F OR P UB LIC AT ION


### U N I TED STA TES C O U R T O F A PPEA LS F O R T H E N IN T H C IR C U IT

J OHN F AULK NER , on behalf of him se lf and a ll o the rs sim ila

rl y situated, Plaintif

f-Appellant ,

v.
ADT S EC UR I TY S ER VI CE S , I NC .; ADT S EC UR I TY S YS TE MS , W EST , I NC .; T YC O I

NTER NATI ONAL (U.S.) I NC ., Defendants-A

ppellees

. No. 11-16233

D.C. No. 3:1 1- c v- 00 96 8- JSW

OPI NI ON

Appea l from the United States District Court fo r t he No rt he rn Di str ic t of

Ca lif or nia J eff rey S. W hite, District J udg e, Presiding Argued and Submitted No ve mbe r 5 , 2 01 2— San F ra nc isc o, Ca lif

or nia Filed January

17, 2013F A U LKN ER V

. ADT S EC UR I TY S ER VI CE S , I NC

. 2

T he H o no rable R o b ert D

. Sa ck, Se ni o r C i rcui t Jud ge f o r t he U

. S. Co urt *
o f A p p eal s f

o r t he Se co nd C i rcui t , s i t t i ng by desi gnat i o n.

T hi s s ummary cons t i t ut es no part o f the o pi ni on of

t he cour t

. I t ha s ** b een p repa red b y co urt s t af f f o r t he co nveni ence o f

t he read er. Be fore : Robert D. Sack, Ronald M. Gould, *
and Mil an D . Sm ith , Jr. , Ci rc uit Judg e s. Opinion by

J udg e Sack

SUMMAR

Y **

Calif ornia Invasi on of

P rivacy Ac t The pa nel re manded to the district cour t to give the plainti ff an o pp or tun ity to s e e k to ame nd

his c omp la int

to succe ssfully

plead a cause of act i o n under Califor nia’s invasion of privac y

law.
The c omplain t was filed in a California state c ourt g overne d by

state proc edura l rules, and r emoved to fe der al court on diver sity

of citizenship gr ounds. The pane l ag ree d
w it h th e d is tr ic t c o urt th a t th e c o mp la int f a il e d to s tate a pla us ibl e c la im und e r C a lif

or nia ’s I nv a sio n o f P ri va c y Ac t, but the panel r emande d to allow plaintiff to a mend to attempt t o s u cc essfully

plead a cause of ac tion under the fe dera l standards se t forth in Ashcroft v. Iqbal , 556 U.S. 662 ( 2009), and Be ll A tla nti c Cor

p. v . Two mb ly , 550 U.S. 544 (2007).F A U LKN ER V

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CO UN SEL
Gre tchen Car

pente r (ar g ued), Strang e & Carpente r, L os An g e le s, Ca lif

or nia , f or Pla int if f- Ap pe lla nt. Robert Hickok, pro hac vic e (a rgue d) , Pep pe r Hamil ton

L L P, Phi la de lph ia , Pe nn sylva

nia , f or De fe nd ants -A

pp e lle e s.

OP IN ION SACK, Circuit J udg e:
J ohn Fa ulkner, a California re s i d en t, broug ht a putative class ac tion ag ainst ADT S ecurity Service s, I nc., ADT Se c ur it y Sy s te ms , We s t, In c
. , an d T y c o In te r

n a ti o n a l, I n c ., (collec tively “ADT ”) in Ca lifornia Superior Cour t al leg ing that ADT re corde d his telephone conver sation with an ADT repr esentative without his consent in violation of Section 632 of California’ s invasion of privac y law. Cal. P en al Code § 632. The c ase w as later remove d by

the def en d an t to the United States District Court for the N orthern D i s t ri ct of California on diver sity

g rounds. Upon ADT ’s motion, the dis tr ic t c ourt

c on c lud e d th a t Faul kn e r’ s p le a din g s f a ile d to state a pla usible claim upon which re lief could be g rante d and there fore dismiss ed the a ction pursuant to Fe dera l Rule of Civil Procedur e 12(b) (6). Althoug h we a g ree with the district
c ourt , w e re mand in or de r to g ive the pla int if f a n o pp or tun ity to s e e k to ame nd

his c omp la int

to s uc c e ssf

ull y ple a d a c a us e of ac tion under the fe dera l standards set f orth in Ashcroft v. Iqbal , 5 5 6 U

. S. 6 6 2 ( 2 0 0 9 ) , and B ell Atlantic Corp. v. Twom bly , 550 U.S. 544 (2007).F A U LKN ER V

