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Justices Ponder Whether Lawyers Can Use Personal DMV Information to Solicit Clients

Monday, January 14, 2013

During Jan. 9 oral arguments, the U.S. Supreme Court wrestled with how lawyers may lawfully use personal information gleaned from state driver's license records covered by the Driver's Privacy Protection Act (Maracich v. Spears, U.S., No. 12-25, argued 1/9/13).  

The arguments focused on whether a South Carolina law firm's solicitation of clients could be considered an “investigation in anticipation of litigation” permitted by the federal privacy statute and whether that use required the consent of the individuals contacted by the lawyers.

The case turns on the interpretation of two permissible use exceptions to the DPPA's general prohibition against the disclosure of personal information contained in department of motor vehicle (DMV) records--the litigation and solicitation exceptions.

The justices are considering the U.S. Court of Appeals for the Fourth Circuit's ruling that a group of lawyers permissibly used DMV data under the DPPA's litigation exception ( 675 F.3d 281 (4th Cir. 2012)) (11 PVLR 668, 4/16/12).

Chance to Resolve Circuit Split

The defendant lawyers in this case asserted the litigation exception to obtain personal information on 34,000 consumers from the South Carolina DMV. The lawyers used that information to solicit clients for a recently filed lawsuit.

Subsequently, some of the consumers filed a federal district court class action complaint, alleging that the lawyers' use of their personal information for solicitation without consent violated the DPPA, 18 U.S.C. §§ 2721-2725. They sought statutory damages of $2,500 per alleged violation, which, according to the defense, could amount to approximately $200 million.

The district court granted summary judgment to the defendant lawyers, holding that the letters they sent to the plaintiff car buyers using information from the DMV did not qualify as solicitations under the DPPA and did not require the consent of the individuals. Further, even if the lawyers had impermissibly solicited the car buyers, their conduct was permissible subject to the statute's litigation and state action exceptions.

The Fourth Circuit disagreed on the solicitation ruling below but still affirmed the grant of summary judgment. It said that the DPPA's solicitation provision does not alter the scope of separate and independent exceptions, such as the litigation exception it found was met in this case.

The Eleventh Circuit in Rine v. Imagitas, 590 F.3d 1215 (11th Cir. 2009) (9 PVLR 89, 1/18/10), and the First Circuit in Downing v. Globe Direct LLC, 682 F.3d 18 (1st Cir. 2012) (11 PVLR 936, 6/11/12), reached similar conclusions.

On the other hand, in Pichler v. UNITE, 542 F.3d 380 (3d Cir. 2008) (7 PVLR 1331, 9/15/08), the Third Circuit held that individuals could pursue actions against any impermissible use “regardless of other circumstances supporting a finding that a permissible use provision was also satisfied.”

What Takes Precedence in Tangle of Exceptions?

Initially, the justices appeared to reject the consumers' principal argument that the more specific solicitation exception, 18 U.S.C. § 2721(b)(12), should trump the more general litigation exception, 47 U.S.C. § 2721(b)(4).

Specifically, Joseph R. Guerra, Sidley Austin LLP, Washington, who argued for the consumers, maintained that the solicitation exception--which prohibits using personal information obtained from DMVs for “surveys, marketing or solicitations” unless the consumer has expressly consented to such solicitations--was more specific than the litigation exception.

The litigation exception permits personal information to be used “in connection with any” court proceeding, “including the service of process, investigation in anticipation of litigation, and the execution or enforcement of judgments and orders, or pursuant to an order.”

Because the litigation exception does not specifically deal with solicitation, the solicitation exception--and its consent requirement--should apply to a lawyer's solicitation of clients, Guerra said.

Guerra also noted that although another exception at 18 U.S.C. § 2721(b)(2) says that “[p]ersonal information may be used in connection with matters of motor vehicle market research activity, including survey research.” But he argued that the exception must be read in connection with § 2721(b)(12),which requires consent for specific solicitations.

This exception provides “strong textual evidence … that Congress did in fact understand that the consent requirement governs all bulk solicitation or surveys,” and that there must be an explicit exception to override the solicitation exception's consent requirement, Guerra said.

After calling the statute a “mess,” Justice Elena Kagan said that the application of the specific-controls-the-general canon was inappropriate here because “this is just a list of exceptions to a general prohibition and no one is more general or specific than any other.”

Justice Antonin Scalia agreed, saying “I don't know which is specific and which is general.”

Guerra attempted to clarify by categorizing the solicitation exception as a “core” provision, noting that “mass marketing … using DMV information is one of the fundamental problems Congress was addressing.”

Seizing on the fact that the solicitation exception was number 12 on a list of 14 exceptions, Chief Justice John G. Roberts Jr. said that “[i]t's kind of hard to argue, when you have … (1) through (14), that … (12) is the core provision. Usually it's 1 of 14 items in a list.”

