* Honorable Michael Burrage, Chief Judge, United Stat es District

Court for the Eastern District of Oklahoma, sitting by designation. 

## F I L E D United States Court of Appeals Tenth Circuit 

### MAY 28 1997 

### PATRICK FISHER Clerk PUBLISH UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

LARRY O. ANDERSON, Lieutenant Colonel (Retired); ALBERTA ANDERSON,

Plaintiffs-Appellants,

v. LA JUNTA STATE BANK,

Defendant-Appellee. No. 96-1352

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO (D.C. No. 95-WY-3273-CB)

Submitted on the briefs: Alison Ruttenberg, Denver, Colorado, and Denis H. M ark and William C. Waller, Jr. of Waller and Mark, P.C., Denver, Colorado, forPlaintiffs-Appellants. Gregory B. Kanan and Jennifer C. Robinson of Rothge rber, Appel, Powers & Johnson LLP, Denver, Colorado, for Defendant-Appell ee.
Before PORFILIO and LOGAN, Circuit Judges, and BURRAGE, District Judge. *1 After examining the briefs and appellate record, th is panel has

determined unanimously to grant the parties’ reques t for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f) and 10th Cir. R. 34.1.9. Th e case is therefore ordered submitted without oral ar gument. -2- BURRAGE, District Judge.

Plaintiffs Larry O. Anderson and his wife, Alberta, appeal from an order of the district court granting La Junta State Bank’s m otion for summary judgment. 1 Plaintiffs brought this action pursuant to 12 U.S.C . §§ 3401-3422, the Right to Financial Privacy Act (RFPA), alleging that the Ban k had violated their rights under the Act. In 1993, the Air Force began an investigation of Mr . Anderson, then an active duty lieutenant colonel in the Air Force, fo r violations of various provisions of the Uniform Code of Military Justice, including theft of nonappropriated funds. An investigating agent met with the Bank’s senior vice president and asked him to produce plaintiffs’ bankrecords. The vice president pulled up the information on his computer screen an d, without permitting the investigator to view the screen, informed him that plaintiffs’ records contained nothing relevant to the investigation as only Mr. A nderson’s military pay check was being deposited into their account. The invest igators later subpoenaed plaintiffs’ bank records.2 Plaintiffs dropped their other claim before the dis trict court and do

not argue it on appeal. -3- Plaintiffs thereafter commenced this action. They initially alleged the Bank had violated the RFPA because plaintiffs were not a fforded the opportunity to challenge the subpoenas issued pursuant to the RFPA . However, in their response to the Bank’s motion to dismiss or for summary judg ment, plaintiffs asserted that the Bank had violated the RFPA when it orally relea sed information in response to the investigator’s oral request. The Bank respo nded to this allegation and the district court addressed the claim in its order. T herefore, plaintiffs’ appeal on this issue is properly before the court. 2 The RFPA was enacted in response to a pattern of go vernment abuse in the area of individual privacy and was intended “to pro tect the customers of financial institutions from unwarranted intrusion into their records while at the same time permitting legitimate law enforcement activity by r equiring federal agencies to follow” established procedures when seeking a custo mer’s financial records. Neece v. IRS , 922 F.2d 573, 575 (10th Cir. 1990) (quotation omi tted). However, “[t]he most salient feature of the [RFPA] is the narrow scope of the entitlements it creates” by limiting the kinds of customers to w hom the RFPA applies and the types of records it protects. SEC v. Jerry T. O'Br ien, Inc. , 467 U.S. 735, 745 (1984). Thus, the RFPA seeks to strike a balance b etween the customers’ right of3 The Air Force is not exempt from the requirements o f the RFPA. See

