Source: http://www2.bloomberglaw.com/public/desktop/document/Maracich_v_Spears_No_1225_2013_BL_158315_US_June_17_2013_Court_Op
Timestamp: 2014-04-24 02:43:01
Document Index: 708513629

Matched Legal Cases: ['§2721', '§2725', '§2721', '§2721', '§2721', '§56', '§56', '§2721', '§2721']

Maracich v. Spears, 133 S. Ct. 2191, 186 L. Ed. 2d 275, 2013 ILRC 2069 (2013), Court Opinion
133 S. Ct. 2191
186 L. Ed. 2d 275
2013 BL 158315
Maracich v. Spears, 133 S. Ct. 2191, 186 L. Ed. 2d 275, 2013 ILRC 2069 (2013) [2013 BL 158315]
MARACICH ET AL. v. SPEARS ET AL. 12-25
[1] Lawyers' use of DMV data to solicit clients not lawful under DPPA litigation exception. ►PR.5 [Show Topic Path]
Attorneys who used South Carolina Division of Motor Vehicle records to solicit clients for a "group action" may be on the hook for $200 million in damages for violating the Driver's Privacy Protection Act's ban on using personal information collected by state DMVs.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT PDF of opinion[**280] [*2192] Syllabus
No. 12-25. Argued January 9, 2013-Decided June 17, 2013 Respondent attorneys submitted several state Freedom of Information Act (FOIA) requests to the South Carolina DMV, seeking names and addresses of thousands of individuals in order to solicit clients for a lawsuit they had pending against several South Carolina car dealerships for violation of a state law that protects car purchasers from dealership actions that are "arbitrary, in bad faith, or unconscionable." Using the personal information provided by the DMV, respondents [*2193] sent over 34,000 car purchasers letters, which were headed "ADVERTISING MATERIAL," explained the lawsuit, and asked recipients to return an enclosed reply card if they wanted to participate in the case. Petitioners, South Carolina residents, sued respondents for violating the federal Driver's Privacy Protection Act of 1994 (DPPA) by obtaining, disclosing, and using petitioners' personal information from motor vehicle records for bulk solicitation without their express consent. Respondents moved to dismiss, claiming that the information was properly released under a DPPA exception permitting disclosure of personal information "for use in connection with any civil, criminal, administrative, or arbitral proceeding," including "investigation in anticipation of litigation." 18 U.S.C. §2721(b)(4) . The District Court held that respondents' letters were not solicitations and that the use of information fell within (b)(4)'s litigation exception. The Fourth Circuit affirmed, concluding that the letters were solicitation, but that the solicitation was intertwined with conduct that satisfied the (b)(4) exception. Held: An attorney's solicitation of clients is not a permissible purpose covered by the (b)(4) litigation exception. Pp. 6-29.
(a) State DMVs generally require someone seeking a driver's license or registering a vehicle to disclose detailed personal information such as name, address, telephone number, Social Security number, and medical information. The DPPA-responding to a threat from stalkers and criminals [**281] who could acquire state DMV information, and concerns over the States' common practice of selling such information to direct marketing and solicitation businesses-bans disclosure, absent a driver's consent, of "personal information," e.g., names, addresses, or telephone numbers, as well as "highly restricted personal information," e.g., photographs, social security numbers, and medical or disability information, §2725(4), unless 1 of 14 exemptions applies. Subsection (b)(4) permits disclosure of both personal information and highly restricted personal information, while subsection (b)(12) permits disclosure only of personal information. Pp. 6-8.
(b) Respondents' solicitation of prospective clients is neither a use "in connection with" litigation nor "investigation in anticipation of litigation" under (b)(4). Pp. 8-15.
(1) The phrase "in connection with" provides [***2] little guidance without a limiting principle consistent with the DPPA's purpose and its other provisions. See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 , 656. Such a consistent interpretation is also required because (b)(4) is an exception to both the DPPA's general ban on disclosure of "personal information" and the ban on release of "highly restricted personal information." An exception to a general policy statement is "usually read ... narrowly in order to preserve the [provision's] primary operation." Commissioner v. Clark, 489 U.S. 726 , 739. Reading (b)(4) to permit disclosure of personal information when there is any connection between protected information and a potential legal dispute would substantially undermine the DPPA's purpose of protecting a right to privacy in motor vehicle records. Subsection (b)(4)'s "in connection with" language must have a limit, and a logical and necessary conclusion is that an attorney's solicitation of prospective clients falls outside of that limit. Pp. 9-11.
