Franklin v. OCWEN Loan Servicing, LLC

Background

Gregory Franklin sued Ocwen Loan Servicing, LLC, individually and on behalf of a proposed class. He alleges that Ocwen, which serviced his home mortgage, placed numerous calls to him between 2011 and 2015 and recorded cellular phone conversations without properly informing him. The complaint asserts one claim under California Penal Code section 632.7, part of the California Invasion of Privacy Act.

The proposed class consists of people in California whose cellular telephone conversations were recorded without their consent by Ocwen or its agents from November 11, 2011, through the filing of the complaint.

Pending Motions and the State-Court Issue

Franklin moved for class certification, which would determine whether the case could proceed on behalf of the proposed class. Ocwen moved for judgment on the pleadings, a motion asking the court to decide the case based on the pleadings rather than proceeding further with the litigation.

Ocwen relied on Smith v. LoanMe, Inc., a California Court of Appeal decision holding that section 632.7 does not prohibit a party to a call from recording it and applies only to third-party eavesdroppers. Ocwen argued that this court was required to follow that decision. The California Supreme Court had accepted review of Smith but had not yet issued its decision.

Franklin argued that there was convincing evidence the California Supreme Court would reject the appellate court’s interpretation. He pointed to other California Supreme Court decisions concerning the California Invasion of Privacy Act, federal district court decisions, the statutory language, and legislative history. Ocwen responded that those authorities did not support Franklin’s interpretation and that earlier federal district court decisions were wrongly decided.

Ruling

The court found that waiting for the California Supreme Court’s decision in Smith would simplify the case without prejudicing either side. Because Franklin asserted only one claim under section 632.7, the state court’s decision could determine whether the claim was legally viable at all, including whether it could proceed as a class action. The court also noted that no final schedule had been set for discovery, dispositive motions, or trial.

The court therefore denied Franklin’s motion for class certification and Ocwen’s motion for judgment on the pleadings without prejudice to renewal, and stayed the case pending the California Supreme Court’s decision in Smith. Ocwen was ordered to file status reports beginning September 18, 2020, every 90 days afterward, and within seven days after the state court resolved Smith. The stay would then be lifted and proceedings would resume in the federal case.

The court did not decide whether section 632.7 prohibits a participant in a phone call from recording it, whether Franklin’s claim is ultimately viable, or whether the proposed class should be certified.