Law School Case Brief
Kearney v. Salomon Smith Barney, Inc. - 39 Cal. 4th 95, 45 Cal. Rptr. 3d 730, 137 P.3d 914 (2006)
Once a preliminary analysis has identified a true conflict of the governmental interests involved as applied to the parties under the particular circumstances of a case, the comparative impairment approach to the resolution of such conflict seeks to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state. This analysis proceeds on the principle that true conflicts should be resolved by applying the law of the state whose interest would be more impaired if its law were not applied. Exponents of this process of analysis emphasize that it is very different from a weighing process. The court does not weigh the conflicting governmental interests in the sense of determining which conflicting law manifested the better or the worthier social policy on the specific issue. The process can accurately be described as accommodation of conflicting state policies, as a problem of allocating domains of law-making power in multi-state contexts -- limitations on the reach of state policies -- as distinguished from evaluating the wisdom of those policies. Emphasis is placed on the appropriate scope of conflicting state policies rather than on the quality of those policies.
Employees at the Atlanta-based branch of defendant Salomon Smith Barney, Inc. (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. Consequently, several California clients of SSB filed a putative class action against SSB seeking to obtain injunctive relief, 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 was appropriate and supported the denial of all relief sought by plaintiffs. Plaintiffs appealed.
- Was the grant of injunctive relief proper?
- Was the dismissal of the claims for monetary damages and restitution proper?
The Supreme Court of California reversed the judgment of the state appellate court as to the grant of injunctive relief, but affirmed as to the dismissal of the claims for monetary damages and restitution. The Court found a true conflict between California and Georgia law. Under a comparative impairment analysis, the Court determined that California has a strong and continuing interest in protecting the privacy of its residents, as set forth in Pen. Code, §§ 630, 637.2, 632, and that the application of California law would not severely impair Georgia's interests under Ga. Code Ann., §§ 16-11-62, 16-11-66, because a Georgia company that has a valid business justification for recording telephone calls could comply with California law by disclosing at the outset of a call made to or received from a California customer that the call was being recorded. Georgia did, however, have a legitimate interest in protecting its companies from unexpected liability based on past actions that were lawful in Georgia.
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