Privacy Project Phase II

The Joan Fullam Irick Privacy Project Phase II

The USA PATRIOT Act: Security and Privacy

Consumer Privacy and Preemption

Constitution, Crime and Clergy

Discovery in Abuse Claims

Parent-Child Communication Privilege

Deliberative Process Privilege

Self Critical Analysis Privilege in Medical Care

European Data Protection

Managing Privacy Risks in Your Business

The Foundation of the Confidential Settlement Agreements International Association International Association of Defense Counsel Expanding Tort Liability for Information Providers of Defense Counsel One North Franklin, Suite 1205 Romantic Relationships at Work Chicago, IL 60606 p (312) 368-1494 f (312) 368-1854 e-mail [email protected] Funding for the The Foundation www.iadclaw.org Privacy Project of the International Association provided by of Defense Counsel The Joan Fullam Irick Privacy Project, Phase II

Dedication

This Volume, and its earlier companion (published in January 2003) originated from Joan Fullam Irick’s deeply held belief that the very concept of privacy faced challenges on many fronts, in the legislature, in the workplace, and in the courts.

Joan’s passion for privacy-related issues led her to devote much of her term as president of the IADC to scrutinizing the many ways that our privacy is being invaded. At her urging, the Foundation of the IADC undertook prepara- tions of scholarly papers analyzing the current state of privacy and anticipating future issues in the area.

Throughout the process that produced these volumes, Joan’s commitment to the issues imbued all of us with the desire to create a body of high-level, intellectually rigorous white papers that could be used in many disciplines to continue exploration of privacy issues on both the national and international scene, and the foreseeable future of privacy in the individual and corporate worlds.

Joan Fullam Irick passed away during her term as IADC president. Her youth, her vitality and her grace could not defeat the cancer that ultimately claimed her life. All of us extend our deepest sympathy to her husband, Tom, and their children. Joan’s legacy to us survives in this Privacy Project. Joan conceived the project, and she shepherded it through to the end.

In recognition of her efforts, and in gratitude to her service, the Foundation renamed this undertaking the Joan Fullam Irick Privacy Project. We are proud here to dedicate Phase II of that Project to the memory of our former President, the leader who made this all possible, our beloved Joan.

Editors George S. Hodges, Chair Jerome A. Galante Joseph W. Ryan, Jr. The Joan Fullam Irick Privacy Project, Phase II

In 2001, Joan Irick submitted a proposal for consideration to the IADC Executive Committee suggesting a new project for the Institute of the IADC Foundation. The proposal was accepted immediately by the Executive Committee as relevant to an important emerging area of law that warranted further study and inquiry. The IADC Foundation Board agreed and the idea grew into the Privacy Project.

The IADC Foundation turned to Board Member George S. Hodges, who agreed to chair an editorial team that would bring the Privacy Project from concept into a reality that would benefit the IADC membership and the legal community. Joining him were fel- low Board Members Joseph W. Ryan, Jr. and Jerome A. Galante.

A plan was implemented to research and organize multiple relevant legal topics dealing with privacy from the corporate and personal perspectives. Once the list was complete, a plan developed to create a series of scholarly white papers on each privacy topic. Authors from within the IADC membership were chosen. Each agreed to submit a paper on a specified area of privacy within a very strict timetable. Commitment to a specific topic, submission of initial outlines, drafts and final drafts were carefully coordinated during countless telephone conferences and e-mails among the editorial board, authors and IADC staff.

In January 2003, Phase I of the Privacy Project was published as a dedicated issue of the IADC Defense Counsel Journal. It was met with repeated positive critiques and commentary from IADC members.

With the support of then President Irick, a decision was made to proceed ahead into Phase II, exploring new areas of concern in the world of privacy while revisiting and updating some of the earlier topics. The within Volume is the end result of this decision.

The Privacy Project editorial team thanks the authors for their commitment and dedication to this project. The talent and dedication of these individuals form the cornerstone of this publication and devotion to the privacy principles espoused by Joan.

The editorial team also thanks Pam Miczuga and Mary Beth Kurzak of the IADC staff, whose multi-task efforts made this project possible, and IADC Executive Director Oliver Yandle for his thoughtful suggestions and input. Finally, the editorial team thanks Joan Irick, whose spirit will live on with us as the Privacy Project moves ahead. Table of Contents

The USA PATRIOT Act: Tensions Between Security and Privacy By Robert A. Curley, Jr. and Lisa M. Caperna...... 1 Consumer Privacy and Preemption: An Overview of Gramm-Leach-Bliley, the Fair Credit Reporting Act and Proposed 2003 Legislative Amendments By Virginia N. Roddy...... 13 Protection Against Discovery in Civil and Criminal Proceedings in Clergy Sexual Abuse Claims By Ralph M. Streza and L. Gino Marchetti, Jr...... 23 Personnel Records, Pedophiles and Priests: An Addendum to Discovery in Sexual Abuse Claims By William G. Porter II and Michael C. Griffaton...... 35 Family Unity or Family Crisis: Revisiting the Need for a Parent-Child Communication Privilege By Mark D. Fox and Michael L. Fox...... 41 The Deliberative Process Privilege: What Is It? When Can It Be Asserted? How Can This Shield Be Pierced? By Cathy Havener Greer, William T. O’Connell and Kristin J. Crawford...... 55 The Self Critical Analysis Privilege in Medical Care: The Law is One Thing in Rome and Another In Athens By Paul E. Svensson and George S. Hodges ...... 69 European Data Protection: Impact on U.K.-U.S. Data Transfers By Ian MacDonald and Julia Graham...... 81 Managing Privacy and Security Risks in Your Business: Are You Properly Protected? By Kathy J. Maus, Michael G. Haire, Jr. and Emily Freeman...... 89 How Good is Your Confidential Settlement Agreement? By William B. Crow...... 105 Expanding Tort Liability of Information Providers: How Far Can Foreseeability Be Stretched? By Dennis T. Ducharme...... 113 Romantic Relationships at Work: Does Privacy Trump the Dating Police? By Rebecca J. Wilson, Christine Filosa and Alex Fennel...... 121

Privacy Project Editors The Foundation George S. Hodges, Chair of the International Association Jerome A. Galante International Association of Defense Counsel of Defense Counsel Joseph W. Ryan, Jr.

Copyright c 2004 by the International Association of Defense Counsel (IADC) and the Foundation of the International Association of Defense Counsel (Foundation). The Privacy Project is a forum for the publication of topical and scholarly writings on the law, its development and reform, and on the practice of law, particularly from the viewpoint of the practitioner and litiga- tor in the civil defense and insurance fields. The opinions and positions stated in signed material are those of the author and not by the fact of publication necessarily those of the IADC and the Foundation. Material accepted for publication becomes the property of the IADC and Foundation, and will be copyrighted as a work for hire. Contributing authors are requested and expected to disclose any financial, economic or professional interests or affiliations that may have influenced positions taken or advocated in the efforts. 1 The Privacy Project II

