Supreme Court Reviews Right to Recover for Invasion of Privacy

April 1, 2004

By: Cameron Etezady

Plaintiffs to lawsuits borne from federal acts protecting privacy rights are entitled to recovery for their "actual damages" suffered as a result of the invasion. Within each of these various acts there contains a floor amount, more commonly written in code books as follows: "in no event less than $1,000." On its face, this sounds like a "can't lose situation" for plaintiff, however, this is not the case.

For example, the United States Supreme Court has determined that in order to even be eligible for damages under the 1974 Federal Privacy Act found at 5 USC 552a(g)(4) [herein "1974 Act"], there must be an affirmative showing of some sort of actual damage. In the most recent decision concerning the issue of damages in a federal invasion of privacy action, Doe v. Chau, the Court ruled that in order to recover damages pursuant to the 1974 Act, a plaintiff must prove "actual damages." A failure to do so, even if there is an existing violation of privacy, preempts the plaintiff's ability to recover the minimum damages of $1,000. This holding eviscerates the concept that the $1,000 minimum is guaranteed. Following that precept, attorney's fees are also not guaranteed even for a straightforward privacy violation despite their inclusion in possible recoveries by statute. The Court held that, by statute, a minimum recovery of damages is a condition precedent to an award of attorney's fees. Going the final step, that same argument follows for any potential award of punitive damages in cases of willful violations of the 1974 Act.

Directly on point to this issue, the court opined " . . . it was hardly unprecedented for Congress to make a guaranteed minimum contingent upon some showing of actual damages, thereby avoiding giveaways to plaintiffs with nothing more than 'abstract injuries.'"

What are "actual damages?"

The obvious issue arises then: what evidence of injury does a plaintiff need to offer as damage in order to recover? In Doe v. Chau, the plaintiff had offered his uncontroverted testimony at a motion for summary judgment that he was "torn . . . all to pieces" and "greatly concerned and worried" about the possibility someone may use his revealed social security number for inappropriate purposes. On appeal, the Court looked at the issue that plaintiff provided no substantiation of his emotional distress claims such as physical symptoms, medical treatment, loss of income, or impact on behavior. The appellate court found his failure to do so was fatal. The Supreme Court concurred; however, they did not address what exactly constitutes "actual damages." This issue was not before the court. Certiorari was granted to review whether the court of appeal properly reversed the motion for summary judgment on the issue of no "actual damages" proven, not on the issue of what constitutes "actual damages."

Of course, the circuits are divided as to what constitutes "actual damages." Looking at Black's Law Dictionary, 7th Edition, they are defined as an "amount awarded to a complainant to compensate for proven injury or loss; damages that repay actual losses." Accordingly, the 11th Circuit has held that "actual damages" are restricted to pecuniary loss and the 9th has held that such damages are limited to those costs that are out of pocket. The 5th, on the other hand, notes that they can cover mental anxiety, even if there is no out of pocket expense.

Thus, there is a powerful tool for defense attorneys in this ambiguous language. Promptly pinning down a plaintiff in discovery to admit that there has been no purchase of medication or doctor's visits as a result of an invasion of privacy can pay dividends in the end. A strong argument can be made that plaintiff cannot recover without something other than being upset by the violation and a defense verdict is possible via a motion for summary judgment.

Not all privacy is equal.

There is a catch to all this. Doe v. Chau has clearly applied itself to the 1974 Act, however, the Court provides clear distinction against its application to other similarly constructed statutes. Of most significance, the Court clearly distinguished itself from similar privacy legislation:

The Electronic Communications Privacy Act of 1986 at 18 USC 2707 uses similar language stating that: " . . . in no case shall a person entitled to recover receive less than the sum of $1,000 [for a violation of the Act]." In civil litigation under this act, the legislature noted that damages thereunder "include actual damages, any lost profits but in no case less than $1,000."

26 USC 6110(j)(2) also provides for circumstances where the IRS publishes private information. Therein the damages are defined as: "actual damages sustained by the person, but in no case shall a person be entitled to receive less than the sum of $1,000 . . . " The legislative notes on this provision clearly states that this language creates "minimum damages of $1,000, plus costs."

The above examples do not appear to differ dramatically (if at all) from the language of the 1974 Act, which reads in pertinent part: " . . . in no case shall a person entitled to recovery receive less than . . . $1,000." As stated above, the difference is in the legislative notes and the perceived intent. In Doe v. Chau, the Court found that the 1974 Act lacks the clear statement that lawmakers intended to create a floor for damages. The lack of the legislative intent requires those seeking remedy under the 1974 Act to make an affirmative showing of "actual damages."

Application

Therefore, in applying this logic, counsel in these cases should not look solely at the language of the privacy act under which recovery is sought, but at the intent of the legislation, and more importantly, the interpretation of the courts. While it might seem that plaintiffs have the upper hand in privacy rights litigation, the determination and the uncertainty of what constitutes "actual damages" should prod defense attorneys to delve a little deeper into the statutes and case law in order to fully evaluate defensive strategies, especially prompt discovery probative to issues of damages.


Footnotes:

1 This provision can be found in, to name a few, the 1974 Federal Privacy Act, the 1986 Electronic Information Privacy Act, and the 15 USC 6110 (governing IRS publication of personal information).
2 This Act provides damages for those persons aggrieved by release of personal information by entities managing their records.
3 See generally, Doe v. Chau, 540 U.S. __ case no. 02-1377, (Feb. 24, 2004) (citations omitted).
4 Doe v. Chau, 540 U.S. ___, at 11.
5 Id. at page 2
6 Id.
7 See Fitzpatrick v. IRS, 665 F. 2d 327, 331 (11th Cir. 1982); see also DCD Programs, Ltd. V. Leighton, 90 F. 3d 1442 (9th Cir 1996). Murchison & Cumming, LLP attorneys would be most likely involved with cases from the 9th Circuit.
8 See Johnson v. Dept. of Treasury, 700 F. 2d 971, 972-4 (5th Cir. 1983).
9 This Act protects unauthorized access of electronically stored information.
10 H.R. Rep. No. 99-647, p., 74 (1986).
11 H. R. Conf. Rep. No. 94-1515, p. 475 (1976).