(2) An attorney's solicitation of new clients is distinct from an attorney's conduct [*2194] on behalf of his client or the court. Solicitation "by a lawyer of remunerative employment is a business transaction," Ohralik v. Ohio State Bar Assn., 436 U.S. 447 , 457, and state bars treat solicitation as discrete professional conduct. Excluding solicitation from the meaning of "in connection with" litigation draws support from (b)(4)'s examples of permissible litigation uses-"service of process, investigation in anticipation of litigation, and the execution or enforcement of judgments and orders"-which all involve an attorney's conduct as an officer of the court, not a commercial actor. Similarly, "investigation in anticipation of litigation" is best understood to allow background research to determine if there is a supportable theory for a complaint or a theory sufficient to avoid sanctions for filing a frivolous lawsuit, or to help locate witnesses for deposition or trial. Pp. 11-14. (3) This reading is also supported by the fact that (b)(4) allows use of the most sensitive personal information. Permitting its use in solicitation is so substantial an intrusion on privacy it must not be assumed, without clear and explicit language, absent here, [**282] that Congress intended to exempt attorneys from DPPA liability in this regard. Pp. 14-15.
(c) Limiting (b)(4)'s reach also respects the statutory purpose and design evident in subsection (b)(12), which allows solicitation only of persons who have given express consent to have their names and addresses disclosed for this purpose. Subsection (b)(12) implements an important objective of the DPPA-to restrict disclosure of personal information in motor vehicle records to businesses for the purpose of direct marketing and solicitation. Other exceptions should not be construed to interfere with this objective unless the text commands it. Reading (b)(4)'s "in connection with" phrase to include solicitation would permit an attorney to use personal information from the state DMV to send bulk solicitations to prospective clients without their express consent, thus creating significant tension between the DPPA's litigation and solicitation [***3] exceptions. Pp. 15-19.
(d) Such a reading of (b)(4) could also affect the interpretation of the (b)(6) exception, which allows an insurer and certain others to obtain DMV information for use "in connection with ... underwriting," and the (b)(10) exception, which permits disclosure and use of personal information "in connection with" the operation of private toll roads. Pp. 19-20.
(e) Respondents contend that a line can be drawn between mere trolling for clients and their solicitation, which was tied to a specific legal dispute, but that is not a tenable distinction. The DPPA supports drawing the line at solicitation. Solicitation can aid an attorney in bringing a lawsuit or increasing its size, but the question is whether or not lawyers can use personal information protected under the DPPA for this purpose. The mere fact that respondents complied with state bar rules governing solicitations also does not resolve whether they were entitled to access personal information from the state DMV database for that purpose. In determining whether obtaining, using, or disclosing personal information is for the prohibited purpose of solicitation, the proper inquiry is whether the defendant's purpose was to solicit, which might be evident from the communication itself or from the defendant's course of conduct. When that is the predominant purpose, (b)(4) does not entitle attorneys to DPPA-protected information even when solicitation is to aggregate a class action. Attorneys also have other alternatives to aggregate a class, including, e.g. soliciting plaintiffs through traditional and permitted advertising. [*2195] And they may obtain DPPA-protected information for a proper investigative use. Although the Fourth Circuit held that the letters here were solicitations, it found the communications nonetheless exempt under (b)(4) because they were "inextricably intertwined" with permissible litigation purposes. If however, the use of DPPA-protected personal information has the predominant purpose of solicitation, it would not be protected by (b)(4). A remand is necessary for the court to apply the proper standard to determine the predominant purpose of respondents' letters. Pp. 20-26. (f) There is no work for the rule of lenity to do here, because the DPPA's [**283] text and structure resolve any ambiguity in (b)(4)'s phrases "in connection with" and "investigation in anticipation of litigation." Pp. 26-27. (g) On remand, the courts below must determine whether respondents' letters, viewed objectively, had the predominant purpose of solicitation, and may address whether respondents' conduct was permissible under (b)(1)'s governmental-function exception and any other defenses that have been properly preserved. Pp. 27-29. 675 F. 3d 281 , vacated and remanded. KENNEDY, J., delivered the opinion of the Court, in which ROBERTS, C. J., and THOMAS, BREYER, and ALITO, JJ., joined. GINSBURG, J., filed a dissenting opinion, in which SCALIA, SOTOMAYOR, and KAGAN, JJ., joined. Opinion of the Court JUSTICE KENNEDY delivered the opinion of the Court.
