Monday, August 17, 2026
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Eavesdropping Claims Over AI Tool Survive Pleading Scrutiny
Federal Judge Declines to Dismiss Putative Class Action Accusing Virtual Transcription Service of Using Secretly Recorded Zoom Meetings to Train Its Artificial Intelligence Models in Violation of California Law
By Kimber Cooley, associate editor
A federal judge for the Northern District of California has ruled that a putative class action accusing a Silicon Valley company of violating California and federal law by surreptitiously eavesdropping on Zoom meetings through the use of a virtual-notetaking assistant that offers transcription services, while also secretly using the content of the conversations to train its artificial intelligence models, survives a pleading challenge.
Thursday’s order, issued by District Court Judge Eumi K. Lee, rejects a motion to dismiss for failure to state a claim filed by the defendant, Otter.ai Inc., over the company’s so-called “Otter Notetaker” which engages in real-time transcription of virtual meetings for accountholders by purportedly secretly slipping into the virtual conversations as a “silent participant,” recording audio, taking screenshots, and storing everything without the participants’ consent.
Three California residents, Justin Brewer, Chaka Theus, and Emily Ryan, together with four others filed the operative putative class action complaint in December, alleging that “when Otter Notetaker joins a meeting, it does not provide meeting participants with reliable or automatic visual or auditory alerts to meeting participants indicating that the meeting is being recorded or transcribed.” They asserted:
“Otter Notetaker is not a tool used solely by the accountholder to record others. Instead, the Otter Notetaker is a tool used by Otter itself—a separate and distinct third-party entity from its accountholders and other parties to the conversation—to record and transcribe conversations to which it is not a party.”
Commercial Purposes
They added that “it uses such data to improve its software for its own commercial purposes regardless of source or lack of consent” and to “bombard[] the participants with commercial emails, enticing them to sign up for its services—without the users’ permission, knowledge, or consent.”
The plaintiffs asserted causes of action under state and federal privacy laws, including the California Invasion of Privacy Act (“CIPA”), codified at Penal Code §631 et seq., the state’s Comprehensive Computer Data and Fraud Access Act (“CDAFA”), found at Penal Code §502, and the California Constitution.
As to the plaintiff’s CIPA claim, Lee noted that §631(a) provides a cause of action against a defendant that “willfully and without the consent of all parties to the communication…reads, or attempts to read, or to learn the contents or meaning of any…communication while the same is in transit or passing over any wire, line, or cable.”
She acknowledged that “[i]t is true that software providers acting only as an extension of a user or client are not considered third-party interceptors” but said:
“Otter argues that the Otter Notetaker joins meetings as an invited participant and functions as the meeting host’s recording tool….However,….[b]ecause Plaintiffs plausibly allege that Otter independently collects, retains, and uses communications for its own commercial purposes, they have sufficiently alleged that Otter is a third-party eavesdropper under section 631.”
Unjust Enrichment
Lee similarly found that the plaintiffs had stated an equitable claim for unjust enrichment, which requires a showing that the defendant received and unfairly retained a benefit, remarking:
“Otter allegedly ‘exploits illegally obtained conversations for…training its proprietary software, improving its services, contracting with service vendors, and more.’…Plaintiffs allege that it would be unjust for Otter to retain these benefits at the expense of the privacy rights of Plaintiffs and putative class members….These allegations plausibly state a claim for unjust enrichment.”
However, she granted the motion to dismiss the plaintiff’s CDAFA claim, opining that Otter’s use of the recordings to improve its AI models “does not establish that Plaintiffs suffered a cognizable loss under the CDAFA,” which requires something more than losing an asserted right to control their own data.
Addressing the invasion of privacy causes of action brought under the California Constitution, she pointed out that a plaintiff must allege that a defendant intentionally intruded into a conversation over which a party has a reasonable expectation of privacy in an objectively highly offensive manner.
She concluded that Brewer’s and Ryan’s bald claims that Otter intercepted “private conversational data” or “sensitive” workplace discussions were insufficient to state a claim. However, she found that “Theus plausibly alleges both elements” by asserting that the company secretly recorded his communications with a healthcare professional about “deeply personal and private medical information.”
Federal Claim
The plaintiffs also asserted a federal claim under the Electronic Communications Privacy Act (“ECPA”), which prohibits the intentional interception of “any wire, oral, or electronic communication.”
Lee remarked:
“Under the party exception, it is not a violation of the ECPA if communications are intercepted by ‘a party to the communication or where one of the parties to the communication has given prior consent to such interception.’… However, the party exception does not apply if the communication is intercepted for a ‘criminal or tortious’ purpose.”
Finding that the plaintiffs; had adequately alleged such a purpose, she commented:
“Plaintiffs allege that Otter tortiously used their conversational data without their knowledge or consent to train its ‘machine learning systems for its own pecuniary gain.’…Otter responds that its alleged interception was undertaken only for ‘commercial purposes.’…However, ‘committing a tort and seeking a profit are not mutually exclusive.’ ”
The judge declared that she “grants leave to amend” as to all claims dismissed by the order except those voluntarily withdrawn by the plaintiffs “because the Court cannot conclude that amendment…would be futile.”
The case is In re Otter.ai Privacy Litigation, 25-cv-0691.
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