Opinion ID: 2745042
Heading Depth: 2
Heading Rank: 2

Heading: Redbox’s Disclosures to Stream

Text: In opposing Redbox’s motion for summary judgment, plaintiffs focused on a 1988 Senate Judiciary Report that purportedly speaks to the type of disclosure that Congress intended to permit under the VPPA. The Senate Report reads: This subsection takes into account that video tape service providers may use third parties in their busi‐ ness operations. For example, debt collection is often conducted by third parties, with disclosure of credit histories made to third party credit bureaus. Debt col‐ lection is subject to other Federal laws: disclosures for that purpose continue to be governed by those laws. This subsection also allows disclosure to permit video tape service providers to use mailing houses, ware‐ houses, computer services, and similar companies for marketing to their customers. These practices are called “order fulfillment” and “request processing.” S. Rep. No. 100‐599, at 14 (1988), reprinted in 1988 U.S.C.C.A.N 4342. Seizing on this last paragraph, plaintiffs argued to the district court that the Senate Judiciary Com‐ mittee intended to group disclosures incident to “order ful‐ fillment” and “request processing” (two of the four disclo‐ sure exceptions) together and define them as disclosures on‐ ly to “mailing houses, warehouses, computer services, and similar companies for marketing to their customers.” Based on that self‐serving interpretation of Congress’s intent, plain‐ tiffs contended that the VPPA permits disclosure only to third‐parties engaged in (1) debt collection, (2) transfer of ownership, and (3) marketing—effectively reducing the No. 13‐3037 9 number of statutory disclosure exceptions from four to three. The district court was not persuaded. Highlighting the Supreme Court’s stance that “[e]xtrinsic materials have a role in statutory interpretation only to the extent that they shed a reliable light on the enacting Legisla‐ ture’s understanding of otherwise ambiguous terms,” and the Court’s recognition that committee reports can “give un‐ representative committee members … both the power and the incentive to attempt strategic manipulations of legislative history to secure results they were unable to achieve through the statutory text,” the district court saw no persuasive rea‐ son to effectively rewrite a federal statute based on an am‐ biguous committee report. Sterk v. Redbox Automated Retail, LLC, 2013 WL 4451223, at –5 (N.D. Ill. Aug. 16, 2013) (quot‐ ing Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568 (2005)). In the district court’s view: “[i]t is undisputed that the only functions Stream performs for Redbox are cus‐ tomer support services and that Stream performs these ser‐ vices only in response to customers’ requests for infor‐ mation. It is difficult to imagine a more obvious illustration of ‘request processing’ given the ordinary meaning of that term.” Id. at . On appeal, plaintiffs abandon their contention that “or‐ der fulfillment” and “request processing” are synonymous with marketing activities. Instead, they argue that Congress intended to limit “request processing” to the processing of requests for specific video materials. The VPPA defines four terms, in the following order: (1) “consumer,” (2) “ordinary course of business,” (3) personally identifiable information,” and (4) “video tape service provider.” 18 U.S.C. § 2710(a). As discussed, “ordinary course of business” means “debt collec‐ 10 No. 13‐3037 tion activities, order fulfillment, request processing, and the transfer of ownership.” Id. § 2710(a)(2). “Personally identifi‐ able information,” the next defined term, “includes infor‐ mation which identifies a person as having requested or ob‐ tained specific video materials or services from a video tape service provider.” Id. § 2710(a)(3) (emphasis added). Plain‐ tiffs urge us to read the former definition as modifying the latter and conclude that “request processing” refers only to requests for “specific video materials.” As plaintiffs see it, a customer makes a request for specific video materials when he selects a particular movie to rent while standing at a Redbox kiosk. By plaintiffs’ logic, therefore, Redbox kiosks process all customer “requests” (as they narrowly construct that term), and so any inquiries made by a consumer who calls Redbox’s customer service line (operated by Stream) necessarily occur outside of the ordinary course of Redbox’s business. There are several problems with plaintiffs’ reasoning. First, we are unconvinced that just because PII includes in‐ formation that identifies a person as having “requested” ma‐ terials, the phrase “request processing”—which appears ear‐ lier in the statute—is necessarily limited to that type of re‐ quest. But even assuming that the phrase is constrained in that way, plaintiffs mischaracterize the VPPA’s definition of “personally identifiable information,” overlooking a critical piece of the statutory language. Again, PII is defined as in‐ clusive of “information which identifies a person as having requested or obtained specific video materials or services from a video tape service provider.” 