The USA PATRIOT Act: Tensions Between Security and Privacy

By Robert A. Curley, Jr. Robert A. Curley, Jr. graduated from and Lisa M. Caperna Harvard College and Cornell Law School I. Introduction and is the President of Curley & Curley P.C. in Boston. Mr. Curley is a past President of the Massachusetts Defense On the morning of September 11, 2001, Lawyers Association and is the Americans watched - over and over - the Massachusetts State Representative to the news footage of airplanes crashing into the Defense Research Institute. He currently World Trade Center in New York City; they serves on the Board of the IADC were shocked. Less than an hour later, they Foundation and has served on the faculty watched an airplane destroy a portion of the of the IADC Trial Academy in 1999. Mr. Pentagon; and by then, they knew their Curley concentrates his practice in the world would never be the same. No enemy area of catastrophic personal injury, prod- had ever invaded this nation in such a hor- uct liability, and insurance coverage matters. rific manner prior to the day which is com- Lisa M. Caperna is a graduate of Boston monly referred to as simply 9/11. College, magna cum laude and Boston One day after the terrorist attacks, College Law School. Ms. Caperna is President George W. Bush vowed that “we presently an associate at Curley & Curley will not allow this enemy to win the war by P.C., where she concentrates her practice changing our way of life or restricting our in general civil litigation and defense of freedoms.” Less than six weeks after the government agencies. attacks, The Uniting and Strengthening America by Providing Appropriate Tools American's had to give up some personal Required to Intercept and Obstruct freedoms in order to make the country safe Terrorism Act (better known by its catchy from terrorist attacks. Seventy-nine percent acronym, the USA PATRIOT Act) was replied: yes. Those in favor of expanded endorsed by Congress and signed into law police power call for legislation that would by President Bush on October 26, 2001. allow government agencies more effective The USA PATRIOT Act is a sweeping means to combat terrorist networks. They piece of legislation making changes to more argue that many of the changes resulting than fifteen different statutes, including the from the USA PATRIOT Act simply recog- Foreign Intelligence Surveillance Act of nize modern technological innovations and 1978 (“FISA”), the Electronic allow the government to adapt their prac- Communications Private Act of 1986 tices to such technology. (“ECPA”), and the Family Education Other political activists, however, have Rights and Private Act (“FERPA”) with criticized the Act, arguing that it gives the potential implications for the protection of Attorney General and federal law enforce- civil liberties. ment unnecessary and permanent new pow- Attitudes toward increased police power ers to violate civil liberties that go far and surveillance have changed in the wake beyond the stated goal of fighting interna- of the September 11th attacks. A CBS/New tional terrorism. Their worry is that these York Times poll conducted in September new and unchecked powers could be used 2001 asked respondents whether against American citizens who are not 2 under criminal investigation and those “principal purposes to be answered by whose First Amendment activities are union are these - the common defense of deemed to be threats to national security by the members; the preservation of the public the Attorney General. peace, as well against internal convulsions So, should we be concerned? Is the as external attacks.” In discussing the USA PATRIOT Act necessary to national authorities essential to the common safety given the modern technology of the defense, Hamilton stated, “These powers 21st Century? Or does the Act go too far, ought to exist without limitation, because it allowing the government to compromise is impossible to foresee or to define the cherished rights which we have enjoyed extent and variety of the means which may and on which our country prides itself? If be necessary to satisfy them.” (emphasis in so, are we willing to accept that compro- original).1 Hamilton did not favor a sepa- mise? Before we answer this question, we rate Bill of Rights.2 Hamilton did foresee should keep in mind what Benjamin that “unjust and partial laws” which affect- Franklin had to say on the subject... ed “the private rights of particular classes of “They that can give up essential liberty citizens” could be passed by legislatures. to obtain a little temporary safety deserve He stressed the “vast importance” of the neither liberty nor safety.” (Inscribed on the judiciary “in mitigating the severity and pedestal of the Statute of Liberty) confining the operation of such laws.”3 It is difficult to estimate the impact of The People clearly saw the wisdom of a the USA PATRIOT Act because its provi- Bill of Rights for the protection of individ- sions modify more than fifteen existing ual liberties and rejected Hamilton’s view statutes. The bill itself is over 342 pages that a Bill of Rights was unnecessary. long and must be read together with the Present considerations of the powers of existing statutes to understand the signifi- government to secure our defense in present cance of its language. To better understand day national exigencies of increasingly the impact of this Act, it is helpful to review unforeseeable extent and variety, the vast the evolution of law concerning the balance importance of our independent judiciary between protecting privacy and allowing and the rights of individuals are, in essence, government to fight crime, beginning with the same considerations present at the birth early case law and extending to the statuto- of our nation. Our people will probably ry environment at the time the USA PATRI- always possess nearly unanimous accord on OT Act was enacted. the goals of security and the protection of personal rights and privacy, but will proba- II. The Tensions in Government Powers bly always disagree and debate about the to Provide Security and Privacy necessary balance to be achieved among the means to achieve those goals. The inherent tensions between government action to protect the security of the III. Traditional Concepts of Limitations people and to protect individual rights, on Government Intrusion Into Privacy including privacy, have always existed in our republic. The preamble to the A. The Fourth Amendment Constitution of the United States succinctly The strongest protection Americans describes this tension in expressing the have against unreasonable governmental rationale for the Constitution itself, namely intrusions into their privacy is the Fourth to, Amendment, which provides that “the right . . . establish Justice, insure domestic of the people to be secure in their persons, Tranquility, provide for the Common houses, papers, and effects, against unrea- Defense, promote the general Welfare and secure the Blessings of Liberty . . . 1. The Federalist No. 23, The Federalist, 2000 Modern Library Edition, p. 140. 2. The Federalist No. 84, op cit., pp. 546-557. Alexander Hamilton argued that the 3. The Federalist No. 78, op cit. p. 501. 3 sonable searches and seizures, shall not be Court struck down a New York statute violated, and no Warrants shall issue but authorizing electronic eavesdropping by upon probable cause, supported by Oath or law enforcement officials investigation cer- affirmation, and particularly describing the tain types of crimes. The Court held that place to be searched, and the persons or conversations fall within the meaning of the things to be seized.”4 Fourth Amendment, and that the seizure of Early interpretations of the Amendment conversations constitutes a Fourth focused on privacy as a property concept. Amendment search. Relying on this concept in cases concerning Furthermore, the Court stated that evi- electronic surveillance such as Olmstead v. dence obtained by surveillance conducted United States, the Supreme Court upheld in violation of the Fourth Amendment is the unwarranted wiretaps in question and inadmissible in court. Concluding the refused to extend the Fourth Amendment statute was so broad that it failed to meet language to include telephone wires.5 constitutional standards under the Fourth Olmstead challenged his conviction of Amendment, the Court delineated the con- conspiracy to violate the National stitutional criteria that electronic surveil- Prohibition Act on the basis that the use of lance legislation should contain.10 The evidence of private telephone conversa- Court held that the Fourth Amendment tions, intercepted by federal agents through requires that a search warrant describe with wiretapping, amounted to a violation of the particularity the person, place or thing to be Fourth Amendment.6 The Court reasoned seized, the nature of the crime in question that there could be no search when there and the type of conversation sought. The was no physical invasion of the appellant’s Berger Court maintained that the continu- personal space, and likewise there could be ance of surveillance should be permitted no seizure given that words are not tangible only upon renewed showings of probable things capable of being seized.7 Justice cause. The Court also stated that there Brandeis’s dissent, however, signaled a should be “precise and discriminate” proce- shift in attitude away from such unyielding dures in place to minimize the unauthorized property-based applications of the Fourth interception of conversations unconnected Amendment when he stated: to the crime being investigated. “The makers of our Constitution... In Katz, FBI agents - acting without a sought to protect Americans in their warrant - set up a wiretap by attaching a lis- beliefs, their thoughts, their emotions tening device to the outside of a public tele- and their sensations. They conferred, as phone booth from which the appellant was against the Government, the right to be engaging in illegal bookmaking activities.11 let alone...To protect that right, every In the landmark case, the Court ruled that unjustifiable intrusion by the “the Fourth Amendment protects people, Government upon the privacy of the individual, whatever the means not places.” Justice Harlan’s concurring employed, must be deemed a violation opinion set forth a two-part test used to of the Fourth Amendment.”8 determine whether a search or seizure is reasonable.12 First, the court must decide Thirty-nine years after Olmstead, the whether the individual had a subjective court again faced an electronic surveillance expectation of privacy and, second, that the issue in both Berger v. New York and Katz v. expectation be one that society is prepared United States.9 In Berger, the Supreme to recognize as reasonable.13 Furthermore,

4. U.S. Const. amend. IV. 10. See Berger, supra at 54-64. 5. See Olmstead v. United States, 277 U.S. 438, 466 11. See Katz, supra at 348. (1928). 12. Id. at 361 (Harlan, J., concurring). 6. Id. at 455. 13. Id. at 358, n.23. 7. Id. at 464. 8. Id. at 478 (Brandeis, J., dissenting). 9. Berger v. New York, 388 U.S. 49 (1967); Katz v. United States, 389 U.S. 347 (1967). 4 the Court concluded that the agents failure establishment of religion, or prohibiting the to obtain prior judicial approval was “per se free exercise thereof: or abridging the free- unreasonable under the Fourth dom of speech, or of the press: or the right Amendment.”14 of people peaceably to assemble, and to In dicta, the Court recognized the possi- petition the Government for a redress of bility that in matters of national security, grievances.”19 prior authorization for electronic surveil- In general, the First Amendment pre- lance may not always be required, limiting vents government from proscribing speech, its decision to issues of domestic criminal expressive conduct or association because surveillance only.15 of disapproval of the ideas expressed or The Court finally addressed the relation- believed. While many forms of expressive ship between issues of domestic and nation- activities are protected by the First al security and electronic surveillance in Amendment, the courts have allowed little 1972, in United States v. United States to no protection for those who seek to incite District Court (Keith), in which the defen- violence, or who use violence or otherwise dants were charged with conspiracy to illegal acts as a means of protest. For exam- destroy government property.16 ple, in NAACP v. Claiborne Hardware Co., Specifically, one defendant was charged the Supreme Court declared “violence has with the attempted bombing of a CIA no sanctuary in the First Amendment, and recruiting office in Michigan. The Court the use of weapons, gunpowder, and gaso- held that the warrantless electronic surveil- line may not constitutionally masquerade lance of a domestic organization with no under the guise of ‘advocacy’.”20 alleged connection to a foreign government Since violence or illegal acts are not pro- constituted a breach of Fourth Amendment tected under the right of free expression, the protections. The Court left open the possi- First Amendment will not act as a barrier bility of different Fourth Amendment stan- against government surveillance of such dards for national security investigations activities. Yet, where individuals exercise involving foreign organizations.17 Eerily free expression in a manner protected by the foreshadowing Congress’ future expansions First Amendment, the courts have recog- of electronic surveillance, Justice Powell nized that the First and Fourth Amendments stated, are meant to protect against government “Fourth Amendment protections become surveillance targeted specifically at such the more necessary when the targets of offi- behavior. In United States v. United States cial surveillance may be those suspected of District Court, the Court stated that “histo- unorthodoxy in their political beliefs. The ry abundantly documents the tendency of danger to political dissent is acute where the Government - however benevolent and Government attempts to act under so vague benign its motives - to view with suspicion a concept as the power to protect 'domestic those who most fervently dispute its poli- security.' Given the difficulty of defining cies.”21 the domestic security interest, the danger of abuse in acting to protect that interest IV.The Threats Presented by 21st becomes apparent.”18 Century Terrorism and Crime

B. The First Amendment On February 26, 1993, six people were The First Amendment provides that killed and more than 1,000 injured when “Congress shall make no law respecting the terrorists bombed the World Trade Center in New York City.22 On April 19, 1995, 168

14. Id. at 359. 19. U.S. Const. Amend. I. 15. See id. 20. NAACP v. Claiborne Hardware, 458 U.S. 886, 916 16. United States v. United States District Court, 407 U.S. (1982). 297, 299 (1972). 21. Keith, supra at 314. 17. Id. at 321-22, 324. 22. CNN Interactive, Last World Trade Center bombing 18. See id. at 313-315. conspirator sentenced, at http://www.cnn.com/US/9804/03 /wtc.bombing (last visited August 12, 2003). 5 people, including 19 children, were killed a strict standard for surveillance that when a car bomb exploded in front of the extends the requirements of the Fourth Alfred P. Murrah Federal Building in Amendment. Oklahoma City, Oklahoma.23 On August 7, Title III authorizes law enforcement to 1998, 223 people were killed in the bomb- engage in surveillance activities pursuant to ing of United States embassies in Nairobi, a court order based on a finding of probable Kenya and Dar es Salaam, Tanzania.24 On cause that a serious crime has been or is October 12, 2000, a suicide bomber about to be committed, and award of a war- rammed into the side of the Navy destroyer rant - in compliance with Fourth USS Cole, killing 17 and wounding 40.25 Amendment directives.28 Title III also And on September 11, 2001, terrorists requires a showing of necessity and mini- hijacked four planes, crashed one plane into mization. For example, law enforcement each tower of the World Trade Center, may not resort to electronic surveillance another into the Pentagon and the fourth, unless normal investigative procedures believed to be headed toward a target in the have either failed or are too dangerous.29 nation’s capital until passengers and its Additionally, surveillance must be con- crew diverted the plane, into a field in west- ducted in a timely manner so that intercep- ern Pennsylvania.26 Approximately 3,062 tions of communications, not otherwise people were killed in those attacks.27 These subject to surveillance, are minimized.30 In tragedies represent only a sample of the ter- emergency situations, however, where there rorist attacks which have plagued the past is immediate danger of death or serious decade alone and have had the greatest injury to any person, conspiratorial activi- affect on America. ties threatening the national security interest, or conspiratorial activities characteristic V. Pre-USA PATRIOT Act of organized crime, warrantless wiretapping Surveillance Law is permitted, so long as an application for a warrant is made within 48 hours of the com- A. Title III of the Omnibus Crime Control mencement of interception.31 and Safe Streets Act of 1968 (Title III) Congress repeatedly amended Title III to Title III was the legislative response to keep up with constant advances in technol- the Supreme Court’s decision in both ogy. In response to the increase use of com- Berger and Katz, where the Court laid out puters, e-mail, cellular telephones, internet constitutional standards for electronic sur- providers, and other forms of communica- veillance. In enacting Title III, Congress tion technology, Congress amended Title III sought to regulate the use of electronic sur- by passing the Electronic Communications veillance as an investigative tool and the Privacy Act of 1986 (ECPA). The ECPA disclosure of materials obtained through made Title III applicable to, inter alia, voice such surveillance. In enacting Title III, mail and e-mail messages.) Congress also sought to protect privacy by establishing a rigorous set of requirements B. Foreign Intelligence Surveillance Act of for how such surveillance could be con- 1978 (FISA) ducted. By incorporating the criteria set As Title III and ECPA authorizes elec- forth in Berger and Katz, Congress created tronic surveillance only in criminal cases,

