Opinion ID: 1036114
Heading Depth: 4
Heading Rank: 2

Heading: Resellers' Duty of Reasonable Care: Legal

Text: Framework Gordon further contends that, even if Resellers disclosed his personal information for what they believed to be a permitted use, they are still liable because they violated a duty of reasonable care imposed by the DPPA. Resellers contend that the DPPA imposes no such duty. Based on the language of the statute, its structure, and its legislative history, we conclude that the DPPA imposes a duty on resellers to exercise reasonable care in responding to requests for personal information drawn from motor vehicle records.
The default rule under the DPPA is non -disclosure. It is unlawful for a state DMV or any employee or officer thereof to knowingly disclose or otherwise make available to any person or entity . . . personal information obtained from a motor vehicle record, except as provided i n section 2721(b). 18 U.S.C. § 2721(a). Resellers are -30- subject to the same general rule of non-disclosure; with limited exceptions not relevant here, resellers may resell or redisclose the information only for a use permitted under subsection (b). Id. § 2721(c) (emphasis added); see also Taylor v. Acxiom Corp., 612 F.3d 325, 338 (5th Cir. 2010). Moreover, the DPPA creates a civil cause of action for unauthorized disclosure: section 2724(a) provides that a person who knowingly obtains, discloses or uses personal information, from a motor vehicle record, for a purpose not permitted under this chapter shall be liable to the individual to whom the information pertains, who may bring a civil action in a United States district court. 18 U.S.C. § 2724(a). Logically, the language makes clear, albeit implicitly, that resellers are obliged to use some care in disclosing personal information obtained from motor vehicle records. If resellers may not disclose personal information except as permitted by the DPPA, they must be obliged to make some inquiry before concluding that disclosure is permitted. See also Roth v. Guzman, 650 F.3d 603, 618 (6th Cir. 2011) (Clay, J., dissenting) (rejecting -31- notion that upstream source had no actual duty . . . other than the ministerial task of soliciting rote representations from prospective requesters of DPPAprotected personal information). It would make no sense that this obligation could be met simply by accepting an end user's mere say-so in the presence of red flags suggesting the requested information was being sought for an improper purpose. Under this theory, advocated by Resellers, an upstream source could always avoid liability by securing a representation that the recipient of personal information had a permissible use or by hiding behind one or more dropdown menus so that a user would always -- and could only -- select a permitted use. The civil remedies provision would be rendered toothless if resellers could insulate themselves from liability based solely on the conclusory representations of end users, with out being required to exercise due care themselves. We note also that the statute's use of the word knowingly is not inconsistent with the notion that some duty of care exists. Cf. id. Case law is replete with situations where knowledge contemplates what a party knew -32- or should have known. 11 Negligence law in particular frequently invokes the concept of constructive knowledge when deciding whether a particular outcome was foreseeable, 12 and criminal law applies a similar concept when imposing criminal liability under a theory of conscious avoidance. 