time Warner Cable.’” (Id.) 

On the same day, Mr. Stoba also called Defendants.

The next day, Defendants called Mr. Stoba again “in an attempt to sell Time

Warner Cable service to Plaintiffs, during which the male caller stated that [sic] ‘I’m

with Time Warner Cable.’” (Compl. ¶ 20.) During thistelephone call, “the male caller

identified himself as ‘Joseph’ and further stated that he was with Saveology, an

authorized dealer of Time Warner Cable.” (Id.) Plaintiffs allege that “[d]uring the end

of this last telephone call . . . , ‘Joseph’ stated that he wanted to let him know their call

was being recorded for quality assurance purposes.” (Id.) Mr. Stoba’s alleged

response to Joseph was “that he did not consent to their call being recorded and that it

was illegal to record a telephone call in California without consent.” (Id.)

Plaintiffs allege that “Defendants recorded and/ormonitored all ofthese multiple

telephone conversations with Plaintiffs in the course of Defendants’ attempt to sell

Time Warner Cable service to Plaintiffs.” (Compl. ¶ 21.) They further allege that “[a]t

no time during any of these calls were the Plaintiffs ever informed at the beginning of

the telephone calls that their telephone calls were being recorded and/or monitored[,]”

and “[a]t no time did Plaintiffs give their consent to Defendants for their telephone

calls to be recorded and/or monitored.” (Id.) According to Plaintiffs, during the

relevant time period, Defendants “had a policy and a practice of recording and/or

monitoring telephone conversations with consumers[,]” and “Defendant’s [sic]

employees and agents [were] directed, trained and instructed to, and [did], record

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and/or monitortelephone conversations with Plaintiffs and other California residents.” 

(Compl. ¶ 22.)

On October 8, 2013, Plaintiffs commenced this class action against Defendants,

asserting three causes of action: (1) Unlawful Recording or Monitoring of Telephone

Calls under California Penal Code § 632; (2) Unlawful Recording of Telephone Calls

under California Penal Code § 632.7; and (3) Unlawful and Unfair Business Acts and

Practices in violation of California Business and Professions Code § 17200 (Unfair

Competition Law, or “UCL”). Then on December 6, 2013, Defendants removed this

action to federal court. Defendants each filed separate briefs moving to dismiss under

Rule 12(b)(6). TWC movesto dismiss the complaint in its entirety, and Saveology and

Elephant move to dismiss Plaintiffs’ UCL cause of action. Plaintiffs oppose all of the

motions.

II. LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil

Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R.

Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must

accept all factual allegations pleaded in the complaint as true and must construe them

and draw all reasonable inferences from them in favor of the nonmoving party. Cahill

v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule

12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it

must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has “facial plausibility when the

plaintiff pleads factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (citing Twombly, 550 U.S. at 556). “Where a complaint pleads facts

that are ‘merely consistent with’ a defendant’s liability, it stops short of the line

between possibility and plausibility of ‘entitlement to relief.’” Iqbal, 556 U.S. at 678

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(quoting Twombly, 550 U.S. at 557).

“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’

requires more than labels and conclusions, and a formulaic recitation of the elements

of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting Papasan v.

Allain, 478 U.S. 265, 286 (1986)) (alteration in original). A court need not accept

“legal conclusions” as true. Iqbal, 556 U.S. at 678. Despite the deference the court

must pay to the plaintiff’s allegations, it is not proper for the court to assume that “the

[plaintiff] can prove facts that [he or she] has not alleged or that defendants have

violated the . . . laws in ways that have not been alleged.” Associated Gen. Contractors

of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Generally, courts may not consider material outside the complaint when ruling

on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d

1542, 1555 n.19 (9th Cir. 1990). However, documents specifically identified in the

complaint whose authenticity is not questioned by parties may also be considered. 

Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superceded by statutes on

other grounds). Moreover, the court may consider the full text of those documents,

even when the complaint quotes only selected portions. Id. It may also consider

material properly subject to judicial notice without converting the motion into one for

summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). 

As a general rule, a court freely grants leave to amend a complaint which has

been dismissed. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when

“the court determines that the allegation of other facts consistent with the challenged

pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well

Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986).

