Privacy Act Page1

---

 

7213- Criminal Penalties for Unauthorized Disclosure of Information: Privacy Act

 

 

[76-2 USTC ¶9575]Robert William Harper, Petitioner v. United States of America , et al., Respondents

U. S. District Court, Dist. S. C., Greenville Div., Civil Action No. 76-252, 423 FSupp 192, 6/1/76

Taxes: Disclosure: Privacy Act.--Disclosure of letters prepared pursuant to routine practices of the IRS which contained a case caption of the taxpayer's name and a notification of referral of the case to the Justice Department were found not to be in violation of the Privacy Act. The letters circulated to other parties to be investigated were found to contain no significant information about the taxpayer or information which could reasonably result in adverse information about the taxpayer or in damage to him.

R. Wayne Byrd, Robert A. Dobson, III, Dosbon & Dobson, P. O. Box 426, Greenville, S. C., for petitioner, Mark W. Buyck, Jr. United States Attorney, Columbia, S. C., for respondents.

Order on Defendants' Motion to Dismiss Plaintiff's Complaint

HEMPHILL, District Judge:

Defendants' motion to dismiss the complaint, filed May 6, 1976 , seeks relief on the following grounds:

(1) The court has no jurisdiction of plaintiff's action;

(2) Plaintiff has failed to state a claim upon which an action can be based; ¹

(3) Plaintiff lacks standing;

(4) Plaintiff has failed to properly serve certain defendants in their individual capacities. ²

Plaintiff's motion for a temporary injunction, previously noticed, was not pressed at the hearing.

This is an action, filed February 11, 1976 , by a taxpayer, who, at the time of filing, was the object of a criminal fraud investigation; he seeks injunctive relief and/or damages by virtue of the alleged violation, by the defendants, or the United States of America which the individuals collectively represent, of "the Privacy Act of 1974." ³ The complaint originally alleged that the circulation of two letters by respondents Stockwell and McDermott, to Joe H. Venable and Clifton G. Cooper violated the privacy act. ⁴

For the purpose of the record it was admitted that on December 11, 1975, Stockwell and McDermott mailed a letter to Venable, and another letter to Cooper, which advised that the Regional Office of the Internal Revenue Service, Atlanta, Georgia, had forwarded the file on the plaintiff, then under investigation for criminal fraud ⁵ to the Justice Department (suggesting criminal prosecution). It is claimed that such letters contained information concerning matters personal to the records of petitioner, Robert William Harper, as maintained by the office of Regional Counsel for Internal Revenue Service, Southeastern Region. It is admitted that Harper, Venable and Cooper were all being investigated in connection with related facts, and counsel for each of them, and possibly in their presence, had discussed criminal investigation at the district level of the Office of Internal Revenue. Plaintiff complains that the letter tells Venable and Cooper that the Regional Counsel had recommended criminal prosecution and the file had been sent to the Department of Justice for criminal activity. Plaintiff contends that the problem is that after Venable and Cooper were informed, plaintiff had no way of knowing who else received the information that plaintiff was under investigation and that his case was in the hands of the Department of Justice in Washington for possible criminal prosecution. The only issue remaining is the issue of damages, and the question is whether or not plaintiff can proceed. ⁶

Statement of Facts

Plaintiff is engaged in aspects of the electrical contracting business. On the basis of an investigation begun in 1974, defendants came to suspect that plaintiff had failed to report certain income from this business in his federal income tax return, and that certain actions of Venable and Cooper, with whom plaintiff did business, may have borne relation to this possible violation of the tax laws by plaintiff. While defendants' investigation concerned not only plaintiff but also Venable and Cooper, the administrative case was captioned, in accordance with then current administrative routines, only with the name of plaintiff and his wife and with plaintiff's address. In its entirety, this case caption is as follows:

In re: Robert William Harper, et ux. 4648-A Fillmore Drive Wilmington , N. C. 28401

As a result of its investigation, the Columbia , South Carolina District of the Internal Revenue Service determined to refer plaintiff's case to the Regional Counsel of the Southeast Region for consideration of certain further possible administrative action. It is the practice of the Regional Counsel to provide notice of referral to persons who are the subject of such referrals; to offer them the opportunity for a conference regarding their case; and to inform them of their right to counsel. By letters dated, respectively, June 16, 1975 , June 16, 1975 , and Dec. 11, 1975 (2), the Regional Counsel, defendant Henry C. Stockell, through Assistant Regional Counsel, defendant Jerry K. McDermott, provided this notification to plaintiff, to Venable and to Cooper. The June letters contain no discussion or evaluation of the facts or status of plaintiff's case with respect to plaintiff himself or with respect to Venable or Cooper. Rather, the entire substantive content of the June letters is as follows:

(1) the administrative case caption cited above;

(2) the above-mentioned notification of referral;

(3) the offer of an administrative conference;

(4) notification of right to representation by counsel.

As a result of these letters, administrative conferences were held on August 7, 1975 between defendants and attorneys representing plaintiff, Venable and Cooper. All of these attorneys were from the same firm, and this firm also represents plaintiff in the present action. At the conferences, defendants notified attorneys, in accordance with standard administrative practice, that they would inform them of the further disposition of their clients's case. In keeping with this assurance, defendants, by letters dated December 11, 1975 , notified plaintiff, Venable and Cooper of the referral of their case to the Department of Justice. These letters, consisting of a single brief sentence, were signed by defendant Stockell. As with the June, 1975 letters, the December letters contained no discussion or evaluation of any aspect of plaintiff's case.

Conclusions of Law

Plaintiff bases his action upon the Privacy Act, 5 U. S. C. Section 552a(g)(1)(D), which provides jurisdiction in the federal courts against an agency which--

(D) fails to comply with any . . . provision [other than those already indicated in subsections (A), (B) and (C) of section 552a(g)(1), which subsections are not here relevant] of this section or any rule promulgated thereunder, in such a way as to have an adverse effect on an individual.

Plaintiff alleges violation by defendants of Privacy Act, 5 U. S. C. Section 552a(b), which provides that--

No agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to a written request by, or with the prior written consent of, the individual to whom the record pertains unless this disclosure is within one or more of the exceptions to section 552a(b) set forth in subsections (1) to (11) of that section . . ..

Plaintiff seeks to ground his claim for damages in this action upon Privacy Act, 5 U. S. C. Section 552a(g)(4), which provides as follows--

(4) In any suit brought under the provisions of subsection (g)(1)(C) or (D) of this section in which the court determines that the agency acted in a manner which was intentional or willful, the United States shall be liable to the individual in an amount equal to the sum of--

"(A) actual damages sustained by the individual as a result of the refusal or failure, but in no case shall a person entitled to recovery receive less than the sum of $1,000; and

"(B) the costs of the action together with reasonable attorney fees as determined by the court.

Defendants contend that plaintiff's complaint should be dismissed in its entirety and that he should be granted none of the relief which he seeks.

Because an evaluation of the factual content of the December 1975 letters must importantly affect any specific legal argument regarding those letters, it appears proper to consider that content before taking up particular legal contentions. Defendants insist that analysis of the letters shows that they can by no stretch of the imagination have resulted in significant disclosure of information about plaintiff to Venable or Cooper or in any significant harm to plaintiff.

The substantive content of the December letters consists, in its entirety, of the following two items: (1) an administrative case caption consisting of plaintiff's name and address; and (2) a notification of the referral of the case of Venable and Cooper to the Justice Department. As with the June 1975 letters, defendants contend that the mere mention of plaintiff's name in a case caption in the December 1975 letters cannot reasonably be anticipated to result in adverse inferences about plaintiff or in damage to him. The referral notifications to Venable and Cooper did not once mention the status of plaintiff with respect to referral. Thus, as with the June 1975 letters, it is wholly implausible that the December 1975 letters can have caused plaintiff harm.

In order to obtain jurisdiction for an injunction or for damages under the Privacy Act, a plaintiff must in effect allege that the disclosures of which he complains have caused him "an adverse effect." 5 U. S. C. Section 552a(g)(1)(D).

Furthermore, it is axiomatic that defendants in an action under the Federal Rules of Civil Procedure are entitled to ". . . fair notice of actual wrong, openly stated on the basis of facts asserted . . ." Spiegler v. Wills, 60 F. R. D. 681 (S. D. N. Y. 1973). Neither the court nor defendants should be required to speculate as to the actions and injuries of which the plaintiff complains. Roe v. Wade, 410 U. S. 113, 128 (1973). Cf. Peyton v. Railway Express Agency, 316 U. S. 350 (1942); Eickhof Construction Co. v. Great Northern Railway, 291 F. Supp. 44 D. Minn. 1968); McIntosh v. Garofalo, 367 F. Supp. 501, 506 (M. D. Pa. 1973). These principles are no less applicable in the context of Privacy Act litigation than in any other context. As the Supreme Court has recognized in Laird v. Tatum, 408 U. S. 1, 13 (1972),

[Recent] decisions have in no way eroded the "established principle that to entitle a private individual to invoke the judicial power to determine the validity of executive or legislative action he must show that he has sustained or is immediately in danger of sustaining a direct injury as the result of that action."

Conversely, "[g]eneral conclusory allegations unsupported by facts are insufficient to constitute a cause of action," Jewell v. City of Covington, 425 F. 2d 459 (5th Cir. 1970), cert. denied, 400 U. S. 929 (1970); and where the claims in a complaint are insufficiently supported by factual allegations, these claims may properly be disposed of by summary dismissal. Reese v. Nixon, 347 F. Supp. 314 (D. C. Calif. 1972); Spiegler v. Wills, supra; Friedman v. Younger, 282 F. Supp. 710 (C. D. Calif. 1968); Schaefer v. Macri, 196 F. 2d 162 (9th Cir. 1952), cert. denied, 344 U. S. 832 (1952). Cf. Finley v. Hampton , 473 F. 2d 180 (D. C. Cir. 1972); Donohoe v. Duling, 405 F. 2d 196 (4th Cir. 1972); Fifth Avenue Peace Parade v. Gray, 480 F. 2d 326 (2d Cir. 1973).

The December 1975 letters did not/do not contain any information about plaintiff which could reasonably be anticipated to cause an adverse inference about plaintiff or to result in his harm. Furthermore, in his complaint plaintiff pleads no circumstances, however general or conclusory, which would support such an inference. Thus this court and defendants can only speculate as to the nature or causation of the harm which plaintiff alleges. Therefore plaintiff has failed to plead adequately either the "adverse effect" required by the Privacy Act, 5 U. S. C. §552a(g)(1)(D) or the "fair notice of actual wrong" required by Rule 12(b) of the Federal Rules of Civil Procedure.

The Privacy Act, 5 U. S. C. §552a(b) prohibits the unauthorized disclosure by agencies of information about individuals contained in the agencies' system of records except insofar as these disclosures are within one or more of the exemptions to the Privacy Act set forth in 5 U. S. C. §552a(b)(1)-(11). While the Act does not specifically define the term "disclosure," common sense requires that this term be taken to denote the imparting of information which in itself has meaning and which was previously unknown to the person to whom it is imparted. Defendants submit that the letters in issue in the present action cannot plausibly have resulted in any such disclosure. As an analysis of these letters, supra, reveals, they contain no information abount plaintiff which could reasonably lead to anything other than idle speculation. In particular, the letters, while headed by case captions bearing plaintiff's name, say nothing about the nature of plaintiff's case; the status of his case; or even whether plaintiff's tax affairs are still of concern to defendants. When these letters are considered in themselves--as they must be, since plaintiff has failed to plead any explanatory circumstances regarding their meaning--it is apparent that they provide no significant information whatsoever about plaintiff, and thus are not within the purview of the Privacy Act.

Furthermore, since Venable and Cooper had already been contacted by defendants regarding plaintiff's case before the letters were sent, and were represented by the same counsel as plaintiff at the August 7 conferences, it appears reasonable to believe that any disclosures which are arguably implicit in the letters were already well known to Venable and Cooper. For this reason, too, the imparting of this information to Venable and Cooper cannot have constituted a "disclosure" within the meaning of the Privacy Act.

The Privacy Act permits agencies to disclose records maintained by them to the extent that these disclosures are within one or more of the eleven exceptions to the Act's prohibition of disclosure set forth in Privacy Act, 5 U. S. C. Section 552a(b)(1)-(11). Defendant maintain that, even assuming arguendo that the June 16 or December 11 letters resulted in any disclosure within the meaning of the Privacy Act, these disclosures were authorized by Section 552a(b)(3) of that Act. Section 552a(b)(3) permits disclosures--

(3) for a routine use as defined in subsection (a)(7) of this section and described under subsection (e)(4)(D) of this section . . ..

Section 552a(a)(7) defines a "routine use" as follows:

[T]he term "routine use" means, with respect to the disclosure of a record, the use of such record for a purpose which is compatible with the purpose for which it was collected.

Section 552a(e)(4)(D) requires that each agency that maintains a system of records--

publish in the Federal Register at least annually a notice of the existence and character of the system of records, which notice shall include--

(D) each routine use of the records contained in the system, including the categories of users and the purpose of such use . . ..

* * *

While there appears to be no legislative history of the Privacy Act itself directly interpreting the meaning of "routine use" as used in that Act, the following passage from the House Report on a closely similar provision in a predecessor bill, designated H. R. 16373, would appear to provide an explanation of those terms--

[A requirement of consent to disclosure] would apply to all so-called non-routine transfers of information. It is not the Committee's intent to impede the orderly conduct of government or delay services performed in the interest of the individual. Under the conditional disclosure provisions of the bill, "routine" transfers will be permitted without the necessity of prior written consent. H. R. Rep. No. 93-1416, 93rd Cong., 2d Sess. at 12 (October 2, 1974).

Additionally, the Office of Management and Budget has provided additional interpretative material with respect to the meaning of the "routine use" concept in Guidelines adopted pursuant to §6 of the Act. In the Guidelines, OMB quotes extensively from Congressman Moorhead's statements in the Congressional Record of November 21, 1974 at H. 10962.

