No. 14898 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1980 

VICTOR SISTOK, 

Plaintiff and Appellant, 

VS . 

NORTHWESTERN TELEPHONE SYSTEMS, INC. 

Defendant and Respondent. 

Appeal from: District Court of the Eleventh Judicial District, 

Honorable Robert M. Holter, Judge presiding. 

Counsel of Record: 

For Appellant: 

Hash, Jellison, O'Brien and Bartlett, Kalispell, Montana 

James Bartlett argued, Kalispell, Montana 

For Respondent: 

Murphy, Robinson, Heckathorn & Phillips, Kalispell, 

Montana 

George Best argued, Kalispell, Montana 

Submitted: April 15, 1980 

Decided: July 221 1980 

Filed: J~L 2 3 1980 

Clerk 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

This appeal results from a directed verdict in an action 

for invasion of privacy brought in the District Court of the 

Eleventh Judicial District, in and for the County of Flathead. 

Respondent is a telephone company or common communications carrier serving subscribers in Flathead County. Prior 

to July 1975, respondent received several complaints from its 

subscribers regarding problems on one of its party lines. The 

problems complained of consisted partly of mechanical problems 

and partly of personal abuses. The mechanical problems were 

primarily crackling background noises on the party line. The 

personal abuses were: (1) listening in on conversations; (2) 

leaving the phone off the hook for extended periods of time 

with a radio playing in the background; (3) crass and harassing comments made during conversations; and (4) obscene 

telephone calls. Complaints were received by respondent 

throughout 1975. At trial respondent introduced evidence of 

five written complaints it had received, and respondent's 

personnel testified that other oral complaints were taken. 

Several of the subscribers to the party line testified that 

the problems with the line were continuous, but the exact dates 

of the abuses could not be recalled. The party line provided 

telephone service to eight subscribers, one of whom was appellant, Victor Sistock. 

Respondent reacted to the complaints by sending letters 

to each of the subscribers on the party line. Two kinds of 

letters were sent. The first type urged the subscribers to 

follow several rules of etiquette in using the party line. 

Subscribers were told, for example, not to listen to other 

parties' conversations or pick the phone up during the con- 
versations. Respondent maintains that this letter was sent 

almost monthly after it had received the first complaints in 

July. The second type of letter sent informed the subscribers 

that further complaints had been received and that the line 

would be monitored by respondent if abusive practices did not 

cease immediately. Without being sure as to the exact date, 

respondent maintains that this letter was sent only once, 

though several of the subscribers could not remember receiving 

any letters. 

On April 16, 1976, approximately ten months after the 

first complaints had been received, respondent attached a recording device to the party line. During its period of operation, the recorder emitted a "beep" tone at time intervals, 

although several of the subscribers could not remember hearing 

any sound. The decision to attach the recorder was made by 

respondent's division manager. All conversation of phone calls 

placed or received were recorded for a period of six days until 

April 21, 1976, when the recorder was disconnected. The taped 

conversations were immediately erased with a bulk eraser, and 

no one ever listened to the tapes. 

Appellant discovered the fact that respondent had recorded 

conversations on the party line and filed a complaint for invasion of privacy in 1976. In his complaint, appellant sought 

general damages in the amount of $5,000 and punitive damages 

of $10,000. The prayer was later amended, however, to seek 

relief in the amount of $500,000 punitive damages. Trial by 

jury began on May 29, 1979. During the trial, the District 

Court refused to admit the testimony of appellant's witnesses 

relating to the issue of punitive damages. At the closing of 

appellant's case-in-chief, the District Court directed a 

verdict for respondent. Appellant now contests the granting 
of the directed verdict and the refusal to admit testimony relating to punitive damages on this appeal. 

The law with respect to directed verdicts is well settled 

in the state: 

"Upon a motion for a directed verdict by a 

party, the evidence introduced by his opponent will be considered in the light most 

favorable to opponent. Thereupon, the conclusion sought by the moving party must 

follow as a matter of law. Parrish v. Witt 

(1976), Mont., 555 P.2d 741, 33 St.Rep. 999; 

Dieruf v. Gollaher (1971), 156 Mont. 440, 

481 P.2d 322; Pickett v. Kyger (1968), 151 

Mont. 87, 439 P.2d 57. 

