Judge Susan Illston, of the Northern District of California, denied a motion to dismiss a class action lawsuit alleging that an AI-powered voice assistant provider for restaurant phone orders violated the California Invasion of Privacy Act (CIPA) sections 631 and 632.
Third Party Status Under CIPA
The central dispute was whether the AI technology provider is a “third party” to customer-restaurant phone calls, or merely an “extension” of the restaurant. California law generally exempts parties to a conversation from liability, but not third parties who intercept communications.
The court adopted the “capability” approach, focusing on whether the provider has the ability to use call data for its own independent purposes, such as improving its AI products and services. The court found that the provider’s use of customer call data to refine its technology and expand its business went beyond merely acting as a tool for the restaurant, making it a third party for purposes of CIPA.
Defendant’s website and privacy policy explain that defendant uses information from the millions of calls it processes to “improv[e] [its] ordering platform, advertisements, products, and services.” Id. ¶¶ 24, 27-28, 44. Defendant’s Voice AI learns from each interaction and “continuously refines the underlying algorithms.” Id. ¶ 25. Live agents working behind the scenes sometimes aid in this process. Id. ¶¶ 22-23. Thus, unlike the plaintiffs in Graham, plaintiff here alleges that defendant provides a software service to its customers, and also uses the information collected to improve its own product. See Graham, 533 F. Supp. 3d at 832. The software’s capabilities thus go “beyond the ordinary function of a tape recorder.” Javier, 649 F. Supp. 3d at 900 (quoting Yoon v. Lululemon, 549 F. Supp. 3d 1073, 1081 (C.D. Cal. 2021)).
Real-Time Interception
The court also addressed whether the provider’s technology “intercepts” communications in real time, as required for liability under CIPA. The complaint alleged that when customers call a restaurant, the call is redirected to the provider’s servers, where an AI assistant answers and processes the order, often without the customer’s knowledge that a third party is involved.
The court found these allegations sufficient to plausibly claim that the provider intercepts communications contemporaneously with their transmission, satisfying the statutory requirement.
Intentional Conduct
To state a claim under CIPA, the plaintiff must allege that the defendant acted intentionally or willfully. The court held that the provider’s business model—contracting with restaurants to process and analyze calls—demonstrated purposeful conduct, not accidental or mistaken interception.
Contrary to defendant’s understanding of the complaint, plaintiff’s allegations plausibly plead that ConverseNow intentionally intercepted and learned the contents of plaintiff’s phone order to Domino’s. Plaintiff alleges that “[b]y virtue of its business, Defendant intended to wiretap Plaintiff and members of the Classes by contracting with businesses such as Domino’s to use its technology.” Compl. ¶ 71. ConverseNow “custom-tailored” its technology specifically for Domino’s existing software and phone systems. Id. ¶ 32. These allegations are sufficient to show that defendant did not stumble into recording the conversations by “accident or mistake.” See Christensen, 828 F.3d at 774; see also Gladstone, 739 F. Supp. 3d at 860 (holding the complaint sufficiently pled intent where the software in question “is designed for the purpose of recording and analyzing communications between its customers (like Capital One) and consumers or other entities”).
Confidentiality of Communications
The court further considered whether the calls at issue involved “confidential communications.” The plaintiff alleged sharing personal and financial information (such as name, address, and credit card details) during the call, and that she reasonably expected this information would not be recorded or shared beyond the restaurant. The court found these allegations sufficient at the pleading stage to establish a reasonable expectation of confidentiality.
Taylor v. ConverseNow Techs., Inc., No. 25-CV-00990-SI, 2025 WL 2308483 (N.D. Cal. Aug. 11, 2025).
