Justices Won't Review Second Circuit Ruling On Driver Privacy Act Reseller Disclosures

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Jan. 13 --The U.S. Supreme Court Jan. 13 declined to review a ruling of the U.S. Court of Appeals for the Second Circuit holding that companies that resell personal information from motor vehicle records are subject to a duty of reasonable care prior to disclosing that information under the Driver's Privacy Protection Act (Gordon v. Softech Int'l, Inc., U.S., No. 13-533, cert. den. 1/13/14; Arcanum Investigations, Inc. v. Gordon, U.S., No. 13-539, cert. den. 1/13/14).

The DPPA, 18 U.S.C. §§ 2721-2725, generally prohibits private citizens and entities from obtaining, disclosing and reselling personal information from motor vehicle records. The act, however, includes fourteen permissible uses of such information, such as certain uses by a “licensed private investigative agency” or insurance company.

In this case, Aron Leifer requested information on the plaintiff's license plate number from an online private investigation service, Arcanum Investigations Inc. Arcanum obtains motor vehicle records from Softech International Inc.

Leifer allegedly obtained the plaintiff's contact information and used that information to make threatening phone calls. The plaintiff filed a complaint, alleging that Leifer and the two resellers--Arcanum and Softech--violated the DPPA.

In November 2011, the U.S. District Court for the Southern District of New York granted summary judgment on the plaintiff's claim that the resellers violated the DPPA, holding that they could not be strictly liable for Leifer's alleged violation.

Second Circuit Decision

The Second Circuit affirmed the district court's decision in part and vacated and remanded it in part .

The DPPA's use of the term “knowingly” suggests that a duty of care exists, the court said. “The civil remedies provision would be rendered toothless if resellers could insulate themselves from liability based solely on the conclusory representations of end users, without being required to exercise due care themselves,” it said.

The Second Circuit concluded that summary judgment was properly granted in favor of Softech, noting that the company had lawfully disclosed the plaintiff's personal information under the private investigative agency exception. But it said that a reasonable jury might conclude that Arcanum failed to exercise reasonable care in disclosing the information to Leifer.

Arcanum did not inquire about Leifer's selection of the DPPA insurance exception on its website, the court said. Arcanum did not investigate the false identity Leifer used or whether that name matched the name on his credit card, it added.

Second Circuit Chief Judge Dennis Jacobs concurred in part and dissented in part in a separate opinion, finding it “reasonable for Congress to draw the line at a knowing violation.”

Justin M. Sher and Valerie A. Gotlib, of Sher Tremonte LLP, in New York, and Marc E. Isserles, Alexandra A.E. Shapiro and Jeremy Licht, of Shapiro, Arato & Isserless LLP, in New York, filed the petition for certiorari in the Gordon case. Gregory R. Saracino, of Milber, Makris, Plousadis & Seiden LLP, in White Plains, N.Y., filed the petition for certiorari in the Arcanum case.

Full text of the Second Circuit's opinion is available at http://www.bloomberglaw.com/public/document/Erik_Gordon_v_John_Does_1_Through_10_Docket_No_1200661_2d_Cir_Feb/2.

Full text of the concurrence and dissent is available at http://www.bloomberglaw.com/public/document/Erik_Gordon_v_John_Does_1_Through_10_Docket_No_1200661_2d_Cir_Feb/3.