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III. DISCUSSION

A. California Penal Code Sections 632 and 632.7

TWC argues that the causes of action brought under California Penal Code §§

632 and 632.7 should be dismissed for two reasons: (1) because TWC cannot be held

criminally liable under §§ 632 and 632.7; and (2) because “there are no facts alleged

from which an inference can reasonably be drawn that TWC aided or abetted

Saveology in failing to provide notice that calls were being recorded, or that Saveology

and TWC conspired to not provide the notice, or even that TWC caused the notice to

not be provided.” (TWC’s Mot. 5:3–11, 6:11–21.) Relying also on California Penal

Code § 31, the latter reason presumes that Plaintiffs assert the causes of action for

criminal liability rather than civil liability. (See id. at 5:3–10.)

Section 632 is part of California’s invasion-of-privacy statutory scheme. It

provides, in relevant part, that “[e]very person who, intentionally and without the

consent of all parties to a confidential communication, by means of any electronic . .

. device . . . records the confidential communication” violates the statute. Cal. Penal

Code § 632(a). Accordingly, “the three elements that Plaintiff must prove are (1) an

electronic recording of (or eavesdropping on); (2) a ‘confidential’ communication;

[where] (3) all parties did not consent.” Weiner v. ARS Nat’l Servs., Inc., 887 F. Supp.

2d 1029, 1032 (S.D. Cal. 2012) (Lorenz, J.) (citing Flanagan v. Flanagan, 27 Cal. 4th

766, 774-76 (2002)). Furthermore, California Penal Code § 637.2 authorizes a private

civil right of action for any violation of § 632. Even though the California Legislature

“chose to impose penal as well as civil sanctions,” the reach of § 637.2 “would be the

same if the Legislature had adopted three separate statutes—one declaring that the

prohibited conduct was unlawful, a second specifying the civil sanctions that could be

imposed upon such unlawful conduct, and a third specifying the penal sanctions that

could be imposed for such conduct—and had placed the first two statutes in the Civil

Code and the third in the Penal Code.” Kearny v. Salomon Smith Barney, Inc., 39 Cal.

4th 95, 116 n.6 (2006).

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Here, there is no indication in Plaintiffs’ complaint that they are pursuing

criminal claims against TWC. TWC also fails to provide any legal authority that

imposes criminal standards—namely, that criminal liability for the acts of another

requires actively engaging in the criminal activity by advising, encouraging, aiding or

abetting it—when pursuing civil liability under §§ 632 and 632.7. TWC only cites

California Penal Code §§ 31, 632, and 632.7 in addition to Twombly in their motion in

order to support their argument. But upon reviewing the aforementioned statutes as

well as Twombly, the Court cannot identify any proposition that imposes any criminal

standards in pursuing civil liability under §§ 632 and 632.7. 

In sum, the Court rejects TWC’s argument that the §§ 632 and 632.7 causes of

action must be dismissed. Plaintiffs are within their right to assert an action solely for

civil liability under these statutes. See Kearney, 39 Cal. 4th at 116 n.6. Both parties

address whether Plaintiffs adequately allege “aiding and abetting” in order for Plaintiffs

to sustain their §§ 632 and 632.7 causes of action. However, the Court need not

address TWC’s argument that Plaintiffs fail to adequately assert their §§ 632 and 632.7

causes of action because that argument presumesthat a criminal standard—specifically,

under California Penal Code § 31—applies. As the Court found above, such criminal

standards do not apply to Plaintiffs’ §§ 632 and 632.7 civil causes of action. 

Accordingly, the Court DENIES TWC’s motion to dismiss asto Plaintiffs’ §§ 632 and

632.7 causes of action.

B. California Business and Professions Code § 17200

Defendants each argue that Plaintiffs lack standing to assert their UCL cause of

action because they fail to allege an “injury in fact and loss of money or property” as

a result of Defendants’ alleged unfair practice in their complaint. (TWC’s Mot.

7:1–9:20; Saveology’s Mot. 5:8–6:22; Elephant’s Mot. 5:8–6:22.) In response,

Plaintiffs contend that they assert sufficient facts to assert an injury in fact under

California Business and Professions Code § 17204 because their “primary asserted

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injury is violation of their statutory right of privacy under California Penal Code §§

632, 632.7.” (Def.’s TWC Opp’n 17:18–28.) They also argue that because they only

seek injunctive relief, § 17200’s standing requirement that a plaintiff must have “lost

money or property” does not apply. (Id. at 22:3–6.) It is worth noting that Saveology’s

and Elephant’s motions and replies are nearly identical, presenting the same argument

nearly verbatim. The same can also be said for TWC’s motion and reply with respect

to its challenge to Plaintiffs’ UCL cause of action.