It would be an impossible legislative task to attempt to set forth all of the appropriate uses of Federal records about an identifiable individual. It is not the purpose of the bill to restrict such ordinary uses of information. Rather than attempting to specify each proper use of such records, the bill gives each Federal agency the authority to set forth the "routine" purposes for which the records are to be used under the guidance contained in the committee's report.

In this sense "routine use" does not encompass merely the common and ordinary uses to which records are put, but also includes all of the proper and necessary uses even if any such use occurs infrequently. 40 Fed. Reg. 28949 at 28953 (July 9, 1975).

As the above citations indicate, the Privacy Act contemplates that agencies must disclose certain information regarding individuals as an ordinary consequence of performing their routine agency duties. The Act provides that as long as these disclosures are pursuant to such duties and as long as the agency routines under which the disclosures occur are noticed in advance in the Federal Register, the disclosures are exempt from the provisions of the Act. Assuming arguendo that the December 1975 letters resulted in disclosures within the meaning of the Privacy Act, these disclosures were in the context of duly noticed routine uses by defendants and thus were not within the purview of the Act.

Any information concerning plaintiff which was arguably present in the June 1975 and December 1975 letters was drawn ultimately from the system of records maintained by the Intelligence Division of the Internal Revenue Service. Concerning this system of records, defendants on August 26, 1975 provided the following notice in the Federal Register pursuant to 5 U. S. C. §552a(e)(4)(D)--

Disclosure may be made to other parties when necessary in the administration and enforcement of law as authorized by 26 U. S. C. 7801 and 7802. 40 Fed. Reg. 27602 at 37735 (August 26, 1975).

The letters themselves were part of the system of records designated by defendants as Chief Counsel Criminal Tax Case Files. On August 26, 1975 , defendants provided Federal Register notice of these files under 5 U. S. C. §552a(e)(4)(D); this notice stated that disclosure of information in these records may be permitted to--

(3) . . . appropriate parties when the Service is engaged in litigation or in preparation of possible litigation such as potential witnesses for the purpose of securing their testimony, courts for the purpose of proceeding with litigation, nonadversary or adversary parties and their attorneys for the purpose of proceeding with litigation or settlement of disputes, individuals seeking information by using established discovery procedures, to federal, foreign and state government agencies to the extent necessary to obtain records in their possession. 40 Fed. Reg. 27602 at 37756 (August 26, 1975).

As noted above, the December letters were prepared pursuant to routine and obviously reasonable administrative practices of the Southeast Regional Counsel. As is evident from their very text, the purpose of the June 1975 letters was to notify Venable and Cooper of certain information regarding an administrative investigation importantly affecting them; the purpose of the December 1975 letters was essentially the same. It is clear that these letters served a significant purpose both for defendants and for Venable and Cooper. The letters contain no element of information, however trivial or indirect, other than that necessary to accomplish this purpose. Any disclosure resulting from the letters is a consequence of defendants' ordinary and necessary business, is entirely compatible with this purpose, and is well within the authorized routine uses set forth above in 40 F. R. 27602 at 37735 and 37756. As such, the disclosures were routine uses within the meaning of 5 U. S. C. §552a(e)(4)(D) and the thus outside the purview of the Privacy Act.

It appears that plaintiff's complaint should be dismissed in its entirety. It is apparent that the plaintiff, as a party who has not "substantially prevailed" within the meaning of Section 552a(g)(3)(B), may not receive any grant of fees or costs under that Act.

Order

The Clerk shall enter judgment dismissing the complaint.

AND IT IS SO ORDERED.

¹ Fed. R. Civ. P. 12(b)(6) provides: How Presented. Every defense, in law or fact, to a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion. . . . (6) failure to state a claim upon which relief can be granted.

² This last ground was abandoned at the hearing on May 20, 1976 .

³ See 5 U. S. C. §552a(b) which provides No agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to a written request by, or with the prior written consent of, the individual to whom the record pertains unless this disclosure is within one or more of the exceptions to section 552a(b) set forth in subsections (1) to (11) of that section. . . .

⁴ A letter of June 16, 1975 , was admittedly outside the coverage of the Privacy Act of 1974, since the Act is not retroactive and was not in effect on June 16, 1975 . Another letter, dated December 11, 1975 , was circulated after passage of the Act.

⁵ The overtones of this case is that plaintiff-petitioner is under investigation for criminal fraud. Because of the lawsuit or not, the fraud investigation has been dropped, and prosecution has been denied by the minions of the Justice Department, according to information furnished at the hearing of this motion.

⁶ The question of an injunction is moot, because it would have to apply to disclosures in the future, and would serve no purpose as the practice apparently employed on December 11, 1975 , has been discontinued.

 

 

 

[79-1 USTC ¶9243]Gertrude C. Gorod v. Internal Revenue Service and United States of America

U. S. District Court, Dist. Mass., Civil Action No. 76-2822-MA, 1/17/79

Privacy Act: Disclosure of information.--Taxpayer's suit to gain access to certain of her tax records rendered moot by the furnishing of copies to her by IRS.

Privacy Act: Disclosure of information.--Government's disclosure of taxpayer's records to state was a routine disclosure to assist in the administration of tax laws, and therefore not in violation of the Privacy Act.

Gertrude C. Gorod, pro se, 371 Bryant St. , Malden , Mass. 02148 . Edward F. Harrington, United States Attorney, Bruce Singal, Assistant United States Attorney, Boston, Mass. 02109, Donald J. Gavin, Robert Gordon, Department of Justice, Washington, D. C. 20530, for defendants.

Memorandum and Order

MAZZONE, District Judge:

This action was brought under the provisions of the Privacy Act of 1974, 5 U. S. C. §552a. Plaintiff, Gertrude Gorod, alleges that defendants, the Internal Revenue Service (IRS) and the United States of America , violated subsections (b) and (d)(1) of the Privacy Act, 5 U. S. C. §§ 552a(b), (d)(1). Subsection (b) prohibits the unauthorized disclosure of information pertaining to an individual except under certain circumstances and subsection (d)(1) permits an individual to gain access to records pertaining to him or her maintained by an agency.

Plaintiff claims that defendants violated subsection (d)(1) by refusing to allow her access to her tax records maintained by the IRS and that the defendants violated subsection (b) by releasing those records without her authorization to the Commonwealth of Massachusetts. Plaintiff seeks two million dollars ($2,000,000.00) in damages. Defendants have moved for dismissal of both claims.

Plaintiff's claim under subsection (d)(1), 5 U. S. C. §552a(d)(1), that defendants refused to allow her access to certain of her tax records, is now moot. Defendants have sent plaintiff copies of the records requested. Accordingly, any injunctive relief plaintiff might seek relative to those records is a settled issue. As to such issue, therefore, there is no Article III case or controversy, and plaintiff's claim is moot. Powell v. McCormack, 595 U. S. 486, 496 n. 7 (1969). While subsection (g)(3)(B), 5 U. S. C. §552a(g)(3)(B), allows recovery for (d)(1) violations of "reasonable attorney fees and other litigation costs reasonably incurred in any case under this paragraph in which the complainant has substantially prevailed," no such recovery is called for here. Although in another context the term "prevailing party" has been held "not [to] require as an essential criteria the securing of a favorable judgment after trial on the merits," Parker v. Matthews, 411 F. Supp. 1059, 1064 (D. D. C. 1976), aff'd sub nom, Parker v. California, 561 F. 2d 320, 333 (D. C. Cir. 1977); see also Buckton v. NCAA, 436 F. Supp. 1258, 1265 (D. Mass. 1977); it would be stretching that term too far here to grant plaintiff recovery for costs or attorney fees. The fact that subsection (g)(3)(B) requires only that a party have "substantially prevailed" does not change this result. Since subsection (g)(3)(B) does not allow any of the damages recovery here sought by plaintiff, plaintiff's entire claim of a subsection (d)(1) violation is dismissed under Rule 12, F. R. Civ. P., as moot.

Plaintiff also has claimed that defendants violated subsection (b) of the Privacy Act. 5 U. S. C. §552a(b). Subsection (b) in general forbids any agency to disclose to any individual or to another agency any records pertaining to an individual unless by request of that individual or with that individual's permission. Plaintiff claims that defendants violated subsection (b) when they turned over certain of her tax records to the Commonwealth of Massachusetts . Although the proscriptions of subsection (b) are broad, there are specific exceptions to the commands of that subsection which are written into the statute itself. One of these exceptions is when "disclosure of the record would be . . . (3) for a routine use as defined in subsection (a)(7) of this section and described under subsection (e)(4)(1) of this section." 5 U. S. C. §552(b)(3). Subsection (a)(7) defines the routine use of a record as "the use of such record for a purpose which is compatible with the purpose for which it is collected." Subsection (e)(4)(D) requires agencies to publish at least annually in the Federal Register "each routine use of the records contained in the system."

On August 26, 1975 , defendant IRS published in the Federal Registere "Notices of Systems of Records," which included a system of records designated as "Treasury/IRS 42.001," "Audit Administrative File." 40 Fed. Reg. 37725. These records were described as containing "investigatory materials required in making a tax determination or other verification in the administration of tax laws and all other related subfiles directly related to the processing of the tax case." This Notice went on to indicate that one of the routine uses of the records in this system was "routine disclosure . . . to states . . . to assist in the administration of tax laws." 40 Fed. Reg. 37725.

It is clear that such use is in accord with Congressional intent as reflected by the remarks of Senator Ervin during Senate discussion of the Privacy Act:

State and local tax agencies now heavily rely on Federal tax information and investigations when state agencies enforce their tax laws. For example, when the IRS sets up a deficiency against a taxpayer who lives in a State, the IRS frequently send information on this deficiency to the State, or local tax agency. The States use this information in collecting their own taxes. This information may be sent before the state itself conducts any tax investigation on the individual.

Under the bill, this is intended to constitute a routine use for a purpose compatible with the purpose for which the information was collected, so the IRS could continue to send this information to the State and local tax agencies as is presently done.

Also, the IRS sends to State and local tax agencies the Federal tax returns of individuals who live in the State so the state agency can check to see if the individual has reported the same income and deductions on his Federal and State, or local tax returns. Again, the States rely on this information in enforcing their own tax laws. Also, this information may be sent to a State before it conducts a tax investigation on its own.

Under the bill, it is intended that this would be a routine use for a purpose compatible with the purpose for which the information is collected so the IRS can continue to send tax information to State and local tax agencies in this way. 120 Cong. Rec. at 21815 (daily ed. December 17, 1974 ).

The disclosure of information to which plaintiff here objects was pursuant to the routine use described by defendant IRS in the Federal Register. Such use also was specifically contemplated by Congress. Accordingly, as to this part of plaintiff's claim, there being no facts presently in dispute, nor is there any further material pertinent to this suit, the motion is treated as one for summary judgment and allowed. It is hereby ORDERED that the plaintiff's complaint is hereby dismissed.

 

 

[79-2 USTC ¶9422]Ivory Jenkins and Brenda Jenkins, his wife, Plaintiffs v. John T. Cannon, Sr., et al., Defendants

U. S. District Court, Dist. Del., Civil Action No. 76-441, 5/2/79

[Privacy Act: 5 U. S. C. 552]

Privacy Act: Unauthorized disclosure of information: Source of information.--The taxpayers were not entitled to damages resulting from an alleged disclosure of their tax rebate by an employee of the IRS. The taxpayers did not establish by a preponderance of the evidence that the source of the information was the agent or the IRS.

Benjamin F. Shaw, III, 4 North Bedford Street , Georgetown , Delaware 19947 , for plaintiffs. John X. Denney, Jr., Assistant United States Attorney, Wilmington , Delaware 19801 , Robert L. Gordon, Department of Justice, Washington , D. C. 20530, for defendants.

Opinion

STAPLETON, District Judge:

At a meeting of the Sussex County Council on April 13, 1976 , during the course of discussions concerning the eligibility requirements for Legal Aid Society assistance, the president of the Council, John T. Cannon ("Cannon"), stated that the plaintiffs, Ivory and Brenda Jenkins ("Jenkins"), had received a tax rebate of $497 from the Internal Revenue Service in 1975 ¹ and that their income level made them ineligible for legal services which they had received from the Society. This statement received with publicity in the town of Bridgeville , Delaware , where the Jenkins live. As a result of the news coverage of these disclosures, the Jenkins suffered embarrassment, in large part because many people received the impression that the Jenkins had failed to disclose all of their income to the Internal Revenue Service.

The Jenkins brought this action under the Privacy Act, ² 5 U. S. C. §552a(g), against the Internal Revenue Service ("IRS") ³ to recover damages for the embarrassment they suffered as a result of the disclosure. Jurisdiction is predicated on 5 U. S. C. §552a(g) and 28 U. S. C. §§ 1331 and 1343. The case was tried to the Court without a jury on April 5, 1979 . This Opinion contains the Court's findings of fact and conclusions of law.

5 U. S. C. §552a(g) provides that

No agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to a written request by, or with the prior written consent of, the individual to whom the record pertains,

except in certain specified situations not applicable to the present case.

5 U. S. C. §552a(g) provides in pertinent part that an individual adversely affected by an agency's failure to comply with the provisions of Subsection 552a(b) may bring a civil action against the agency. It provides that the United States District Courts shall have jurisdiction over such causes of action. In such actions, the individual may recover "actual damages" sustained by him or her as a result of the agency's failure to comply with Subsection 552a(b) and the costs of the action together with reasonable attorney fees, but only if the Court determines that the agency acted intentionally or willfully. 5 U. S. C. §552a(g).

The Jenkins claim that the information disclosed at the council meeting came from Andrew Coleman ("Coleman"), a senior revenue officer in the Dover , Delaware office of the IRS, who lives near Bridgeville. ⁴ The IRS maintains that it was not the source of the information and that, even if was, the Jenkins are not entitled to any recovery in this action because they did not sustain any "actual damage" as a result of the disclosure ⁵ and because the agency did not act intentionally or willfully. Because I am not convinced by a preponderance of the evidence that the information came from the IRS, it will not be necessary to address the defendant's last two arguments.