"Generally, directed verdicts are not favored by the courts. LaVelle v. Kenneally 

(1974), 165 Mont. 418, 529 P.2d 788. A 

cause should never be withdrawn from the 

jury unless the conclusions from the facts 

advanced by the moving party follows necessarily, as a matter of law, that recovery 

can, as here, or cannot be had under any 

view which can be reasonably drawn from the 

facts which the evidence tends to establish. 

In Re Estate of Hall v. Milkovich (1972), 

158 Mont. 438, 492 P.2d 1388; Shields v. 

Murray (1971), 156 Mont. 493, 481 P.2d 680; 

Johnson v. Chicago, M & St. P. Ry. Co. 

(1924), 71 Mont. 390, 230 P.2d 52. A cocollary rule is that where reasonable men might 

differ as to the conclusions of fact to be 

drawn from the evidence, viewed in the light 

most favorable to the party against whom the 

motion is made, a jury question is presented, 

and resolution by way of directed verdict is 

improper. Parini v. Lanch (1966), 148 Mont. 

188, 418 P.2d 861." Lawlor v. Flathead 

County (1978), 177 Mont. 508, 582 P.2d 751, 

754, 35 St.Rep. 884. 

The record in this case indicates that appellant's cause 

of action was tried on the basis of federal statutes regulating 

electronic surveillance and th~ interception of wire or oral 

communications, codified at sections 2510 through 2520 of 

Title 18 of the United States Code and commonly known as Title 

I11 of the Omnibus Crime Control and Safe Streets Act. Under 

these statutes, it is illegal as a general rule for any person 

to intercept any wire or oral communication. For violations 
thereof, a civil cause of action is authorized on behalf of 

any person whose conversation has been illegally intercepted. 

Section 2511 makes it a crime, with certain specified sxceptions, for any person to willfully intercept, endeavor to 

intercept, or procure any other person to intercept or endeavor to intercept, any wire or oral communication. Exempted 

from this crime, however, are certain activities of telephone 

companies or common communication carriers: 

"It shall not be unlawful under this chapter for an operator of a switchboard, or an 

officer, employee, or agent of any communications common carrier, whose facilities 

are used in the transmission of a wire communication, to intercept, disclose, or use 

that communication in the normal course of 

employment while engaged in any activity 

which is necessary incident to the rendition of his service or to the protection of 

the rights or property of the carrier of 

such communication: Provided, That said 

communication common carriers shall not 

utilize service observing or random monitoring except for mechanical or service 

quality control checks." 18 U.S.C. 2511(2) 

(a) (i). 

For violations of section 2511, a civil action providing 

for the recovery of actual damages, punitive damages, costs 

and reasonable attorneys fees is authorized. Section 2520 

provides: 

"Any person whose wire or oral cormunication 

is intercepted, disclosed, or used in violation of this chapter shall (1) have a civil 

cause of action . . . and (2) be entitled to 

recover from any such person-- 

" (a) actual damages but not less than liquidated damages computed at the rate of $100 

a day for each day of violation or $1,000, 

whichever is higher; 

" (b) punitive damages; and 

" (c) a reasonable attorney's fee and other 

litigation costs reasonably incurred." 

At trial respondent defended against appellant's cause of 

action by contending, among other things, that it conducted 
monitoring or recording which fell within the statutory exception to section 2511. Respondent argued, in moving for a 

directed verdict, that the evidence showed only that the 

telephone company, by recording the conversations, was taking 

necessary steps to render service to its subscribers and 

protect its property. Appellant contended, however, that 

respondent's recording did not fall within section 2511(2) 

(a)(i), because the exception was strictly construed and because the evidence demonstrated that the recording was excessive. The trial court, however, applied the exception 

and concluded, after reviewing appellant's case, that the 

type of recording which was conducted by respondent was a 

necessary incident to the rendition of services and the protection of its property. In effect, the trial court ruled that 

the recording could not have been conducted less extensively 

and that the telephone company could not have employed other 

reasonable measures to deal with the abusive practices. 