18 U.S.C. § 2710(a)(3) (emphasis added). Only by ignoring the words “or services” are plaintiffs able to craft a reading of the statute that ex‐ cludes customer service requests from “request processing” No. 13‐3037 11 with at least some degree of plausibility. Restoration of “or services” to the definition of PII, however, forecloses plain‐ tiffs’ strained reading altogether, since it is difficult to fathom “a request for service” in the video rental context that does not implicate the customer service that Stream provides for Redbox. Moreover, common sense counsels against plaintiffs’ statutory construction. Plaintiffs argue that “request pro‐ cessing” refers only to a Redbox kiosk’s computerized re‐ sponse when a consumer selects a movie using the kiosk’s touchscreen, while “order fulfillment” describes the kiosk’s dispensing of the selected movie after processing the cus‐ tomer’s request. But Congress enacted the VPPA in 1988, be‐ fore the advent of automated kiosks (or internet‐based rental companies or streaming services). Thus, when the law was passed, Congress assuredly had a brick‐and‐mortar video rental store in mind. The “ordinary course” of that rental store’s business would have included typical interactions be‐ tween a customer and the store clerk, who in many cases would have accessed an individual customer’s rental history, address, and other personal information during the check‐ out process. And if that customer experienced technical problems with his rented VHS upon his return home from the store, he would have called the store to complain or seek a refund. He also would have called to complain if the store overcharged his credit card. All of these interactions, occur‐ ring within the store’s ordinary course of business, constitute that customer’s “request processing” and “order fulfill‐ ment,” if ordinary meaning is assigned to those terms. Ac‐ cordingly, plaintiffs’ attempt to carve out customer service from a video rental company’s “ordinary course of business” is unpersuasive. Congress, of course, did not draft the VPPA 12 No. 13‐3037 only with automated video rental kiosks in mind, and so it defies logic to construe the statute’s terms as if it had. Be‐ sides, though a typical visit to a Redbox kiosk may not ne‐ cessitate an interaction between a customer and a live service representative, some do—which is precisely why Redbox provides its customers with the phone number for its call center. And when the VPPA was enacted, we can safely as‐ sume that Congress contemplated customer service as part and parcel of the ordinary rental experience. That Redbox has replaced most live customer service interactions with a computer interface does not change this. Plaintiffs argue that even if responding to customer ser‐ vice requests is incident to Redbox’s ordinary course of busi‐ ness, Redbox violates the VPPA by preemptively disclosing its entire customer database to Stream, rather than waiting until Stream receives a call from a Redbox user and disclos‐ ing to Stream just the PII for that customer. In other words, plaintiffs draw a distinction between disclosure of customer PII that is proactive (in anticipation of customer requests) and disclosure that is reactive (in response to an individual customer’s call). We find that distinction meaningless, be‐ cause the permissibility of disclosure under the VPPA turns on the underlying purpose for which Redbox provides the information to a third party. And whether proactive or reac‐ tive, Redbox’s purpose for disclosing the information to Stream is the same. Our decision in Gracyk v. West Publ’g Co., 660 F.3d 275 (7th Cir. 2011), underscores our conclusion. Gracyk involved a similar challenge under the Driver’s Privacy Protection Act (“DPPA”). There, the plaintiffs alleged that defendant West Publishing acquired their personal information from motor No. 13‐3037 13 vehicle records for resale in violation of the DPPA. Id. at 276– 77. The DPPA prohibits state DMVs from disclosing personal information about individuals that the DMV obtained in connection with a motor vehicle record, and it prohibits pri‐ vate individuals from knowingly obtaining or disclosing such information. Id. at 277. But like the VPPA, the DPPA in‐ cludes several disclosure exceptions. Id. The Gracyk plaintiffs alleged that West Publishing obtained personal information from state DMVs, stored it in a database, and then sold the information to others. Id. at 279. The plaintiffs, however, did not challenge the lawfulness of West Publishing’s disclo‐ sures; instead, the plaintiffs argued that the act of storing the information in a database (prior to a lawful disclosure) was illegal under the DPPA. Id. We disagreed, noting that “[t]here is no meaningful difference in terms of West Pub‐ lishing’s purpose between the practice the plaintiffs ap‐ prove—obtaining the records each time West Publishing re‐ ceives a valid request—and the practice they object to— compiling the records first and then disclosing them in re‐ sponse to a valid request. In both cases, West Publishing’s ‘purpose’ for obtaining the records” is the same. Id. at 279– 80. That reasoning applies with equal force here. If it is per‐ missible to disclose PII to Stream in order to respond to a customer’s call, there is nothing objectionable about Redbox’s wholesale disclosure of information pertaining to all customers, for use in the event of such a call. Likewise, plaintiffs take issue with Stream’s use of customer PII during training exercises in advance of such calls, but—again—the purpose underlying Redbox’s disclosure of the PII is proper. Disclosure of customer information for training purposes may not be incident to a specific customer service request, 14 No. 13‐3037 but it is, of course, incident to the request processing func‐ tion that Stream serves.