13 11 See, e.g., Farmer v. Brennan, 511 U.S. 825, 843 n.8 (1994) (inferences not conclusive but prison official in Bivens suit would not escape liability if the evidence showed that he merely refused to verify underlying facts that he strongly suspected to be true, or declined to confirm inferences of risk that he strongly suspected to exist); In re Potomac Transp., Inc., 909 F.2d 42, 46 (2d Cir. 1990) (construing privity and knowledge under provision of maritime law to mean ship owner knew or should have known that particular condition existed). 12 See, e.g., Ehrens v. Lutheran Church, 385 F.3d 232, 235 (2d Cir. 2004) (to state claim of negligent supervision, plaintiff must allege, inter alia, that employer knew or should have known of employee's propensity for injury-causing conduct); Williams v. Long Island R.R. Co., 196 F.3d 402, 406 (2d Cir. 1999) (employer may breach liability under Federal Employers Liability Act, 45 U.S.C. § 51 et seq., if it knew or should have known of workplace hazard but did not inform or protect its employees). 13 See, e.g., United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1195 (2d Cir. 1989) (finding conscious avoidance applies when defendant claims to lack some specific aspect of knowledge necessary to conviction but where the evidence may be construed as deliberate ignorance (citation and internal quotation marks omitted)); United States v. Finkelstein, 229 F.3d 90, 95-96 (2d Cir. 2000) (distinguishing conscious avoidance from negligence but holding it is relevant when considering sentencing enhancements). -33-
Provision The structure of the DPPA also supports the conclusion that resellers owe a duty of reasonable care. The DPPA provides that a court may award punitive damages upon proof of willful or reckless disregard of the law. 18 U.S.C. § 2724(b)(2); see also Pichler, 542 F.3d at 397 (willful or reckless disregard is when a party appre ciated it was engaging in wrongful conduct (internal quotation marks omitted)). In contrast, the preceding subdivision provides that the court may award actual damages, but not less than liquidated damages in the amount of $2,500. 18 U.S.C. § 2724(b)(1). The actual damages provision is silent as to the degree of fault necessary to trigger liability for actual damages. If, however, as the statute suggests, punitive damages are available only for willful and reckless violations of the DPPA, then actual damages must require something less -- that is, conduct that is neither willful nor reckless. As we have rejected a theory of strict liability, the most appropriate standard, in our view, is -34- reasonableness: a reasonableness standard best harmonizes the wording, the structure, and, as discussed below, the purpose of the DPPA. Accordingly, we conclude that a reseller is liable for actual (or liquidated) damages when it fails to use reasonable care to ensure that personal information is being obtained for a permissible purpose. We note too that the Department of Justice (DOJ) has reached a similar conclusion. In a non-binding advisory opinion, DOJ concluded that a state DMV could release personal information to resellers upon reasonably concluding that the information [requested by the commercial distributor] will be used for authorized purposes only. Letter from Robert C. McFetridge, Special Counsel to the Assistant Att'y Gen., Civil Div., Dep't of Justice, to Peter Sacks, Office of the Att'y Gen., The Commonwealth of Mass. (Oct. 9, 1998) (on file with the Court) [hereinafter DOJ Letter], at 2 (emphasis added); see also, e.g., Graczyk v. W. Publ'g Co., 660 F.3d 275, 280-81 (7th Cir. 2011) (discussing DOJ Letter), cert. denied, 132 S. Ct. 2391 (2012); Taylor, 612 F.3d at 339 (same). An entity cannot reasonably conclude that a person -35- or entity may access DPPA-protected personal information if it does not exercise some modicum of care. See Cook v. ACS State & Local Solutions, Inc., 663 F.3d 989, 997 (8th Cir. 2011) (summarizing DOJ letter as stating that states must reasonably conclude that the information would be used only for authorized purposes).