23. CNN Interactive, Oklahoma City Tragedy: The 26. Office of International Information Programs, U.S. Bombing, at http://www.cnn.com/US/OKC/bombing.html Department of State, A Selected Chronology of Key Events, (last visited August 12, 2003). September 11, 2001 -Present at http://usinfo.state.gov/jour- 24. Office of International Information Programs, U.S. nals/itgic/0902/ijge/gjchron.htm (last visited August 12, Department of State, Fact Sheet: Terrorist Bombing of U.S. 2003). Embassy in Kenya at http://usinfo.state.gov/regional/af/secu- 27. Id. rity/a0081101.htm (last visited August 12, 2003). 28. 18 U.S.C. 2518(3)(a) (2000). 25. Wendi S. Ross, Ashcroft Announces Indictment of Two in 29. Id. at 2518 (3)(c). USS Cole Bombing, (last modified May 15, 2003) at 30. Id. at 2518 (5). http://usinfo.state.gov/topical/pol/terror/texts/03051502.htm 31. Id. at 2518(7). (last visited August 12, 2003). 6 Congress determined that similar legisla- FISA is that the officer is not seeking evi- tion authorizing electronic surveillance for dence of criminal activities on which to foreign intelligence gathering purposes was base a prosecution, but rather is seeking necessary as threats to national security information regarding foreign intelligence increased. FISA allows wiretapping of activities that may compromise national aliens and citizens of the United States security. when there is probable cause to believe that It is important to note that once the the target of the wiretap is a member of a Attorney General certifies the application foreign terrorist group or an agent of a for- of a federal officer, the surveillance request eign power. FISA seeks to deter espionage is “subjected to only minimal scrutiny by within the United States by a foreign gov- the courts.”35 In fact, on April 29, 2003, the ernment or component thereof, by any enti- Attorney General reported that 1,228 appli- ty that a foreign government acknowledges cations were made to the FISA court for it controls and directs, and by any group either electronic surveillance or physical engaged in international terrorism.32 searches during calender year 2002 and all FISA requires that a federal official, of these applications were ultimately with the approval of the Attorney General, approved.36 submit an application for electronic surveil- In emergency situations, FISA permits lance warrants to the Foreign Intelligence the Attorney General to authorize warrant- Surveillance Court (FISC). The application less searches for a 24-hour period when the must include: the identity of the target, the Attorney General certifies that an emer- information indicating probable cause to gency situation exists requiring immediate believe that the target is a “foreign power” surveillance. Furthermore, warrantless or an “agent of a foreign power,” evidence searches are allowable for periods of up to that the location indicated for surveillance one year when the Attorney General desig- is being used or is about to be used by the nates a situation an “emergency,” as long as target, the type of surveillance, proposed such surveillance is demonstrated, in writ- minimization procedures, and certification ing, to be solely directed at communication that the information sought is “foreign between or among foreign powers. Such intelligence information.”33 provisions raise another concern; namely, Such requirements do not rise to the that the Attorney General may declare any level of the Fourth Amendment’s probable situation an “emergency,” as the statute cause requirement in a criminal investiga- does not define what constitutes an emer- tion. Probable cause in a criminal investi- gency. gation exists “where facts and circum- Information obtained under FISA’s pro- stances within their [the officers’] knowl- visions could be disclosed for law enforce- edge... are sufficient in themselves to war- ment purposes if either the information was rant a man of reasonable caution in the to be used in a criminal proceeding and the belief that an offense has been or is being Attorney General had given advanced committed.”34 Congress’ justification for authorization, or if the government could the less stringent requirements found in establish that intelligence gathering had

32. 50 U.S.C. 1804, 1823 (2000). Standards for the Intelligence Community in Conducting 33. Id. at 1801(e). Electronic Surveillance (2001), at http://www.fas.org/irp/ 34. Brinegar v. United States, 338 U.S. 160, 175-76 (1949). nsa/standards.html (last visited August 13, 2003). However, when the subject is a U.S. person, a higher proba- 35. United States v. Duggan, 743 F.2d 59, 77 (2nd Cir. ble cause standard is imposed and the application must show 1984). that the acquisition of such information is necessary to 36. See Report from John Ashcroft, Attorney General, to L. national defense or security or the conduct of foreign affairs. Ralph Mecham, Director, Administrative Office of the In the case of a non-U.S. person, it is sufficient to show that United States Courts (Apr. 29, 2003). This disclosure was the information to be acquired is merely related to the made pursuant to 50 U.S.C. § 1807, which requires that such national defense or security or the conduct of foreign affairs. a report be provided in April of each year. Nat'l Security Agency, NSA Report to Congress: Legal 7 been the “primary purpose” of the surveil- B. Section 218: Elimination of the lance.37 Primary Purpose Standard of FISA Proceedings of the FISC are conducted Section 218 of the USA PATRIOT Act in secrecy due to national security concerns. relaxes FISA requirements permitting the Where the Attorney General files an affi- issuance of FISA warrants where foreign davit under oath that disclosure or an adver- intelligence is a “significant” - though not sary hearing would harm the national secu- necessarily the “primary” - purpose of an rity of the United States, 1806(b) of FISA investigation. By requiring that the primary provides for in camera, ex parte review of purpose of a wiretap or search was to obtain the application by the court. Unlike Title III foreign intelligence, FISA forbade the use which provides for disclosure of Title III of the surveillance authority in criminal applications made and orders granted upon cases without meeting the Fourth a showing of good cause by the target, FISA Amendment probable case standard. As the does not provide a similar privacy protec- Act does not provide a definition of “signif- tion to targets. This practically ensures that icant purpose,” it is unclear how far the intrusive wiretaps that do not uncover FISC will stretch its interpretation of this incriminating information, and thus do not phrase to accommodate law enforcement result in prosecutions, never will be made and intelligence agencies. known to the target. The modification has been criticized for making it easier for the government to cir- VI. Provisions of the USA PATRIOT Act cumvent what are supposed to be limita- Relating to Government Intrusions Into tions on permissible domestic surveillance. Privacy This potential end-run around Title III’s Fourth Amendment’s probable cause A. Definition of Domestic Terrorism requirement for criminal investigations Section 802 of the Act amends the crim- contradicts the rationale for permitting a inal code, 18 U.S.C. 2331, to add a new def- lower threshold for obtaining FISA wire- inition of “domestic terrorism” to include taps. The consequences of this amendment activities that: (A) involve acts dangerous to FISA may mean that surveillance author- to human life that are a violation of the ity for investigations seeking information criminal laws of the United States or of any primarily pertaining to purely domestic State; (B) appear to be intended (i) to intim- criminal activities will be granted without a idate or coerce a civilian population; (ii) to showing of probable cause that a serious influence the policy of a government by crime has been or will soon be committed. mass destruction, assassination, or kidnap- Courts, however, may limit the potential ping; or (iii) to effect the conduct of a gov- reach of Section 218. For example, the ernment by mass destruction, assassination, court in United States v. Troung Dinh Hung or kidnapping; and (C) occur primarily held that “once surveillance becomes pri- within the territorial jurisdiction of the marily a criminal investigation, the courts United States. Such extensions of the defi- are entirely competent to make the usual nition of terrorism threatens to transform probable cause determination, and because, conduct that was once thought of as free- importantly, individual privacy interests dom of expression or freedom of associa- come to the fore and government foreign tion designed to influence government pol- policy concerns recede when the govern- icy into a terrorist act. ment is primarily attempting to form the basis for a criminal prosecution.” While Section 218 may be vulnerable to 37. E.g., United States v. Pelton, 835 F.2d 1067, 1076 (4th constitutional challenge, it is still an expan- Cir. 1987); United States v. Cavanagh, 807 F.2d 787, 791 (9th Cir. 1987) (finding no merit to petitioner's contention sion of government intrusion into privacy, that he was entitled to suppression simply because evidence albeit in the interest of protecting national of his criminal conduct was discovered incidentally as the security. result of an intelligence surveillance). 8 C. Section 206: “Roving” Surveillance permits agencies to execute so-called Section 206 of the USA PATRIOT Act “sneak and peek” warrants without notify- extends Title III’s roving wiretap authority ing the target of the search until completion to intelligence wiretaps authorized under of the search. Usually notice is required FISA. The government now has the power when agents conduct a search, except in to intercept all of a suspect's wire or elec- very specific circumstances when authori- tronic communications relating to the con- ties must obtain judicial permission to delay duct under investigation, regardless of the notification. Section 213 allows law suspect's location when communicating. enforcement agents to delay notification in The result is that surveillance can follow a every criminal case.38 person, rather than requiring a separate The Supreme Court has held that a court order identifying each telephone com- search and seizure of a dwelling may be pany or other communication carrier whose constitutionally defective if police officers assistance is needed. enter without prior announcement. This Advances in technology certainly justify requirement is codified in the federal crim- modifying FISA to allow intelligence sur- inal procedure statutes and is referred to as veillance to meet the growing use of cellu- the “knock and announce” protocol. lar telephones, pages, e-mails and other Section 213 amends FISA by adding a new portable methods of communication so that subsection, 18 U.S.C. 3103a(b), which pro- surveillance may continue without disrup- vides that the requisite notice of the tion when, for instance, a suspect changes issuance of any warrant (under any provi- cell phone numbers. Section 206, however, sion of law) may be delayed if the court has does not extend Title III's “reasonably prox- reasonable cause to believe that the imme- imate” provision to FISA wiretaps. Such diate notification of execution of the war- provision requires law enforcement to rant will have an “adverse effect.” The war- demonstrate that the target actually uses the rant need only provide for giving notice device to be tapped. “within a reasonable period of its execu- The extension of roving wiretap author- tion,” and the period my be extended for ity to FISA without the “reasonably proxi- “good cause.” mate” provision of Title III raises the con- Moreover, while Section 213 stipulates cern that innocent individuals could have that warrants issued under the delayed their privacy invaded. Pursuant to a FISA notice provision prohibit seizure of tangible warrant, an agent can listen to a phone line property, communications, or electronic in an innocent person’s home for an entire data, such as e-mails or voice mails, this day, if the agent had information that the requirement may be waived if the court target was expected to visit that person at finds “reasonable necessity for the seizure.” some point during a given twenty-four hour The result of Section 213 is that individ- period. Even if it is clear that the target uals are not provided with notice of a search already had left the location, the surveil- and, therefore, have no opportunity to check lance can continue. Given the lower stan- if the warrant is valid or even accurate for dard of proof required to obtain a FISA war- that matter. Consequently, an individual rant in the first place, the potential for such may come home and find their personal an invasion into an innocent person’s priva- belongings missing and have no idea what cy seems all the more likely. happened to their things. Weeks or even This provision will sunset on December 31, 2005 providing an opportunity for 38. On July 22, 2003, the U.S. House of Representatives in debate on whether such surveillance should an overwhelming bipartisan effort agreed to an amendment continue or not. that would effectively prohibit any implementation of Section 213. The Otter Amendment, added to the Commerce, Justice and State Departments funding bill and D. Section 213: “Sneak and Peek” named after Rep. C.L. “Butch” Otter, an Idaho Republican, passed by a margin of 309 to 118, with 113 Republicans vot- Warrants ing in favor. The amendment still has to make it pass the Section 213 of the USA PATRIOT Act Senate and President Bush before it becomes law. 9 months later they may receive a letter in the tions in any investigations “to protect mail explaining that their home was against international terrorism or clandes- searched and property seized. The individ- tine intelligence activities,” provided that ual may then realize that the police had such investigation of a Unites States person someone else’s name matched with their is not conducted solely upon the basis of address. Another possibility, is that law activities protected by the First enforcement may be entering and searching Amendment. homes but not seizing anything, leaving no This expansion of the use of pen register indication that they were ever there in the and trap and trace devices raises privacy first place. concerns. The previous use of pen register If you think these changes will not affect and trap and trace devices to obtain tele- you because you’re not involved with ter- phone numbers did not reveal the content of rorist activity, you may be in for a big sur- any conversation occurring at those tele- prise and an empty house one day. This phone numbers. Because very little is delay notification is not limited to investi- revealed, the standard of proof required for gations of terrorist activity. In fact a this type of warrant is very low: “relevant delayed notice warrant can be justified by to an ongoing criminal investigation.” simply demonstrating that an individual is Internet service provider numbers, how- “seriously jeopardizing an investigation or ever, contain data that is far more revealing unduly delaying a trial.”39(e) otherwise seri- than telephone numbers. Through the use ously jeopardizing an investigation or of trap and trace devices, law enforcement unduly delaying a trial. What does that can determine which websites a person vis- mean? Who knows. its and view subject lines of e-mail communications, which is equivalent to obtaining E. Sections 214 and 216: FISA Pen content, while only having to demonstrate Register and “Trap and Trace” Orders the low standard of proof required under Section 214 expands the definition of FISA. pen register and trap and trace devices to Section 216 expands the range of FISA encompass communications from the pen register and trap and trace authority to Internet, including electronic mail and Web “anywhere in the United States.” Formerly, surfing. A pen register is a device that reg- the order was limited to the jurisdiction of isters and records all telephone or Internet the court to a particular communications service provider numbers dialed by a phone provider or location. Now, the order fol- for outgoing communications. A trap and lows the FBI and the suspect anywhere. trace device similarly registers numbers of Thus, law enforcement officers no longer telephones or Internet service provider have to seek orders from multiple courts in numbers dialing in. the course of a large-scale investigation. Previously, under FISA, law enforce- Like the roving surveillance powers, this ment was able to obtain a pen register or raises concerns relating to identification of trap and trace order requiring a telephone the party charged and the practical ability to company to reveal the numbers dialed to challenge the order. and from a particular telephone. Now, pursuant to Section 214, law enforcement can F. Section 215: Access to Business utilize pen register and trap and trace under Records FISA orders to obtain Internet communica- Section 215 expands the business records seizures available under a FISA 39. 18 U.S.C. 2705 (1995). The definition of “adverse order to allow law enforcement agents to result” is borrowed from another provision of the code compel the production of “any tangible which includes the following as “adverse results” justifying delayed notice: things” (i.e., books, computers, disks and (a) endangering the life or physical safety of an individual; records) sought for an investigation “to pro- (b) flight from prosecution; tect against international terrorism or clan- (c) destruction of or tampering with evidence; (d) intimidation of potential witness; or 10 destine intelligence activities.” The government need only specify that the records H. Section 358: Bank Secrecy Provisions sought contain foreign intelligence infor- and Activities of Unites States Intelligence mation not concerning a U.S. citizen or per- Agencies to Fight International Terrorism manent resident, or that the records are Section 358 amends the Right to Financial needed to protect against international ter- Privacy Act of 197841 to allow law enforce- rorism. In addition, the Act states that, “no ment authorities to obtain financial data person shall disclose to any other related to intelligence or counterintelli- person...that the Federal Bureau of gence activities, investigations, or analysis Investigation has sought or obtained tangi- in an effort to protect against international ble things under this section.” The exten- terrorism. Thus, financial analysis is now a sion of searches is not limited to foreign sufficient basis for federal authorities to powers and their agents and may include review citizen financial information. U.S. persons, as long as the investigation is Further, Section 358 allows government relevant to an investigation and “not con- investigators access to consumer records ducted solely upon the basis of activities without a court order. The records are to be protected by the First Amendment.” This provided in secret and without civil liabili- provision also will sunset on December 31, ty. 2005. VII. Provisions of the USA PATRIOT G. Section 507: Required Disclosure of Act Which Protect Privacy Educational Records Congress passed the Family Educational A. Section 212: Emergency Disclosure of Rights and Privacy Act (FERPA) in 1974 to Electronic Communications to Protect Life protect the privacy rights of students and and Limb their parents with respect to their education- Section 212 provides for voluntary and al records. The Act provides that no funds required disclosure of customer information will be made available to an educational from Internet Service Providers (ISPs) only institution that permits the release of educa- during emergencies. Section 212 permits tional records of its students (or personally ISPs to disclose the content of stored e-mail identifiable information beyond directory messages and other customer information information contained in a record) except to a governmental entity without first con- where the release is authorized b the student tacting the customer, if the provider “rea- or by statute.40 sonably believes that an emergency involv- Pre - Section 507, FERPA permitted dis- ing the immediate danger of death or seri- closure of educational records to law ous physical injury” justifies disclosure of enforcement pursuant to a subpoena, based the information42. Pursuant to Section 212, upon probable cause and a sworn affidavit ISPs can disclose information not only to demonstrating that the information sought governmental entities but to virtually “any- was probative of a criminal investigation. one” incident to the emergency. Section 507 amended FERPA to require Pursuant to Section 212, an owner or automatic disclosure of such records to fed- operator of a computer network may now eral law enforcement upon an ex parte court authorize law enforcement to intercept a order based only upon certification that the computer trespasser’s wire or electronic educational records may be relevant to an communication on the network where the investigation of domestic or international communications will be relevant to an terrorism. investigation and the interception does not acquire communications other than those

