Lawyers USA//June 17, 2013
//June 17, 2013
The litigation exception to a federal privacy law did not allow four trial attorneys to obtain the personal information of drivers for the “predominant purpose” of soliciting new clients for consumer lawsuits, the U.S. Supreme Court ruled Monday.
“While the … exception allows this sensitive information to be used for investigation in anticipation of litigation and in the litigation itself, there is no indication Congress wanted to provide attorneys with a special concession to obtain medical information and Social Security numbers for the purpose of soliciting new business,” Justice Anthony M. Kennedy wrote.
The 5-4 ruling, which reversed a decision by the 4th U.S. Circuit Court of Appeals, addressed the reach of the Driver’s Privacy Protection Act of 1994 (DPPA). Congress enacted the law to address the problem of states selling or otherwise disclosing personal information collected in the licensing of motor vehicle drivers.
Generally, the disclosure of such personal information is prohibited unless for a purpose permitted by an exception listed in the Act. Subsection (b)(4) of the Act is one such exception and permits obtaining personal information from a state department of motor vehicles for use “in connection with” judicial and administrative proceedings, including “investigation in anticipation of litigation.”
The act also contains a general solicitation exception, which provides that less sensitive personal information may be disclosed for “bulk distribution for surveys, marketing, or solicitations,” but only if the state has obtained the driver’s express consent.
The defendants in the case, Michael E. Spears, Gedney M. Howe III, Richard A. Harpootlian, and A. Camden Lewis, are South Carolina lawyers who, in 2006 and 2007, instituted several group-action lawsuits in state court against numerous car dealerships. Harpootlian is also a former chairman of the South Carolina Democratic party.
The lawsuits alleged that the dealerships collected illegal fees from car buyers.
In conjunction with their lawsuits, the attorneys submitted several state Freedom of Information Act requests to the South Carolina Deparment of Motor Vehicles, seeking the names and addresses of thousands of car purchasers.
Using the personal information provided by the DMV, the attorneys sent letters to more than 34,000 car purchasers, explaining the consumer lawsuits and asking recipients to return an enclosed reply card if they wanted to participate in the litigation.
The plaintiffs in the case, Edward F. Maracich, Martha L. Weeks and John C. Tanner, are South Carolina residents who received mailings from the attorneys. In 2009, the plaintiffs sued in federal court, alleging the attorneys violated the DPPA by obtaining, disclosing and using their personal information for bulk solicitation without their express consent.
The district court dismissed the plaintiffs’ case, finding the attorneys’ letters were not solicitations and that the use of information fell within the act’s litigation exception. The 4th Circuit affirmed.
Before the Supreme Court, the attorneys argued that the litigation exception applied to bar the plaintiffs’ lawsuit because their use of the plaintiffs’ personal information was plainly “in connection with” ongoing lawsuits against the car dealerships.
But Kennedy rejected such an expansive reading of the litigation exception.
“If (b)(4) were read to permit disclosure of personal information whenever any connection between the protected information and a potential legal dispute could be shown, it would undermine in a substantial way the DPPA’s purpose of protecting an individual’s right to privacy in his or her motor vehicle records,” he explained.
“The ‘in connection with’ language in (b)(4) must have a limit. A logical and necessary conclusion is that an attorney’s solicitation of prospective clients falls outside of that limit.”
Kennedy proceeded to craft a “predominant purpose” test for determining whether a lawyer is liable for engaging in prohibited solicitation.
“Where a reasonable observer could discern that the predominant purpose of obtaining, using, or disclosing protected personal information was to initiate or propose a business transaction with a prospective client, (b)(4) does not exempt the solicitation,” he wrote.
Dissent: high liabilitly
Justice Ruth Bader Ginsburg wrote a dissent, joined by Justices Antonin Scalia, Sonia Sotomayor and Elena Kagan.
Ginsburg expressed the concern that the court’s holding exposed the attorneys not only to “astronomical” liquidated damages, but to criminal fines as well.
“The Court today exposes lawyers whose conduct meets state ethical requirements to huge civil liability and potential criminal liability,” Ginsburg wrote. “It does so by adding to the DPPA’s litigation exception a solicitation bar Congress did not place in that exception.”
The court remanded the matter for the lower courts to determine whether the attorneys’ letters, viewed objectively, had the predominant purpose of solicitation. In addition, the court said that the attorneys could pursue the alternative theory that their conduct was permissible under the Act’s governmental-function exception.
The case is Maracich v. Spears, No. 12-25.
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