The question confronting us on this appeal, then, is 

whether, viewing the evidence in a light most favorable to 

appellant, reasonable men might have differed with regard to 

the factual conclusions reached by the trial court. Was respondent's recording "reasonably necessary" to protect its 

property? All of this assumes, of course, that respondent 

could avail itself of the benefits or protection of the 

statutory exception. Was section 2511(2) (a) (i) intended to 

operate as a defense in proceedings such as this one and allow 

the kind of recording that occurred under the circumstances 

of this case? To provide a background from which we can view 

the evidence and facts of this case and thereby come to grips 

with these questions, we turn now to a brief consideration of 
the legislative history of section 2511 (2) (a) (i) and the courts' 

treatment of cases under the statutory exception. 

A legislative history of section 2511(2) (a) (i) indicates 

that the "protection of property" exception was passed by Congress in 1968 in recognition of the already existing right of 

a telephone company to conduct investigations into wire fraud 

by monitoring or interception. The Senate Report to Title I11 

states that section 2511 (2) (a) (i) was intended to reflect 

"existing law," as exemplified by the case of United States v. 

Beckley (D. Ga. 1965), 259 F.Supp. 567. See S. Rep. No. 1097, 

90th Cong., 2d Sess. 93 (1968), U.S. Code Cong. & Admin. News 

1968 at 2112. In Beckley, two defendants used the services 

of a corrupt telephone employee to make long distance calls 

without charge so that regular bookkeeping procedures of the 

telephone company were bypassed. The telephone company monitored defendants' calls and discovered the scheme to defraud. 

The court held that the telephone company could monitor these 

conversations to protect its property without violating Fourth 

Amendment rights. 

Subsequent to the passage of Title 111, in accordance 

with this expression of Congressional intent, the applicability 

of section 2511 (2) (a) (i) has generally been limited by most 

courts to wirefraud cases. Most of these have involved the 

fraudulent circumvention of telephone company billing procedures through the use of such devices as "blue boxes." See, 

e.g., United States v. Goldstein (9th Cir. 1976), 532 F.2d 

1305, 1311; United States v. Freeman (7th Cir. 1975), 524 F.2d 

337, 340, cert. den. 424 U.S. 920, 96 S.Ct. 1126, 47 L.Ed.2d 

327 (1976); United States v. Glanzer (9th Cir. 1975), 521 F.2d 

11, 12; United States v. Clegg (5th Cir. 1975), 509 F.2d 605, 

613. "Blue boxes" emit multi-frequency tones used to activate 
long distance lines. The caller uses the device by calling a 

toll free number and then generating the required tones to 

place the long distance call. As far as the billing system is 

concerned, the call is coming from the toll free number. Under 

these circumstances, telephone companies have been allowed to 

intercept and conduct recording. 

Where other contexts have been discussed, such as the 

right of a telephone company to use electronic surveillance 

devices to investigate the making of obscene telephone calls, 

there has been little authority to suggest a broadening or an 

expansion of the statutory exception. One court has indicated, 

in relation to other federal statutes, a refusal to give 

telephone companies protection in these circumstances. Hodge 

v. Mountain States Tel. & Tel. Co. (9th Cir. 1977), 555 F.2d 

254. In that case, Judge Merril, agreeing with Judge Renfrew, 

stated in a concurring and dissenting opinion : 

"When S605 was amended in 1968, Congress preserved (in 18 U.S.C. S2511(2) (a) (i)) the judicially created exception for telephone 

company investigations of fraud against its 

property. United States v. Clegg, 509 F.2d 

605, 613 (5th Cir. 1975). Congress did not 

further encourage telephone companies to conduct self-authorized criminal investigations. 

To expand this limited exception to 8605 to 

include investigations of misuse of company 

facilities by obscene telephone calls would 

invite including investigations of misuse by 

extortion, threat or other crimes directed 

against a telephone subscriber. The statutory exception should not, in my view, be 

broadened to include areas other than those 

in which the company is acting in selfdefense . . ." Hodge, 555 F.2d at 269. 