Paul D. Clement, Bancroft PLLC, Washington, who argued for the lawyers, urged the justices not to use “a junior varsity version of” the specific-controls-the-general canon “to harmonize the statute.”

Pointing out that there were several instances where the exceptions overlapped, Clement argued that the exceptions did not need to be harmonized.

For example, Clement said that the first exception permitted use by government entities, including courts, and would cover personal information used by a court in its opinion. This same use, however, would also be covered by the litigation exception, Clement argued.

Trolling for Clients Versus Furthering Litigation

Despite this admonition, the justices did attempt to harmonize the litigation exception with the solicitation exception.

Specifically, they tried to determine the line between what is considered “in connection with” a court proceeding and what is not, and, in particular, whether solicitation can ever be considered an “investigation in anticipation of litigation.”

After all parties seemed to agree that a lawyer could not “troll for clients” under the DPPA, Justice Stephen G. Breyer asked Clement to “draw the boundary of this [litigation exception] south of” that.

Conversely, he asked Guerra to draw a line “[n]orth of trolling.”

Guerra answered that the line for permissible use under the litigation exception was drawn at solicitation--a lawyer can never solicit clients under the litigation exception without first obtaining the consumer's consent.

In support of this argument, Guerra said that the litigation exception was really about providing information to lawyers in their capacities as officers of the court, and not about providing them personal information “in their own commercial capacities”--such as when they are engaged in solicitation.

After Kagan asked whether that distinction could be found in the text of the DPPA, Guerra responded that the examples given in the litigation exception--“service of process, investigation in anticipation of litigation, and the execution or enforcement of judgments and orders”--were all duties carried out by lawyers as officers of the court.

This answer, however, was met with doubt by Roberts, who did not believe that a lawyer acted as an officer of the court when investigating litigation.

Guerra pointed out that lawyers have a Rule 11 duty to ensure that they are not filing frivolous claims.

“Well, that just seems to me to be saying that lawyers are always acting as an officer of the court,” Roberts responded.

Guerra agreed that may be the case a lot of the time, but, importantly, not when lawyers solicit clients.

Is Lawyer Investigating Specifics?

Clement, however, thought that the line between solicitation and investigation was “far too thin a line to make a $200 million difference.”

His “line” focused on the fact that the litigation exception was “remarkably broad. Congress uses the word 'any' three times. It uses 'in connection with,' which I think we all know is a term of breadth. And then it uses 'including' and uses illustrative examples.”

Roberts interrupted to say that “in connection with” cannot “really mean in connection with as broadly as that … . Otherwise everything would be covered.”

Clement agreed that there had to be “some limit.”

Further, he suggested that the line for purposes of the litigation exception be that a lawyer's solicitation will be considered “in connection” with the litigation so long as the lawyer has a “specific transaction, occurrence, [or] defect” that they are investigating.

At Breyer's prompting, Clement clarified that no litigation actually needed to be filed yet and that it was sufficient that the lawyer had a particular defendant in mind, but no plaintiff.

Justice Anthony M. Kennedy repeatedly offered his own “line.” Specifically, Kennedy argued that the examples in the litigation exception demonstrated a “chronological progression.” Because the DPPA listed “service of process,” and then “investigation in anticipation of litigation,” and finally, “the execution or enforcement of judgments and order,” the examples were meant to illustrate the chronology of litigation. Accordingly, service of process had to occur before an investigation.

But neither Clement nor Guerra agreed. “I guess I've never understood that--after service of process, it's still in anticipation of litigation,” Guerra said.

Social Security Numbers, ID Theft Concerns

Justice Samuel A. Alito Jr. pointed out that lawyers are one of the few categories of people who get access to “highly restricted personal information”--including “an individual's photograph or image, social security number, medical or disability information”--under the DPPA.

Clement corrected Alito's assertion, however, saying that lawyers “presumptively” have access to such information under the federal law, but “federal law is only a floor.”

He said that states were free to restrict access to that information and noted that South Carolina did just that by prohibiting lawyers' access to Social Security numbers.

Breyer said that, despite the presence of the South Carolina statute banning access to Social Security numbers, the issue of gaining access to SSNs in other states brought to his mind the “exaggerated” thought of “identity theft run wild.”

He said reaching a conclusion that the lawyers' use of the DMV data was solicitation requiring consent would “force” other states “to focus on” protecting such data.

By Kimberly Robinson  


Full text of a transcript of the argument is available at http://pub.bna.com/lw/1225US.pdf.

Full text of the Fourth Circuit's opinion is available at http://pub.bna.com/lw/102021p.pdf.

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