The evidence concerning the crucial question of the source of the tax information is in conflict. The Jenkins maintain that Coleman was the source, but Coleman testified that, while he was asked for the information, he refused to divulge it. I believe his testimony.

In addition, the evidence reveals other possible sources of the tax information. A likely source, I believe, was the Jenkins' landlord. The Jenkins themselves testified that their landlord could have known the amount of their refund check and the evidence is uncontradicted that the landlord communicated several times with Cannon concerning the Jenkins' income.

It is also possible that the figure announced at the meeting was simply an estimate based on the Jenkins' W-2 form. Cannon testified that he wrote to the Legal Aid Society and inquired whether the Jenkins were eligible to receive Legal Aid Society assistance. In response, the Society sent him a copy of the Jenkins' W-2 form for 1974.

In sum, I conclude that a preponderance of all the evidence does not establish that the IRS disclosed information from the Jenkins' 1974 tax return. Accordingly, judgment will be entered for the defendant.

¹ The statement was incorrect in that the Jenkins received a tax refund of $459.87, but no rebate, that year.

² In an Opinion and Order dated July 13, 1977 the Court held that the complaint stated a claim upon which relief could be granted against the Internal Revenue Service under the Privacy Act and that the government had waived its sovereign immunity with respect to such suits in the Act.

³ The complaint has been dismissed as to the other defendants named in the complaint.

⁴ It is uncontested that the Jenkins did not consent to the disclosure.

⁵ Both of the Jenkins testified that the disclosure had no adverse impact on their employment and that neither one of them visited a doctor as a result of the disclosure. The only injuries they claim to have suffered as a result of the disclosure is a nervous stomach on the part of Mrs. Jenkins and the intangible embarrassment.

 

 

 

[80-1 USTC ¶9327]Robert Parks, Dillon Gaulding, and National Treasury Employees Union, on behalf of themselves and all others of their class similarly situated, Plaintiffs-Appellants v. United States Internal Revenue Service, Wichita District, Maurice Johnson, Robert Edmiston, and the United States of America, Defendants-Appellees

(CA-10), U. S. Court of Appeals, 10th Circuit, No. 78-1518, 618 F2d 677, 3/27/80

[Privacy Act: 5 U. S. C. §552]

Unauthorized release of information: Civil damage suit: IRS employees: Standing to sue.--The Court of Appeals reversed the District Court's dismissal of a complaint filed by employees of the IRS and the National Treasury Employees Union under the Privacy Act who sought damages for release of the personnel files of employees who had not voluntarily pledged to purchase government bonds. The individual employees had standing to sue and had alleged viable claims sufficient to withstand the motion to dismiss. The Court of Appeals affirmed the District Court's dismissal of both the credit union and the individual agency officers who released the information as improper parties and outside the scope of the Privacy Act which authorized suits only by individuals against agencies. In addition, the Court of Appeals held that injunctive relief was not appropriate in this case because of the clearly delineated instances in which the Act authorized such relief.

Robert M. Tobias, General Counsel, William F. White, Associate General Counsel, National Treasury Employees Union, Washington, D. C., Regan & McGannon, Vickers-KSB&T Bldg., Wichita, Kansas 67202, for James P. Buchele, United States Attorney, M. Carr Ferguson, Assistant Attorney General, Jonathan S. Cohen, Gilbert E. Andrews, Thomas M. Walsh, Department of Justice, Washington, D. C. 20530, for defendants-appellees.

Before DOYLE, BREITENSTEIN and MCKAY, Circuit Judges.

DOYLE, Circuit Judge:

The basic question in this case is whether the plaintiffs, who are employees of the Internal Revenue Service, can maintain a civil action growing out of the use by the Wichita office of the Internal Revenue Service of personnel files of the employees who had not pledged to purchase government bonds, whereby these employees were pinpointed for a telephone campaign making use of a list of such "recalcitrants," and, if so, what the nature of the remedy is. The case is one of first impression. The trial court ruled that no remedy existed under the Privacy Act of 1974. We disagree and reverse.

This action was instituted on June 29, 1978 , in the United States District Court for the District of Kansas. It was alleged that it arose under the Privacy Act of 1974 and that the court had jurisdiction pursuant to 5 U. S. C. §552(g)(1)(D), 28 U. S. C. §§ 1331(a) and 1361. The plaintiffs, Parks and Gaulding, are employees of the Internal Revenue Service in Wichita , Kansas . An additional plaintiff in the trial court was the National Treasury Employees' Union , the members of which are employed by the United States Department of the Treasury. The Union alleged that it had an interest in upholding the rights of Treasury Department employees in legal contract and personnel actions.

The complaint further alleged that the Privacy Act prohibits disclosure of "* * * any record which is contained in a system of records by any means of communication to any person except pursuant to a written request by, or prior written consent of, the individual to whom the record pertains," unless the officers and employees of the agency which maintains the records have need for it in the performance of their duties or if the record is disclosed for routinue use. 5 U. S. C. §552a(b)(1) and (3).

The disclosures complained of occurred when nonsupervisory personnel of the Internal Revenue Service called the plaintiffs Parks and Gaulding for the purpose of soliciting their purchase of U. S. Savings Bonds. The persons calling, upon being questioned, said that lists of IRS employees who had not participated in the purchase of U. S. Savings Bonds were supplied for the purpose of telephone calls. The senior member of management, defendant Maurice Johnson, stated that he knew of the lists and condoned their use for the purpose of encouraging participation in the bond program. It was also alleged that the use for the purpose described above was not a routine use of the files; that disclosures were made to inappropriate users for other than officially designated purposes, and that the information was not needed by agency officials and employees in the regular performance of their work.

Plaintiffs sought damages based upon alleged psychological damage or harm from the unauthorized and illegal disclosures. They prayed for the award of a minimum of $1,000 damages together with attorney's fees in accordance with 5 U. S. C. §552a(g)(4). Also sought was injunctive relief. The defendants moved to dismiss and the district court granted this motion.

The district court also ruled that it lacked subject matter jurisdiction over the Union because the Privacy Act precludes suits by anyone other than "individuals" as that term is defined in 5 U. S. C. §552a(a)(2), and, second, because the Union had failed to allege actual harm to itself and therefore lacked standing to sue under Warth v. Seldin, 422 U. S. 490 (1975), and Sierra Club v. Morton, 405 U. S. 727 (1972).

The judge ruled, in addition, that there was a lack of subject matter jurisdiction over the individual defendants Johnson and Edmiston, because the Privacy Act only authorized suits against agencies as defined in 5 U. S. C. §§ 552a(a)(1) and 552(e). The judge's final point was that the amended complaint failed to state a claim under the Privacy Act, because the IRS' use of the information from the personnel files was an intra-agency "routine use" within the definition of 5 U. S. C. §552a(a)(7). Accordingly, the judge ruled that the plaintiffs had not violated the Act. In addition, the judge ruled that the plaintiffs had failed to allege sufficiently that they had suffered an adverse effect or injury-in-fact from disclosures. The district court did not address itself specifically to the plaintiff's claim for damages as distinguished from the plaintiffs' claim for injunctive relief. Nor did the judge consider the alternative grounds advanced by plaintiffs in support of the claim for injunctive relief, 28 U. S. C. §§ 1331(a) and 1361.

The plaintiffs seek reversal on a number of grounds, which we summarize as follows:

The plaintiffs contend that they have stated a claim for relief under the Privacy Act under two substantive provisions of the Act, first, under 5 U. S. C. §552a(b)(1), and, secondly, 5 U. S. C. §552(b)(3). They also say that the invasion which caused psychological harm was adequate to constitute an adverse effect or an injury-in-fact. The plaintiffs argue further that injunctive relief should be available to them under 28 U. S. C. §1331(a) or 1361. Finally, the plaintiffs contend that the Union and the individual defendants Johnson and Edmiston were proper parties to the lawsuit.

The defendants argue that the complaint is insufficient because the injunctive relief sought is unavailable under the Privacy Act. They say, in addition, that the plaintiffs' allegations are inadequate for failure to allege the element of willfullness or intent necessary for monetary relief.

The plaintiffs take issue with all of the defendant's contentions in their reply brief.

* * *

Does the complaint state a claim under the Privacy Act? Our conclusion is that the allegations are sufficient to demonstrate a violation of that part of the Act which defines a remedy against the offending agency for money damages.

The applicable provisions are subsections (1) and (3) of 5 U. S. C. §552a(b). Subsection (1) sets up the prohibition against disclosure in unmistakable terms:

(b) Conditions of disclosure.--No agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to written request by, or with the prior written consent of, the individual to whom the record pertains, unless disclosure of the record would be--

(1) to whose officers and employees of the agency which maintains the record who have a need for the record in the performance of their duties; . . ..

There is a specific allegation in the amended complaint that:

21. Disclosure of savings bond information was not needed by agency officials and employees in the regular performance of their work.

The trial court did not consider this particular remedy averred by the plaintiffs in their complaint, that is, the prohibition against disclosure together with the exceptions, one of which is that the agency employees had need of the record in the regular performance of their duties. While the district court failed to address this element of the plaintiffs' claim, it did give a general rejection. If the plaintiffs have stated a claim pursuant to §552a(1), ¹ they are entitled to have their case tried.

It cannot be gainsaid that Congress expressly held out nonparticipation in savings bond programs as an example of information not needed in the performance of federal employees' regular duties. We do not say that this does not prevent the defendants from arguing to the contrary that disclosure of savings bond information was necessary to the performance of their duties. The defendants rely on Executive Order No. 11532, 35 Fed. Reg. 8629 (June 4, 1970). This Executive Order was signed by President Richard Nixon on June 2, 1970 . It established an Interdepartmental Committee for the Voluntary Payroll Savings Plan for the Purchase of United States Savings Bonds. This consisted of the heads of all federal executive-branch agencies. The order charged the committee to formulate a plan of organization and sales promotion of the savings bond program. Even though this may have been a worthy effort, it does not justify the use of information derived from the personnel files of employees, particularly in view of the subsequent passage of the Privacy Act. In short, the order, which was at odds with the stated legislative purpose of the Privacy Act, does not license the defendants to violate the Privacy Act, and it would not be a ground for justifying the dismissal of plaintiff's complaint.

The defendants also maintain that the use here was a routine one within the meaning of 5 U. S. C. §552a(b)(3), which prohibits an agency from disclosing a record which is contained in a system of records except pursuant to written request by, or with the written consent of, the individual to whom the record pertains unless the disclosure of the record would be for a routine use. Plaintiffs have alleged that the use of personnel records for the purpose of soliciting the purchase of savings bonds is not a routine one.

Section 552a(e) of the Privacy Act establishes notice-and-comment rulemaking procedures for determining what constitutes a routine use of information from agency record systems. In order for agency information to qualify for the routine use exemption, each agency must publish annually in the Federal Register a notice of the existence and character of the agency's system of records, which is to include each routine use of the records contained in the system together with the categories of users and the purpose of such use. A further provision in the Act is that at least 30 days prior to this annual notice, a notice of any new use or intended use of the information must be published in the Federal Register and the agency must provide an opportunity for interested persons to submit written data, views, or arguments. Thus, Congress intended that each agency describe in advance of disclosure the uses of information that it considers routine. While the courts may consider whether the agency acted arbitrarily and capriciously in the designating certain uses as routine, it is the agency and not the court which makes this determination at first.

What the foregoing leads up to is that the savings bond information has not been designated by the IRS as a routine use in accordance with §552a(e). The Department of the Treasury did publish a notice in the Federal Register on December 2, 1975 , describing the "routine uses" of information from personnel files. See 40 Fed. Reg. 56017 , 59096 -97 (December 2, 1975). But the routine uses enumerated in this notice failed to include disclosure of information concerning nonparticipation in the voluntary savings bond program for the purpose of soliciting savings bond sales.

As appears above, the express prohibition of disclosure of records contained in §552a(b)(1) and (3) is clear, and the complaint unquestionably alleges a violation of this.

* * *

Are remedy elements adequately alleged? The remedy provision, §552a(g)(1), is as follows:

(g)(1) Civil remedies.--Whenever any agency * * *

(D) fails to comply with any other provision of this section, or any rule promulgated thereunder, in such a way as to have an adverse effect on an individual.

the individual may bring a civil action against the agency, and the district courts of the United States shall have jurisdiction in the matters under the provisions of this subsection.

The effect of subsection (g)(1) is that when any agency fails to comply with any other provision of this section or any rule promulgated thereunder in such a way as to have an adverse effect on an individual, that individual may bring a civil action in the United States courts. The allegation in the complaint is that the nonparticipation by plaintiffs in the savings bond sales program was disclosed so as to pressure the plaintiffs.

The next element is whether this had an adverse effect on the plaintiffs. If true, it subjected the plaintiffs to unconsented-to exposure and to special pressure looking to their purchase of the bonds. Although the Privacy Act is silent on what constitutes an adverse effect within the statute, 5 U. S. C. §552a(g)(1)(D), the phrase "adverse effect" derives from the remedial section of the House bill, H. R. 16373, 93d Cong., 2d Sess. (1974), which states that:

[A]n action will lie for the failure of the agency to comply with any other section of this law when such non-compliance has an adverse effect upon the aggrieved individual.

H. Rep. No. 93-1416, 93d Cong., 2d Sess. 17 (1974).

The remedial section of the Senate bill, S. 3418, 93d Cong., 2d Sess. (1974), granted a cause of action to any "aggrieved person." ² The Senate Report considered the remedial provision of the Act to be a main enforcement mechanism. Plaintiffs have alleged that they were the victims of illegal disclosure. They have alleged that this effect was adverse in that they have suffered psychological harm.