McDonough v. Widnall , 891 F. Supp. 1439, 1450 (D. Colo. 1995). -4- privacy and the need of law enforcement agencies to obtain financial records pursuant to legitimate investigations. Under the RFPA, the government 3 may have access to, or obtain copies of, information contained in a customer’s financial rec ords from a financial institution only if the customer authorizes the dis closure, the government obtains an administrative or judicial subpoena or summons, or the records are sought pursuant to a search warrant or formal written requ est. See 12 U.S.C. § 3402. Further, the financial institution may not release the requested financial records until the government “certifies in writing to the f inancial institution that it has complied with the applicable provisions” of the RFP A, including notice to the customer of the existence of the subpoena, summons, search warrant, or request; the nature of the government’s inquiry; and permitt ing the customer sufficient time to respond to the notice. Id. §§ 3403(b), 3405-08. The RFPA also restricts disclosure of customers’ fi nancial records by financial institutions themselves. Financial insti tutions may not provide “any Government authority access to or copies of, or the information contained in, the financial records of any customer . . . .” Id. § 3403(a). One exception has been provided: A financial institution may notify a Gov ernment authority if it believes-5-

it has “information which may be relevant to a poss ible violation of a statute or regulation.” Id. § 3403(c). In such a case, the financial institut ion may provide only the customer’s name or other identifying information and the nature of the suspected illegal activity. See id. The issue in this case is one we have not previousl y addressed. We must determine whether an oral request by a government i nvestigator which is orally responded to, without permitting visual inspection of the customer’s records, violates the RFPA, absent compliance by the Governm ent authority with the §§ 3402, 3403 requirements. See Neece v. IRS , 96 F.3d 460, 464 n.1 (10th Cir. 1996).The district court held, and the bank argues, that such a disclosure does not run afoul of the RFPA. The district court held that our decision in Bailey v. USDA , 59 F.3d 141 (10th Cir. 1995), permitted the Bank to orally disclose the information provided. We disagree. In Bailey , the bank suspected two of its customers were enga ging in questionable banking practices relating to the depo sit of food stamps and the immediate withdrawal of a corresponding amount of c ash. See id. at 142. The bank notified the government. A government investi gator went to the bank and interviewed a bank employee who told the investigat or the customers’ names and the monetary value of the transactions and showed h im a log of the transactions.-6-

We held this disclosure did not violate § 3403(c) a s only the “essence of the suspected illegal activity” was revealed by the dis closure. Id. at 143. The district court held that the disclosure in this case was also valid as the bank revealed even less information than had been r evealed in Bailey . However, the issue here is not how much information was prov ided, but who initiated the contact. The Bank did not suspect plaintiffs of any wrongdoing. Rather, the government initiated the contact based on suspicion s arising from information obtained from sources outside of plaintiffs’ bank r ecords. We agree with the district court that had the Bank suspected plaintif fs of wrongdoing and initiated contact with the government investigators, the info rmation disclosed would not have violated the RFPA. However, the Bank could no t respond to the government’s inquiry and release information to the government investigator unless the government had properly complied with th e procedures set forth in the RFPA. Cf. Duncan v. Belcher , 813 F.2d 1335, 1339 (4th Cir. 1987) (RFPA does not insulate private accounts from government inves tigation, but “merely establishes summary procedures for government inves tigators to follow”). Thus, the Bank violated the RFPA. The Bank also argues that the RFPA permits oral dis closure of information absent compliance with RFPA procedures. The RFPA p rohibits the release of “financial records” unless set procedures are follo wed. “Financial records” are-7-

defined as “an original of, a copy of, or informati on known to have been derived from” a customer’s bank records. 12 U.S.C. § 3401( 2). In Hunt v. SEC , 520 F. Supp. 580 (N. D. Tex. 1981), the court held thatthe plain meaning of the language of § 3401(2) “clearly includes oral testim ony relating to a customer’s relationship with a bank or financial institution.” Id. at 605. We agree. The oral disclosure here by the Bank related information der ived from plaintiffs’ bank records and was protected by the RFPA. The RFPA do es not require that such information be conveyed in writing before its discl osure can violate a bank customer’s right to privacy in his records. We need not consider whether plaintiffs suffered any damages as a result of the disclosure. If the government or a financial i nstitution violates the RFPA, the customer whose financial records were disclosed is entitled to $100, regardless of the volume of records involved. Id. § 3417(a). Damages may also be awarded in the form of any actual damages sustained as a resul t of the disclosure and punitive damages if the violation is determined to have been willful or intentional. Id. Further, if the action is successful, costs and rea sonable attorney’s fees may also be awarded. Id. We leave it for the district court in the first i nstance to determine whether damages are appropriate here.-8-

The judgment of the United States District Court fo r the District of Colorado is REVERSED, and the case is REMANDED for further proceedings in accordance with this opinion.