Opinion ID: 200462
Heading Depth: 3
Heading Rank: 2

Heading: Availability of Emotional Distress Damages Under the Privacy Act

Text: 38 The district court ruled as a matter of law that no recovery is available under the Privacy Act for emotional distress damages. The question presented is not whether out-of-pocket pecuniary costs occasioned by emotional distress, such as payments to therapists for treatment, are actual damages; they surely are. The government agrees that such losses are actual damages within the meaning of the statute, but argues that damages are restricted to only such out-of-pocket expenses. 39 What appears to be a simple question is instead a complicated series of questions. The Privacy Act provides: 40 (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 — 41 (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 42 (B) the costs of the action together with reasonable attorney fees as determined by the court. 43 5 U.S.C. § 552a(g)(4). This in turn raises a series of questions concerned with the relationship between the statutory requirement that there be an adverse effect on an individual, id. § 552a(g)(1)(D), the actual damages requirement, id. § 552a(g)(4)(A), and the $1,000 statutory damages provision for a person entitled to recovery, id. 44 First is the question of whether an individual must show merely an adverse effect to receive $1,000 in statutory damages, or whether he must also show actual damages in order to receive even statutory damages. The statutory adverse effect requirement, id. § 552a(g)(1)(D), is generally viewed as a standing requirement and a causation requirement which enables an individual to bring a civil action to enforce civil remedies. Quinn, 978 F.2d at 135. If showing an adverse effect is sufficient to get $1,000 statutory damages, then the initial question is whether provable emotional distress constitutes an adverse effect. Five circuits have held that an allegation of emotional distress was sufficient to show adverse effect, and that a plaintiff asserting emotional distress could recover at least $1,000: the Third Circuit, see id. at 135; the Fifth Circuit, Johnson v. IRS, 700 F.2d 971, 976-77 (5th Cir.1983); the Tenth Circuit, see Parks v. IRS, 618 F.2d 677, 682-83 (10th Cir.1980); the Eleventh Circuit, see Fitzpatrick v. IRS, 665 F.2d 327, 331 & n. 7 (11th Cir.1982); and the D.C. Circuit, see Albright v. United States, 732 F.2d 181, 186 (D.C.Cir.1984). Whether under actual damages the plaintiff could recover more than statutory damages is another question for this group of courts. One circuit, the Fourth, over a dissent, has held that an individual must suffer actual damages in order to be considered a person entitled to recovery and thus eligible for the statutory minimum damages of $1,000. Doe v. Chao, 306 F.3d 170, 177 (4th Cir.2002). That court agreed that an adverse effect may be shown by emotional distress, but disagreed that an adverse effect is sufficient to obtain emotional distress statutory damages, while acknowledging the issue to be close. 4 Id. at 177-79 & 180 n. 6. 45 Inherent in these cases allowing statutory damages is an analysis that Congress would not have granted standing to pursue an action for civil remedies to those who suffered an adverse effect caused by an intentional or willful violation and then afforded no remedy at all for the adverse effect. Such a result, the reasoning goes, would be belied by the language that in no case shall a person entitled to recovery receive less than the sum of $1000. 5 U.S.C. § 552a(g)(4)(A). Such a reading is also supported by the legislative history, which shows that the phrase adverse effect is drawn from the remedial section of the House bill and is consonant with the remedial section of the Senate bill, which refers to aggrieved persons. See Parks, 618 F.2d at 682-83 & n. 2. 46 As explained by the dissent in Doe, the meaning of `adverse effect' in subsection(g)(1)(D) is both distinct from and broader than the meaning of `actual damages' in subsection (g)(4)(A). 306 F.3d at 186 (Michael, J., concurring in part and dissenting in part). This is also how the Third Circuit has interpreted the statute. Quinn, 978 F.2d at 135 n. 15. As a result, proof that there is an adverse effect may not be sufficient to prove actual damages. 47 We agree with the dissent in Doe that the most natural and reasonable reading of the statute is that statutory damages, if not actual damages, are available to individuals who suffer adverse effects from intentional and willful violations of the act and that provable emotional distress may constitute an adverse effect. The statute provides that a person entitled to recovery shall receive at least statutory damages of $1,000. 5 U.S.C. § 552a(g)(4)(A). We join the rule adopted by the majority of circuits that have addressed this issue, 5 as described by the dissent in Doe, 306 F.3d at 189. That is the interpretation adopted by OMB, the agency responsible for implementing the Act. See OMB Privacy Act Guidelines, 40 Fed.Reg. 28,949, 28,970 (July 9, 1975). It is also the most consistent with the legislative history described in Parks, 618 F.2d at 682-83. Indeed, even the seminal Eleventh Circuit case which rejected emotional distress damages as actual damages found that emotional distress is an adverse effect for which statutory damages are available. Fitzpatrick, 665 F.2d at 331 & n. 7. 