It appears from the Act that Congress was borrowing from the common law tort of invasion of privacy. These are personal wrongs which result in injury to the plaintiffs' feelings and are actionable even though the plaintiff suffered no pecuniary loss nor physical harm. It is the invasion of the right that is the essence of the action. See 62 Am. Jur. 2d Privacy §45 (1972). Thus, mental distress or embarrassment would be a natural and probable consequence of such an invasion.

The trial court concluded that there was a lack of subject matter jurisdiction alleged; that the plaintiffs had not demonstrated that they had standing to sue. However, neither Warth v. Seldin, supra, nor Sierra Club v. Morton, supra, have any application. The plaintiffs are the objects or the subjects of the disclosure and the allegation is that they suffered a personal invasion. Therefore, there is no problem of lack of subject matter standing. The complaint sufficiently states a claim for relief.

* * *

Do the plaintiffs' allegations satisfy the damages remedy provision of the Privacy Act? Under 5 U. S. C. §552a(g)(4), the United States has consented to be sued by persons whose right to privacy has been invaded through disclosure of personnel records without their consent and which have resulted in adverse effect upon them. First, the plaintiffs have alleged that disclosure of the bond information was not needed by agency officials and employees in the regular preformance of their work. Second, the Act, subsection (4) of §552a(g), states that where the court determines that the agency acted in a manner which was intentional or willful, the United States shall be liable to the individual in an amount equal to the sum of the actual damages sustained as a result of the refusal or failure and continues "but in no case shall a person entitled to recovery receive less than the sum of $1,000; and the costs of the action together with reasonable attorney fees as determined by the court."

Defendants say that the above remedy provision is not satisfied; that the plaintiffs have failed to allege intentional or willful misconduct by the IRS. However, the allegations made are that the information was published by defendants. Indeed, the individual defendants admitted that the lists were furnished to IRS management and to nonsupervisory employees for the purpose of contacting the plaintiffs. Plaintiffs further allege that defendant Johnson knew of the lists and condoned their use for soliciting bond sales. These allegations certainly serve generally to fill in the gaps on the question of willfulness and intentional misconduct in that they show that the plaintiffs are not relying on negligent acts. Thus, assuming that the failure to specifically allege intentional or willful misconduct should not preclude the plaintiffs from proving it, the trial court should allow the plaintiffs to amend the amended complaint in this particular case. It does not appear that premeditated malice is required.

It is noteworthy that the legislative history stated:

In a suit for damages, the [compromise] amendment reflects a belief that a finding of willful, arbitrary or capricious action is too harsh a standard of proof for an individual to exercise the rights granted by this legislation. Thus the standard for recovery of damages was reduced to "willful or intentional" action by an agency. On a continuum between negligence and the very high standard of willful, arbitrary, or capricious conduct, this standard is viewed as only somewhat greater than gross negligence.

ANALYSIS OF HOUSE AND SENATE COMPROMISE AMENDMENTS TO THE FEDERAL PRIVACY ACT, reprinted in 120 CONG. REC. 40405 , 40406 (1974).

* * *

Are the plaintiffs entitled to injunctive relief? We conclude that they are not. The amended complaint sought an injunction to prevent the IRS from further practicing the disclosure of savings bond information and to require the IRS to recover and destroy the previously prepared lists. The district court did not address the question whether injunctive relief was available, and since the district court did dismiss the action, we deem it appropriate to comment on this aspect.

Our conclusion is that the plaintiffs are not entitled to injunctive relief under the Privacy Act. Section 552a(g) authorizes the court to issue injunctions in only two instances: first, to amend the individual's record, see 5 U. S. C. §552a(g)(2)(A); second, to order an agency to produce agency records improperly withheld from an individual, see 5 U. S. C. §552a(g)(3)(A). But the Act fails to authorize injunctive relief against violating the Act in other ways. Moreover, the legislative history evidences an intent to preclude the availability of injunctive relief in all cases. See ANALYSIS OF HOUSE AND SENATE COMPROMISE AMENDMENTS TO THE FEDERAL PRIVACY ACT, reprinted in, 120 Cong. Rec. 40405 , 40406 (1974). A relevant principle of construction is that where, as here, the statute provides for certain special types of equitable relief but not others, it is not proper to imply a broad right to injunctive relief. Cell Associates v. National Institutes of Health, 579 F. 2d 1155, 1161-62 (9th Cir. 1978).

It is further argued by the plaintiffs that injunctive relief should be available under 28 U. S. C. §1331(a) (the federal-question jurisdictional provision of the Judicial Code). This is not a remedial provision and hence it cannot be employed to supplement the Privacy Act. This action arises under the Privacy Act and hence plaintiffs are limited to the express remedies provided by the Act. Nor does §1361 of 28 U. S. C. apply. That section provides that the district court shall have original jurisdiction of any action in the nature of mandamus to compel the officer or employee or any agency to perform a duty owed to the plaintiff. But, the plaintiffs have sought a prohibitory or preventive order, not a mandatory one. Cf. Schulke v. United States , 544 F. 2d 453, 455 (10th Cir. 1976); Lovallo v. Froehlke, 468 F. 2d 340, 343 (2d Cir. 1972), cert. denied, 411 U. S. 918 (1973). See also Prairie Band of Pottawatomie Tribe of Indians v. Udall, 355 F. 2d 364, 367 (10th Cir.), cert. denied, 385 U. S. 831 (1966). Mandamus is not the proper remedy here, and it fails to fill the requirements.

* * *

Are the defendants Johnson and Edmiston proper parties to this suit? We hold that they are not. The district court ruled them out as being improper parties to a private civil action under the Privacy Act, §552a(g)(1), which authorizes a suit against an agency only. The term "agency" is defined in §552a(a)(1), and so defined it excludes individual officers or employees. Plaintiffs also seek an injunction against these two individual defendants under 28 U. S. C. §1331(a) and §1361, but the injunctive relief is not available.

We conclude, therefore, that the trial court was correct in dismissing the case against these individuals.

* * *

Does the National Treasury Employees Union (N. T. E. U.) lack standing to sue under the Privacy Act for damages to its members? The trial court held that it had no standing to sue either on its own behalf or in a representative capacity. The result of the court's ruling is correct. The Union is beyond the scope of the Act. Section 552a(g)(1) allows civil actions to be brought only by individuals. Cf. Dresser Industries, Inc. v. United States , 596 F. 2d 1231, 1237-38 (5th Cir. 1979), cert. denied, 48 U. S. L. W. 3465 (1980). Dresser Industries holds that corporations have no standing to maintain an action under the Privacy Act.

There is authority, however, for recognition of this procedure in a case in which the requisites for associational standing set forth in Hunt v. Washington State Apple Advertising Comm'n, 432 U. S. 333, 343 (1977) are met. There are other difficulties, however. Each of the plaintiffs would have to testify because the actionable injury and the damages are individual. They are not common to nor shared by all of the Union members. Warth v. Seldin, 422 U. S. 490, 515-16 (1975). Therefore, we must conclude that the Union lacks standing to maintain an action in a representative capacity for damages suffered by its individual members. The district court indicated that the N. T. E. U. might have standing to sue for injunctive relief. However, consistent with our conclusion that injunctive relief would not be available, the Union is excluded on this ground also.

In conclusion: In construing the subject Act, we are mindful of the Congressional purposes in enacting the measure, first, to have a self-help enforcement program. Such a system encourages the filing of lawsuits, for it is only through this process that the objects of the Act can be realized. Secondly, the right which the Act seeks to protect is a very sensitive one, that is, the right of an individual to be free of unnecessary invasions of his privacy. The Act seeks to prevent rummaging through his personnel file in a search for information which will advance objectives that are not incident to the mission of the agency. So, therefore, the product of the Congressional effort is to be treated in the spirit which attended its enactment. The individual plaintiffs here have alleged viable claims for damages pursuant to 5 U. S. C. §552a(g) which are sufficient to withstand the motion to dismiss.

Accordingly, the judgment of the district court is reversed insofar as it denied the sufficiency of the violations by employees and officers of the agency. The judgment is affirmed in other respects. The cause is remanded for further proceedings consistent with the views expressed herein.

¹ The purpose of this subsection is described in legislative history, but particularly, the Senate Report on the parallel provision contained in the Senate Bill, S. 3418, 93d Cong., 2d Sess. (1974), which declares that:

This action is designed to prevent the office gossip, interoffice and interbureau leaks of information about persons of interest in the agency or community, or such actions as the publicizing of information of a sensational or salacious nature or of that detrimental to character or reputation.

This would cover such activities as reading results of psychological tests, reporting personal disclosures contained in personnel and medical records, including questionnaires containing personal financial data filed under the ethical conduct programs of the agency.

It is designed to halt the internal blacklisting that frequently goes on in agencies and on Federal installations on persons who did not comply with the organizational norms and standards for some reason, such as not participating in savings bonds drives or charity campaigns; and the listing of results of employee tests or performances.

S. Rep. No. 93-1183, 93d Cong., 2d Sess., reprinted in (1974) U. S. C. C. A. N. 6916, 6966 (emphasis added).

² [T]he grant of a cause of action to any "aggrieved person" is designed to encourage the widest possible citizen enforcement through the judicial process. This is necessary, as mentioned, since the Act does not give the administrative body authority to ensure compliance with the Act. The Committee intends the use of the term "aggrieved person" to afford the widest possible standing consistent with the constitutional requirement of "case or controversy" in Article III, Sec. 2 of the Constitution. In this respect, the provision is designed, among other things, to supply certain deficiencies in standing and ripeness which the courts found in the Environmental Protection Agency v. Mink, 410 U. S. 73 (1973), Laird v. Tatum, 408 U. S. 1 (1972), and [California Bankers Ass'n v. Shultz [74-1 USTC ¶9318], 416 U. S. 21 (1974)].

S. Rep. No. 93-1183, 93d Cong., 2d Sess., reprinted in [1974] U. S. C. C. A. N. 6916, 6697.

 

 

 

 

 

[80-2 USTC ¶9643]R. Donnie Calhoun, Plaintiff v. Worth W. Wells, Warren L. Holcombe, Roger Enlow, and the Internal Revenue Service, Defendants

U. S. District Court, Dist. S. C., Greenville Div., Civil Action No. 79-2337-2, 7/30/80

[Code Secs. 6103, 7213, and 7217; 5 U. S. C. §552a]

Disclosure of information: Confidentiality of returns: Damages: Wilfulness.--A public accountant was not entitled to recover damages from the IRS for violations of the Privacy Act of 1974 concerning the disclosure of return information to former employees and assumed clients of the accountant where the disclosures were not wilful or intentional violations of Code Sec. 6103 or 5 U. S. C. §552a. Disclosures of portions of the accountant's return to former employees of the accountant that were made to ascertain who prepared the return were made under the agent's good faith belief that such disclosures were not prohibited. Although circular letters mailed by the IRS caused undue damage to the accountant by indicating that a criminal investigation was involved and were mailed to a significant number of taxpayers who were not clients of the accountant during the tax years in question, the court found that the disclosures were reasonably necessary in determining unreported income.

James R. Gilreath, Michael D. Layman, Dobson & Dobson, P. O. Box 426, Greenville, S. C. 29602, for plaintiff. James D. McCoy, III, Assistant United States Attorney, Greenville, S. C. 29603, James R. Hall, Michael J. Kearns, Department of Justice, Washington, D. C. 20530, for defendants.

Findings of Fact, Conclusions of Law and Order

HOUCK, District Judge:

This action was instituted by a summons and complaint filed on November 30, 1979 . An amended complaint, on which the plaintiff now proceeds, was filed on December 7, 1979 . The plaintiff therein sets forth five counts. In the fifth count he sought a temporary restraining order, temporary injunction, and permanent injunction restraining the defendants from further disclosing to third parties tax returns and return information concerning the plaintiff. That count was previously disposed of by this Court in its order dated April 17, 1980 . The remaining four counts contained two causes of action against the individual defendants for damages under §7217 of the Internal Revenue Code, ¹ and two causes of action against the Internal Revenue Service for damages under 5 U. S. C. §552a (hereinafter referred to as the Privacy Act of 1974).

In response to the plaintiff's demand for a jury trial, the two counts against the individual defendants based on alleged violations of the Internal Revenue Code were tried before a jury in Greenville , South Carolina , with the jury returning a verdict for the said defendants on June 6, 1980 . In due course judgment was entered on that verdict.

The two counts under the Privacy Act of 1974, seeking damages against the Internal Revenue Service, are presently before this Court as nonjury matters. ² They seek damages against the Internal Revenue Service for two types of disclosures. In the first instance, the plaintiff asserts that the Internal Revenue Service willfully and intentionally violated the Privacy Act of 1974 by disclosing the plaintiff's 1974, 1975, and 1976 federal income tax returns to former employees of the plaintiff. Secondly, the plaintiff alleges that the Internal Revenue Service disclosed tax return information concerning the plaintiff, a public accountant, by sending circular letters to persons assumed to be his clients during the period under investigation, ³ which informed them that the plaintiff was being investigated by the Criminal Investigation Division of the Internal Revenue Service. These disclosures of tax returns and return information involved the same facts and are the same disclosures asserted by the plaintiff against the individual agents of the Internal Revenue Service. Since the evidence to be presented was the same for all counts in the amended complaint, the trial of the counts against the individual agents, which were decided by the jury, and the counts against the Internal Revenue Service were combined.

In order to recover damages under the Privacy Act of 1974, ⁴ the plaintiff must establish by the preponderance of the evidence, that the Internal Revenue Service disclosed tax returns and/or return information in a manner which did not fall within the conditions of disclosure set out in 5 U. S. C. §552a(b). ⁵ The only such "conditions of disclosure" that could conceivably apply to this case is that for a "routine use" provided for under 5 U. S. C. §552a(b)(3). The parties have agreed in their trial briefs, and this court concludes, that if the disclosures alleged herein were authorized by 26 U. S. C. §6103, ⁶ they fall within the definition of a "routine use" under the Privacy Act of 1974. ⁷ As a result of this conclusion, 26 U. S. C. §6103 and the Privacy Act of 1974 must be examined together to properly determine the rights and liabilities of the parties in this matter.