In the same case, however, the opposite view was also expressed..Judge Hufstedler, speaking for the minority and believing that telephone companies should have the right to 

protect their customers against obscene telephone calls, 

stated: 
". . . While making obscene telephone calls 

may be a crime, it also threatens the quality 

of the telephone company's delivery of service (i,e., a victim may, as a result of receiving such calls, refuse to pick up his 

telephone or may discontinue his service altogether). Thus, in contrast to those 

situations where the use of the telephone 

merely supplies the jurisdictional component 

for the application of a federal criminal 

statute, a telephone company has an interest 

to protect when a telephone is used to make 

obscene telephone calls . . ." Hodge, 

555 F.2d at 265, n. 5. 

The extent to which courts have allowed telephone companies 

in wirefraud cases to monitor or record conversations of their 

subscribers has varied. See United States v. Cornfeld (9th 

Cir. 1977), 563 F.2d 967; United States v. Clegg, supra; United 

States v. Freeman, supra; Bubis v. United States (9th Cir. 

1967), 384 F.2d 643. The general rule for monitoring or intercepting has been that the authority to monitor or intercept 

is limited and that a telephone company may only record or 

monitor to the extent "reasonably necessary" to protect its 

property from fraud. Reasonable methods include the use of a 

frequzncy recording device, such as a pen register, and the 

limited use of a tape recorder to identify the offending parties. United States v. Cornfeld, 563 F.2d at 970. 

A pen register is a device which records only the numbers 

dialed from a particular telephone. It does not disclose the 

contents of any conversation, nor does it indicate whether 

any calls were completed. A pen register is permissible because it is not capable of "interception" or "aural acquisition" 

within the meaning of Title 111. See 18 U.S.C. 2510(4); 

United States v. New York Tel. Co. (1977), 434 U.S. 159, 98 

S.Ct. 364, 54 L.Ed.2d 376; Michigan Bell Telephone Co. v. 

United States (6th Cir. 1977), 565 F.2d 385, 388. 

In regard to tape recorders, courts have approved of in- 
stances of recording under the exception where only the beginning salutations were recorded to identify the parties, United 

States v. Clegg, supra, and where the first two minutes of 

conversations were recorded. United States v. Cornfeld, supra; 

United States v. Freeman, supra. Where, however, a telephone 

monitored and recorded the entire contents of all calls placed 

and received by a subscriber for a period of three months, it 

has been held that such monitoring and recording was unreasonable and unnecessary under the "protection of property" 

exception, violating the subscriber's right of privacy. Bubis 

v. United States, supra. 

It is important to keep in mind here that several of the 

above holdings and statements have been made in the context of 

criminal prosecutions for wire fraud, where monitoring or recording was conducted pursuant to court order. In this regard, 

section 18 U.S.C. 2518(5) imposes a "minimization requirement" 

for such monitoring or recording, which may or may not be 

directly applicable to purely civil acts such as the instant 

case. 

This case, of course, does not involve any element of 

wire fraud. Rather, it concerns the alleged misuse of telephone company facilities by means of harassing, annoying and 

obscene telephone calls. Assuming arguendo that the telephone 

company could avail itself of the protection of the statutory 

exception, we find that the trial court erred in directing a 

verdict for respondent. 

Respondent here conducted recording on the party line for 

a period of six days. During this time, all phone calls 

placed and received were intercepted and recorded. Considering 

the nature and extent of this recording, and viewing it against 

prior cases in which courts have set forth the limits of per- 
missible recording in analogous situations, we find that 

reasonable men could have drawn different conclusions as to 

whether the recording was necessary to the protection of 

property and the rendition of services. While some may have 

found the recording reasonably necessary, others may have 

found it intrusive. Different conclusions could have been 

gathered from the evidence, and the factual conclusion advanced by respondent and reached by the trial court did not 

follow as a matter of law. Therefore, the District Court 

erred in directing the verdict for respondent, and we find it 

necessary to remand this case for a new trial. 