. ADT S EC UR I TY S ER VI CE S , I NC

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F ACTUAL AND P ROCEDURAL BACK GR OUND
Acc ordingto his complaint, on March 4, 2010, John Fa ulkner contac ted his se curity provider, ADT, by telephone to dispute a cha

rg e asse ssed by

ADT. F aulkner

was transfe rre d to ADT’s tec hnical line, whe re, he alleges, he beg an hearingperiodic “ beeping ” sounds duringthe
conver sation. Upon inquiring a bout the sounds, Fa

ulkner wa s informed that his te lephone c onversation was beingrec orded by ADT.
F a ulk ne r t old the re pr e se ntativ e that he ha d n ot p re vio us ly been informed that the conversation was be ing r ecor ded and that he did not wish to co n tinue the conve rsation if the
re c or din g c on tin

ue d. Th e re pr e se ntativ e a dv ise d F a ulk ne r t o contac t the customer se rvice l i n e to discuss the issue. Fa ulkner c alled on the c ustomer s ervic e line, whe re he asked to speak with a r epre sentative on a line that was not being
rec orded. That r epre sentative informed Fa ulkner that it was the company ’s policy

to rec ord telephon e calls and a dvised Fa ulkner to end the call if he did n o t wi sh to be rec orded, which he did.

B a se d o n th e se conve rs a tio ns , F a ulk ne r f ile d a c la im alleg ing a violation of Section 632 of C alifornia’ s invasion of privac y law, Cal. Penal Code § 632, in the S uperior Court of California, County

o f San Mateo, on F ebrua ry 3, 2011. Fa ulkner a lleg ed that his was a co nfidential communication under the statute and that ADT h ad viol ated the statute by
re c or din g the c o nv e r s a

t i on wi tho ut f ir st o bta ini nghis c on se nt. He a ll ege dthat conver sations such as his wer e conf idential “bec ause the y

are car ried on in circ umstances a s may rea s o nably

indicate that a

ny party to the communicationF A U LKN ER V

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. 5
de sir e s it to b e c on fi ne d to the pa

rt ie s th e re to. ” Pl. ’s Com

pl. ¶ 27.
On Marc h 2, 2011, ADT re mo v ed this action to the United States District C o u rt for the N orthern D istrict of Ca lif orn i a , a s s e r t i n g j u r i s d i c t i o n u n d e r 28 U. S.C. § 1 33 2( d) (2 ). On

Marc h 2 1, 20 11 , A DT f iled a mot ion to dis miss Fa

ulk ne r’ s c omp la int

un de r F e de ra l Ru le of

Civ il Procedur e 12(b) (6) f

or fa ilure to state a c laim u p on which relief can be grante d. By

order dated Ma

y 12, 2011, the district court (Jeffre y

S. W hite, J .) g rante d the motion.
The district cour

t conclude d that Fa

ulkner’s c onversation was not a c onfiden t i al communi cation bec ause he had “no objectively

rea son able ex pectation that his t elephone
conver sation with ADT would not be over hear d or
rec orded

. . . .” Faulkner v . ADT Sec. Se rvs., Inc

. , No. 11- 0 0 9 6 8 , 2 0 1 1 U

. S. D is t. L E X I S 5 0 9 9 3 , a t * 8 , 2 0 1 1 WL 18 12 74 4, a t *3 (N .D . Ca l. M ay 12 , 2 01 1). I

n r e a c hin g thi s conclusion, t he cou

rt l o o k e d

a t t h e “ s ur r ounding circ umstances to det er m ine whethe r the pa rties had a

n objectively

rea sonable e x pectation th a t t h e c o nv e r s a

ti o n [w a ]s not being rec orded or

overhe ard,” id. , and concluded that Fa ulkner ha d “not alleg ed what circumstanc es would support
an ex pectation of privacy in such a c all,” id. a t * 1 0 , 2 0 1 1 WL 1812744, at * 4

. The c ourt distinguished F aulkner ’s alleg ations from the fa cts of ca ses in which courts had f ound a reasonably

war rante d expectation of conf identiality

on the g rounds that the natur e of ADT’s business and the cha rac ter of the c all wou ld not

a lon e pr ov ide fo r s uc h a n o bje c tiv e ly
rea sonable e x pectation. Id. at *10–11, 2011 WL1812744, at *3 –4

. Th e c ourt

the re fo re g ra

nte d A DT ’s mot ion

to d ism iss the c omp la int

wi th p re jud ic e . F a

ulk ne r a pp e a ls.F A U LKN ER V

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JU RI SDI CT ION AN D ST AN DA RD OF RE VI EW We have jurisdiction to hear Fa ulkner’s a

pp ea l under 28 U.S.C. § 1291 because the jud gment from which he
ap p e a l s i s a “ f

i n a l d e c i s i o n [ ] o f th e d i s tr i c t c o urt [

. ] ” We revie w de novo the dis tr ic t c ourt ’s or de r gra nti nga mot ion to dis mis s f or fa ilure to s tate a

c la im und e r F e de ra l Ru le of Civ il Procedur e 12(b) (6). Cousins v. Lockye r , 568 F.3d 1063, 1067 (9th Cir. 2009). All w ell-plea ded alleg ations of mater ial fac t in the complaint are acc epted a s true and are construed in the light most favor able to the non- moving pa rty

