Yesterday's oral argument in Pioneer Electronics did not focus on the fact that the case was a class action. The attorneys and justices spent more time debating whether the putative class members (whom Justice Kennard referred to as "percipient witnesses") had any right to privacy under the circumstances of the case, whether it was fair that the defendant, but not the plaintiffs, had access to these witnesses, and how hard it would really be for the witnesses to return a card if they did not want to be contacted.
By way of background, the action alleged that certain Pioneer DVD players would not play some types of DVDs because of compatibility problems. The plaintiffs sought the names and addresses of persons who had contacted Pioneer to complain about the performance of their DVD players. Pioneer produced its summaries of the complaints, but refused to identify the complainants, citing the right to privacy. Plaintiffs moved to compel. Ultimately, the Court of Appeal held that the complainants' names and contact information could be released only if they affirmatively consented after notice was sent to them by first class mail.
Jeff S. Westerman of Milberg Weiss argued for the plaintiffs. He started out by saying that, regardless of whether it's a class action or not, the case involved three issues: (1) whether there was a right to privacy under the circumstances of the case; (2) whether parties to litigation should be allowed equal access to witnesses; and (3) whether it is appropriate to allow witnesses to "self-select" or "veto their role in the case."
Justice Corrigan interrupted to ask who should be in control of a witness's role. If other people have decided to litigate over an issue, she asked, do we mandate a witness's participation? Westerman responded that the court should be involved in deciding whether a witness will have to participate in a case. Justice Chin then interrupted to ask whether it was appropriate for the Court of Appeal to rely on the Colonial Life case (which adopted a notice procedure similar to that mandated by the Court of Appeal). Westerman said no. The problem is in letting the witnesses self-select. It sets up a situation where the witnesses who are the maddest, or who have the most free time, participate in the case, but these witnesses are not necessarily those with the most relevant information. Also, he pointed out, the other side has full access to all witnesses with no limits. He cited the Discovery Act, the purpose of which is to ensure equal access by all parties to all relevant information.
Justice Chin then asked whether the procedures in Colonial Life were mandated by a statute? Westerman answered yes (and this, in my view, is a key distinction between this case and Colonial Life). Chin said, "Do we have such a statute in this case?" Westerman said, "No." Chin said, "Isn't that the difference?" Westerman said, "That's a big difference."
Justice Kennard (whose questions tend to be more detailed than those of the other justices) then mentioned the fact that the case was brought as a class action. She pointed out that Pioneer redacted the names of the complainants, and asked Westerman whether his argument was that his client has the right to know the identities of those persons. She then said that she assumes Westerman relies heavily on the Court's opinion in Hill, and that he focuses on the first element of Hill, and argues that the complainants have no privacy right because they voluntarily gave their identifying information to Pioneer, so that would be the end of the analysis.
Westerman responded that his answers were yes and yes. He also mentioned the second and third prongs of Hill, and said that the complainants did not request privacy, they weren't offered privacy, there's no privacy agreement, and Pioneer's website says it can do whatever it wants with information provided by customers.
Justice Corrigan said, "So if I complain, I no longer have a reasonable privacy expectation?" Westerman said yes, you have a diminished expectation of privacy. The fact that the person complained suggests that the person is a more knowledgeable witnesses (than a DVD owner who did not complain). Justice Corrigan asked if they had given up the right to privacy. Westerman said that's a case-by-case question, but in this case, the Court of Appeal went too far. Justice Kennard interjected that a key fact in this case is that the people who complained are "not just potential witnesses but percipient witnesses" with knowledge of a defect. Percipient witnesses have no right to conceal their knowledge from the court, she said, but then she asked Westerman if he would acknowledge that they have the right to refuse to talk to plaintiffs' counsel if contacted. Westerman agreed with that, and said that if he were to attempt to contact them, it would be in his best interest to try not to antagonize them.
Here, Justice Kennard interrupted again, but if she had not it would have been interesting to see if Westerman was going to point out that ultimately, they could be compelled to participate by subpoena. In any event, Justice Kennard made the point that witnesses have no legally protected right to conceal their identities as witnesses. Westerman readily agreed. He mentioned that law enforcement agencies have filed amicus briefs suggesting that the Court of Appeal's opinion would hinder their own enforcement efforts. He said that the way to deal with the problem is to enter a protective order restricting the use of information about the witnesses.
