In Smith v. LoanMe, Inc., No. E069752, 2019 Cal. App. LEXIS 1282, at *2-4 (Ct. App. Dec. 20, 2019), the California Court of Appeal addressed the scope of a cause of action under Penal Code 632.7.  The facts were as follows:

LoanMe is in the business of providing personal and small business loans. Smith’s wife is the borrower on a loan from LoanMe. In October 2015, an employee of LoanMe called the telephone number provided to LoanMe by Smith’s wife to discuss the loan. Smith answered the call on a cordless telephone and informed the caller that his wife was not available, and the call then ended. The call lasted approximately 18 seconds. LoanMe recorded the call. Three seconds into the call LoanMe “caused a ‘beep tone’ to sound.” It is LoanMe’s practice to cause a beep tone to play at regular 15 second intervals on all of its outbound calls. LoanMe did not orally advise Smith that the call was being recorded. Smith also did not sign a contract granting LoanMe consent to record calls.  In September 2016, Smith filed a class action complaint against LoanMe, alleging that LoanMe recorded phone calls without consent in violation of section 632.7 and seeking statutory damages and injunctive relief. On the parties’ stipulation, the trial court ordered a bifurcated bench trial to resolve the “the beep tone issue.” After listening to a recording of the phone call, the trial court concluded that the beep tone provided Smith sufficient notice under section 632.7 that the call was being recorded and that Smith implicitly consented to being recorded by remaining on the call. The trial court entered judgment against Smith.

The Court of Appeal held that

In sum, we see no viable alternative to interpreting sections 632.5 and 632.6 as limited to third party eavesdroppers, because they apply only to persons who intercept or receive communications without all parties’ consent. Section 632.7 contains the same restriction in the same language (“without the consent of all parties … intercepts or receives”), and we must interpret section 632.7 in a way  that harmonizes it with the statutory scheme of which it is a part. (Meza, supra, 6 Cal.5th at p. 856.) For all of the foregoing reasons, we conclude that section 632.7 clearly and unambiguously applies only to third party eavesdroppers, not to the parties to a phone call. . . .Thus, read as a whole, the Senate Rules Committee analysis reflects the Legislature’s concern about recording of cordless and cellular phone calls by third party eavesdroppers. The analysis contains not a hint of concern about recording by the parties to the calls. It is therefore unreasonable to interpret the ambiguous language quoted ante (“it will be illegal to record the same conversations”) as meaning that the bill would make it illegal for anyone to record cellular or cordless phone calls. The Legislature was not interested in recording by parties. The Legislature was targeting recording by eavesdroppers, so it used the same language it had used in sections 632.5 and 632.6, which target  eavesdroppers.  Similar observations hold true of all of the legislative history materials that we have reviewed. Throughout the legislative history of section 632.7, the Legislature demonstrates its concern with eavesdropping on wireless communications, and it never shows any concern about recording by parties. We therefore conclude that the legislative history supports our interpretation of section 632.7 as limited to third party eavesdroppers. To summarize: The plain language of section 632.7 clearly and unambiguously applies to third party eavesdroppers alone, not to the parties to cellular and cordless phone calls. The legislative history of section 632.7 confirms that interpretation. We must therefore affirm the judgment in favor of LoanMe, because Smith alleges only that LoanMe recorded calls to which LoanMe was a party.

A copy of the decision is here.