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,