Count II of the amended complaint addresses the disclosure of return information as continued in the circular letter mailed to the alleged clients of the plaintiff. In order to recover on that cause of action, the plaintiff must establish by a preponderance of the evidence the following elements:

1. The Internal Revenue Service disclosed tax return information ⁸ by mailing the circular letters which revealed that the plaintiff was being investigated by the Criminal Investigation Division. 26 U. S. C. §6103(a);

2. The disclosure of such return information was not necessary to obtain information which was not otherwise readily available and was needed in order to determine the tax liability of the plaintiff. 26 U. S. C. §6103(k)(6);

3. The acts of the Internal Revenue Service in making such disclosure were intentional and willful. 5 U. S. C. §552a(g)(4); and

4. The disclosure(s) had an adverse effect on the plaintiff. 5 U. S. C. §552a(g)(1)(D).

As to the plaintiff's fourth count, which alleges unlawful disclosures of the plaintiff's tax returns for the years 1974, 1975 and 1976, three elements must be established. They are as follows:

1. The Internal Revenue Service disclosed the plaintiff's tax returns, or portions thereof. 26 U. S. C. §6103(a);

2. The acts of the Internal Revenue Service in making such disclosures were intentional or willful. 5 U. S. C. §552a(g)(4); and

3. The acts of the Internal Revenue Service had an adverse effect on the plaintiff. 5 U. S. C. §552a(g)(1)(D).

For the purposes of both these counts, the term "disclosure" means the making known to any person in any manner whatever a return or return information. 26 U. S. C. §6103(b)(8). Only information previously unknown to the person to whom it is imparted may be the subject matter of a "disclosure" under this section; i. e., you cannot "disclosure" information that is already known. Harper v. United States [76-2 USTC ¶9575], 432 F. Supp. 192 (D. S. C. 1973). This has particular significance when considering the allegations of the plaintiff that the Internal Revenue Service disclosed tax returns to employees of the plaintiff.

With this framework of the applicable law in mind, this Court has carefully considered all of the evidence adduced during the trial and the legal positions taken and argued by the parties. Pursuant to Rule 52 of the Federal Rules of Civil Procedure, it now publishes the following:

Findings of Fact

1. During all times involved in this case the plaintiff was a public accountant, practicing in Greenwood , South Carolina . The plaintiff's accounting practice was responsible for preparing and filing a substantial number of federal tax returns for which fees were charged and paid. The income received by the accounting practice of the plaintiff was an important and necessary factor in determining plaintiff's tax liability to the federal government for the tax years 1974, 1975 and 1976.

2. In 1978 revenue agents of the Internal Revenue Service initiated a civil audit of the plaintiff's federal income tax liability for the years 1974, 1975 and 1976. Some time during 1979, the case was referred to, and accepted by, the Criminal Investigation Division of the Internal Revenue Service for the purposes of investigating possible criminal tax violations by the plaintiff in the filing of his federal tax returns for years 1974, 1975 and 1976. Thereafter, the investigation continued as a joint effort directed by Special Agent Warren Holcombe of the Criminal Investigation Division and Revenue Agent Roger Enlow.

3. Throughout the pertinent parts of the investigation by the Internal Revenue Service, the plaintiff was represented by his present attorney James R. Gilreath, Esquire, of Greenville , South Carolina . Such representation was evidenced by power of attorney signed by the plaintiff. ⁹

4. As long as the investigation of the plaintiff's tax returns for 1974, 1975 and 1976 was a civil audit, the plaintiff expressed a desire to cooperate with the Internal Revenue Service and did, in fact, acting through James R. Gilreath, deliver to the Internal Revenue agents some of his financial records. He did not, however, at any time furnish to the Internal Revenue Service a list of the clients for whom federal tax returns were prepared by his accounting practice. After the investigation was enlarged to include possible criminal tax violations by the plaintiff, the plaintiff, again acting through James R. Gilreath, advised the Internal Revenue Service that he would no longer cooperate in any way whatsoever with its investigation of his tax liabilities for the years 1974, 1975 and 1976. From that date forward the plaintiff offered no further cooperation and furnished no further information to the Internal Revenue Service.

5. In an effort to calculate the total income received by the plaintiff's accounting business, Special Agent Warren Holcombe recommended the use of a circular letter. As required by the provisions of paragraph 247 of the Special Agent's Handbook (5 C. C. H. Internal Revenue Manual 247), ¹⁰ Agent Warren Holcombe submitted his recommendation, along with a draft of the proposed circular letter, to his supervisor. The form and contents of the letter submitted had been previously used in another case by the Criminal Investigation Division of the Internal Revenue Service, and Special Agent Warren Holcombe selected it for that reason. Special Agent Holcombe's supervisor approved the letter and forwarded it to Worth W. Wells, Chief, Criminal Investigation Division, for his approval and signature. Worth W. Wells approved the letter to be sent out, and signed a form letter to be used in printing of the circular letters. ¹¹ At the time he approved use of the circular letter, Worth W. Wells did not know the specific names of the individuals to whom said letter was to be mailed, or the manner in which such names were to be obtained.

6. In order to obtain a list of the clients for whom the plaintiff's accounting practice prepared returns during the years 1974, 1975 and 1976, Special Agent Warrent Holcombe contacted the Atlanta Service Center of the Internal Revenue Service for a list of the taxpayers for whom the plaintiff's accounting practice prepared 1976 federal income returns. Such a list would have shown the clients supplying the plaintiff's income for 1977, which was one year removed from the years under investigation. Special Agent Holcombe selected the 1976 returns for his request because he believed that would be the earliest year for which such information would be available. ¹² Upon requesting this information, Special Agent Warrent Holcombe was informed by the Atlanta Service Center that such information could not be furnished, but that a list could be compiled of those taxpayers for whom the plaintiff's accounting practice prepared 1977 returns. Such a list was requested and received by Special Agent Warren Holcombe. It gave the names and addresses of those persons for whom four hundred thirty-six (436) federal income tax returns (some joint) were prepared by the plaintiff's accounting practice during 1978. The circular letter approved by Worth W. Wells, Chief, Criminal Investigation Division, ¹³ was addressed and mailed to four hundred twenty-one (421) of the four hundred thirty-six (436) taxpayers appearing on the list received by Special Agent Warren Holcombe from the Atlanta Service Center.

7. Prior to mailing these letters the Internal Revenue Service made no further effort to determine whether the plaintiff's accounting practice prepared the 1973, 1974 and 1975 returns of the four hundred twenty-one (421) taxpayers to whom the circular letters were sent. This could have been done by requesting the Atlanta Service Center to provide the federal tax returns of said four hundred twenty-one (421) addressees for the years 1973, 1974 and 1975, and individually examining each return. In response to the plaintiff's discovery request during this action, this information was obtained by the Internal Revenue Service, and it revealed that a significant number of the taxpayers to whom the circular letters were mailed were not clients of the plaintiff's accounting practice during any of the years under investigation.

8. The information sought by the use of the circular letters in this case was necessary if the Internal Revenue Service was to effectively carry out its investigation of the plaintiff. Furthermore, because of the number of persons involved, the required information was not otherwise readily available by reasonable means, and the use of a circular letter was justified.

9. In mailing the circular letters in this case, the Internal Revenue Service, through its agents, disclosed return information as defined in 26 U. S. C. §6103(b)(2) by revealing in said letters that the plaintiff was under an investigation by the Internal Revenue Service, and that the investigation was being conducted by the Criminal Investigation Division.

10. The mailing of circular letters to those persons whose tax returns were not prepared by the plaintiff's business during any of the years under investigation furnished the defendant no needed information. Under the circumstances existing in this case, however, we find that the same was reasonably necessary and, clearly, was not a willful or intentional violation of 26 U. S. C. §6103 and 5 U. S. C. §552a. ¹⁴

11. There was, however, no need to state in the circular letters that the plaintiff was under criminal investigation by the Internal Revenue Service. ¹⁵ The information sought by said letters could have been obtained equally well and with far less damage to the plaintiff if the recipients of those letters had simply been advised that the Internal Revenue Service was conducting an investigation of the plaintiff's income tax liabilities for the years 1974, 1975 and 1976.

12. The mailing by the Internal Revenue Service of the circular letters disclosing that the Criminal Investigation Division of the Internal Revenue Service was investigating the plaintiff had an adverse effect on the plaintiff. ¹⁶

13. The disclosure made by the Internal Revenue Service in the circular letters that the plaintiff was under investigation by the Criminal Investigation Division of the Internal Revenue Service was the result of good faith efforts on the part of the agents of the Internal Revenue Service to carry out their responsibilities in compliance with the dsclosure provisions of the Internal Revenue Code and were not willful or intentional violations of 26 U. S. C. §6103 and 5 U.S.C. §552a. ¹⁷

14. In order to determine the plaintiff's culpability, for any inaccurate or improper information contained in his federal tax returns for the years 1974, 1975 and 1976, it was necessary for the Internal Revenue Service's investigation of the plaintiff to determine who prepared the subject tax returns. The plaintiff had previously advised the Internal Revenue Service that employees of his public accounting business had prepared the same for the years under investigation.

15. In an attempt to determine the actual prepare of the 1974, 1975 and 1976 federal tax returns filed by plaintiff, Agent Holcombe showed various parts of these returns to Lee Hipp, Dewey D. Brothers, and Henry A. Dorn, three former employees of the plaintiff's accounting business. This took place during interviews with said employees in June and December of 1979. With each of these individuals, Agent Holcombe showed the returns, or portions thereof, only after obtaining information which reasonably led him to believe that the person to whom he was showing the returns, or portions thereof, actually prepared what was being shown. At such times Agent Holcombe revealed to the named employees only such portions of the plaintiff's returns as were necessary to determine who prepared the plaintiff's federal tax returns for the years 1974, 1975 and 1976.

16. Prior to this investigation Agent Holcombe had received training concerning the disclosure of tax returns under 26 U. S. C. §6103. A major part of this training was through a film presentation which Agent Holcombe and other members of the Criminal Investigation Division viewed in November of 1978. In the film, portions of which were introduced into evidence and viewed by the Court, the special agents were instructed that it was permissible to show a witness any portion of a tax return which the witness indicated he had prepared or may have prepared.

17. Because of the prior knowledge of the three former employees, the acts of Agent Holcombe in showing them portions of the plaintiff's tax returns did not, in most cases, constitute a disclosure of tax returns within the meaning of 26 U. S. C. §6103(b)(8). Even in those instances where the witnesses, upon being shown portions of the tax returns, discovered they had not prepared the same, the disclosures occurring were the result of a good faith belief on the part of Agent Holcombe that he was not making any disclosure which was prohibited by law. Any disclosures of the plaintiff's tax returns for the years 1974, 1975 and 1976 by the Internal Revenue Service were clearly not willful or intentional violations of 26 U. S. C. §6103 or 5 U. S. C. §552a.

Conclusion of Law

A. This court has jurisdiction and venue of this action by virtue of 5 U. S. C. §552a(g)(5), and under 5 U. S. C. §552a(g)(4), it is the responsibility of this court to decide the factual and legal issues presented by counts II and IV of the amended complaint.

B. As to count II of the amended complaint, the plaintiff has established by the greater weight and preponderance of the evidence that the defendant Internal Revenue Service, by mailing circular letters to clients of the plaintiff, disclosed return information concerning the plaintiff which was not necessary in order to complete its investigation. Such disclosures were in violation of 26 U. S. C. §6103, and constituted unauthorized disclosures of records within the meaning of the Privacy Act of 1974. The plaintiff has also established, by stipulation, that said disclosures had an adverse effect on him and his accounting business. The plaintiff has, however, failed to establish, as required by 5 U. S. C. §552a(g)(4), that the defendant Internal Revenue Service acted in a manner which was intentional or willful in making said unauthorized disclosures.

C. As to count IV of the amended complaint, the plaintiff has failed to prove by the greater weight and preponderance of the evidence that any disclosures of the plaintiff's tax returns were the result of willful or intentional actions on the part of the defendant Internal Revenue Service. IT IS, THEREFORE,

ORDERED that the plaintiff's claims be, and the same are hereby, denied; and the clerk of this court is hereby directed to enter judgment for the defendant Internal Revenue Service.

¹ 26 U. S. C. 7217(a) provides: Civil damages for unauthorized disclosure of returns and return information

(a) General rule.--Whenever any person knowingly, or by reason of negligence, discloses a return or return information (as defined in section 6103(b)) with respect to a taxpayer in violation of the provisions of section 6103, such taxpayer may bring a civil action for damages against such person, and the district courts of the United States shall have jurisdiction of any action commenced under the provisions of this section.

² As to those counts, the court granted the Internal Revenue Service's motion to strike the plaintiff's demand for a jury trial upon determining that no such right exists under the Privacy Act of 1974. This determination was made upon concluding that the Seventh Amendment of the United States Constitution does not guarantee a jury trial in an action against the U. S. Government and that Congress intended trial without a jury in actions brought under the Privacy Act of 1974. Henson v. United States Army, Case No. 76-45-C5 (D. Kan. 1977); Wright & Miller, Federal Practice and Procedure: Civil §2314 (1971); 5 J. Moore, Moore's Federal Practice, ¶38.31 (2d Ed. 1979).

³ The plaintiff, as is hereinafter discussed, strongly contends that this was not a proper assumption for the Internal Revenue Service to make.

⁴ 5 U. S. C. §552a(g)(4) provides as follows:

(4) In any suit brought under the provisions of subsection (g)(1)(C) or (D) of this section in which the court determines that the agency acted in a manner which was intentional or willful, the United States shall be liable to the individual in an amount equal to the sum of--

(A) actual damages sustained by the individual as a result of the refusal or failure, but in no case shall a person entitled to recovery receive less than the sum of $1,000; and

(B) the costs of the action together with reasonable attorney fees as determined by the court.

