Fear Not Law Articles: KELLY v. Salomon Smith Barney, Inc Part I

KELLY v. Salomon Smith Barney, Inc

Filed 7/13/06

IN THE SUPREME COURT OF CALIFORNIA

KELLY KEARNEY et al., )

)

Plaintiffs and Appellants, )

) S124739

v. )

) Ct.App. 1/2 A101477

Salomon Smith Barney, Inc., )

) San Francisco County

Defendant and Respondent. ) Super. Ct. No. 412197

__________ )

The complaint in this case alleges that employees at the Atlanta-based branch of defendant Salomon Smith Barney (SSB) -- a large, nationwide brokerage firm that has numerous offices and does extensive business in California -- repeatedly have recorded telephone conversations with California clients without the clients' knowledge or consent. These facts give rise to a classic choice-of-law issue, because the relevant California privacy statute generally prohibits any person from recording a telephone conversation without the consent of all parties to the conversation, whereas the comparable Georgia statute does not prohibit the recording of a telephone conversation when the recording is made with the consent of one party to the conversation.

In this proceeding, several California clients of SSB filed a putative class action against SSB seeking to obtain injunctive relief against its Atlanta-based branch's continuing practice of recording telephone conversations, resulting from calls made to and from California, without knowledge or consent of the California clients, and also seeking to recover damages and/or restitution based upon recording that occurred in the past. SSB filed a demurrer to the complaint, maintaining that no relief is warranted, because the conduct of its Atlanta-based employees was and is permissible under Georgia law.

The trial court sustained SSB's demurrer and dismissed the action. The Court of Appeal affirmed the judgment rendered by the trial court, concluding that application of Georgia law is appropriate and supports the denial of all relief sought by plaintiffs. We granted review to consider the novel choice-of-law issue presented by this case.

Past decisions establish that in analyzing a choice-of-law issue, California courts apply the so-called governmental interest analysis, under which a court carefully examines the governmental interests or purposes served by the applicable statute or rule of law of each of the affected jurisdictions to determine whether there is a â€

Description	An action seeking to enjoin practice of Atlanta branch of nationwide brokerage firm--which has numerous offices and does extensive business in California--of recording telephone calls made to and from California clients without their knowledge or consent and seeking to recover damages for past recordings--where California law prohibits recording of a telephone conversation without the consent of all parties to the conversation whereas Georgia law allows recording of a telephone conversation where one party to conversation consents--California law should apply with respect to injunctive relief because failure to apply California law would impair California's interest in protecting degree of privacy afforded to California residents by California law more severely than application of California law would impair any interests of the state of Georgia; Georgia law should apply with respect to the request for damages for calls recorded in past because Georgia's interest would be more severely impaired were monetary liability to be imposed for such past conduct.
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