United States District Court, S.D. California
ORDER DENYING PLAINTIFF'S MOTION FOR
ATTORNEYS' FEES AND COSTS [ECF NO. 182]
Cynthia Bashant United States District Judge.
NEI Contracting and Engineering, Inc. (“NEI”)
placed orders for concrete by phone with Defendant Hanson
Aggregates Pacific Southwest, Inc. (“Hanson”).
After accepting delivery of the concrete, NEI refused to pay
for it. But NEI's efforts to stiff Hanson crumbled when
Hanson produced recordings of its phone orders. The company
paid its bill in full.
then filed this putative class action against Hanson based on
Hanson's practice of recording customers' phone
calls. It hoped to recover millions of dollars in damages on
behalf of a class of Hanson's customers. NEI also sought
to change Hanson's conduct. The company succeeded on the
second point-part way through the litigation, Hanson
voluntarily changed its phone system's admonition to
advise customers that their calls may be recorded.
would turn out to be a Pyrrhic victory. By the time NEI
discovered Hanson's new behavior, the company's
contingency fee counsel had already invested nearly $300, 000
worth of time into this case. Yet, the hope of a large class
action recovery never materialized. NEI proceeded to trial on
its individual claim against Hanson, and it lost. The company
NEI turns to California's Private Attorney General
Statute and the state's catalyst theory to try to recoup
some of its counsel's investment. By leveraging its
success in changing Hanson's conduct, the company hopes
to subsidize its unsuccessful pursuit of a class action
recovery. Thus, NEI seeks to recover all of its
attorneys' fees up to the date it discovered Hanson's
new behavior. The company also requests this fee amount be
increased by a multiplier of 1.75-for a total bounty of
almost $500, 000. Hanson opposes.
NEI achieved partial success, a fee award is not appropriate.
NEI does not meet its burden of demonstrating the
requirements under California's Private Attorney General
Statute and the catalyst theory are satisfied. Consequently,
for the following reasons, the Court DENIES NEI's motion.
sells crushed aggregates, ready-mix concrete, and soil
amendments to the construction industry. NEI is a general
contractor that has purchased concrete products from Hanson
since at least 2002. As mentioned above, this case arises
from Hanson's practice of recording its customers'
phone orders and a billing dispute between the parties that
was resolved through reference to recordings of NEI's
Hanson's Recording Practice
receives orders for ready-mix concrete and aggregate
materials through its dedicated phone order line. Before the
order is placed, the customer generally speaks with
Hanson's sales and specifications departments to
determine what is needed and the pricing of the order. None
of these calls, nor calls to Hanson's administrative or
billing departments, is recorded. However, Hanson does record
all calls that come into its dispatch lines, which are used
when a customer actually places an order.
to July 15, 2009, Hanson used a Voice Print International
(“VPI”) phone system. While the VPI system was in
place, Hanson used “beep tone generators” on all
of its telephones that received calls to the dispatch lines.
The beep tone generators qualified as notice of recording.
owner and president is Eric Barajas. Various NEI employees,
including Rich Degraffenreid, Sandy LeFever, and Charles
Alexander, had authority to and did place orders with Hanson
on behalf of NEI from job sites using their cell phones.
Thus, NEI employees placed orders through Hanson's
dispatch lines prior to July 15, 2009, and heard the audible
beep tones generated by Hanson's beep tone generators.
Accordingly, prior to July 15, 2009, NEI knew it was being
recorded when its employees called the Hanson dispatch lines
and therefore consented to the recording.
2009, Hanson replaced its VPI system with an OAISYS Talkument
phone system. As part of this phone system, Hanson included a
pre-recorded verbal admonition stating that the call
“may be monitored for quality assurance” to any
customers calling through the dispatch lines. NEI continued
to place orders with Hanson after it switched to the OAISYS
Talkument phone system.
2011, NEI placed orders with Hanson in conjunction with its
work on a construction project. Mr. Degraffenreid was the
superintendent on the project. He, Mr. Alexander, and Mr.
LeFever all had authority to place orders in conjunction with
this project. The original estimate for the project was 100
cubic yards of concrete. In fact, however, the project used
over 600 cubic yards of concrete. Hanson thus billed NEI for
this higher amount of concrete.
Barajas, who was reviewing the Hanson invoices for the
project, thought the bill was too high. He did not make
inquiry of any of NEI's employees who placed the orders
whether the bills were correct or not. Instead, he requested
proof from Hanson that the orders belonged to NEI. Hanson
provided copies of the original invoices for the concrete
orders, but Mr. Barajas still disputed the bills and
requested proof that the amount of concrete billed was
actually delivered to NEI. Hanson then provided copies of the
delivery tickets for the concrete NEI ordered. The delivery
tickets were signed by NEI employees at the construction site
who accepted delivery of the concrete. However, because many
of the signatures were illegible, Mr. Barajas refused to pay
response, Hanson filed a lawsuit against NEI and its bond
company on December 8, 2011, seeking approximately $66,
266.98, plus costs and fees, for unpaid invoices. Mr. Barajas
countered that the concrete billed by Hanson could not have
been concrete for the construction project at issue because
the project did not require the particular strength of
concrete being billed. Hanson replied by producing on March
8, 2012, recordings of phone calls with NEI employees that
proved NEI had ordered the particular strength of concrete
for the project.
being confronted with invoices, signed delivery tickets, and
recordings of NEI employees ordering the concrete, Mr.
Barajas acquiesced and settled the case on behalf of NEI in
May 2012 and paid the amount invoiced. Hanson agreed to waive
any attorneys' fees or interest requested. NEI did not
object to Hanson's recording practice during this billing
thereafter, on July 6, 2012, NEI filed the present action
against Hanson under California's Invasion of Privacy Act
(“CIPA”) and the Class Action Fairness Act. The
company did not try to resolve this dispute before filing
suit. NEI's initial pleading raised a putative class
claim under California Penal Code section 632, which
prohibits the recording of confidential communications. The
company, however, ultimately abandoned this claim in favor of
a claim under California Penal Code section 632.7, which
prohibits the recording of cell phone calls without consent.
Thus, NEI's Second Amended Complaint filed on October 29,
2013, alleged Hanson violated section 632.7 by recording its
customers' phone calls without their consent. NEI sought
$5, 000 in statutory damages per violation of section 632.7.
It also sought injunctive relief enjoining Hanson's
alleged violation of section 632.7.
Change in Hanson's Conduct
December 23, 2013-a few months after NEI filed its Second
Amended Complaint and clarified its theory of relief-Hanson
changed the admonition that customers hear when calling its
dispatch lines. The new admonition informs customers that
their calls “may be monitored or recorded for
quality assurance.” Hanson disclosed this change on
August 8, 2014, in a response to a written discovery ...