⁵ The defendant Internal Revenue Service admitted that the tax returns and the return information in issue in this case are records within the meaning of the Privacy Act of 1974. The court agrees that they are records; thus, the question becomes whether their disclosure was one of the accepted disclosures set out in 5 U. S. C. §552a(b).

⁶ This is the disclosure provision of the Internal Revenue Code, and the one involved in the trial of the individual agents which ended in a jury verdict for said agents on June 6, 1980 . Please see footnote 1.

⁷ The court has reached this conclusion over a very circuitous path. Since the parties admit that this is the law, however, the court shall not burden this order with the reasoning and authority which support this conclusion.

⁸ The applicable portion of the statutory definition found in 26 U. S. C. §6103(b)(2)(A) states that "return information" includes ". . . whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing . . .."

⁹ This is an authorized procedure. Research Institute of America Tax Guide (1980), §911, page 3,407.

¹⁰ Paragraph 247 of the Special Agent's Handbook provides:

To ensure proper use of this technique, mail circularization will not be undertaken in any case without the prior approval of the Chief, Intelligence Division, including approval of the letters to be sent out. Extreme care must be exercised in approving mail circularization to ensure that: mail inquiries are sent only to third parties who are a likely source of information; the information sought is vital to the investigation; the information cannot be obtained by any other practical means; the format of the proposed letter is discreetly worded, is neither offensive nor suggestive of any wrongdoing by the taxpayer; and the taxpayer's reputation will not be unduly affected by the form letter. When mail circularization is used, all such letters will be sent in the name of the Chief, Intelligence Division. ^*

* Prior to any acts of the parties now before this court, the "Intelligence Division" of the Internal Revenue Service was redesignated the "Criminal Investigation Division."

¹¹ The circular letter approved for mailing and mailed was as follows:

INTERNAL REVENUE SERVICE & DEPARTMENT OF THE TREASURY

District Director Person to Contact: Warren L. Holcombe

Telephone Number:

(803) 232-1037

(Name of Addressee(s) Inserted Here)

Refer Reply to: 901

Date: 11/13/79

Re: Robert D. Calhoun Rt. 1, Springdale Subdivision Ninety-six, South Carolina 29666

A/K/A: R. Donnie Calhoun Donnie R. Calhoun Grier Building Greenwood, South Carolina 29646

The Criminal Investigation Division of the Internal Revenue Service is currently conducting an investigation of the income tax liabilities of Robert D. Calhoun for the years 1974, 1975 and 1976. The following information is requested as provided for in Section 7602 of the Internal Revenue Code of 1954.

FILL IN CORRECT INFORMATION

1. Did Robert D. Calhoun prepare tax returns or perform any type accounting or bookkeeping services for you during the years 1974, 1975 or 1976?

Yes or No

1974.....

1975.....

1976.....

2. If you answered yes to all or part of question (1), please indicate the amounts paid and the nature of the payment.

                             Amount         Check or Cash

Calendar Year 1974

Calendar Year 1975

Calendar Year 1976

 

3. If paid by check please mail a copy of the check(s) (both sides) to the Internal Revenue Service. If you are unable to mail a copy of the check(s) with your reply, please indicate your current address and phone number:

Address

Phone Number

A self-addressed/stamped enveloped is enclosed for your prompt handling of this matter.

/s/ Worth W. Wells

Worth W. Wells, Chief

Criminal Investigation Division

¹² Agent Holcombe's belief was based upon his knowledge of a significant change in the law relative to the preparers' responsibility to sign returns which provided that all return preparers would be subject to a penalty for failing to properly identify themselves on returns prepared after December 31, 1976 , unless the failure was shown to be due to reasonable cause and not due to willful neglect. 26 U. S. C. §6695(b). No such penalty existed prior to this act.

¹³ See footnote 11, supra.

¹⁴ This finding is specifically limited to the facts in the instant case. In arriving at this finding the Court has given considerable weight to the following factors:

1. The unusually large number of returns involved and the difficulty in obtaining for review the tax returns of the 436 clients for the three years appropriate to the investigation;

2. The closeness in time of the years under investigation to the filing of the 1977 tax returns from which the list used by the defendant was prepared;

3. The place and character of the plaintiff's accounting practice and the reasonable expectation that his clientele would be substantially stable and repetitive from year to year; and

4. Only after December 31, 1976 , were preparers of returns subject to statutory penalty for failure to properly identify themselves on such returns.

¹⁵ Throughout the trial of this case, the defendant Internal Revenue Service argued that paragraph 247.2 of the Special Agent's Handbook (see footnote 10, supra) requires that the recipient of a circular letter, such as the ones sent in this case, be at least indirectly informed that the person about whom the information sought therein was under criminal investigation, because it requires all such letters to be sent in the name of the Chief, Criminal Investigation Division. No useful purpose could be accomplished by addressing that point. Suffice it to say that the manual provision in question does not have the force and effect of law, and is in no way binding on this court. Further, if interpreted as the defendant Internal Revenue Serice argues, this court concludes that the manual provision referred to would require an unnecessary disclosure of return information in violation of 26 U. S. C. §6103.

¹⁶ This fact was stipulated to by the parties during the trial.

¹⁷ The relative newness of the disclosure laws, the confusing indication in the Special Agents' Handbook that the letters must disclose the involvement of the Criminal Investigation Division, and the fact that the wording of the letter had been previously used successfully, convince this court that the agents of the defendant were acting in good faith and reasonably when choosing the wording of the circular letter.

[80-1 USTC ¶9444]Donald R. Huene et al., Plaintiffs v. United States of America et al., Defendants

U. S. District Court, East. Dist. Calif. , No. F-77-187-CIV, 1/29/80

[Code Secs. 7213(a), 7217 and 7422]

Civil suits: Civil remedy for unlawful disclosure of information: Privacy Act: Motion for summary judgment.--The court granted the government's motion for summary judgment in the taxpayer's suit that alleged unlawful disclosures and Privacy Act violations. The taxpayer failed to provide competent evidence of unlawful disclosures. Mere allegation is not sufficient to raise a genuine issue of material fact.

Donald R. Huene, 7429 North Valentine, Fresno, Calif. 93711, pro per. James E. White, Assistant United States Attorney, Fresno, Calif. 93612, Michael Salem, Department of Justice, Washington, D. C. 20530, for defendants.

Magistrate's Recommendation on Defendant's Motion for Summary Judgment

PRICE, District Judge:

The defendant's Motion for Summary Judgment came on regularly for hearing before the Honorable A. D. Christensen, United States Magistrate. The plaintiff, Donald R. Huene, appeared in propria persona. James E. White, Assistant United States Attorney and Michael J. Salem, trial attorney, Tax Division, United States Department of Justice, appeared on behalf of the defendants. Following oral arguments, the matter was submitted to the Court for its recommendation.

It is the recommendation of the Court to the Honorable M. D. Crocker, United States District Judge that the defendant's Motion for Summary Judgment be granted. This recommendation is based upon the following findings of fact and conclusions of law.

This claim for relief was brought pursuant to the Privacy Act of 1974, 5 USC §552(a), and the Internal Revenue Code of 1954, 26 USC §7217.

Plaintiff's complaint alleges that on or about July, 1975, defendants did undertake a lawful investigation of income tax compliance of said plaintiffs; such investigation is continuing to the present time. That the defendants did not comply with the Privacy Act of 1974 and that they disclosed information to other individuals both within or without the Internal Revenue Service. Those persons in the Internal Revenue Service to whom the records were disclosed were not officers and employees of the IRS who had a need for the records in the performance of their duties. As a result of these disclosures, plaintiffs have been brought into public disgrace and disrepute, are being held in contempt, hatred, ridicule and obloquy, and said statements and disclosures have had a tendency to and did injure plaintiffs in their business, trade and occupation.

In support of their motion, defendants have filed points and authorities, a statement of material facts as to which there is no genuine issue, and the affidavits of Dennis Bean, Fred Bolding, Francis L. Browitt, Darryl P. Ladmirault, Joseph P. Mastro, and Gary Reynolds.

Plaintiffs have filed no affidavits in opposition to this Motion for Summary Judgment.

Federal Rules of Civil Procedure Rule 56(C) states in pertinent part:

"The judgment sought shall be rendered forwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

Federal Rules of Civil Procedure Rule 56(E) was amended in 1963 to state in pertinent part:

"When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him."

The purpose of the amendment to 56(E) was to overrule the doctrine which prevailed primarily in the Third Circuit that well-pleaded claims and defenses were invulnerable to attack by a motion for summary judgment. The amendment merely codified the view which already had been established in all of the other circuits that, evidentiary materials admissible under Rule 56(E) can overcome even well-pleaded claims or defenses unsupported by material presented in opposition to a summary judgment motion. The advisory committee note makes it clear that the purpose of the 1963 amendment was to protect the summary judgment procedure against the debilitating effect of the Third Circuit practice which states:

"A typical case is as follows:

'A party supports his motion for summary judgment by affidavits or other evidentiary matter sufficient to show that there is no genuine issue as to a material fact. The adverse party, in opposing the motion, does not produce any evidentiary matter or produces some, but not enough to establish that there is a genuine issue for trial. Instead, the adverse party rests upon averments of his pleadings, which on their face present an issue. In this situation, Third Circuit cases have taken the view that summary judgment must be denied at least if the averments are "well-pleaded" and not suppositious, conclusory or ultimate. * * *'

The very mission of the summary judgment procedure is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial. The Third Circuit doctrine, which permits the pleadings themselves to stand in the way of granting an otherwise justified summary judgment is incompatible with the basic purpose of the rule."

It is the finding of the Court that the defendant's support for its Motion for Summary Judgment sets forth relevant and admissible evidence showing there is no genuine issue as to any material fact remaining for trial. Plaintiffs, in an attempt to avoid summary judgment, reiterate what has previously been pleaded, to wit, various allegations regarding unlawful disclosures. Without competent evidence of disclosures falling outside that which is [permissible] under 5 USC §552A(b)(1), or under 26 USC §6103(h)(1), to wit, necessary work-related disclosures, plaintiffs have failed to adequately oppose defendant's motion. An example of plaintiffs' failure in this regard involves the allegation that Mr. Dennis Bean disclosed confidential information to Mrs. Iris Bean. If plaintiff had intended to prove at trial that such disclosure was made in violation of the Privacy Act or the Internal Revenue Code, an affidavit, signed by Mrs. Bean to that effect, should have been supplied.

The Court has fulfilled its obligation to search the record independently to determine whether or not a genuine issue of fact exists. It is upon the above-stated reasoning that this recommendation is made.

 

[82-2 USTC ¶9437]Robert B. Clarkson, Plaintiff-Appellant v. Internal Revenue Service and John Henderson, District Director, Defendant-Appellees

(CA-11), U. S. Court of Appeals, 11th Circuit, No. 80-7973, 678 F2d 1368, 6/21/82 , Affirming in part and reversing and remanding in part District Court, 80-2 USTC ¶9714

[Freedom of Information Act and Privacy Act]

Freedom of Information Act: Attorney's fees: Privacy Act: Documents maintained.--In a suit brought under the Freedom of Information Act and the Privacy Act, a pro se litigant who was not an attorney was not entitled to an award of attorney's fees; however, costs may be awarded to a pro se litigant who is not an attorney if it is found that he substantially prevailed in the litigation. With regard to the Privacy Act claims that the IRS maintained various documents, including surveillance reports, newsletters and press releases pertaining to the litigant, to the extent the IRS has engaged in the practice of collecting protected information, unconnected to any investigation of past, present or anticipated violations of the statutes which it is authorized to enforce, the Act has been violated.

Robert B. Clarkson, 515 Concord Ave., Anderson, S. C. 29621, pro se. William L. Harper, United States Attorney, Myles E. Eastwood, Assistant United States Attorney, Atlanta, Ga. 30303, John F. Murray, Acting Assistant Attorney General, Michael L. Paup, Richard W. Perkins, Gayle P. Miller, Robert A. Bernstein, Mark G. Gellar, Department of Justice, Washington, D. C. 20530, for defendants-appellees.

Before TUTTLE, TJOFLAT and CLARK, Circuit Judges.

TUTTLE, Circuit Judge:

This appeal involves several consolidated cases arising under the Freedom of Information Act (FOIA), 5 U. S. C. §552 (1976) and the Privacy Act of 1974 (Privacy Act or Act), 5 U. S. C. §552a (1976). In each of these cases the Court below granted summary judgment in favor of the Internal Revenue Service (IRS) and Director Henderson. Seeking to obtain attorney fees and costs relating to the FOIA actions and to have the judgment relating to the Privacy Act suit reversed, Clarkson filed this appeal pursuant to 28 U. S. C. §1291 (1976). We affirm in part and reverse in part for the reasons which follow.

I. Background

Appellant Clarkson has for several years been active in various organizations formed to protest the federal government's system of taxation. In February of 1979, Clarkson served as the principal speaker at a meeting held in Atlanta , Georgia for the purpose of planning the 1979 Tax Protest Day demonstration. Two Internal Revenue Agents, apparently claiming to be insurance agents, attended this meeting. Upon learning the true identity of these agents, Clarkson initiated a series of letters to the IRS requesting copies of various documents pursuant to the FOIA and the Privacy Act. ¹

The IRS refused these requests on the ground that it maintained no files on any of the entities named in Clarkson's letters. Dissatisfied with the IRS's responses to his requests, Clarkson filed his first FOIA suit in propria persona against the IRS and Director Henderson on April 18, 1979 . After further correspondence between the parties concerning Clarkson's FOIA requests, the IRS provided Clarkson with 109 pages of documents on August 1, 1979 , and informed him that other documents were being withheld based on certain exemptions from disclosure under the FOIA. On August 31, 1979 , Clarkson filed a second FOIA suit in propria persona against the IRS and Director Henderson. Clarkson also filed a Vaughn Rosen motion to compel the IRS to provide him with a detailed justification for the withholding of all documents claimed to be exempted from disclosure under the FOIA. By order of December 28, 1979 , the district court consolidated these two suits, granted Clarkson's Vaughn Rosen motion, and directed the IRS to respond to Clarkson's FOIA request within thirty days. Clarkson contends that it was primarily because of this order that he received a second group of documents from the Department of Justice on January 18, 1980 . The district court then reviewed in camera the documents for which the IRS claimed specific exemptions. By order of June 27, 1980 , the district court granted the IRS's motion for summary judgment on the basis that the exemptions claimed as to this third set of documents were proper. The costs of the actions were taxed against Clarkson.

