Antitrust Law Daily Wrap Up, PRIVACY—USSCt: Attorneys’ Solicitation of Clients Not Permissible Use of Personal Information Under Driver’s Privacy Protection Act, (Jun 17, 2013)

By John W. Arden, J.D., LL.M.

Attorneys who obtained motor vehicle records of South Carolina vehicle purchasers, without consent, for the purpose of engaging in a mass solicitation in connection with a lawsuit against automobile dealerships could be liable for violating the federal Driver’s Privacy Protection Act, according to the U.S. Supreme Court (Maracich v. Spears, June 17, 2013, Kennedy, A.). A Fourth Circuit ruling that the attorneys’ use of the information was permissible under the Act as used “in connection with litigation” was overturned in a 5-4 decision, authored by Justice Anthony Kennedy.

The case was remanded for a determination of whether the letters had the predominant purpose of solicitation, which would bring the use outside of the litigation exception of the Driver’s Privacy Protection Act of 1994 (DPPA).

Background. The attorneys submitted several state Freedom of Information Act requests to the South Carolina Department of Motor Vehicles, seeking the names and addresses of thousands of individuals, in order to solicit clients for a lawsuit they had pending against South Carolina automobile dealerships for violation of a state statute barring dealers from engaging in arbitrary or unconscionable acts. After receiving the requested information, the attorneys sent over 34,000 letters to vehicle purchasers. The letters were labeled “ADVERTISING MATERIALS,” explained the pending lawsuit, and directed the recipients to return an enclosed reply card if they wanted to participate in the case.

Some of the recipients brought an action against the attorneys, alleging violation of the DPPA for their obtaining, disclosing, and using personal information from motor vehicle records for bulk solicitation without express consent. The attorneys moved to dismiss, claiming that the information was properly released and used under an exception to the DPPA, permitting disclosure of information “for use in connection with any civil, criminal, administrative, or arbitral proceeding,” including “investigation in anticipation of litigation.” 18 U.S.C. §2721(b)(4).

The federal district court held that the attorneys’ letters were not solicitations under the law and that use of the information fell within this litigation exception. On appeal, the Fourth Circuit affirmed, ruling that the letters were solicitations, but that the solicitations were within the litigation exception.

Litigation exception. The U.S. Supreme Court disagreed, holding that solicitation of clients is not a permissible purpose under the litigation exception because it is neither a use “in connection with litigation” nor an “investigation in anticipation of litigation.” An exception to a general policy statement of a statute is usually read narrowly in order to preserve the provision’s primary operation, according to the high court. Reading the exception to permit disclosure of information when there is any connection between protected information and a potential legal dispute would substantially undermine the DPPA’s purpose of protecting a right to privacy in motor vehicle records.

Solicitation of new clients is distinct from an attorney’s conduct on behalf of a client or a court. It is in the nature of a business transaction and is treated by state bars as discrete professional conduct, the court held. An “investigation in anticipation of litigation” allows background research to determine if there is a supportable theory for a complaint or a theory to avoid sanctions for filing a frivolous lawsuit or to help locate witnesses.

Limiting the reach of the “litigation exception” respects the statutory purpose and design of 18 U.S.C. §2721(b)(12), which allows solicitation only of those persons who have given express consent to have their names and addresses disclosed for this purpose. “If (b)(4) were to be interpreted to allow solicitation without consent, then the structure of the Act, and the purpose of (b)(12), would be compromised to a serious degree,” the Court reasoned.

While the Fourth Circuit held that the letters were solicitations, it found the communications exempt under (b)(4) because they were “inextricably intertwined” with permissible litigation purposes. Where the use of DPPA-protected personal information has the predominant purpose of solicitation, it is not protected by the litigation exception, the Court explained. Thus, the matter had to be remanded for a determination, under the proper standard, of the predominant purpose of the attorneys’ letters.

On remand, the court of appeals or the district court must determine whether the letters had the predominant purpose of solicitation, according to the Court. Because the Fourth Circuit applied the wrong standard in finding the solicitations exempt, the proper standard had to be applied on remand.

Justice Kennedy’s opinion was joined by Justices Roberts, Thomas, Breyer, and Alito. A dissenting opinion was filed by Justice Ginsburg, joined by Justices Scalia, Sotomayor, and Kagan.

Dissent. In her dissent, Justice Ginsburg stated that the attorneys obtained and used the Department of Motor Vehicles information for “investigation in anticipation of litigation” and for communication “in connection with” a civil action under the litigation exception. “Rather than adopt a straightforward interpretation of statute, the Court labors to justify reading a limitation into (b)(4) that has no basis in the text of that provision.”

The majority exposes lawyers whose conduct meets state ethical requirements to civil liability and potential criminal liability, according to the dissenters, who would have affirmed the judgment of the Fourth Circuit.

The case is No. 12-25.

Attorneys: Philip N. Elbert (Neal & Harwell PLC) for Edward F. Maracich. Paul D. Clement (Bancroft PLLC) for Michael Eugene Spears.

Cases: Advertising Privacy