We acknowledge that there is some ambiguity in the statute. The DPPA does not explicitly provide for a duty of reasonable care, and it is silent as to the degree of fault necessary for an award of actual or liquidated damages. Moreover, the word knowingly, as used in sections 2722(a) and 2724(a), is ambiguous: depending on one's reading of the statute, civil liability could attach (1) to any act committed intentionally, or (2) only for an act undertaken with knowledge of an improper purpose . For example, in Pichler v. UNITE, 542 F.3d 380 (3d Cir. 2008), the Third Circuit concluded that the end user -- a union -- could be civilly liable for using DPPA -protected personal information for an improper purpose even though, at the -36- time, the union did not know that its purpose would be deemed improper. Id. at 396-97. By contrast, in Roth v. Guzman, 650 F.3d 603 (6th Cir. 2011), the Sixth Circuit concluded that a state DMV was not subject to civil liability under the DPPA unless it actually knew that the recipient, who had represented that it had a permissible use for the requested DPPA-protected personal information, would use it for an improper purpose. Id. at 611-12. We need not resolve the disagreement, however, as both Pichler (addressing use by an end user) and Roth (addressing disclosure by the state) are distinguishable from this case, which addresses disclosure by resellers . In light of the ambiguity in the statute, we look to its legislative history, and the legislative history supports the conclusion that resellers must exercise some degree of care. The legislative history emphasized that the DPPA would protect an individual's fundamental right to privacy and safety. 145 Cong. Rec. H2522 (daily ed. Apr. 20, 1994) (statement of Rep. Moran), available at 1994 WL 140035; see also id. at H2527 (statement of Rep. Goss). Protecting this right was particularly important in light -37- of two mandates associated with driving: all drivers must register with the state, and no drivers may obscure the license plate number on their cars. See 139 Cong. Rec. S15764 (daily ed. Nov. 16, 1993) (statement of Sen. Boxer), available at 1993 WL 470986; 140 Cong. Rec. H2523 (daily ed. Apr. 20, 1994) (statement of Rep. Moran), available at 1994 WL 144035; 139 Cong. Rec. S14436 (daily ed. Oct. 26, 1993) (statement of Sen. Warner), available at 1993 WL 470986 (drivers that register with the DMV should do so with full confidence that the information they provide will not be disclosed indiscriminately). Because disclosures, such as the one made by Softech to Arcanum to Leifer, are often totally incompatible with the purpose for which the information was collected, regulating the circumstanc es of disclosure was of paramount importance to Congress. See 139 Cong. Rec. S15764 (daily ed. Oct. 26, 1993) (statement of Sen. Boxer), available at 1993 WL 470986. Concerns that state actions had undermined public safety also catalyzed the enactment of the DPPA, which was passed as part of the Violent Crime Control and La w Enforcement Act of 1994, Pub. L. No. 103-322, 108 Stat. -38- 1796. Congress perceived a need to better regulate disclosure of personal information because such disclosures had been used to stalk, rob, and even kill private citizens. See, e.g., 139 Cong. Rec. E2747 (daily ed. Nov. 3, 1993) (statement of Rep. Moran), available at 1993 WL 448643; 139 Cong. Rec. S15762, S15766 (daily ed. Nov. 16, 1993) (statements of Sen. Boxer and Sen. Harkin). Assuming Gordon's allegations are true, Leifer's threats to Gordon's family and friends were precisely the sort of acts that Congress sought to curtail. Given the nature of information available through motor vehicle records -- e.g., social security number, medical or disability information, and home address -- the DPPA's purpose would be severely undermined if resellers' disclosures were not subject to a duty of reasonable inquiry. See Reno, 528 U.S. at 151 (The DPPA regulates the universe of entities that participate as suppliers to the market for motor vehicle information -- the States as initial suppliers of the information in interstate commerce and private resellers or redisclosers of that information in commerce. (emphasis added)). And, in light of the -39- clear congressional intent to safeguard the privacy and safety of drivers, it is inconceivable that a dropdown menu, a check box, and a representation that no laws would be violated could satisfy any reasonable diligence floor. See 139 Cong. Rec. S15765 (daily ed. Nov. 16, 1993) (statement of Sen. Robb), available at 1993 WL 470986; see also Roth, 650 F.3d at 619 (Clay, J., dissenting) ([T]he DPPA compels the conclusion that the Act imposes . . . a duty of reasonable inquiry.); Welch v. Jones, 770 F. Supp. 2d 1253, 1260 (N.D. Fla. 2011) (no DPPA violation in reseller's disclosure where recipient identified its permissible use under penalties of perjury, and reseller verified recipient's identity, even though the recipient ultimately used the information impermissibly). In light of the text, structure, and legislative history of the DPPA, we hold that resellers are subject to a duty of reasonable care before disclosing DPPA -protected personal information. 14 See 18 U.S.C. § 2721(b)-(c). 14 Notwithstanding the similarities among upstream sources of DPPA-protected personal information, as this case does not require us to consider the effect on state DMVs, we limit our holding to private resellers under the statute. -40-