Justice Chin then asked Westerman's opinion on the trial court's ruling (which required notices to be sent to the witnesses, but their failure to respond would be deemed consent to disclose their names to plaintiffs' counsel). Westerman said that he would not have challenged that order in the appellate courts, even though he thought that a letter was not strictly necessary.
Justice Baxter asked about the "chilling effect on consumers who knew that if they choose to complain they'd suddenly be open game for use in a class action lawsuit. Shouldn't we be concerned about this?" He then asked whether "the most important thing is that the consumer be told in a very conspicuous way what his failure to respond will mean?" Westerman cited the Valley Bank case, and said that someone who complains about a product has no more reasonable expectation of privacy than someone who gets up in the morning, drives down the street and witnesses an accident. He argued that there would be no chilling effect because people make decisions to return products for all kinds of reasons and that would not stop.
Justice Moreno asked whether notice by first class mail is appropriate. Westerman said yes. Justice Moreno asked if he agreed with the concern that some people won't read it and therefore won't respond. Westerman said that if there's a notification on the outside of the envelope stating that it relates to a lawsuit people will be more likely to open it. Justice Chin said what about notice by fax or email. Westerman pointed out that this was the only contact information available for some people. Justice Chin asked if that's all you have, what's wrong with giving notice that way. Westerman said nothing's wrong with it; in fact it indicates a preference on the part of the witness as to how they'd like to be contacted.
Westerman's argument time was then over.
William T. Bissett of Hughes Hubbard & Reed argued for Pioneer. He started out by saying that although he's Pioneer's counsel, he's representing the interests of the witnesses. He said that Pioneer is trying to do what the consumers would want. Justice Kennard interrupted to point out that we're not just dealing with potential witnesses, but rather with percipient witnesses. Bissett said we have to start out with the proposition that everyone has a constitutional right to be left alone. Justice Chin said, "Is it absolute?" Bissett said no. Chin said, "How is it limited?" Bissett explained that it depends on whether another interest outweighs it. He then went into a detailed discussion of the facts, and was not interrupted for some time. He said that out of 1.5 million DVD players sold, between 700 and 800 people contacted the company. Not all of these were complaints about the DVD players; some were just inquiries. He said that the notice program (presumably that required by the Court of Appeal's opinion) was implemented; 731 letters were sent; 88 were returned as undeliverable; 178 people wrote back and said that plaintiffs' counsel may contact them.
He then asked whether you can really say, in the context of this case, this class action case, which alleges that everyone is similarly situated, and you have 178 people who waived their right to privacy, do you really need 500 more?
Justice Corrigan then said, "What about the argument that you know who they are and the plaintiffs don't?" Bissett said that these people provided information to Pioneer for a limited purpose and did not agree to let Pioneer do anything else with it. Justice Corrigan observed that you're reading something into it either way (i.e., either you assume that they thought Pioneer would not use their complaints for any other purpose, or you assume that they willingly shared their information with Pioneer thereby waiving any privacy right). Bissett said that when you call a company with a complaint you expect them to get back to you in response to the complaint, not to be called by a lawyer. Justice Corrigan says that goes to what's a reasonable expectation. Bissett said yes, it becomes a policy question. Justice Corrigan said she agreed. Bissett said that the 800 million people who signed up for the "do not call" list think it's important to be left alone. (I would point out, however, that those people affirmatively said they did not want to be contacted. The "do not call" list operates in the manner plaintiffs are advocating, not Pioneer (i.e., people may be called unless they affirmatively say "do not call").)
Justice Kennard then said that if you go back to the allegations of the complaint, she would think that these people would expect to be contacted later. Bissett said that they would expect someone at the company to get back to them, but they don't expect to hear from anyone else. "If a class had been certified," he started to say, but then Justice Kennard interrupted and said "I know this is a pre-certification case, but getting back to the point, what is your response to the argument that the name and address isn't particularly sensitive because it doesn't relate to business secrets, intimate information, things of that nature, nor does it constitute an undue intrusion such as a marketing campaign." Bissett said that if we were only talking about the name and address, it would not be a problem, but what we're really talking about is people being contacted at home, with some kind of court approval of that.