40. Family Educational Rights and Privacy Act, 20 U.S.C. 41. 12 U.S.C.S. 3412 (1978) § 1232g (2000). 42. In the case of records revealing cable subscriber selection of video programming from a cable operator, the ISP must first contact the customer. 11 transmitted to or from the computer tres- D. Section 362: Establishment of Highly passer. Thus, companies, universities, or Secure Network other computer system operators can now Section 362 directs Treasury to establish obtain assistance from law enforcement within its Financial Crimes Enforcement authorities when they come under attack Network a highly secure electronic network from trespassing hackers. This eliminates through which reports - including the need for law enforcement to first obtain Suspicious Activity Reports (SARs) - may a court order before performing the surveil- be filed and information regarding suspi- lance activities now authorized under this cious activities warranting immediate provision. scrutiny may be provided to financial insti- Providers complying with a government tutions. order in good faith are immune from liability to third parties. Providers who turn over VIII. Judicial Treatment of the USA records or communications voluntarily PATRIOT Act under Section 212, though not expressly immunized from third-party liability in the In Global Relief Foundation, Inc. v. Paul USA PATRIOT Act, should enjoy such H. O'Neill, et al, 207 F. Supp. 2d. 779 (N.D. immunity under the Electronic Ill. 2002), the Global Relief, an Islamic Communications Privacy Act. charitable organization, challenged the con- This amendment will sunset on stitutionality of a search performed by the December 31, 2005. FBI of Global Rights headquarters and the home of its president. The Court reviewed B. Section 223: Civil Liability for Certain the materials seized in camera and ex parte, Unauthorized Disclosures and affirmed the constitutionality of the Section 223 allows court action against search. The Court expressed considerable government agents who violate prohibitions deference to judicial intervention in the against the unauthorized release of informa- conduct of foreign policy by the Executive tion that the government obtains through Branch. The Court found probable cause surveillance and increases the ability of the and proper compliance by the government government to discipline employees who with FISA. The Court held that the USA commit such violations. This section fur- PATRIOT Act had expanded the ther calls upon the Inspector General of the International Emergency Economic Powers Department of Justice to review informa- Act so that the President could block the tion and receive complaints alleging abuse exercise of property rights during an inves- of civil rights and civil liberties by employ- tigation with respect to “any property in ees and officials of the Department of which any foreign country or a national Justice. thereof has any interest by any person . . . subject to the jurisdiction of the United C. Section 326: Verification of States.”43 Two of Global Relief’s three Identification directors were foreign nationals, and the Section 326 requires financial institu- Court upheld the blocking order in issue tions to adopt procedures for verifying the with respect to domestic assets of Global identity of new customers. Section 326 Relief. requires the Treasury to issue regulations The Court held that Global Relief did for financial institutions setting forth mini- not have a likelihood of success on the mer- mum standards for customer identification its with respect to constitutional challenges when opening an account. The regulations to the USA PATRIOTAct based on theories require verification of customer identifica- that it violated the Bill of Attainder clause, tion, maintenance of records of verification, the Ex Post Facto clause, the Takings clause and comparison of identification with government lists of known or suspected terror- 43. 207 F. Supp. 2d at 793. ists. 12 of the Fifth Amendment, the Due Process decisive: “rights” are regularly limited or clause of the Fifth Amendment, violation of defeated by privileges, immunities, and the Fourth, Fifth and Sixth Amendments, other defenses of many kinds. . . . In truth, and that it was unconstitutionally vague. all rights are limited by countervailing con- In United States v. Richard C. Reid, 206 cerns and interests. The distinction that calls some of these limitations ones on F. Supp. 2d 132 (D. Mass. 2002), Reid “remedy” is largely a verbal convenience.47 moved to dismiss one count of a multiple count indictment against him for an alleged In Center for National Security Studies attempt to explode a shoe bomb on a plane v. Department of Justice,48 the court set the on grounds that §801 of the USA PATRIOT stage for a revision of an existing consent Act44 did not apply to airplanes. The sec- decree concerning NYPD investigative tion applied to mass transportation vehicles. activities which would expand the abilities The Court held that airplanes were involved of the NYPD in investigative and intelli- in mass transportation, but held that an air- gence activities. The court noted that the plane was not a “vehicle” for the purposes USA PATRIOT Act had “recognized the of that section. The Court noted that Reid important intelligence gathering informa- was facing charges under other Federal tion at the grass roots level . . .”49 laws which specifically applied to air- At this time, the courts have revealed planes. that they will give substantial deference to In American Civil Liberties Union v. executive decisions made pursuant to the U.S. Department of Justice, 265 F. Supp. 2d USA PATRIOT Act, that they will reject a 20 (DDC 2003), the ACLU sought informa- broad scope of constitutional arguments tion from the government concerning the aimed at the USA PATRIOT Act, that they number of times the Department of Justice will seek a constitutional reading of the used the surveillance and investigatory USA PATRIOT Act, that they will provide tools authorized by the USA PATRIOTAct. very substantial protection to the release of The Court granted summary judgment to information concerning the activities of the the government, holding that it had sus- government pursuant to the USA PATRIOT tained its burden of establishing that the Act for which the government seeks protec- information sought was properly within the tion, and that those who provide informa- national security exemption to the Freedom tion concerning possible illegal activities to of Information Act. the government will receive very substan- In Stoutt v. Rancal International, Inc.,45 tial protection from civil liability. the Plaintiffs brought claims for malicious prosecution, unlawful arrest and incarcera- IX. Conclusion tion, and defamation arising out of a report of suspected illegal activity. Summary Has the USA PATRIOT Act struck the right judgment entered in favor of the bank balance between the security of the People which had reported possibly illegal check and the liberty of the People? Do we sim- kiting activities. The bank was immune ply not know whether an arguably unneces- from liability to the Plaintiffs on the basis of sary intrusion upon individual liberties has the safe harbor provisions of the Wiley occurred due to government secrecy? The Anti-Money Laundering Act46, as amended bottom line is that we the People will need by the USA PATRIOT Act. The court to trust the institutions which have served as observed: so well throughout the existence of the Assuredly, under the safe harbor provision, Republic, especially our independent judi- careless or malicious reporting is possible. ciary, and a vigorous and ongoing public Thus, the statute, whether read broadly or narrowly, means that some “wrongs” will go debate concerning the balance struck by the unredressed. But this is neither novel nor USA PATRIOT Act.