. Manzar ek v

. St. Paul Fire & Marine Ins. Co. , 51 9 F.3 d 1 02 5, 10 31 (9 th Cir . 2 00 8) ; W

arshaw v

. X

o ma Corp. , 7 4 F .3 d 9 55 , 9 57 (9 th Cir . 1 99 6)

. To surv ive a

mot ion to d ism iss , a

c omp la int

mus t a lle g e “ e no ug h f

a c ts t o s tate a

c la im t o re lie f that is pla

us ibl e on i t s fa ce
. ” Be ll A tl. Cor p. v . Two mb ly , 550 U.S. 544, 570 (2 00 7) ; see also Moss v . U.S. Sec ret Serv. , 572 F.3d 962, 969 (9th Cir. 2009). A cla im has fac ial plausibilit y when “ the plaintiff pleads f

actua l content that allows the c ourt to draw the re asonable infere nce that the defe ndant is l iable for the misconduct alleg ed.” A s h c r o ft v

. I q bal , 5 5 6 U.S. 662, 678 (2009).

DI SCU SSIO N
California’s Invasion of P rivac y Act provide s, in releva

nt part, that “[e]very person who, intentionally and without the consent of a ll parties to a con fi d en tial communication, by
me an s o f an y e le c tr o n ic amp li f yin g o r r e c o r d in g d e v ic e
. . . rec ords t he confidential communication” violates the statute. Ca l. P e na l Co de § 632 (a) . T he statut e a lso pr ov ide s, in Section 632(c) , that “[t]h e te r m ‘confide ntial communication’ inc lu d e s an y c o mm

un ic a ti o n c ar

r ie d o n in c ir c u ms ta

n ces a s may rea sonably indicate that any party to the communicationF A U LKN ER V

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desires it to be c onfined to the pa rties t h ere to . . . .” Id. § 632(c) . The statute doe s not reac h a communication made “in any other c ircumstance in which the parties to the communication mayrea s o n ab l y ex p ec t t h at t he communication may

be over hear d or re corde d.” Id.
Th e C a l i f

o r n i a S u p r e m e C o ur

t h a s c o n c l u d e d tha t a conver sation is c onfidential within the meaning of S ection 63 2 “ if a pa rt y to t ha t c onve rs a tio n h a s an o bject iv ely
rea sonable e x pectation that the conver sation is not being overhe ard or

rec orded.” Kearney v. Salomon Smith Barney, Inc. , 3 9 C al

. 4 th 9 5 , 1 1 7 n
. 7 ( 2 0 0 6 ) ( q u o t i n g Flanagan v. Flanagan , 27 Cal. 4th 766, 776–77 (2002)). The standa rd of confide ntiality

is “an ob

j ec t i ve one de fined in terms of
rea sonablene ss.” Fr io v . S up e rio r Co ur t , 2 0 3 C al. App. 3d 1480, 1488 (1988).

In th e c on te xt of a bu sin e ss- re late d te le ph on e c a ll, c ourt s have loo ke d to the c ir c ums tanc e s su rr ound in g the c a ll t o divine whether the standard has been met, inclu d i n g the “natur e of [t he defenda

nt’s] business and the chara cter of the communications.” Flanagan , 2 7 C al

. 4 that 7 7 2 (c i t i n g Fr io , 203 Cal. App. 3d at 1489–90). F or example, the Court of Appea l in Fr io , consideringcalls betwe en a re cord pr oducer and his clients, c oncluded that the c ommunications were confide ntial beca

use “[a]ll t he telephone communications
wer e conduc ted on a o n e-on- one basis and r elated to a profitable ve nture which the speake r re asonably might expect would be conf

ined to the par

ties.” 20 3 C al. App. 3d at 1489–90. I t observed that the communication in cl u ded “mar ket data [and] business strateg y ,” wa s “sensitive,” a nd was “ persona l . . . among t h e parties.” Id. The Court of Appea l c oncluded that there was “ a re asonable expectation byF A U LKN ER V

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one o f th e p arti e s th a t n o o n e [w a s ] .

