Out-of-state callers may not surreptitiously tape record telephone conversations with people in California, the state Supreme Court decided unanimously Thursday.
The high court said that California privacy law forbids such taping without permission even if the calls were recorded in a state that allowed it. California is one of 11 states that prohibit such recordings without the consent of all parties.
Kevin Eng, a lawyer for a class of people whose calls were taped, said he suspects a large number of companies outside California have been recording calls with residents.
The ruling "puts companies on notice that they are not free to ignore California laws," Eng said.
But Donald M. Falk, who represented the U.S. Chamber of Commerce, complained the ruling extended "state regulation beyond state borders." He called the decision "highly unusual."
Most courts have found that the law in the state where the recording was made applied, he said. Falk said the ruling invited review by Congress or the U.S. Supreme Court.
The case stemmed from a lawsuit brought against a brokerage firm, then called Salomon Smith Barney Inc. and now Citigroup Global Markets Inc.
During the course of the litigation, the disgruntled clients who sued Salomon learned that brokers based in Georgia had been taping their telephone conversations.
Because the taping was done in Georgia, where such recordings are legal, a trial judge and a Court of Appeal in California threw out the clients' privacy lawsuit.
The state Supreme Court reinstated it, ruling that the failure to apply California law would impair Californians' privacy and potentially place California businesses at a disadvantage. The ruling will affect all telephone calls to or from California.
Chief Justice Ronald M. George, who wrote the court's holding, said the brokerage firm could not be held liable for monetary damages because of the confusion in the law prior to Thursday's ruling.
"Of course, out-of-state companies that do business in California now are on notice that, with regard to future conduct, they are subject to California law" and possible monetary sanctions, George wrote.
Alex Samuelson, a spokesman for Citigroup Smith Barney, the brokerage entity of the corporation, refused to comment on a possible appeal to the U.S. Supreme Court.
"The California Supreme Court's decision is a new interpretation that extends California law beyond its borders," Samuelson said. "We will review our procedures to comply with the court's decision."