A Legal Guide to the California Invasion Privacy Act

This guide no the California Invasion of Privacy Act (“CIPA”) is for in-house legal counsel or outside law firms without privacy expertise. Your clients may have received a demand letter or may have been sued by an individual working together with a plaintiffs’ law firm looking to make use of CIPA to extract cost-of-litigation settlements.

I. What is the California Invasion of Privacy Act (CIPA)?

The California Invasion of Privacy Act (“CIPA”) is a 1960s era law that outlaws eavesdropping on telephone calls. It appears in the California Penal Code starting at Section 630.

II. Is CIPA a Threat for In-House Counsel?

Yes. For businesses with in-house counsel, the legal department is the first place the business will direct a demand letter or a complaint. Defending a CIPA case can be potentially costly in terms of legal fees. But no business wants to pay anything to settle what appears to be a trolling meritless case meant to generate income.

Clients with sufficient resources, however, are pushing back by defending cases, filing demurrers in state court and Rule 12(b)(6) motions in federal court with the hope of ending the case before significant legal fees are incurred. The hope is that these clients will deter future plaintiffs’ firms from targeting them.

III. Are Plaintiffs’ Firms Following Up on CIPA Demand Letters with Suits?

Yes. With the large number of demand letters going to clients, the question arises whether the plaintiffs’ firms are series. The question might arise whether plaintiffs’ firms sent so many letters that they wouldn’t have the ability to follow up with suits on all the cases. In other words, a client could take its chances and simply ignore a demand letter under the view that it could stay under the radar. Our experience has been that plaintiffs’ firms are starting to follow up on the hundreds or thousands of demand letters with suits. In other words, ignoring CIPA demand letters does not appear to be a viable option for clients.

IV. Are Businesses Settling CIPA Cases?

Yes. Some cases are settled early. Other businesses have decided to defend cases notwithstanding the defense costs. If all businesses threatened with suit collectively decided to defend their cases, then plaintiffs’ firms may choose more promising lines of litigation. Nonetheless, with the cost of litigation rising and the lack of resources for litigation, many businesses feel that they have no choice but to settle.

V. Will There Be a Legislative Fix for Abusive CIPA Litigation?

Perhaps. The California legislature is considering a bill right now to make it clear that processing personal information for a “commercial business purpose” under California law. The bill is S.B. 690. The legislation’s sponsor hopes the bill will remove the threat of abusive CIPA litigation from California businesses using standard Internet-based marketing and other tools.

VI. Conclusion

Threats of California Invasion of Privacy Act (CIPA) litigation pose a threat to clients. A small number of plaintiffs’ firms in California are extracting settlements from clients that may see no choice but to avoid the cost of defending CIPA cases. Nonetheless, some clients are fighting back. Our firm is in the process of defending CIPA cases for some of our clients, and we would be happy to discuss options open to your client if it is faced with a demand letter or worse, a complaint in state or federal court.

If your client received a lawsuit threat about the California Invasion of Privacy Act or want to find out more about the California Invasion of Privacy Act, please contact Stephen Wu, (408) 573-5700.