It is often assumed that the statutory penalty in civil actions under California’s Invasion of Privacy Act, Penal Code section 630 et seq. (“CIPA” or “Act”), is $5,000 for each instance of misconduct that violates the Act.  (Some California courts have indeed indicated as much, though in dicta and without analysis.)  Adopting such a view, class action plaintiffs usually contend that CIPA violations should be punished at a rate of $5,000 per violation per class member, which could expose class action defendants to monstrous and potentially annihilating penalties.  But, this view is not supported by the plain text or legislative history of the Act.

The Text Of Civil Code Section 637.2

Nowhere in Penal Code section 637.2, the provision of CIPA allowing civil actions, does it say that statutory penalties are $5,000 per violation.  Rather, the text of the section convincingly suggests, if not conclusively requires, that statutory penalties be capped at $5,000 per lawsuit.  The text indicates that a plaintiff is only entitled to recover more if she suffered actual damages and those damages exceed $5,000 either alone or under the portion of 637.2 allowing treble damages.

Section 637.2 states in full:

“(a) Any person who has been injured by a violation of this chapter may bring an action against the person who committed the violation for the greater of the following amounts:  (1) Five thousand dollars ($5,000).  (2) Three times the amount of actual damages, if any, sustained by the plaintiff.

(b) Any person may, in accordance with Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of the Code of Civil Procedure, bring an action to enjoin and restrain any violation of this chapter, and may in the same action seek damages as provided by subdivision (a).

(c) It is not a necessary prerequisite to an action pursuant to this section that the plaintiff has suffered, or be threatened with, actual damages.”

Whether section 637.2 imposes penalties per violation or per action has not been litigated often, although defendants have advanced the argument that the penalty should be per action.  Defendants have noted, for example, that section 637.2’s reference to $5,000 modifies the term “action” not “violation.”  Defendants have also argued that the California Legislature has drafted dozens of penalty provisions whereby the penalty is explicitly written to be per violation, but that Penal Code section 637.2 simply does not include such terminology.

The Legislative History Of Civil Code Section 637.2

That statutory civil penalties under CIPA are capped at $5,000 per action is the most direct construction of the language of section 637.2 and thus the one that should be favored.  See, e.g., California Fed. Savings & Loan Assn. v. City of Los Angeles, 11 Cal.4th 342, 349 (1995).  Such a statutory interpretation also happens to be supported by the Act’s legislative history.

At the outset, nothing in the legislative history appears to support an intent that penalties would be on a per violation basis.  Rather, the phrasing found in the pieces of the history, like the language of the statute, shows the intent to award the statutory penalty on a per action basis.  See, e.g., Digest of Assembly Bill 860, by Assembly Speaker Jesse M. Unruh (May 2, 1967), p. 6 (“In that action he could recover a minimum of $3,000 or an amount equal to three times the actual damage he suffered by the invasion of his privacy”); Assembly Committee on Criminal Procedure, Judiciary Com., Assem. Bill No. 860 (April 25, 1967), p. 5 (section 637.2 “provides for a civil action by any person injured by a violation of this chapter for $3,000 or treble damages, whichever is greater”).

The Legislature intended the real deterrent to be the threat of triple damages; the penalty was merely a floor that only actual damages, trebled or otherwise, could exceed.  See, e.g., Digest of Assembly Bill 860, by Assembly Speaker Jesse M. Unruh (as amended June 5, 1967), p. 6 (“The availability of a civil action for the recovery of triple damages should prove to be an effective deterrent in cases where wire­tapping or eavesdropping is connected with industrial espionage.  In such cases the possible economic rewards might be so great that they would outweigh the threat of criminal penalties.  But a large civil damage award, such as could be obtained in a triple damage suit, might in fact discourage the activity”).

It was further contemplated that repeat violations would be civilly remedied by means of injunctive relief, not though accruing penalties.  Id. (“In the same suit, or in a separate action, he could also seek to enjoin the continuation of the eavesdropping”).  This is significant in that the Legislature was obviously aware of and acknowledged the possibility of multiple violations by a defendant, but did not enact language stating that the penalty is to be awarded for each violation.

An interpretation that the penalty is only authorized once per action is all the more reasonable when one considers that the original $3,000 penalty in 1967, when the statue was enacted, would be worth approximately $20,000 in today’s dollars.  By the time section 637.2 was enacted, the Legislature had already passed several statutes where it overtly stated penalties were on a per violation or offense basis.  See, e.g., Civ. Code § 52; Bus. & Prof. Code § 556; Bus. & Prof. Code § 17536.  It even enacted statutes in 1967 that had language imposing penalties on a per violation basis, including penalties of as little as $100.  See, e.g. Food & Agric. Code § 10786; Civ. Code § 1716; Health & Safety Code § 18700.  With this backdrop, it is implausible that the Legislature intended to impose in section 637.2 the equivalent of $20,000 in penalties for each offense without following its contemporaneous and prior draftsmanship and explicitly stating the penalty would be on a per violation basis.

Class Defendants Should Consider Arguing That Statutory Penalties Are Capped At $5,000 Per Action

Class action defendants have strong arguments against a construction of section 637.2 that imposes the $5,000 penalty on a per violation bases.  One obstacle is those cases that have made statements in dicta that the penalty is per violation.  But, it does not appear the courts considered or were presented with the legislative history, nor did the decisions articulate the reasoning for their statements or engage in any meaningful analysis of the language of section 637.2.  Thus, their dicta should not be binding.  See, e.g., People v. Superior Court, 1 Cal. 4th 56, 66 (1991) (“we must view with caution seemingly categorical directives not essential to earlier decisions and be guided by this dictum only to the extent it remains analytically persuasive”); Kasky v. Nike, Inc., 27 Cal. 4th 939 (“disapprov[ing] as ill-considered dicta” certain statements the Supreme Court had made in a prior decision); People v. Evans, 44 Cal. 4th 590, 599 (2008) (noting with respect to a statement in a prior Supreme Court opinion that “an appellate decision is not authority for everything said in the court’s opinion but only for the points actually involved and actually decided”) (citation omitted); Appel v. Superior Court of Los Angeles County, 214 Cal. App. 4th 329, 340 (2013) (“general observations unnecessary to the decision [] are dicta, with no force as precedent” and that such statements even lack persuasive authority where they were not made in a process that “demonstrates a thorough analysis of the issue”).

A good-faith argument, therefore, can still likely be advanced that section 637.2 does not authorize a penalty per violation but rather only allows a penalty of $5,000 per lawsuit, or up to three times actual damages.  Class action defendants sued under CIPA should consider raising the argument if for no other reason than to preserve the issue for appellate review.