Meanwhile, on March 31, 1980 , after exhausting his administrative remedies, Clarkson filed a Privacy Act suit against the IRS and Henderson. In this suit Clarkson sought declaratory, injunctive and monetary relief against the defendants for alleged violations of subsections (e)(1), (5) and (7) of the Privacy Act. 5 U. S. C. §552a(e)(1), (5) and (7) (1976). By order dated July 31, 1980 , the district court granted summary judgment in favor of the defendants on the ground that the Privacy Act is not applicable to documents which are not contained in the agency's "system of records" as that phrase is defined by the Act.

Clarkson also filed a series of motions in these cases. On July 24, 1980 , he filed a motion for attorney fees in the two FOIA actions. On July 30, 1980 , Clarkson filed a motion for a new trial in the FOIA suit. On August 11, 1980 , Clarkson filed a motion to consolidate all three cases, a motion for a new trial in the Privacy Act suit, and a cross-motion for summary judgment in the Privacy Act suit. On August 12, 1980 , Clarkson filed a motion in opposition to defendant's bill of costs in the FOIA suits. The court treated the new trial motions and the cross-motion for summary judgment as motions for reconsideration. ² On October 17, 1980 , the court entered an order consolidating the three cases and denying Clarkson's other motions.

II. Attorney Fees and Costs

Awards of attorney fees and costs against the United States are allowable only to the extent that the government has waived its right of sovereign immunity. E.g., Alyeska Pipeline Service Co. v. Wilderness Society, 421 U. S. 240, 267-68 n. 42, 95 S. Ct. 1612, 1626-1627 n. 42, 44 L. Ed. 2d 141 (1974); Barrett v. Bureau of Customers, 651 F. 2d 1087 (5th Cir. 1981). The Freedom of Information Act contains a specific limited waiver of sovereign immunity by providing:

The court may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this section in which the complainant has substantially prevailed.

5 U. S. C. §552(a)(4)(E) (1976).

Thus, in the context of FOIA litigation, an award of attorney fees and costs is proper only where the party seeking the award has "substantially prevailed" in the litigation and where the court, in its discretion, determines that such an award is justified in a particular case. E.g., Cazalas v. United States Department of Justice, 660 F. 2d 612 (5th Cir. 1981); Lovell v. Alderete, 630 F. 2d 428 (5th Cir. 1080); Blue v. Bureau of Prisons, 570 F. 2d 529 (5th Cir. 1978).

Moreover, with respect to attorney fees, the Fifth Circuit Court of Appeals recently interpreted a similar provision of the Privacy Act to authorize such an award only to the extent that the "services of an attorney were utilized and fees incurred." Barrett v. Bureau of Customs, 651 F. 2d 1087, 1089 (5th Cir. 1981). Thus, in Barrett, the Court held that pro se litigants who are not attorneys are not entitled to an award of attorney fees even if the other requirements of the Privacy Act are satisfied. ³ Since we find the attorney fees provisions of these acts to be virtually identical, both in terms of statutory language and congressional intent, we must conclude that the holding in Barrett precludes an award of attorney fees under the FOIA to a pro se litigant who is not an attorney. We therefore hold that Clarkson is not entitled to an award of attorney fees for his pro se representation in the two FOIA suits.

Unlike attorney fees, however, costs of litigation can be reasonably incurred even by a pro se litigant who is not an attorney. Thus, the rationale of the Barrett decision would not preclude a pro se litigant from recovering his costs of litigation if the other requirements of the statute are satisfied. See, e.g., Crooker v. United States Department of Justice, 632 F. 2d 916, 921-22 (1st Cir. 1980); White v. Arlen Realty & Development Corp., 614 F. 2d 387, 389 n. 4 (4th Cir. 1980). In deciding whether a party has substantially prevailed, a court should consider whether the "prosecution of the action could reasonably be regarded as necessary to obtain the information" and whether "the action had a substantial causative effect on the delivery of the information." Lovell v. Alderete, 630 F. 2d 428, 432 (5th Cir. 1980) (quoting Vermont Low Income Advocacy Council, Inc. v. Usery, 546 F. 2d 509, 514 (2d Cir. 1976)). If a party is found to have substantially prevailed in the litigation, then the court must exercise its discretion in determining whether an award is justified. ⁴ Cazalas v. United States Department of Justice, supra; Blue v. Bureau of Prisons, supra.

In the instant case, the district court found, without discussion, that Clarkson had not substantially prevailed in his FOIA suits. As is often the case in FOIA suits brought to enforce an administrative request for documents, the record in this case is somewhat confusing as to when and to what extent the government provided Clarkson with the documents requested in his various letters. Yet it is undisputed that Clarkson received two sets of documents from the government at some point after suit had been filed. ⁵ More importantly, this second set of documents was released only after the court entered an order requiring the IRS to provide Clarkson with a detailed justification of why additional documents were exempt from disclosure. Under these circumstances, we must conclude that the lawsuits "could reasonably be regarded as necessary" and that they had a "substantial causative effect on the delivery of information." Lovell v. Alderete, 630 F. 2d 428, 432 (5th Cir. 1980) (quoting Vermont Low Income Advocacy Council, Inc., 546 F. 2d 509, 514 (2d Cir. 1976)). Since the district court did not reach the issue of whether a discretionary award of costs was justified in this case, we remand this issue to it for further proceedings consistent with this opinion.

III. Privacy Act Claims

Appellant Clarkson raises several statutory challenges to the IRS's practice of collecting and maintaining various documents, including surveillance reports, newsletters and press releases, pertaining to him individually. Specifically he asserts that the collection of documents describing his exercise of First Amendment rights violates subsection (e)(7) of the Privacy Act which provides:

(e) . . . Each agency that maintains a system of records shall--

* * *

(7) maintain no record describing how any individual exercises rights guaranteed by the First Amendment unless expressly authorized by statute or by the individual about whom the record is maintained or unless pertinent to and within the scope of an authorized law enforcement activity.

5 U. S. C. §552a(e)(7) (1976).

Moreover, he asserts that by maintaining these documents, the IRS has violated two other provisions ⁶ of the Privacy Act which require:

(e) Each agency that maintains a system of records shall--

(1) maintain in its records only such information about an individual as is relevant and necessary to accomplish a purpose of the agency required to be accomplished by statute or by executive order of the President;

* * *

(5) maintain all records which are used by the agency in making any determination about any individual with such accuracy, relevance, timeliness, and completeness as is reasonably necessary to assure fairness to the individual in the determination;

5 U. S. C. §552a(e)(1) and (5) (1976).

In interpreting the scope of these agency requirements, it is necessary to refer to the pertinent definitions contained in the Act. The term "maintain" is defined to include the terms "maintain, collect, use, or disseminate." 5 U. S. C. §552a(a)(3) (1976). The term "record" is defined as:

any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, his education, financial transactions, medical history, and criminal or employment history and that contains his name, or the identifying number, symbol, or other identifying particular assigned to the individual, such as a finger or voiceprint or a photograph;

5 U. S. C. §552a(a)(4) (1976).

The phrase "system of records" is defined as:

a group of any records under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual;

5 U. S. C. §552a(a)(5) (1976).

In the instant case, there is no dispute that the IRS is an agency which maintains a system of records. Similarly there can be no dispute that at least some of the surveillance reports or other documents identified by Clarkson are "records" since the IRS has admitted that these documents contain individual references to Clarkson. According to the IRS, these records are not, however, retrievable by Clarkson's name or other identifying particular. Rather these records are maintained only in a separate file entitled the "Tax Protestors Project" file. Because these records have not been incorporated in the agency's "system of records," the district court held that the requirements of subsection (e)(1), (5) and (7) were not applicable and that the IRS was not required to comply with Clarkson's requests for amendment or expungement.

Asserting that the district court's interpretation of the Act is erroneous, Clarkson urges this Court to adopt the rationale espoused by the Circuit Court of Appeals for the District of Columbia in Albright v. United States, 631 F. 2d 915 (D. C. Cir. 1980). The factual situation in Albright is in many respects similar to the instant case. In Albright an agency of the federal government videotaped a meeting between social security analysts and their personnel director regarding the recent demotions of the analysts. The videotape was not, and was never intended to be, made a part of the agency's "system of records." Focusing on the plain meaning of the statutory language, the Albright court held that 5 U. S. C. §552a(e)(7) prohibits an agency from even collecting records which describe how an individual exercises his First Amendment rights. The Albright court found this interpretation of the Act to be consistent with both the legislative history of the Act, ⁷ which reflects Congress' "special concern for the protection of First Amendment rights," id. at 919, and the guidelines promulgated by the Office of Management and Budget (OMB). ⁸ Id. at 919-20 n. 5.

The IRS describes the Albright interpretation of the Act variously as "grammatically possible," "literal," "clearly strained" and "erroneous." It asserts that the district court's decision in this case ascribes the correct meaning to the requirements imposed on the agency by the Act. Thus, the IRS would have us interpret subsection (e)(7), for example, as requiring that an agency shall "maintain no record [which is incorporated into a system of records] describing how any individual exercises rights guaranteed by the First Amendment. . . ." Since most of the arguments presented by the IRS are directed toward subsection (e)(7), we find it appropriate to discuss this provision separately.

A. Subsection (e)(7)

The IRS raises numerous arguments in support of its assertion that the Albright interpretation of subsection (e)(7) is erroneous. Many of these arguments were discussed in detail by the court in Albright and we see no reason to repeat them here. In this case, however, the IRS presents two additional arguments which merit individual consideration by this Court.

The IRS first asserts that if this Court adopts the rationale of the Albright decision, every piece of paper collected by a government agency will subject it to a claim for a subsection (e)(7) violation. We believe the IRS has seriously overstated its case for several reasons. In order for the prohibition of subsection (e)(7) to apply, the documents involved must constitute "records" which implicate an individual's First Amendment rights. As we have previously noted, at least some of the documents involved in this case clearly fall within the definition of records provided by the Act. 5 U. S. C. §552a(a)(4) (1976). And, it cannot be disputed that memoranda reflecting the contents of Clarkson's political speech would be subject to First Amendment protections. Even where records implicating an individual's First Amendment rights are involved, however, the prohibition against collection of such records is not absolute. Thus, Congress has provided that an agency may collect such records if

expressly authorized by statute or by the individual about whom the record is maintained or [if the collection is] pertinent to and within the scope of an authorized law enforcement activity.

5 U. S. C. §552a(e)(7) (1976).

Indeed, while the first two exceptions are not applicable in this case, the IRS asserted during oral argument that the surveillance of tax protest meetings is an authorized law enforcement activity. ⁹ The Privacy Act does not specifically define the term "authorized law enforcement activity." Some guidance is provided, however, by the legislative history and the OMB Guidelines. The objective of the law enforcement exception to subsection (e)(7) was "to make certain that political and religious activities are not used as a cover for illegal or subversive activities." 120 Cong. Rec. H 10,892 (daily ed. Nov. 20, 1974 ). By enacting this exception, however, Congress did not intend to dilute the guarantees of the First Amendment by authorizing the maintenance of files on "persons who are merely exercising their constitutional rights." OMB Guidelines, 40 Fed. Reg. 28965 (1975) (quoting 120 Cong. Rec. H 10,892) (daily ed. Nov. 20, 1974 ) and H 10,952 (daily ed. Nov. 21, 1974 ). In determining the scope of the FBI's authorized law enforcement activities, one court has held:

Merely because [an agency] may act within its authority by monitoring the public or private speeches of a person in the course of a legitimate security investigation does not give it the right to maintain records relating to the contents of these speeches where the investigation does not focus on a past or anticipated specific criminal act.

Jabara v. Kelley, 476 F. Supp. 561, 581 (E. D. Mich. 1979) ¹⁰ (emphasis in original). Support for this proposition can be found in the Senate Report which states that the restraint imposed upon an agency by subsection (e)(7) is aimed at "preventing collection of protected information not immediately needed, about law-abiding Americans, on the off-chance that Government or the particular agency might possibly have to deal with them in the future." S. Rep. No. 1183, 93d Cong., 2d Sess., reprinted in [1974] U. S. Code Cong. & Admin. News 6916, 6971. Although the scope of authorized activities must necessarily vary depending upon the particular agency involved, we find the balance struck by the court in Jabara to be appropriate in this case. Thus, we hold that to the extent that the IRS has engaged in the practice of collecting protected information, unconnected to any investigation of past, present or anticipated violations of the statutes which it is authorized to enforce, subsection (e)(7) of the Act has been violated. Since the record in this case does not reveal either the purpose of the surveillance activities or the extent to which records of political speeches are maintained by the IRS, we must remand this issue to the district court for further proceedings consistent with this opinion.

The IRS next asserts that even if subsection (e)(7) applies to records not contained within a system of records, Clarkson would be unable to obtain any effective relief under the Act. Although subsections (d)(2) and (d)(3) of the Act require the IRS to amend or expunge its records under certain circumstances, the IRS asserts that the applicability of these subsections is limited to records contained within a system of records. ¹¹ See Grachow v. United States Custom Service, 504 F. Supp. 632 (D. D. C. 1980); Lynch v. IRS, Civ. No. 77-1219 (D. D. C., May 10, 1978 ). Thus, according to the IRS, since the Act does not authorize the amendment or expungement of offending documents which are not contained within an agency's system of records, the Albright interpretation of subsection (e)(7) does not fit within the comprehensive statutory scheme enacted by Congress.

