Ditech Financial, LLC vs. Buckles (Nev. Supreme Ct. – Sep. 14, 2017)
NRS 200.620 prohibits a person from recording a telephone call unless both parties participating in the call consent to the recording. In response to a certified question submitted by the United States District Court for the District of Nevada, the Supreme Court of Nevada considered whether NRS 200.620 applies to telephone recordings made by a party outside Nevada who uses equipment outside Nevada to record telephone conversations with a person in Nevada without that person’s consent.
The original proceeding arose out of a class action suit brought by Sanford Buckles against Ditech Financial LLC in the United States District Court for the District of Nevada. Ditech, a Delaware limited liability company, is a home mortgage servicer that was headquartered in Minnesota at the time Buckles initiated the underlying litigation. Although Ditech is now headquartered in Florida, it has customer call centers equipped to record telephone calls in Arizona and Minnesota. Buckles is a Nevada resident whose home mortgage is serviced by Ditech. In his complaint, Buckles alleged Ditech violated NRS 200.620 by unlawfully recording certain telephone conversations without Buckles’s consent.
Ditech moved to dismiss the complaint, arguing NRS 200.620 does not apply to telephone calls recorded by persons and on equipment located outside of Nevada, and if NRS 200.620 does apply, the extraterritorial application of NRS 200.620 would violate the United States Constitution’s Due Process Clause and Dormant Commerce Clause. The federal court concluded:
If [NRS] 200.620 does not apply to recordings made outside of Nevada by Ditech, Ditech’s motion to dismiss is due to be granted. If the statute applies to telephone recordings made outside of Nevada by Ditech, however, this Court must decide Ditech’s constitutional challenge to the statute under the Due Process Clause and the Dormant Commerce Clause of the United States Constitution. The necessity of reaching these serious constitutional questions depends upon resolution of prior, potentially dispositive, questions of Nevada statutory law.
The federal court therefore decided to certify a question under NRAP 5 concerning the applicability of NRS 200.620. Because the parties ultimately were unable to agree upon the appropriate language of the question to be certified, the federal court certified two questions to the Court:
Plaintiff’s position: Does [NRS] 200.620 apply to telephone recordings made by a party outside Nevada, who regularly records telephone conversations with Nevada residents, of telephone conversations with a person in Nevada without that person’s consent?
Defendant’s position: Does [NRS] 200.620 apply to telephone recordings by a party outside Nevada who uses equipment outside Nevada to record telephone conversations with a person in Nevada without that person’s consent? If so, does that decision apply retroactively or prospectively only?
The Supreme Court of Nevada noted that the two certified questions ask essentially the same thing: whether NRS 200.620 applies to recordings of telephone conversations with a person in Nevada without that person’s consent when the recordings are made by a party who is located and uses recording equipment outside of Nevada.
In relevant part, NRS 200.620(1)(a) provides that “it is unlawful for any person to intercept or attempt to intercept any wire communication unless . . [t]he interception or attempted interception is made with the prior consent of one of the parties to the communication.” See also NRS 179.430 (defining “[i]ntercept” as “the aural acquisition of the contents of any wire, electronic or oral communication through the use of any electronic, mechanical or other device or of any sending or receiving equipment”). The Court explained that it has previously concluded that “the tape-recording of telephone conversations constitutes an intercept,” and interpreted NRS 200.620 “to prohibit the taping of telephone conversations with the consent of only one party.” Lane v. Allstate Ins. Co., 114 Nev. 1176, 1179, 969 P.2d 938, 940 (1998); see also Ira David, Note, Privacy Concerns Regarding the Monitoring of Instant Messaging in the Workplace: Is It Big Brother or Just Business?, 5 Nev. L.J. 319, 330 (2004) (recognizing NRS 200.620 “parallels the Wiretap Act, and is likewise restricted to interception of actual transmission”.
The crux of Ditech’s argument was that NRS 200.620 does not apply because the allegedly prohibited conduct—i.e., the interception— took place outside Nevada. Whereas Buckles argued that NRS 200.620 applied because the statute contains no location-based limitations and Ditech’s conduct caused harm in Nevada. The Court agreed with Ditech, and concluded that Mclellan v. State, 124 Nev. 263, 182 P.3d 106 (2008), was instructive.
The Court explained that Mclellan did not address whether someone could be found guilty of violating NRS 200.620 for recording a phone call outside of Nevada; rather, it addressed whether an out-of-state recording of a conversation with a person in Nevada made without that person’s consent could be admitted as evidence at their criminal trial. The Court ultimately held “that Nevada law allows the admission of evidence legally obtained in the jurisdiction seizing the evidence.” Id. at 265, 182 P.3d at 108. To reach that holding, the Court concluded that the interception in Mclellan “was lawful at its inception in California” because California requires only one party to consent to police monitoring the communication. Id. at 267 & n.7, 182 P.3d at 109 & n.7. While the central issue concerned admissibility, the Court concluded that because the recording was permissible in California, it was admissible in a Nevada criminal trial even though “the manner of interception would violate Nevada law had the interception taken place in Nevada.” Id. at 267, 182 P.3d at 109.
Consistent with its analysis in Mclellan, the Court held that NRS 200.620 does not apply when the act of interception takes place outside Nevada. Instead, “[i]nterceptions and recordings occur where made.” Kadoranian v. Bellingham Police Dep’t, 829 P.2d 1061, 1065 (Wash. 1992); see also State v. Fowler, 139 P.3d 342, 347 (Wash. 2006) (“[T]he test for whether a recording of a conversation or communication is lawful is determined under the laws of the place of the recording.”). The Court further explained that whether the interception of telephone conversations with Buckles and other putative class members was lawful is determined according to the laws of Arizona and Minnesota, the places where the conversations were intercepted and recorded, not according to the laws of Nevada where the calls were received. Therefore, the Court answered the certified question in the negative, concluding that NRS 200.620 does not apply to recordings of telephone conversations with a person in Nevada without that person’s consent when the recordings are made by a party who is located and uses recording equipment outside of Nevada.