48 This, though, leaves the question of whether non-pecuniary emotional distress damages of more than $1,000 may be recovered as actual damages. We describe but do not resolve the question, which we consider to be a much closer one. Here, too, the circuits disagree. The Fifth Circuit has held that emotional distress damages should be included as actual damages under the Privacy Act. See Johnson, 700 F.2d at 977. The Tenth Circuit has not explicitly addressed this question but has interpreted the Privacy Act as borrowing from the common law tort of invasion of privacy, where mental distress or embarrassment would be a natural and probable consequence of such an invasion. Parks, 618 F.2d at 683. The Sixth and Eleventh Circuits have held that emotional distress damages are not recoverable under the Privacy Act as actual damages. Hudson v. Reno, 130 F.3d 1193, 1207 (6th Cir.1997); Fitzpatrick, 665 F.2d at 331. The Fourth Circuit reserved the question. Doe, 306 F.3d at 181. See generally F.Z. Lodge, Note, Damages Under The Privacy Act of 1974: Compensation and Deterrence, 52 Ford. L.Rev. 611 (1984). 49 The circuits which exclude emotional distress damages from actual damages do so on the basis that what is involved is a waiver of sovereign immunity and thus must be strictly read. A waiver of the Federal Government's sovereign immunity must be unequivocally expressed in statutory text and will not be implied. Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996) (internal citations omitted); see United States v. Nordic Vill., Inc., 503 U.S. 30, 33-34, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992). In addition, the term actual damages does not have a generally accepted meaning of including emotional distress damages. Such emotional distress damages are hard to police and may lead to broader waivers of immunity than Congress intended when it used the phrase actual damages. These courts also rely on legislative history set forth ably in Fitzpatrick, 665 F.2d at 330-31, although other cases point to legislative history going the other way, see Johnson, 700 F.2d at 975-77; Parks, 618 F.2d at 682; see also Lodge, supra, at 623 n. 76. 50 The reading that actual damages include emotional distress damages is based on several arguments, as follows. Congress clearly waived immunity as to actual damages in the Privacy Act, which in turn was based in part on the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681-1681t (2000), which then and since has usually been interpreted to include emotional distress damages within actual damages. See Cousin v. Trans Union Corp., 246 F.3d 359, 371 (5th Cir.2001). 6 Admittedly, the government is not the usual defendant in FCRA cases and so no issue of sovereign immunity is necessarily involved in those cases. Admittedly as well, there was not a large body of case law at the time of enactment of the Privacy Act under the FCRA. 51 Further, under the common law, damages for emotional distress were awardable for invasion of privacy or for public disclosure of private facts. 62A Am.Jur.2d Privacy § 106 (2002); see Time, Inc. v. Hill, 385 U.S. 374, 386 n. 9, 87 S.Ct. 534, 17 L.Ed.2d 456 (1967); Parks, 618 F.2d at 683; Restatement (Second) of Torts § 652H (1977). 52 Finally, in civil rights actions under 42 U.S.C. § 1983, the Supreme Court has permitted the award of emotional distress damages, Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 307-08, 106 S.Ct. 2537, 91 L.Ed.2d 249 (1986), albeit subject to standards of proof, Carey v. Piphus, 435 U.S. 247, 264 n. 20, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978). As to the sensible limits point, Distress is a personal injury familiar to the law, customarily proved by showing the nature and circumstances of the wrong and its effect on the plaintiff. Id. at 263-64, 98 S.Ct. 1042. 53 This circuit has no informative precedent under the Privacy Act or the FCRA. One case includes emotional distress damages within the meaning of the statutory term actual damages. In Fleet Mortgage Group, Inc. v. Kaneb, 196 F.3d 265 (1st Cir.1999), we interpreted damages under 11 U.S.C. § 362(h) (2000) of the Bankruptcy Code, which addresses the willful violation of a stay, as encompassing emotional distress damages. Id. at 269. But again, that case did not involve waiver of the federal government's immunity. 54 Under any of the above formulations, the plaintiff would have to show a causal connection between the Privacy Act violation and the emotional distress damages. And here we have the trial judge's fully warranted holding, after trial, that plaintiff failed to meet his burden on causation. 55 Orekoya has not appealed from the district court's determination that there was no causal relationship between the termination of his employment and the defendants' actions. Thus, his only damages, if any, are to compensate for emotional distress. Orekoya said that he sought mental health counseling as a result of being upset when he was escorted from BNE when he could not produce immigration papers showing he was validly in the country. To support Orekoya's claim of emotional distress, a psychiatrist testified that he suffered from depression. 56 The district court had before it a decade of accumulated record, including testimony from the § 1981 jury trial. It found that Orekoya's claim of emotional distress lacks credibility. The psychiatrist who testified had examined Orekoya during three one-hour sessions and had not independently verified his statements. There was no external evidence of Orekoya's distress; as the district court found, During the first semester following his suspension, Orekoya performed exceptionally in all his classes at Northeastern University, and he had a successful interview at the New England Banking Institute, which led to his admission there, two months after his suspension at BNE. 57 Even if Orekoya could have proven emotional distress, there was nothing but speculation to link it to a Privacy Act violation. Orekoya had independent reasons to be distressed: he had been accused of rape, which led to BNE suspending him from his job; and a massive layoff at BNE caused him to lose that job. 58 We find no clear error in the district court's holding that Orekoya neither demonstrated emotional distress nor showed that it was caused by any Privacy Act violation.