Concerned that personal information collected by States in the licensing [***4] of motor vehicle drivers was being released-even sold-with resulting loss of privacy for many persons, Congress provided federal statutory protection. It enacted the Driver's Privacy Protection Act of 1994, referred to here as the DPPA. See 18 U.S.C. §§2721-2725 . The DPPA regulates the disclosure of personal information contained in the records of state motor vehicle departments (DMVs). Disclosure of personal information is prohibited unless for a purpose permitted by an exception listed in 1 of 14 statutory subsections. See §§2721(b)(1) -(14). This case involves the interpretation of one of those exceptions, subsection (b)(4). The exception in (b)(4) permits obtaining personal information from a state DMV for use "in connection with" judicial and administrative proceedings, including "investigation in anticipation of litigation." §2721(b)(4) [*2196] . The question presented is whether an attorney's solicitation of clients for a lawsuit falls within the scope of (b)(4) . Respondents are trial lawyers licensed to practice in South Carolina. They obtained names and addresses of thousands of individuals from the South Carolina DMV in order to send letters to find plaintiffs for a lawsuit they had filed against car dealers for violations of South Carolina law. Petitioners, South Carolina residents whose information was obtained and used without their consent, sued respondents for violating the DPPA. Respondents claimed the solicitation letters were permitted under subsection (b)(4). In light of the text, structure, and purpose of the DPPA, the Court now holds that an attorney's solicitation of clients is not a permissible purpose covered by the (b)(4) litigation exception. I A The State of South Carolina, to protect purchasers of motor vehicles, enacted the South Carolina Regulation of Manufacturers, Distributors, and Dealers Act (MDDA). In June 2006, respondent attorneys were approached by car purchasers who complained about administrative fees charged by car dealerships in certain South Carolina counties, allegedly in [**284] violation of the MDDA. The state statute prohibits motor vehicle dealers from engaging in "any action which is arbitrary, in bad faith, or unconscionable and which causes damage to any of the parties or to the public." S. C. Code Ann. §56-15-40(1) (2006). The MDDA provides that "one or more may sue for the benefit of the whole" where an action is "one of common or general interest to many persons or when the parties are numerous and it is impracticable to bring them all before the court." §56-15-110(2) .
On June 23, 2006, one of the respondent attorneys submitted a state Freedom of Information Act (FOIA) request to the South Carolina DMV to determine if charging illegal administrative fees was a common practice so that a lawsuit could be brought as a representative action under the MDDA. The attorney's letter to the DMV requested information regarding "[p]rivate purchases of new or used automobiles in Spartanburg County during the week of May 1-7, 2006, including the name, address, and telephone number of the buyer, dealership where purchased, type of vehicle purchased, [***5] and date of purchase." App. 57. The letter explained that the request was made "in anticipation of litigation ... pursuant to the exception in 18 USC §2721(b)(4) of the Driver's Privacy Protection Act." Ibid. The South Carolina DMV provided the requested information. On August 24, 2006, respondents submitted a second FOIA request to the DMV, also asserting that it was made "in anticipation of litigation ... pursuant to the exception in 18 USC §2721(b)(4) ," for car purchasers in five additional counties during the same week. Id., at 67. On August 29, 2006, respondents filed suit in South Carolina state court on behalf of four of the consumers who originally contacted them. The case is referred to here, and by the parties, as the Herron suit. The complaint in the Herron suit named 51 dealers as defendants and invoked the MDDA's "group action" provision to assert claims "for the benefit of all South Carolina car buyers wh[o] paid administrative fees," id., at 128, to those dealers during the same time period. Some of the dealer defendants in the Herron suit filed motions to dismiss for lack of standing because none of the named plaintiffs purchased cars from [*2197] them. On October 26, 2006, while the motions to dismiss were pending, respondents submitted a new FOIA request to the South Carolina DMV. That request, again citing subsection (b)(4) of the DPPA, sought to locate additional car buyers who could serve as plaintiffs against the dealers who had moved to dismiss. On October 31, 2006, respondents filed an amended complaint, which added four named plaintiffs and increased the number of defendant dealers from 51 to 324. As before, defendant dealerships that had not engaged in transactions with any of the now eight named plaintiffs filed motions to dismiss for lack of standing. On January 3, 2007, using the personal information they had obtained from the South Carolina DMV, respondents sent a mass mailing to find car buyers to serve as additional plaintiffs in the litigation against the dealers. Later in January, respondents made three more FOIA requests to the South Carolina DMV seeking personal information concerning people who had purchased cars from an additional 31 dealerships, again citing the (b)(4) exception. The South [**285] Carolina DMV granted all the requests. On January 23, respondents mailed a second round of letters to car buyers whose personal information had been disclosed by the DMV. Respondents sent additional rounds of letters on March 1, March 5, and May 8. Each of the five separate mailings was sent to different recipients. In total, respondents used the information obtained through their FOIA requests to send letters to over 34,000 car purchasers in South Carolina. This opinion refers to the communications sent by respondents simply as the "letters."
The letters, all essentially the same, had the heading "ADVERTISING MATERIAL." The letters explained the lawsuit against the South Carolina dealers and asked recipients to contact the respondent-lawyers if interested in participating in the case. Attached to the letter was a reply card that asked a few questions about the [***6] recipient's contact information and car purchase and ended with the sentence "I am interested in participating" followed by a signature line. The text of the letter and reply are set out in full in the Appendix, infra. In accordance with South Carolina Rule of Professional Conduct 7.3 (2012), which regulates the solicitation of prospective clients, respondents filed a copy of the letter and a list of recipients' names and addresses with the South Carolina Office of Disciplinary Counsel.
In June 2007, respondents sought to amend their complaint to add 247 plaintiffs. The court denied leave to amend and held the named plaintiffs had standing to sue only those dealerships from which they had purchased automobiles and any alleged co-conspirators. In September 2007, respondents filed two new lawsuits on behalf of the additional car buyers. Those subsequent cases were consolidated with the Herron suit. All claims against dealerships without a corresponding plaintiff-purchaser were dropped. B
In the case now before the Court