44. 18 USC §1993. 47. 320 F. 3d at 33. 45. 320 F.3d 26 (1st Cir. 2003). 48. 331 F.3d 918 (D.C. Cir. 2003). 46. 31 U.S.C. §5318. 49 277 F. Supp. 2d at 341. 13 The Privacy Project II Consumer Privacy and Preemption: An Overview of Gramm-Leach-Bliley, The Fair Credit Reporting Act and Proposed 2003 Legislative Amendments

By Virginia N. Roddy IADC member Virginia N. Roddy is a founding partner of the firm Preaus, Roddy I. Introduction & Associates, LLP in New Orleans. Since The Gramm-Leach-Bliley Act1 (GLBA) her admission to the bar in 1979, she has sets minimum standards for protecting the practiced primarily in the areas of life, privacy of consumers’ personal financial health and disability insurance defense lit- information.2 The Fair Credit Reporting igation. Beginning in the early 1980s, she Act3 (FCRA) protects consumers from developed experience as trial and appel- inaccurate and inappropriate disclosure of late counsel in handling cases involving their personal information by consumer claims for benefits under plans governed 4 by the Employee Retirement Income reporting agencies (CRA), and governs the Security Act. disclosure of consumer reports.5 Together, GLBA and FCRA contain the most compre- 6 hensive privacy policies ever enacted. On July 24, 2003, the House Committee on Financial Services overwhelmingly 1. Gramm-Leach-Bliley Financial Modernization Act of 1999, Pub. L. No. 106-102, 113 Stat. 1338 (1999) (codified passed H.R. 2622, characterized as “land- in scattered sections of 12 U.S.C. and 15 U.S.C.) (enacted mark bipartisan legislation,” to provide Nov. 12, 1999) (hereinafter GLBA). 2. The privacy provisions of GLBA are set forth in Subtitle consumers with greater identity theft pro- A of Title V; Pub. L. No. 106-102, §§ 501-510, 15 U.S.C. §§ tection and to amend section 624 of FCRA 6801-6809 (2000). to remove the January 1, 2004 sunset of the 3. In 1970, Congress amended the Consumer Credit Protection Act, 15 U.S.C. § 1601 et seq., by adding a num- uniform national consumer protection stan- ber of provisions collectively known as the Fair Credit dards and make them permanent.7 The bill Reporting Act (FCRA). Fair Credit Reporting Act, Pub. L. was placed on the House Calendar for con- No. 91-508, Title VI, 84 Stat. 1127 (1970) (codified in 15 U.S.C. § 1681, et seq.) (enacted Oct. 26, 1970). 4. The term “consumer reporting agency” is defined as: privacy. . . . [T]he Act seeks to accomplish those goals by [A]ny person which, for monetary fees, dues, or on a coop- requiring credit reporting agencies to maintain ‘reasonable erative nonprofit basis, regularly engages in whole or in part procedures’ designed ‘to assure maximum possible accura- in the practice of assembling or evaluating consumer credit cy of the information’ contained in credit reports, and to information or other information on consumers for the pur- ‘limit the furnishing of [such reports] to’ certain statutorily pose of furnishing consumer reports to third parties, and enumerated purposes. The Act creates a private right of which uses any means or facility of interstate commerce for action allowing injured consumers to recover ‘any actual the purpose of preparing or furnishing consumer reports. damages’ caused by negligent violations and both actual 15 U.S.C. § 1681a(f). and punitive damages for willful noncompliance. 5. See 15 U.S.C. § 1681b. “Consumer reports” are defined TRW, Inc. v. Andrews, 534 U.S. 19, 23 (2001); see also as: [A]ny written, oral, or other communication of any infor- Stafford v. Cross County Bank, 2003 WL 21058173 (W.D. mation by a consumer reporting agency bearing on a con- Ky. May 8, 2003). sumer’s credit worthiness, credit standing, credit capacity, 6. See 145 Cong. Rec. H11, 539-40, 544 (daily ed. Nov. 4, character, general reputation, personal characteristics, or 1999). See also An Examination of Existing Federal mode of living in establishing the consumer’s eligibility for Statutes Addressing Information Privacy: Hearing Before - (A) credit or insurance to be used primarily for personal, the Subcomm. on Commerce, Trade, and Consumer family or household purposes; Protection of the House Comm. on Energy and Commerce, . . . 107th Cong. 20-22 (April 3, 2001), Serial No. 107-22 (state- Id. at § 1681a(d)(1)(A) (emphasis added). A central purpose ment of L. Richard Fischer, Partner, Morrison and Foerster). of FCRA is to ensure the “confidentiality, accuracy, relevan- 7. House Committee on Financial Services [Committee cy, and proper utilization of [consumers’ credit informa- News], Committee Approves Landmark Identity Theft tion].” Id. at § 1681. Consumers may bring suit for either Legislation 61-3 (July 24, 2003), http://financialservices. willful or negligent violations of FCRA’s requirements. See house.gov/News.asp?FormMode=release&ID=380 (last vis- id. at §§ 1681n, 1681o (1994 ed.) ited August 22, 2003); see also 15 U.S.C. § Congress enacted the FCRA in 1970 to promote efficiency 1681t(3)(d)(2)(A); H.R. 2622, 108th Cong. (2003); H.R. in the Nation’s banking system and to protect consumer Rep. No. 108-263 (2003). See infra Part IV.1. 14 sideration8 and, on September 10, 2003, it pose of GLBA is “to enhance competition passed the House by a vote of 392-30.9 On in the financial services industry by provid- September 11, 2003, the bill was referred to ing a prudential framework for the affilia- the Senate Committee on Banking, Housing tion of banks, securities firms, insurance and Urban Affairs.10 companies, and other financial service Legislation has also been introduced to providers . . . .”15 Insurance companies, amend GLBA by providing stricter privacy securities firms and banks may now protections and requiring affirmative con- acquire, affiliate with, or engage in any sent from consumers before their informa- activities that are “financial in nature,” tion is disclosed (opt-in versus the current including “insuring, guaranteeing, or opt-out provisions).11 Competing legislation indemnifying against loss, harm, damage, seeks to retain the current opt-out provi- illness, disability, or death, or providing and sions and amend GLBA by making the pri- issuing annuities, and acting as principal, vacy provisions preemptive.12 Unlike agent or broker for purposes of the forego- FCRA, GLBA does not preempt the states ing in any State.”16 from enacting more stringent privacy regu- Recognizing the concerns of consumers lations.13 regarding the dissemination of private financial information, Congress enacted II. Overview of Title V of Gramm- Title V.17 Entitled “Privacy,” Title V protects Leach-Bliley: the Privacy Provision consumers18 and customers19 from certain disclosures of nonpublic personal informa- GLBA repealed the Glass-Steagall Act, tion20 by financial institutions and requires thereby eliminating the long-standing prohibition against cross-ownership and affili- and continuing obligation to respect the privacy of its cus- ation among banks, security brokerage tomers and to protect the security and confidentiality of firms, and insurance companies.14 The pur- those customers’ nonpublic personal information.” 15 U.S.C. § 6801. For a discussion of the legislative history of 8. See House Calendar, 108th Cong. (Sept. 9, 2003), avail- GLBA and issues relating to whether promulgation of regu- able at http://frwebgate. access.gpo.gov/cgi-bin/getdoc.cgi lations under GLBA contravened the plain meaning of ?dbname=house_calendar&docid=f:hc03.pdf (last visited GLBA and violated credit reporting agencies’ rights to equal September 10, 2003); see also Office of the Clerk, U.S. protection, due process and free speech under the First House of Representatives, Current House Floor Proceedings, Amendment, see Individual Reference Services Group v. at http://clerk.house.gov/floorsummary/floor.php3 (last visit- Federal Trade Commission, 145 F.Supp.2d 6 (D.D.C. 2001); ed September 10, 2003). The status of the bill can be Trans Union LLC v. Federal Trade Commission, 295 F.3d reviewed at http://thomas.loc.gov/cgi-bin/ bdquery 42 (D.C. Cir. 2002). /z?d108:h.r.02622. See also H.R. Rep. No. 108-263 (2003). 18. “Consumer” is defined as “an individual who obtains, 9. See Office of the Clerk, U.S. House of Representatives, from a financial institution, financial products or services Current House Floor Proceedings, at http://clerk.house.gov/ which are to be used primarily for personal, family or house- floorsummary/floor.php3 (last visited September 10, 2003). hold purposes[.]” 15 U.S.C. § 6809(9). 10. See http://thomas.loc.gov/cgi-bin/ bdquery/z?d108: 19. A “customer” is a consumer with whom a “customer h.r.02622. relationship” has been established with a financial institu- 11. See infra Part IV. tion. 15 U.S.C. § 6809(11); see also 15 U.S.C. § 6803(a). 12. See id.; see also H.R. 1766, 108th Cong. (2003); infra Under GLBA, both consumers and customers are given opt- Part IV.2. out rights. See 15 U.S.C. § 6802. 13. See 15 U.S.C. § 6807; infra Part II. 20. The term ‘nonpublic personal information’ means per- 14. See 12 U.S.C. § 377(a); Pub. L. No. 106-102, Title I, § sonally identifiable financial information - 101. (i) provided by a consumer to a financial institution; 15. H.R. Conf. Rep. No. 106-434, at 245 (1999), reprinted (ii) resulting from any transaction with the consumer or in 1999 U.S.C.C.A.N. 245, 245. any service performed for the consumer; or 16. 15 U.S.C. § 6809(3)(A); 12 U.S.C. § 1843(k)(4)(B), (iii) otherwise obtained by the financial institution. Pub. L. No. 106-102, Title I, § 103. Therefore, under GLBA, (B) Such term does not include publicly available informa- insurance companies qualify as financial institutions. See id.; tion, as such term is defined by the regulations prescribed see also infra notes 43-44 and accompanying text. under section 6804 of this title. 17. See H.R. Rep. 106-74, pt.3, at 106-07 (1999) (“As a (C) Notwithstanding subparagraph (B), such term - result of the explosion of information available via electronic (i) shall include any list, description, or other grouping of services such as the Internet, as well as the expansion of consumers (and publicly available information pertaining financial institutions through affiliations and other means as to them) that is derived using any nonpublic personal infor- they seek to provide more and better products to consumers, mation other than publicly available information; but the privacy of data about personal financial information has (ii) shall not include any list, description, or other grouping become an increasingly significant concern of consumers.”) of consumers (and publicly available information pertain- Title V of GLBA includes the statement that, “It is the policy ing to them) that is derived without using any nonpublic of Congress that each financial institution has an affirmative personal information. 15 U.S.C. § 6809(4)(A)(B)(C). 15 financial institutions21 to protect the privacy to any nonaffiliated third party for use in of consumers by: telemarketing, direct mail marketing, or developing, creating and maintain- other marketing through electronic mail to ing privacy policies and disclosing these the consumer.”29 privacy policies to its customers and There are a number of statutory excep- consumers22 tions under Title V, which permit disclosure giving customers and consumers, in of a consumer’s nonpublic personal infor- certain circumstances, the right to opt- mation in certain circumstances.30 These out of information sharing with nonaffil- include disclosures as necessary to handle a iated third parties before their nonpublic transaction, service, or financial product personal information is disclosed23 requested by the consumer, maintaining or servicing the consumer’s account, and dis- Under Title V, privacy notices must be closures that are with the consent or at the given to customers at the inception of the direction of the consumer.31 Furthermore, customer relationship with the financial disclosures may be made to protect the con- institution and not less than annually there- fidentiality and security of the financial after.24 The privacy notices inform cus- institutions’ records pertaining to the con- tomers of the financial institutions’ privacy sumer, to protect against fraud, to consumer policies, including how and where the insti- reporting agencies, in connection with the tution obtains private customer information, sale, merger, or transfer of business, to how this information can be used and to comply with subpoena or summons by a whom it may be disclosed.25 federal, state, or administrative authority, to The “opt-out” provision contained in comply with federal, state, or local rules, or Title V is limited, in that GLBA only allows to the extent otherwise specifically permit- a consumer to opt-out of the disclosure of ted by law.32 his nonpublic personal information to non- Enforcement of GLBA is by the regula- affiliated third parties with whom the insti- tory agency or authority with jurisdiction tution does not have a joint marketing over the financial institution.33 Title V agreement.26 GLBA does not permit a con- specifically designates the Department of sumer to opt-out of information sharing Insurance as the agency to establish the among affiliated companies27 or among appropriate standards covering any person nonaffiliated third parties who have a “joint engaged in providing insurance under state marketing” arrangement.28 However, a law. It states: “This subtitle and the regula- financial institution “shall not disclose, tions prescribed thereunder shall be other than to a consumer reporting agency,” enforced by the Federal functional regula- a consumer’s account number or other sim- tors, the State insurance authorities, and the ilar access code “for a credit card account, Federal Trade Commission with respect to deposit account, or transaction account . . . financial institutions and other persons sub-

