Smith v. LoanMe, Inc. (2021) 11 Cal.5th 183, which holds that no party or nonparty can intentionally record a covered telephone communication without consent, impacts all aspects of the legal system, criminal and civil, because recording phone calls occurs in all aspects of life. As an added benefit, LoanMe also provides an in-depth tutorial on how to interpret a statute.  

     The issue in LoanMe was whether  Penal Code section 632.7 applies to all parties to a communication transmitted between a cellular or cordless telephone and another telephone, prohibiting those parties from recording the communication without the consent of all participants, or whether that statute is concerned only with recording by nonparties, such as individuals who covertly intercept phone calls and eavesdrops upon them.  

     LoanMe had given a loan to the wife of plaintiff Jeremiah Smith and thereafter called a phone number Smith’s wife had provided. Smith answered, on what he asserted was a cordless phone, and advised the LoanMe representative that his wife was not at home. The call then ended, 18 seconds after it began. LoanMe had recorded the call. Although LoanMe caused a “beep” tone to sound during the call, the representative did not orally advise Smith that the call was being recorded. Smith brought a class action against LoanMe on behalf of all persons in California whose inbound and outbound telephone conversations involving their cellular or cordless telephones had been recorded without their consent by LoanMe in violation of section 632.7.  

     The trial court found that the beep tone gave Smith adequate notice that the call was being recorded and entered judgment in LoanMe’s favor. The Court of Appeal affirmed, concluding that section 632.7 applies only to nonparties and does not forbid a party to a phone call transmitted to or from a cellular or cordless telephone from recording the conversation without the consent of the other party or parties. The Supreme Court reversed and remanded the matter, finding that section 632.7 applies to the intentional recording of a covered communication regardless of whether the recording is performed by a party to the communication or by a nonparty. (Id. at p. 190.) Besides finding that the statute’s language favors that interpretation (id. at pp. 193-196), the Court concluded that such a broad interpretation better promotes the statute’s goal of protecting privacy in communications. (Id. at pp. 196-200.) The Court rejected the argument that liability should not be imposed on parties who, by happenstance, answer a call on a cordless phone instead of a landline. (Id. at pp. 200-201.) Finally, it held that the rule of lenity, which generally requires that defendants be given the benefit of every reasonable doubt when an ambiguity exists in a criminal statute that is being interpreted, should not be invoked in this instance because there was no uncertainty regarding the legislative intent. (Id. at p. 200.)  

MDM’s observation: Caution dictates that no calls, whether they be on landlines, cell phones or cordless phones, should be recorded without the consent of all parties. 

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, April 2021

Please visit my website at for information about my mediation and arbitration background and experience. Copies of my previous Mediation Messages and Arbitration Insights are available at the articles link on the website. 

Leave a comment