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Jo Ann Zephyr, et al v. Saxon Mortgage Services

June 4, 2012

JO ANN ZEPHYR, ET AL.,
PLAINTIFFS,
v.
SAXON MORTGAGE SERVICES, INC. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

ORDER

Before the Court is Defendant Saxon Mortgage Services, Inc.'s ("Saxon") Motion to Dismiss Jo Ann Zephyr's ("Zephyr") First Amended Class Action Complaint (ECF No. 21). The Motion is fully briefed. Also before the Court is Saxon's Request for Judicial Notice in Support of its Motion to Dismiss (ECF No. 22), which is opposed (ECF No. 31), Plaintiff's Request for Judicial Notice (ECF No. 31), and Saxon's Supplemental Request for Judicial Notice (ECF No. 34). For the reasons that follow, the Requests for Judicial Notice (ECF Nos. 22, 32 and 34) are GRANTED and Defendants' Motion to Dismiss (ECF No. 21) is DENIED.

BACKGROUND

Zephyr is a California citizen and resident of Sacramento, who brings this putative class action on the basis of diversity jurisdiction under the Class Action Fairness Act ("CAFA") against Saxon, a Texas corporation, that she alleges made and recorded mortgage lending and/or servicing calls to individuals in California. First Amended Complaint ("FAC") at 3-5. Zephyr brings this action on behalf of herself and a class of "all California residents who received telephone calls from Defendants related to mortgage lending and/or servicing." FAC at 5. Zephyr contends that Saxon recorded its outbound calls from Texas to the class members in California without obtaining their consent. FAC at 7, 9-10. Zephyr's First Cause of Action alleges that these calls violated California Penal Code ("Penal Code") § 632, which prohibits the intentional recording of confidential communications without the consent of all parties to the communication.*fn1 Id.

Zephyr contends that Saxon's calls were confidential because plaintiffs had an objectively reasonable expectation their conversations were not being recorded.*fn2 Id. Zephyr's Second Cause of Action alleges that Saxon also violated Penal Code § 632.7, which prohibits the intentional recording of any communication without the consent of all parties where one of the parties is using a cellular or cordless telephone.*fn3 FAC at 10.

Zephyr contends that she and the proposed Class meet the class requirements under Rule 23 of the Federal of Civil Procedure. FAC at 5-9.

On behalf of the Class, Zephyr seeks statutory damages in the amount of $5,000 for each violation of Sections 632 or 632.7 of the Penal Code, as well as injunctive relief, attorneys fees and costs, and any other relief the Court deems just and proper. FAC at 11.

Saxon moves to dismiss pursuant to Fed. R. Civ. P. 12(b)(6).*fn4 Motion to Dismiss ("MTD") (ECF. No. 21). Saxon does not dispute that it made calls from Texas to actual or potential customers in California, or that some of these calls went to cellular or cordless telephones. MTD at 1. Saxon also does not dispute that some or all of these calls may have been recorded in violation of Penal Code §§ 632 or 632.7. Id. Rather, Saxon moves to dismiss on the basis that the application of Penal Code §§ 632 or 632.7 to Saxon's alleged conduct violates the dormant Commerce Clause of the United States Constitution.*fn5

REQUESTS FOR JUDICIAL NOTICE

Both Saxon and Zephyr have filed requests seeking judicial notice under Rule 201. (See ECF Nos. 22 and 32.) Saxon requests that the Court take judicial notice of the legislative history of Penal Code Section 632 and attaches portions of that history as an exhibit to its Request. (ECF No. 22.) Zephyr opposes (ECF No. 31), arguing that the statute is unambiguous, therefore the Court need not resort to a review of the legislative history. (ECF 31 at 1-4.) Zephyr seeks judicial notice of a California Department of Corporations' Mortgage Lender and Servicer license for Saxon. (ECF No. 32.) That Request is unopposed. Finally, Saxon filed its Supplemental Request for Judicial Notice, which attaches excerpts from the legislative history of Section 632.7 (ECF No. 34.)

The Court "may take judicial notice of 'matters of public record' without converting a motion to dismiss into a motion for summary judgment." Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001). The matters of which a court may take judicial notice should be "generally known" or "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(f); U.S. v. Camp, 723 F.2d 741, 744 (9th Cir. 1984).

Having reviewed the exhibits to Saxon's and Zephyr's Requests for Judicial Notice, the Court finds that it may take judicial notice of all of the attached documents.

Although Zephyr objects to the admission of some of the legislative history, Zephyr does not contest that these are readily available public documents or challenge their authenticity. Furthermore, there is no dispute that the documents relate to the matter at issue: specifically, the meaning of Section 632 of the Penal Code. Similarly, Zephyr's Request for Judicial Notice relates to a readily available public document and there is no dispute as to its authenticity. The Court therefore GRANTS the parties' requests for judicial notice. (ECF Nos. 22, 32 and 34.)

LEGAL STANDARD UNDER RULE 12(B)(6)

On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) "requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant a fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell. Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require detailed factual allegations. Id. However, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id.

(Internal citations omitted.) A court is not required to accept as true a "legal conclusion couched as a factual allegation." Ashcroft v. Iqbal,129 S. Ct. 1937, 1949-50 (2009) (quoting Twombly, 550 U.S. at 555). "Factual allegations must be enough to raise a ...


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