Justice Kennard then asked, "If we agree with you," how should the court deal with the argument made by the California District Attorneys' Association that it would have an adverse impact on government attorneys' ability to investigate and remedy consumer-related problems. Bissett said, basically, that it has to depend on the particular case. This is not a situation where one size fits all. You have to balance the rights. Justice Kennard asked whether the court has to engage in balancing when the other side is arguing under the first prong of Hill that there is no privacy right at all. Bissett then talked about the Hill case at some length, basically saying that it's factually distinguishable. Justice Chin joined in discussing the Hill case as well. Eventually Bissett circled back to the argument that 178 people have consented; why do you need 500 more? He pointed out that no one is going to call 500 witnesses to the stand at trial, and argued that all it would do is establish that everyone's circumstances are different (thereby defeating class certification).
Justice Baxter asked what happens if you tell them that if they don't respond, their information will be disclosed? Bissett said that you put the burden on them to act. Justice Chin asked what's wrong with that? Tell them if you really want to be left alone, return this post card. Bissett said it should be made as easy as possible for people to exercise their privacy rights. Justice Corrigan said both are easy. Requiring them to respond to protect their privacy rights is "not hair-raisingly unreasonable." Bissett had to agree with the "not hair-raisingly unreasonable" characterization. Justice Corrigan said that this puts the individual consumer in the driver's seat AND serves to strike a balance between the adversaries in the litigation. (I think this strongly suggests where she is going; in fact Corrigan, Chin and Baxter all seem to be favoring the plaintiffs' position so far.)
Bissett then made what might be described, with 20-20 hindsight, as a mistake. He said he did not think that the fact that one side does not know all the witnesses is that important. Justice Chin said, "But that's becase you know!" and the courtroom chuckled. Bissett re-grouped. If you're saying someone can waive the right to privacy, he argued, why not make it an affirmative choice? Why presume someone has chosen to waive their rights by inaction? Justice Corrigan said, "Why not? It is such a huge deal either way?" Bissett said, "Well, you have to pick." Justice Corrigan said, "Yes, yes, that's why we're here." (This was an interesting exchange because during an earlier argument that morning, Justice Corrigan had said that she was trying to keep the argument focused on a particular issue because "we have to write a rule" on that issue.)
Bissett gamely responded that in this particular case, we are way at one end of the spectrum, there's just no need to presume that people waived their rights. Both sides know what these people's complaints were (about the DVD players). Justice Corrigan pointed out that both sides don't know whether the people who affirmatively consented are the ones who had the most serious complaints. Bissett said that all of the complaints had to do with the compatibility problem alleged in the action, and that there's no need to call people at home if you already know what they said, and especially where you have 178 people who have consented to being called—unless the court holds that merely contacting Pioneer constitutes waiver. Why burden the exercise of the right to complain without a significant need on the other side? There might be other cases in which the balancing of the rights comes out differently, and he posed as a hypothetical a case in which the private information might help find a kidnapped child. But in this case, the rights at stake are not very important. He said that Pioneer has won summary judgment in five out of five cases (apparently there are other cases pending in other states that allege the same defect; Bissett took pains to point out that these were "filed by the same law firm"). The claim is that some DVDs won't play right.
And that was the end of Bissett's time.
Before Westerman could say word one in rebuttal, Justice Kennard broke in with a lengthy summary of what she understood Westerman's argument to be. Westerman agreed that she had accurately summarized his position. He pointed out that Pioneer did produce their summaries of the complaints, but that those summaries are not evidence. To establish the right to class certification, he needs evidence. He then pointed out that this issue happens to have arisen in the context of a class action, but the principles laid out by the Court of Appeal apply to all cases. He said that the "defense bar" has seized on the right to privacy as a way to prevent access to witnesses. But if the Court of Appeal's opinion stands, then "if I'm in an auto accident and a witness gives me his card, I can refuse to identify that person" to the other side. Nothing in the Court of Appeal's opinion prevents its application that way.
And that was the end of the argument. Neither Chief Justice George nor Justice Werdegar made any comments, so it is hard to read their tea leaves, but I think on balance the justices' comments suggest that they are leaning in favor of the plaintiffs, primarily due to the unequal access to witnesses and because of how easy it would be for a potential witness to return a card affirmatively saying that they do not wish to be contacted. I also think that the argument would have been very different if the witnesses had been members of a certified class. It does not seem that the fact that they are putative class members is going to affect the court's analysis at all; it had no impact on the argument. A decision is due in ninety days.
The Fall 2006 issue of California Courts Review (a "quarterly magazine, by, for and about the state judicial branch") has this article by Alameda County Superior Court Judge Ronald M. Sabraw on my firm's Wal-Mart trial last year. The article describes some of the innovative procedures he implemented during the trial. 
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