21. “Financial institutions” are defined as “any institution third party for the purposes of “perform[ing] services for or the business of which is engaging in financial activities functions on behalf of the financial institution, including described in section 4(k) of the Bank Holding Act of 1956.” marketing of the financial institution’s own products or serv- 15 U.S.C. § 6809(3)(A); see supra note 16 and accompany- ices,” if the financial institution fully discloses the providing ing text. of such information and the third party enters into an agree- 22. See 15 U.S.C. § 6803. ment to maintain the confidentiality of the information. Id. 23. See id. at § 6802. A nonaffiliated third party who receives nonpublic personal 24. See id. at § 6803(a). Privacy notices must be given to information may not disclose it to any other nonaffiliated consumers at the time of their transaction with the financial third party, unless disclosure would be lawful if made direct- institution. See id. at § 6802(a). ly by the financial institution to the other person. See id. at 25. See id. at § 6803(b). (c). 26. Id. at § 6802(b)(1). 29. Id. at § 6802(d). 27. See id. at § 6802. “Affiliate” means any company that 30. See id. at § 6802(e). controls, is controlled by, or is under common control with 31. See id. at (e)(i)(2). another company. Id. at § 6809(6). 32. See id. at (e)(3)-(8). 28. 15 U.S.C. § 6802(b)(2). A financial institution may 33. See 15 U.S.C. § 6805; see also 15 U.S.C. § 6801(b). disclose nonpublic personal information to a nonaffiliated 16 ject to their jurisdiction under applicable including the prohibition of state laws that law.”34 Under state insurance law, enforce- regulate the sharing of consumer informa- ment of GLBA is by the applicable state tion among affiliates.42 insurance authority.35 The regulators are FCRA allows a consumer reporting also responsible for establishing “appropri- agency to furnish a consumer credit report ate standards for the financial institutions “[t]o a person which it has reason to believe ...relating to administrative, technical, and . . . intends to use the information in con- physical safeguards:” nection with the underwriting of insurance (1) to ensure the security and confiden- involving the consumer.”43 Insurance com- tiality of customer records and information; panies may therefore be held liable under (2) to protect against any anticipated FCRA if they fail to insure the “confiden- threats or hazards to the security or integri- tiality, accuracy, relevancy, and proper uti- ty of such records; and lization” of a consumer’s credit informa- (3) to protect against unauthorized tion.44 access to or use of such records or informa- The Federal Trade Commission (FTC), tion which could result in substantial harm as the agency authorized with administering or inconvenience to any customer.36 the FCRA,45 has defined “underwriting of GLBA does not grant an express private insurance” as follows: “An insurer may right of action to enforce its provisions or to obtain a consumer report to decide whether seek redress for violations of the Act.37 or not to issue a policy to the consumer, the Some courts, however, have found that an amount and terms of the coverage, the dura- implied private right of action exists.38 tion of the policy, the rates or fees charged, As noted earlier, unlike FCRA, GLBA or whether or not to renew or cancel a poli- does not preempt state laws, except to the cy, because these are all ‘underwriting’ extent that the state law is inconsistent with decisions.”46 a provision of Title V, and then only to the extent of the inconsistency.39 However, “a IV. Proposed Legislation Amending State statute, regulation, order or interpreta- FCRA and GLBA tion is not inconsistent with the provisions of [Title V] if the protection such statute, A number of bills were introduced dur- regulation, order or interpretation affords ing the 2003 legislative session to amend any person is greater than the protection FCRA and GLBA. Among them are the provided under [Title V].”40 following:

III. The FCRA 1. Fair and Accurate Credit Transactions Act (FACT) FCRA excludes from the definition of As mentioned above, on September 10, “consumer reports” consumer information 2003, the House passed legislation that that is shared by corporate affiliates.41 It would make permanent certain preemption also contains certain preemption provisions, provisions of FCRA.47 H.R. 2622, known

34. 15 U.S.C. § 6805(a). GLBA expressly states that the 44. See St. Paul Guardian Ins. Co. v. Johnson, 884 F.2d McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015, “remains 881, 883 (5th Cir. 1989). the law of the United States.” 15 U.S.C. § 6701(a). The 45. See 15 U.S.C. § 1681s(a). McCarran-Ferguson Act ensures that the states bear the pri- 46. FTC Commentary on the Fair Credit Reporting Act, 16 mary responsibility of regulating insurance. See 15 U.S.C. C.F.R. pt. 600, App. See also Scharpf v. AIG Marketing, § 1012. Inc., 242 F.Supp.2d 455, 462 (W.D. Ky. 2003) (“In effect, 35. See 15 U.S.C. § 6805(a)(6). the FCRA created a fair mechanism through which creditors 36. Id. at § 6801(b). and insurers could obtain a consumer’s report in order to 37. See 15 U.S.C. § 6801, et seq. make an offer [of credit or insurance] and evaluate credit- 38. See infra Part VI. worthiness”). 39. See 15 U.S.C. § 6807(a) 47. H.R. 2622, 108th Cong. (2003) (Sponsored by House 40. Id. at § 6807(b) (emphasis added). Financial Institutions Subcommittee Chairman Spencer 41. 15 U.S.C. § 1681a(d)2)(A)(ii). Bachus (R-AL)). See supra notes 7-9 and accompanying 42. See id. at § 1681t(2); see supra note 5. text. If signed into law, the preemption provisions of FCRA 43. Id. at § 1681b(a)(3)(C). will become permanent. See H.R. 2622, at Title I, § 101. 17 as the Fair and Accurate Credit by establishing a private right of action to Transactions Act (FACT) also includes a enforce “any liability created under this number of provisions relating to identify title.”53 theft and fraud, improving the accuracy of consumer credit information, and granting 4. Privacy Act of 2003 consumers the right to request one free On March 31, 2003, Senator Diane credit report each year.48 Under FACT, Feinstein (D-CA) introduced the Privacy CRAs would be required to place a “fraud Act of 2003, which amends GLBA by pro- alert” in a consumer’s file if the consumer hibiting the disclosure of personal financial believes that he is, or is about to become, a information by commercial entities to non- victim of identity theft.49 affiliated third parties unless the consumer first consents, or opts-in, to the disclosure.54 2. National Uniform Privacy Standards It also prohibits entities from sharing infor- Act of 2003 mation among affiliates and nonaffiliated Introduced on April 11, 2003 by Rep. third parties under a joint marketing agree- Patrick J. Tiberi (R-OH), the National ment unless consumers are first given a Uniform Privacy Standards Act of 2003 right to opt-out of such disclosures.55 makes permanent the preemption provi- Additional prohibitions exist for the disclo- sions of FCRA and amends GLBA by pre- sure of social security numbers, drivers empting states from enacting any require- license data, and health information.56 ment or prohibition with respect to any subject matter regulated by GLBA.50 The bill 5. Privacy Protection Clarification Act - establishes a uniform national privacy stan- Exempting Lawyers from the Disclosure dard for financial institutions by prohibiting Requirements of GLBA states from enacting “opt-in” privacy On February 13, 2003, Rep. Judy requirements or more strict privacy laws Biggert (R-IL) introduced the Privacy than those currently under FCRA and Protection Clarification Act to exempt GLBA.51 lawyers from the privacy provisions of GLBA.57 Financial institutions must com- 3. Identity Theft Consumer Notification Act ply with the privacy, disclosure and notice The Identity Theft Consumer provisions of GLBA.58 Under the bill, an Notification Act, introduced by Rep. Gerald amendment to GLBA explicitly excludes D. Kleczka (D-WI) on February 13, 2003, lawyers from the definition of “financial amends GLBA by requiring financial insti- institution,” which currently contains no tutions to notify consumers if their private reference to law firms or lawyers.59 financial information has been compro- Concerned that attorneys might be con- mised and to reimburse consumers for any sidered by the FTC as “financial institu- resulting damages.52 It also amends FCRA