We find unpersuasive the government's argument that the Act provides no effective relief for a violation of subsection (e)(7) as interpreted by the Court in Albright v. United States , supra. Section (d) of the Act provides in pertinent part:

(d) Access to records--Each agency that maintains a system of records shall--

(1) upon request by any individual to gain access to his record or to any information pertaining to him which is contained in the system, permit him and upon his request, a person of his own choosing to accompany him, to review the record and have a copy made of all or any portion thereof in a form comprehensible to him, . . .

(2) permit the individual to request amendment of a record pertaining to him and--

. . . . .

(B) promptly, either--

(i) make any correction of any portion thereof which the individual believes is not accurate, relevant, timely, or complete; or

(ii) inform the individual of its refusal to amend the record in accordance with his request, the reason for the refusal, the procedures established by the agency for the individual to request a review of that refusal by the head of the agency or an officer designated by the head of the agency, and the name and business address of that official;

(3) permit the individual who disagrees with the refusal of the agency to amend his record to request a review of such refusal, . . . and notify the individual of the provisions for judicial review of the reviewing official's determination under subsection (g)(1)(A) of this section;

5 U. S. C. §552a (d)(1)-(3) (1976).

The language of paragraph (d)(1) expressly limits its applicability to records contained within a system of records. See Hanley v. United States Department of Justice, 623 F. 2d 1138 (6th Cir. 1980); Smiertka v. United States Department of the Treasury, 447 F. Supp. 221 (D. D. C. 1978), remanded on other grounds, 604 F. 2d 698 (D. C. Cir. 1979). Paragraphs (d)(2) and (d)(3), however, contain no such restrictions. Moreover, neither of these paragraphs refers back to the restrictive language concerning records in paragraph (d)(1). Rather, paragraph (d)(2) refers only to "a record."

The IRS asserts that the application of paragraphs (d)(2) and (d)(3) must be implicitly limited by the language in paragraph (d)(1) because the former paragraphs apply only to records obtained under paragraph (d)(1). This argument, however, ignores not only the plain language of the statute, but also the reality that the Privacy Act is not the exclusive means for obtaining access to records maintained by an agency. Without delving into the complex interrelationship between the FOIA and the Privacy Act, we note that the FOIA is, of course, in no way limited to records contained within a system of records. See 5 U. S. C. §552 (1976). As one commentator has explained: "An individual may utilize the Privacy Act or the FOIA or both to seek access to information about himself in agency records and is entitled to the cumulative total of access rights under the two Acts." ¹² Guidebook to the Freedom of Information and Privacy Acts 21-22 (R. Bouchard & J. Franklin ed. 1980). Thus, we find it both necessary and appropriate to construe the plain meaning of the language of subsections (d)(2) and (d)(3) to authorize the amendment or expungement of all records which are maintained in violation of subsection (e)(7). Moreover, we believe that this construction is consistent with Congress' purpose in enacting provisions to safeguard First Amendment rights. Just as Congress must have been aware of the special treatment accorded First Amendment rights by the judiciary, it must also be credited with an awareness of the typical remedies afforded to vindicate violations of those rights. Prior to the enactment of the Privacy Act, courts have often recognized actions arising under the Constitution for expungement of agency records collected and maintained in violation of the First Amendment. ¹³ See, e.g., Paton v. La Prade, 524 F. 2d 862 (3d Cir. 1975) (FBI surveillance and interception of lawful correspondent with the Socialist Workers Party); Chastin v. Kelley, 510 F. 2d 1232 (D. C. Cir. 1973) (retention of documents relating to proposed dismissal of FBI agent after charges had been withdrawn). Thus, we hold that, at least with respect to violations of subsection (e)(7), a plaintiff may be entitled to have the offending records amended or expunged even if the records are not maintained within the agency's system of records.

B. Subsections (e)(1) and (e)(5).

The language of subsections (e)(1) and (e)(5) compels a different analysis. Unlike subsection (e)(7), these subsections do not address the protections afforded to individuals by the First Amendment. Indeed, subsection (e)(1) merely provides a general overall prohibition against the collection and maintenance of information which is irrelevant to the purposes of an agency. By definition the language of this subsection imposes a much less rigorous standard upon the agency than that required by subsection (e)(7). See OMB Guidelines, 40 Fed. Reg. at 28965 (1975). In light of the limited function of subsection (e)(1), we decline to extend the Albright rationale to this provision of the Act.

Similarly, the language of subsection (e)(5) cannot be read to apply to records not incorporated within an agency's system of records. The objective of this provision is to require an agency to take reasonable steps to insure the informational quality of the records which it relies upon in making determinations about an individual. See, e.g., Edison v. Department of the Army, 672 F. 2d 840 (11th Cir. 1982); Savarese v. United States Department of Health, Education and Welfare, 479 F. Supp. 304 (N. D. Ga. 1979), aff'd w/o opinion, 620 F. 2d 298 (5th Cir. 1980), cert. denied, 449 U. S. 1078, 101 S. Ct. 858, 66 L. Ed. 2d 801 (1981); Zeller v. United States, 467 F. Supp. 487 (E. D. N. Y. 1979); OMB Guidelines, 40 Fed. Reg. at 28964. Thus, unlike subsection (e)(7), the requirements of subsection (e)(5) are specifically directed toward the agency's use of the records in making "decisions affecting the rights, benefits, entitlements, or opportunities (including employment) of the individual." ¹⁴ OMB Guidelines, 40 Fed. Reg. at 28964. Indeed, this Court has held that subsection (e)(5) requires a plaintiff to prove a "causal relationship between the allegedly erroneous record and an adverse determination based on that record." See Edison v. Department of the Army, supra at 845. The record in the instant case in no way indicates that the IRS has made or intends to make any "determinations" about Clarkson based on these records. ¹⁵ Thus, we find it unnecessary to extend the rationale of the Albright decision to subsection (e)(5) of the Act.

Accordingly, we affirm the district court's decision insofar as it holds that Clarkson is not entitled to an award of attorney fees under the FOIA and that subsections (e)(1) and (e)(5) of the Privacy Act are not applicable to the instant case. With respect to issue of costs under the FOIA and the alleged violation of (e)(7) of the Privacy Act, we REVERSE and REMAND to the district court for further proceedings consistent with the views expressed in this opinion.

¹ Clarkson's first letter, dated February 20, 1979 , requested copies of all documents pertaining to me or an organization known as "We the People" or the Georgia Patriots, especially the materials pertaining to the survaillance [sic] operation conducted on 6 Feb. '79 at the Holiday Inn in Atlanta.

² We find no error in the district court's decision to treat these motions as motions for reconsideration. Since one of these motions was served within the time period prescribed by Rule 59 by the Federal Rules of Civil Procedure, we find that appellate jurisdiction was properly invoked in this case. See Fed. Rules App. Proc. 4(a)(4).

³ In construing this portion of the Privacy Act, the court in Barrett concluded that the phrase "reasonably incurred" modifies the phrase "reasonable attorney fees and other litigation costs." 651 F. 2d 1087, 1089 (5th Cir. 1981). The court also found that the purpose of the Act, to encourage potential litigants to consult with attorneys, would not be furthered by an award of attorney fees to a pro se litigant who was not an attorney. Id. We note that this rationale does not necessarily preclude an award of attorney fees either to legal services corporations, Sellers v. Wollman, 510 F. 2d 119, 123 (5th Cir. 1975) or to a pro se litigant who is an attorney. Cazalas v. United States Department of Justice, 660 F. 2d 612, 623 n. 13 (5th Cir. 1981). Although Clarkson maintains that he is a law school graduate, we find the Cazalas decision to be inapposite since Clarkson concedes he is not licensed to practice law in any state. See Hannon v. Security National Bank, 537 F. 2d 327 (9th Cir. 1976).

⁴ Based on the legislative history of the FOIA, courts have identified four criteria to be evaluated in reaching the discretionary determination of whether the award is justified:

1. The benefit to the public deriving from the case;

2. The commercial benefit to the complainant;

3. The nature of plaintiff's interest in the records sought;

4. The basis for the government's withholding of the requested documents.

Cazalas v. United States Department of Justice, 660 F. 2d 612, 619 (5th Cir. 1981); Blue v. Bureau of Prisons, 570 F. 2d 529 (5th Cir. 1978); Nationwide Building Maintenance, Inc. v. Sampson, 559 F. 2d 704 (D. C. Cir. 1977).

⁵ The government asserts, however, that until it received Clarkson's letter of June 25, 1979 , it lacked adequate notice of the documents requested. Recognizing that the mere delivery of information after a suit has been filed does not in itself establish that a party has "substantially prevailed." Cox v. United States Dept. of Justice, 601 F. 2d 1 (D. C. Cir. 1979), we find the government's explanation unpersuasive. We note that Clarkson's original letter dated February 20, 1979 , provided the government with the specific date, location and sponsor of the meeting which was the subject of surveillance by its agents. Thus, we are unable to find that the IRS lacked information sufficient to enable it to respond to Clarkson's request in a timely manner.

⁶ Clarkson also alleges that the IRS has violated 5 U. S. C. §552a(e)(6) by disseminating these documents without making reasonable efforts to insure their accuracy. We will not consider this issue since it was raised for the first time in this appeal.

⁷ The Senate Report makes special note of "the preferred status which the Committee intends managers of information technology to accord to information touching areas protected by the First Amendment to the Constitution." S. Rep. No. 1183, 93d Cong., 2d Sess, reprinted in [1974] U. S. Code Cong. & Admin. News 6916, 6971.

⁸ See 40 Fed. Reg. 28949 (1975). The OMB's authority to promulgate guidelines to the Privacy Act is contained in §6 of the Act, Pub. L. No. 93-579, 88 Stat. 1896 (1974).

⁹ Criticizing the breadth of this exception one commentator has noted that it "opens a loophole that threatens to swallow the rule" and "may well perpetrate those 'fishing expeditions' that subsection (e)(7) is designed to preclude." Guidebook to the Freedom of Information and Privacy Acts 46, 74-75 n. 70 (R. Bouchard & J. Franklin ed. 1980).

¹⁰ Subsection (e)(7) of the Act has rarely been construed by the courts. A similar reference to "law enforcement activities" is, however, contained in subsection (b)(7) of the FOIA. See 5 U. S. C. §552(b)(7). Examples of properly authorized law enforcement activities in an analogous context may thus be found from a review of FOIA cases involving subsection (b)(7) exemptions from disclosure. See, e.g., NLRB v. Robbins Tire & Rubber Co., 437 U. S. 214, 98 S. Ct. 2311, 57 L. Ed. 2d 159 (1978) (witness statements relating to NLRB investigation); Moorefield v. United States Secret Service, 611 F. 2d 1021 (5th Cir. 1980) (background records relating to surveillance of specific person twice convicted for threatening the life of the President); Williams v. IRS [73-1 USTC ¶9476], 479 F. 2d 317 (3d Cir. 1978) (data compiled in connection with an audit of an individual's income tax liability).

¹¹ The Privacy Act expressly provides for injunctive relief for only two types of agency misconduct, that is, wrongful withholding of documents under subsection (d)(1) and wrongful refusal to amend an individual's record under subsection (d)(3). See 5 U. S. C. §552a(g)(2) & (3). The remedy for violations of all other provisions of the Act is limited to recovery of damages upon a showing that the agency acted in an intentional or willful manner. See 5 U. S. C. §552a(g)(4) 1976); Edison v. Department of the Army, 672 F. 2d 840 (11th Cir. 1982); Parks v. IRS [80-1 ¶9327], 618 F. 2d 677 (10th Cir. 1980); Cell Associates, Inc. v. National Institute, 579 F. 2d 1155 (9th Cir. 1978).

Section (g) of the Act also contains a detailed provision for establishing jurisdiction. The jurisdictional requirements vary depending on which provision of the Act has been violated. Since Clarkson may fall within at least one of these provisions by establishing a violation of subsection (e)(7) alone, we find it more appropriate to discuss the question of the scope of paragraphs (d)(2) and (d)(3) in terms of an alvailable remedy rather than as a separate basis for jurisdiction. We do not intend to restrict the district court's ability to reexamine the question of jurisdiction on remand after the appropriate jurisdictional facts have been developed.

¹² Indeed, the correctness of this explanation is amply illustrated by the ability of the plaintiffs in Albright to obtain a copy of the videotape, see 631 F. 2d 915, 917 n. 3, and the ability of Clarkson to receive a substantial number of documents maintained in the "Tax Protest Project" file.

¹³ In amking this comparison, we of course do not intend to suggest that the enactment of the Privacy Act in any way precludes a plaintiff from asserting a constitutional claim for violation of his privacy or First Amendment rights. Indeed, several courts have recognized that a plaintiff is free to assert both Privacy Act and constitutional claims. See, e.g., Metadure Corp. v. United States, 490 F. Supp. 1368 (S. D. N. Y. 1980); Jabara v. Kelley, 476 F. Supp. 561 (E. D. Mich. 1979).

¹⁴ The Senate Report confirms this difference in the scope of protections afforded by the various provisions of section (e) by noting that only certain subsections, including subsection (e)(7), reflect "another dimension of the privacy issue [which prevails] whether or not the information is intended to be used to make decisions about specific indiivduals." S. Rep. No. 1183, 93d Cong., 2d Sess., reprinted in [1974] U. S. Code Cong. & Admin. News 6916, 6960.

¹⁵ Indeed, it is apparent that if the IRS had intended to rely on these records to make individual determinations, the Act would require these records to be indexed by the mane or other identifying particualr of the individuals involved. As the OMB Guidelines make clear:

Systems, however, should not be subdivided or reorganized so that information which would otherwise have been subject to the act is no longer subject to the act. For example, if an agency maintains a series of records not arranged by name or personal identifier but uses a separate index file to retrieve records by name or personal identifier it should not treat these files as separate systems.

40 Fed. Reg. at 28963 (1975).