California’s Unfair Competition Law (“UCL”) prohibits “any unlawful, unfair

or fraudulent business act or practice[.]” Cal. Bus. & Prof. Code § 17200. This cause

of action is generally derivative of some other illegal conduct or fraud committed by

a defendant. Khoury v. Maly’s of Cal., Inc., 14 Cal. App. 4th 612, 619 (1993). 

Standing to bring a UCL action requires “a person who has suffered injury in fact

and has lost money or property as a result of the unfair competition.” Cal. Bus. & Prof.

Code § 17204. To have standing under the UCL, a plaintiff must sufficiently allege

that (1) he or she has lost “money or property” sufficient to constitute an “injury in

fact” under Article III of the Constitution, and (2) there is a “causal connection”

between the defendant’s alleged UCL violation and the plaintiff’s injury in fact. Rubio

v. Capital One Bank, 613 F.3d 1195, 1203-04 (9th Cir. 2010) (citing Birdsong v. Apple,

Inc., 590 F.3d 955, 959-60 (9th Cir. 2009); Hall v. Time Inc., 158 Cal. App. 4th 847,

855-56 (2008)); see also Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 323 (2011). 

To show an economic injury, a plaintiff may (1) surrender in a transaction more,

or acquire in a transaction less, than he or she otherwise would have; (2) have a present

or future property interest diminished; (3) be deprived of money or property to which

he or she has a cognizable claim; or (4) be required to enter into a transaction, costing

money or property, that would otherwise have been unnecessary. Kwikset, 51 Cal. 4th

at 885-86. Though “lost money or property” as an economic injury is a “classic form

of injury in fact,” it is not the exclusive means of establishing an injury in fact under

California’s UCL. See id. at 323-24.

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In Walker v. Geico General Insurance Co., 558 F.3d 1025, 1027 (9th Cir. 2009),

the Ninth Circuit addressed a plaintiff’s challenge to a district court’s ruling that he

lacked standing under California’s UCL. The court noted that the amended UCL

statute requires a plaintiff to establish that he has “suffered an injury in fact and has lost

money or property.” Id. (quoting Californians for Disability Rights v. Mervyn’s, LLC,

39 Cal. 4th 223, 227 (2006)) (internal quotation marks omitted). The plaintiff in

Walker took the position that “although he cannot establish the requisite ‘lost money

or property’ for the purposes of monetary relief under the UCL, he is nevertheless

entitled to an injunction[.]” Id. The Ninth Circuit concluded that the plaintiff’s

argument “issupported neither by the language ofthe amended statute nor its purpose.” 

Id. (citing Buckland v. Threshold Enters. Ltd., 155 Cal. App. 4th 798, 817 (2007)

(“Because remedies for individuals under the UCL are restricted to injunctive relief and

restitution, the import of the requirement is to limit standing to individuals who suffer

losses of money or property that are eligible for restitution.”);see also Walker v. USAA

Cas. Ins. Co., 474 F. Supp. 2d 1168, 1172 (E.D. Cal. 2007).

Similarly, Plaintiffs suggest here that the “lost money or property” requirement

for standing to pursue a UCL action under § 17204 does not apply them because they

are only seeking injunctive relief. However, as the Ninth Circuit found in Walker,

Plaintiffs are mistaken. See Walker, 558 F.3d at 1027; see also Buckland, 155 Cal.

App. 4th at 817. In order to have standing to pursue a UCL action, Plaintiffs must

allege facts that demonstrate lost money or property. See id. Plaintiffs fail to do so

here. They also fail to direct this Court’s attention to any allegations in the complaint

that provide any facts plausibly demonstrating lost money or property. Therefore,

based on the allegations in the complaint, Plaintiffs lack standing to pursue their UCL

action, and the Court GRANTS Defendants’ motions to dismiss as to Plaintiffs’ UCL

cause of action. See Cal. Bus. & Prof. Code §§ 17200, 17204; Walker, 558 F.3d at

1027. 

//

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IV. CONCLUSION & ORDER

In light ofthe foregoing, the Court GRANTS IN PART and DENIES IN PART

TWC’s motion to dismiss, and GRANTS Saveology’s and Elephant’s motions to

dismiss. Specifically, the Court DISMISSES WITHOUT PREJUDICE only

Plaintiffs’ UCL cause of action as to all of the defendants. 

The Court also GRANTS Plaintiffs’ request for leave to file an amended

complaint to cure any deficiencies in the complaint. See Fed. R. Civ. P. 15(a). 

Consequently, if Plaintiffs choose to amend their UCL cause of action, they must do

so no later than August 11, 2014. 

IT IS SO ORDERED.

DATED: July 18, 2014

Hon. Cynthia Bashant

United States District Judge

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