48. See id. at Title II, IV, V. Institutions and Consumer Credit on February 27, 2003. See 49. Id. at Title II, § 202. A “fraud alert” is a “clear and con- http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.00818: spicuous statement in the file of a consumer that notifies all (last visited September 10, 2003). prospective users of a credit report . . . that the consumer 54. S. 745, 108th Cong. (2003), Title III, § 302. does not authorize the issuance or extension of credit in the 55. See id. name of the consumer.” Id. Unless it receives express per- 56. See S. 745, Title II, IV, V. S. 745 was referred to the mission from the consumer, an issuer or extender of credit Senate Committee on the Judiciary March 21, 2003. No cannot issue or extend credit in the name of the consumer. action has been taken since that date. See See id. Additionally, CRAs must notify each person who http://thomas.loc.gov/ cgi-bin/bdquery/z?d108:s.0745: (last procures a credit report of the fraud alert. See id. visited September 10, 2003). 50. H.R. 1766, 108th Cong. (2003), § 3. 57. H.R. 781, 108th Cong. (2003). 51. See H.R. 1766. No action has been taken on H.R. 1766 58. See 15 U.S.C. § 6801, et seq. since it was referred to the House Subcommittee on 59. See 15 U.S.C. 6809(3); H.R. 781. No action has been Financial Institutions and Consumer Credit on April 29, taken on H.R. 781 since it was referred to the House 2003. See http://thomas.loc.gov/cgi-bin/bdquery/z?d108: Subcommittee on Financial Institutions and Consumer h.r.01766: (last visited September 10, 2003). Credit on March 10, 2003. See http://thomas.loc.gov/cgi- 52. H.R. 818, 108th Cong. (2003). bin/bdquery/z?d108:h.r.00781: (last visited September 10, 53. Id. No action has been taken on H.R. 818 since it was 2003). referred to the House Subcommittee on Financial 18 tions” and thereby subject to GLBA’s dis- V. The National Association of closure requirements,60 the American Bar Insurance Commissioners (NAIC) Rules Association (ABA) and the New York State and Regulations and State Laws Bar Association (NYSBA), in separate Implementing GLBA suits, brought actions against the FTC, seeking a ruling that lawyers are not finan- Since the 1980s, the National cial institutions and therefore exempt from Association of Insurance Commissioners the privacy provisions of GLBA.61 The FTC (NAIC) has adopted model acts and regula- filed motions to dismiss both actions, which tions concerning the privacy of insurance were heard by Judge Reggie Walton of the consumer’s personal information, including United States District Court, District of the Insurance Information and Privacy Columbia.62 Protection Model Act of 1982 (“1982 On August 11, 2003, in denying the Model Act”),66 the Privacy of Consumer FTC’s motions to dismiss, Judge Walton Financial and Health Information Model issued a preliminary ruling that the FTC Regulation of 2000 (“2000 Model may have acted beyond its authority and Regulation”),67 and Standards for engaged in “arbitrary and capricious” con- Safeguarding Customer Information Model duct when it determined that lawyers were Regulation in April 2002 (“Safeguarding covered by the privacy notification provi- Standards”).68 sions of GLBA.63 Judge Walton stated, “It All 50 states and the District of does not appear that Congress intended for Columbia have taken steps to put privacy the privacy provisions of the GLBA to protections in place by either adopting new apply to attorneys.”64 The case will likely laws or amending existing laws to comply proceed on summary judgment.65 with GLBA standards.69 Fourteen states

60. GLBA requires certain federal agencies, including the 64. Id. at *11, 30. Stating that attorneys were not “finan- FTC, to issue final rules necessary to carry out the purposes cial institutions,” Judge Walton also noted that state law reg- of Subtitle A of Title V. See 15 U.S.C. § 6804(a)(1). On ulates lawyers and the practice of law, not the federal gov- May 24, 2000, the FTC issued a Final Rule, which did not ernment. Id. at *6, 12, 14. specifically exempt lawyers from the privacy provisions of 65. See id. at *30, n.26. GLBA. See 16 C.F.R. § 313.18; see also Center for 66. Insurance Information and Privacy Protection Model Regulatory Effectiveness, FTC Determines Attorneys to be Act, Model Laws, Regulations and Guidelines, NAIC Subject to Notice Requirements of Gramm-Leach-Bliley Act Model V-670, available at http://www.naic.org/library/ ref- (reprinting letter from the Boston Bar Association to the erence/subjects/privacy.htm (last visited August 25, 2003). FTC (Feb. 23, 2001), available at http://www.thecre.com/ 67. Privacy of Consumer Financial and Health emerging/) (“The Federal Trade Commission (FTC) has Information Regulation, Model Laws, Regulations and determined that law firms must comply with the notice pro- Guidelines, NAIC Model IV-672, available at visions included in the 1999 Gramm-Leach-Bliley financial http://www.naic.org/ library/reference/subjects/privacy.htm modernization legislation. According to the FTC, attorneys (last visited August 25, 2003). may provide “financial services” under the Act, thereby trig- 68. Standards for Safeguarding Consumer Information gering the notice provisions related to the privacy of con- Model Regulation, Model Laws, Regulations and sumer financial information.”) Guidelines, NAIC Model IV-673, available at 61. New York State Bar Ass’n v. Federal Trade Comm’n, http://www.naic.org/library /reference/subjects/privacy.htm 2003 WL 21919841 (D.D.C. Aug. 11, 2003). More than a (last visited August 25, 2003). dozen state bar associations and the Conference of Chief 69. See RICHARD J. HILLMAN, FINANCIAL PRIVA- Justices filed amicus briefs siding with the ABA and CY: STATUS OF STATE ACTIONS ON GRAMM- NYSBA. See id. at *30, n.8. The suits filed by the NYSBA LEACH-BLILEY ACT’S PRIVACY PROVISIONS, Gen. and the ABA were consolidated. Accounting Office 02-361, p. 6 (April 12, 2002). 62. New York State Bar Ass’n v. Federal Trade Comm’n, Some municipal governments have also adopted ordi- 2003 WL 21919841. In a letter dated June 30, 2003, coun- nances or regulations to provide greater consumer protection sel for the FTC informed counsel for the ABA and NYSBA than that afforded under GLBA. For example, the San that the FTC does “not intend to bring any enforcement Francisco Financial Information Privacy Ordinance, effec- actions under [GLBA provisions 15 U.S.C. §§ 6801-6809] tive January 21, 2004, requires financial institutions to first against lawyers for any action or inaction by lawyers in the obtain the consent of San Francisco customers before the period of time prior to the Court’s rulings on the FTC’s disclosure or sharing of private information to affiliates or motions to dismiss [the cases brought by ABA and nonaffiliated third parties. San Francisco, Cal., Financial NYSBA].” Id. at *30, n.1.; see also Letter from William E. Information Privacy Ordinance 237-02, § 2004 (Dec. 20, Kovacie, General Counsel, Federal Trade Commission, to 2002), available at http://www.amlegal.com/nxt/ David L. Roll, Esq., counsel for the American Bar gateway.dll?f=templates&fn=default.htm&vid=alp:sf_busi- Association, and Warren L. Dennis, Esq., counsel for the ness (last visited August 25, 2003). The ordinance New York State Bar Association (June 30, 2003), available “afford[s] consumers greater privacy protection than that at http://www.abanet.org/poladv/glbfactsheet/ amnestylet- provided in [Gramm-Leach-Bliley].” Id. at § 2001(b). It ter.pdf. also imposes penalties for the negligent and wilful disclo- 63. See id. at *24-25, 30. sure of confidential consumer information in violation of the 19 have laws based on the 1982 Model Act70 financial institutions covered by the rule.75 and 35 states plus the District of Columbia In Conboy v. AT & T Corp.,76 a con- have issued regulations based on the 2000 sumer brought suit against AT & T for vio- Model Regulation.71 NAIC members adopt- lations of the Fair Debt Collection Practices ed the 2000 Model Regulation “to facilitate Act and Telecommunications Act.77 The a uniform state approach to implementing Second Circuit Court of Appeals agreed the disclosure-related requirements of with the district court in its ruling that the Subtitle A [of Title V of GLBA].”72 The Telecommunications Act did not explicitly Safeguarding Standards, which were estab- or implicitly provide for a private right of lished to provide model standards for insur- action.78 The Second Circuit stated, “The ers to meet the confidentiality and security question of the existence of a statutory requirements of section 501 of GLBA, has cause of action is, of course, one of statuto- not been widely adopted by the states.73 ry construction. In this case, the text of the Telecommunications Act contains no lan- VI. Privacy Litigation Under GLBA guage that explicitly provides a private right of action for damages for violations of Title V of GLBA does not contain an the two FCC regulations at issue here79 . . . . express private right of action provision Moreover, no private right of action for that would enable consumers to bring suit money damages can be implied.”80 for violations of GLBA’s requirements or to In analyzing whether a consumer has a enforce its provisions.74 Enforcement is left private right of action, the Second Circuit to the federal agencies and the state insur- Court of Appeals referred to Cort v. Ash,81 ance agencies that have jurisdiction over in which the Supreme Court established a ordinance. See id. at § 2008. rights to any identifiable class.” Touche Ross & Co. v. Vermont and New Mexico have also adopted “opt-in” pro- Redington, 442 U.S. 560, 576 (1979). The Supreme Court visions. See VT Reg. IH-2001-01 (no longer available has also held that, for a statute to create private rights of online); N.M. Reg. 13.1.3, at .11, .12 (2002). “This rule action, its text must be “phrased in terms of the persons ben- governs the treatment of nonpublic personal health informa- efitted,” Cannon v. University of Chicago, 441 U.S. 677, tion and nonpublic personal financial information about 692, n.13 (1979) and “with an unmistakable focus on the individuals by all licensees of the NMPRC Insurance benefitted class.” Id. at 691. A plaintiff suing under an Division and is intended to afford individuals greater priva- implied right of action must show that the statute manifests cy protections than those provided in the Gramm-Leach- an intent “to create not just a private right, but also a private Bliley Financial Modernization Act . . . .” Id. at 13.1.3.6. remedy.” Alexander v. Sandoval, 532 U.S. 275, 286 (2001) For a chart of state statutes and regulations relating to (emphasis added). See Gonzaga University v. Doe, 536 U.S. GLBA and consumer privacy with respect to insurers, see 273 (2002) (examining private rights of action under 42 http://www.llgm.com/articles/article_15_print.asp (last vis- U.S.C. § 1983). ited September 8, 2003). 75. See 15 U.S.C. § 6805. See supra, notes 33-35 and 70. See HILLMAN, supra at pp. 9-11; see also, e.g., NEW accompanying text. For a discussion of consumer privacy JERSEY INSURANCE BULLETINS, Enforcement of litigation related to financial services companies, the internet Gramm-Leach-Bliley Privacy Requirements, Bulletin 2000- and other industries during the years 1999 and 2000, see 15 (Nov. 8, 2000), available at http://www.njdobi.org/ Stephen F. Ambrose, Jr. & Joseph W. Gelb, Consumer blt00_15.htm (last visited September 9, 2003) (“N.J.S.A. Privacy Regulation and Litigation, THE BUSINESS 17:23A-1 et seq., effective December 7, 1985, and based on LAWYER, May 2001, http://www.weil.com/wgm/ the National Association of Insurance Commissioners’ cbyline.nsf/0/a90b82c4728b100a85256a7a00652e5f?OpenD Insurance Information and Privacy Protection Model Act, ocument. See also Ronald L. Plesser & Stuart P. Ingis, regulates the collection, use and disclosure of information Limiting Private Rights of Action In Privacy Legislation, gathered by insurers in connection with policies, contracts http://www.cdt.org/privacy/ccp/privaterightofaction1.shtml or certificates of insurance issued or delivered in this State. (last visited September 9, 2003) (“As policymakers consider In most respects, this statute provides standards that are at the merits of additional privacy legislation, the potential for least as stringent, and in many cases more stringent, than the abuse that can result from a private right of action must be standards set forth in GLBA”). considered. Statutory damages should not be included in leg- 71. See HILLMAN, supra at pp. 6-8. islation. Where effective government enforcement is avail- 72. See id. at p. 6. able, such enforcement is better policy as it protects con- 73. See id. at pp. 12-13. See also Summary Of NAIC Fall sumers and limits frivolous lawsuits.”). 2002 Meeting, http://www.aba.com/NR/ rdon- 76. 241 F.3d 242 (2d Cir. 2001). lyres /00006946 qqocodkcytxufioi/NAIC+Fall+2002 77. See id. at 246. +Meeting6.doc (last visited August 22, 2003); Implementing 78. See id. at 252. Privacy Protections, http://www.naic.org/GLBA/ 79. The two Federal Communications Commission (FCC) privacy.htm (last visited September 8, 2003). regulations referred to in the opinion are 47 C.F.R. §§ 74. See 15 U.S.C. § 6801, et seq. The Supreme Court has 51.217, 64.1201. held that “[t]he question whether Congress . . . intended to 80. Conboy, 241 F.3d at 252. create a private right of action [is] definitively answered in 81. 422 U.S. 66 (1975). the negative” where “a statute by its terms grants no private 20 four-factor test to determine whether a fed- [Gavel #1], Union Planters Bank brought eral statute creates an implied private right an action in federal court to enjoin the dis- of action: closure of private consumer financial infor- (1) whether the plaintiff is one for whose mation without the prior consent of its cus- benefit the statute was enacted; (2) whether tomers in violation of GLBA.89 Gavel, an there is evidence of legislative intent, explic insurance broker, worked with a company it or implicit, to create or deny a private that provided insurance services to Union remedy; (3) whether the existence of a Planters.90 In connection with that working private right of action would be consistent relationship, Gavel received information with the underlying legislative purpose of the statute; and (4) whether the cause of relative to Union Planters customers, which action is in an area traditionally left to state information was sought by way of subpoe- law.82 na in connection with an insurance fraud case filed in state court.91 Since Cort, the Supreme Court has Union Planters sought an injunction refined this inquiry.83 The analysis has been from the District Court for the Eastern simplified to the following inquiry: whether District of Louisiana, contending that, Congress, expressly or by implication, unless Gavel was enjoined from producing intended to create a private right of action.84 the nonpublic personal information, a clear The Second Circuit in Conboy determined violation of GLBA would occur.92 that “it is highly unlikely, therefore, that Intervenors moved to dismiss the injunction Congress intended to create a private right action on the grounds of res judicata and of action for violations of FCC regulations. abstention.93 Such a right would ‘threaten[ ] the sound Union Planters alleged that it would suf- development of a coherent nationwide com- fer irreparable injury to its business reputa- munications policy - a central objective of tion when its customers learned that their the [Communications] Act.”85 nonpublic personal financial information Since Title V of GLBA was designed to had been disclosed to third parties without protect the privacy of consumers but does their prior knowledge or consent.94 It also not preempt state laws, it is arguable that it alleged that it would be subject to regulato- establishes a “coherent nationwide” poli- ry sanctions for violating GLBA and that an cy.86 The Fifth Circuit Court of Appeal is injunction would not be contrary to public currently considering whether an implied interest since GLBA promotes the public private right of action exists under GLBA. interest by protecting the privacy interests of consumers.95 Union Planters Bank, N.A. v. Gavel The District Court granted the injunc- [Gavel # 1] tion.96 It found that the information which Gavel had been subpoenaed to produce was In Union Planters Bank, N.A. v. Gavel88