On remand we leave several matters for the consideration 

of the parties and the District Court. These matters include 

the questions of whether respondent may avail itself of the 

protection of the statutory exception, and whether, for that 

matter, appellant may bring a section 2520 action in a state 

court. In an annotation on the civil action under section 

2520, it is stated: 

". . . Relatively few cases have been reported in which the statute is construed or 

applied, and many questions about it are yet 

unanswered. For example, while it has been 

held that jurisdiction over a 52520 claim 

may be had in the federal courts under 28 

U.S.C. 1343(4) (84 infra), no federal case 

has been found in which it has been determined whether a S2520 action may be maintained in state courts (see, however, SR No. 

1097, 90th Cong 2d Sess (1968) 1968 USCCAN 

p 2112, at 2196, wherein it is stated that 

the scope of the [§2520] remedy is intended 

to be comprehensive and exclusive, but there 

is no intent to preempt parallel State 

law') . . ." Annot. 25 A.L.R.Fed. 759, 761 

(1975). 

In this connection, we note that appellant may have an action at common law for the invasion of his privacy. See Annot., 

11 A.L.R.3d 1296 (1967); Carr, The Law of Electronic Surveillance, §8.04(3) at 496. Several jurisdictions have extended 
the common law tort to the field of telecommunications. 

Hamberger v. Eastman (1964), 106 N.H. 107, 206 A.2d 239; 

LaCrone v. Ohio Bell Tel. Co. (1961), 114 Ohio App. 299, 182 

N.E.2d 15; Rhodes v. Graham (1931), 238 Ky. 225, 37 S.W.2d 46; 

Billings v. Atkinson (Tex. 1973), 489 S.W.2d 858. While some 

courts have indicated that a cause of this type would be 

denied to party line subscribers such as appellant, LaCrone, 

182 N.E.2d at 16, it has been stated in a related context 

under federal statutes that although a party line user's privacy is obviously vulnerable, it does not necessarily follow 

that telephone conversations are completely unprotected. Lee 

v. State of Florida (1967), 392 U.S. 378, 88 S.Ct. 2096, 20 

L.Ed.2d 1166. The elements of the cause of action are a 

". . . wrongful intrusion inta one's private activities in 

such a manner as to outrage or cause mental suffering, shame 

or humiliation to a person of ordinary sensibilities." 

LaCrone, 182 N.E.2d at 17; Housch v. Peth (1956), 165 Ohio 

St. 35, 133 N.E.2d 340, 341. 

Finally, in response to appellant's second issue, we note 

that punitive damages under 18 U.S.C. 2520 are recoverable 

only where malice is shown. Halperin v. Kissinger (D. D.C. 

1977), 434 F.Supp. 1193, 1195; Campiti v. Walonis (D. Mass. 

1979), 467 F.Supp. 464, 466; Jacobson v. Rose (9th Cir. 1978), 

592 F.2d 515, 520. The transcript in this case indicates that 

respondent's recording was conducted out of a good faith effort to solve the abuses of the party line after many complaints had been received. Recordings were made only after 

letters of notice had been sent regarding these problems and 

the possibility of attaching a tape recorder to the party 

line. No evidence of malice was present. Consequently, we 
find that the trial court properly refused evidence relating 

to punitive damages under these circumstances. If appellant 

seeks to recover punitive damages on remand under a 82520 

theory, evidence of malice need be shown. 

Remanded to the District Court for further proceedings 

consistent with this opinion. 

We concur: 

/ I Justice 

Chief Justice 

, 

'J ' L /i / .< (Ll - 

Justices 
Mr. Justice John C. Sheehy concurring in part and dissenting 

in part: 

I concur with the foregoing opinion except I dissent 

to that portion determining that punitive damages are not 

recoverable here. 

I believe that is a matter of fact to be decided on 

retrial and that the determination by this Court on an incomplete record and before retrial, is premature. 

Under the federal cases of Halperin v. Kissinger (D.D.C. 

1977), 434 F.Supp. 1193, 1195; and Campiti v. Walonis (D. Mass. 

1979), 467 F.Supp. 464, 466, it need only be shown to establish 

malice under 18 U.S.C. 2520, that the defendant acted "wantonly, reckless, or maliciously." This includes implied malice 

as well as express malice. We could leave it to the jury to 

determine whether or not there was express or implied malice 

in this case, if the plaintiff otherwise prevails.