. . o v e r h e ar in g the
conver sation.” Id. at 1490. To preva il a gai nst the Rule 12(b)(6) motion, then, Faulkn e r w o u ld h av e to a ll e g e f a c ts th a t w o u ld le a d to the plausible infer ence tha

t his was a conf

idential communication – tha ti s , a

c o m mun i c a t i o nth a th e h a d ano b j e c t i v e ly
rea sonable e x pectation was not being rec orded. F aulkner ’s complaint, at least in its present f orm, does not do so.
Fa ulkner’s c ompl a in

t c o ntains two alleg ations conce rning the con fide nti a lity

of his c omm

un ic a tio ns wi th A DT . F ir st, he alleg es that he c alled ADT to “dispute a c harg e.” Pl.’s Compl. ¶ 10. Second, he states th at his conversation was confide ntial beca

use it was “c arr ied on in circ umstance s as may rea sonably

indicate that any party

to the communication desires it to be confined there to.” Id. ¶ 27

. Th e latte r o f t he se al leg ations is no more than a “ [t ]hreadbar e re cital[] ” of the l an g u a g e o f

S e c t i o n6 3 2 , p r e c i s e l y th e k i n d

th a t Iqbal prohibits. Iqbal , 5 5 6 U

. S. a t 6 7 8

. U nder Iqbal , s uc h b a ld leg al conc lusions are not entitled to be ac cepte d as true a nd thus “do not suffice ” to pre vail over a motion to dismiss. Id.
No r i s th e fo rm e r a lle g a tio n, that F a ulk ne r c all ed to dispute a cha

rg e, suff icient to lead to the plausible infere nce that he had a

n objectively

rea sonabl e expectation of confiden t i ali ty . Although c ircumstance s may arise unde r whi ch the nature of the re lationship or the char acte r of the
c omm un ic a tio ns be tw e e n a

c us tom e r a

nd a ho me se c ur ity company could pl ausibly constitute a c o n f id ential
c omm un ic a tio n und e r t

he Ca lif or nia statut e , h e re, th e de ta il that Fa ulkner a lleg es is mere l y consistent with such aF A U LKN ER V

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A D T ar gu es t hat di s mi s s al was proper l y gr ant ed becau s e a cons umer ***
c a l l t o a h om e s e c u r i t y c om pa n y c a n n e v e r c on s t i t u t e a c on f i dent i al
c o m m u n ic a tio n w ithin the m e a n ing o f C a lif o rn ia P e n a l C o d e § 6 3 2 . W e d i sagr ee. T here i s no t hi ng i nherent l y non-conf i d ent i al ab o ut a b i l l i ng di s pu t e wi t h a h ome s ec u r i t y c ompan y
. For e x ampl e, a c al l er mi g h t be
a sk e d to ve rify h is id e n tit y b y c o n firm ing h is so c ia l se c u rity nu m b e r o r h is
u n listed tele p h o n e nu m b e r, o r to d isc lo se o the r p riv a te o r p o te n ti a lly p riv a te info rm a tio n . If a d e q u a te ly p le d , suc h fac ts m igh t we ll su p p o rt a find ing o f co n fid e n tiality. conclusion. In o t h erwords, too little is asserted in the

*** complaint about the par ticular re lationship between the pa rt ie s, and the pa rt ic ula r c ir c ums tanc e s o f t

he c a ll, to l e a d to the pla us ibl e c on c lus ion th a t an o bje c tiv e ly re a so na ble expectation of conf

identiality

would have attended such a
c o mm un ic a ti o n
. F a

u lk n e r h a s th e r e f

o r e f a il e d to “ nu d g e []” his claim “fr om conce ivable to plausible.” Id. at 680 (interna l citations and quotation marks omitted). His complaint cannot survive ADT ’s Rule 12(b)( 6) motion.

F a ulk ne r’ s c omp la int

wa s f ile d in a Ca li fo rn ia

State c ourt , w hic h is , o f c ours e , g ov e rn e d b y state pr oc e dura l r

ule s. Th e a c tio n, a lon g wi th t

he c omp lai nt , wa s th e n r e mov e d to fe de ra l c ourt , a s n ote d, on di versity of c iti zen sh ip gro un ds

. I t is under the F eder al Rules of Civil P roce dure, a s interpre ted by the Supreme Court, that the m o t i on to dismi ss was proper ly g rante d. See Kearns v. For d Mo t o r Co. , 567 F.3d 11 20 , 11 25 (9 th Cir

. 20 09 ) (a pp lying fe de ra l ple a ding r ule s, and noting t h at “[ i ]t is well-settled that the F eder al Rules of Civil Procedur e apply

in fede ral c ourt, irrespe ctive of the
source of the subjec t matter jurisdiction, and irre spective of whether the substantive law at issue is state or fede ral” ) (interna l quotation marks omitted)). In an abunda nce – pe rh a ps an o ve ra

bund a nc e – o f c a

uti on we rem and

thi s c a se to the dis tr ic t court fo r it to c on sid e r a llo wi ngthe pla int if f t oF A U LKN ER V

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ame n d h is c o mp la int i na

ma n n e r th a t w o u ld

s a ti s f y f e d e r al ple a din g sta

nd ard s.
REMAND ED.