82. Id. at 78. as the regulatory authority under the Telecommunications 83. See Miller v. United States, 710 F.2d 656, 667 (10th Act, could have investigated the claim of plaintiffs and Cir. 1983), cert. denied, 464 U.S. 939 (1983). imposed penalties as permitted under the statute. See id. 84. See Transamerica Mortgage Advisors, Inc. v. Lewis, “Plaintiffs therefore had a forum in which to complain 444 U.S. 11, 15-16 (1979); Touche Ross & Co. v. about the behavior alleged in their amended complaint, and Redington, 442 U.S. 560, 575 (1979); see also Thompson v. to obtain relief if appropriate; however, they chose to seek Thompson, 484 U.S. 174, 189 (1988) (Scalia, J., concurring) relief elsewhere.” Id. (“[W]e effectively overruled the Cort v. Ash analysis in 86. Id. at 253; 15 U.S.C. §§ 6801, 6807. Touche Ross [and Transamerica], converting one of its four 87. See infra note 104. factors (congressional intent) into the determinative fac- 88. 2002 WL 975675 (E.D. La. May 9, 2002), reconsider- tor.”). The other Cort factors are relevant insofar as they ation denied 2002 WL 1379182. assist in determining congressional intent. See Touche Ross, 89. See id. at *1. 442 U.S. at 575-76. 90. See id. at *5. 85. Conboy, 241 F.3d at 253, quoting New England Tel. & 91. See id. Tel. Co. v. Public Utils. Comm’n, 742 F.2d 1, 6 (1st Cir. 92. See id. at *2. 1984). The Second Circuit noted that, while plaintiffs did 93. See id. not have a private right of action under the 94. See id. Telecommunications Act, they could have sought relief by 95. See id. filing a complaint with the FCC. See id. at 256. The FCC, 96. See id. at *6. 21 nonpublic personal financial information, poena seeks disclosure of information which the disclosure of which was prohibited by otherwise would, by law, remain confiden- GLBA.97 It further found that irreparable tial, the action by Plaintiff to seek injunctive injury would result since, once the informa- relief as to the specific nonpublic consumer tion was disclosed, no monetary relief could information is correct. . . . The purpose of the injunction is to stop the release of that be awarded to compensate for the loss and information before it is made public. The Union Planters could suffer “grave conse- Plaintiff has a definite right of action in that quences” if the information were dis- this injunction seeks to protect the Plaintiff’s closed.98 The Court concluded that “the information. . . . The subpoena asks that this injunction in no way would disserve the information be yanked out from the cloak of public interest as the injunction would the protection . . . of the . . GLBA. The merely uphold and enforce a federal Court has twice ruled that the Intervenor statute.”99 The opinion did not address should be enjoined from gaining access to whether Union Planters had a private right the nonpublic consumer information, and of action under GLBA. today, the Court maintains its previous reasoning.103 Union Planters v. Gavel [Gavel # 2] The case has been appealed to the U.S. Fifth Circuit Court of Appeal.104 Appellant’s On March 12, 2003, in Union Planters v. Brief was filed on September 11, 2003.105 Gavel100 [Gavel #2], the District Court for the Eastern District of Louisiana granted New York Life Insurance and Annuity Union Planters’ motion to make the prelim- Corporation v. Filo inary injunction granted in Gavel #1 permanent.101 In Gavel #2, the intervenors argued While the District Court for the Eastern that, since the injunction was premised on District of Louisiana found that Union GLBA, Union Planters had no right of Planters had a private right of action to action or standing to bring an action request an injunction prohibiting disclosure because GLBA does not grant a private of nonpublic information protected by right of action to enforce the provisions of GLBA, in New York Life v. Filo, the District GLBA.102 Court for the Western District Court of In granting Union Planters request for a Louisiana held otherwise.106 The facts of permanent injunction, the District Court Gavel and Filo are similar; the results are stated: different. The GLBA is written with the protection of the customers of the financial institutions in In December 2002, New York Life mind. . . . The subpoena issued in the state Insurance Company (New York Life) filed a court proceeding seeks full disclosure of the Complaint for injunctive relief and for a very nonpublic consumer information which temporary restraining order in the United GLBA seeks to protect. . . . Since the sub-

97. See id. at *5-6. The District Court recognized that 99. Id. GLBA prohibits the disclosure of nonpublic personal finan- 100. 2003 WL 1193671 (E.D. La. March 12, 2003). cial information to third parties unless the consumer is given 101. See id. at *9. an opportunity, prior to the disclosure, to direct that the 102. See id. at *3. information not be disclosed. See id. at *5. Cf. Landry v. 103. Id. at *9 (emphasis added). Union Planters Corp., 2003 WL 21355462, at *5-6 (E.D. La. 104. Union Planters v. Gavel, No. 03-30409 (5th Cir. June 6, 2003) (ordering the disclosure of “blind” documen- (La.)), at http://www.ca5. uscourts.gov/Opinions/pacer.cfm tation, in which personal identifiers had been redacted, in 105. See Union Planters v. Gavel, No. 03-30409 (5th Cir. ruling on a motion to quash depositions and requests for (La.)), at http://www.ca5. uscourts.gov/Opinions/pacer.cfm. production of documents, but ordering the issuance of a pro- Appellants brief, originally due August 27, 2003, is now due tective order, “given the confidential nature of even the September 11, 2003. See id. redacted discovery”). All federal district courts now require 106. New York Life Insurance and Annuity Corporation v. redaction of personal identifiers in documents filed into the Filo, No. CV02-2556 (W.D. La. May 21, 2003) (hereinafter record. See Judiciary Privacy Policy page, at New York Life v. Filo). The Complaint, Motions to Dismiss, http://www.privacy. uscourts.gov/ (last visited October 10, Memoranda in Support and in Opposition, and the Court’s 2003). Ruling are all available on PACER, at 98. Gavel, 2002 WL 975675, at *5. http://pacer.lawd.uscourts.gov. 22 States District Court for the Western District Life is without adequate remedy at law to of Louisiana, seeking an order prohibiting protect its rights and those of its customers, the disclosure by New York Life of its cus- which New York Life is required by law to tomers’ personally identifiable financial protect. New York Life has no private right information protected under GLBA without of action under state or federal privacy laws the customers’ knowledge and consent.107 to redress the unlawful disclosure of confi- The defendants, Thomas Filo, an attorney, dential consumer information.”114 New York and Steven Blount, a former insurance agent Life cited to Union Planters v. Gavel in sup- with New York Life, moved to dismiss the port of its argument that an injunction should Complaint on the basis that GLBA did not be entered. create a private right of action.108 Notwithstanding the decisions in Gavel In its Complaint, New York Life alleged #1 and Gavel #2, the district court in Filo that Filo, an attorney who represented cer- granted defendants’ Motions to Dismiss.116 tain New York Life customers in actions In its Ruling dated May 21, 2003, the Court brought by New York Life customers against stated: Blount for fraudulent insurance practices, The Court finds that New York Life cannot made numerous attempts to obtain a list of state a cause of action under the GLBA or and information about customers who were Regulation 76 because those enactments do not his clients.109 Like the intervenors in not provide for private suits to enforce Union Planters v. Gavel, Filo had sought their terms. The plain language of the nonpublic information through discovery GLBA grants federal and state regulatory agencies exclusive authority to prosecute propounded in a state court proceeding. violations of the GLBA and to enforce its New York Life had moved to quash the sub- provisions. Neither Congress nor the poena and sought a protective order on the Louisiana legislature extended enforcement basis that the information sought was “tanta- of the GLBA or Regulation 76 beyond the mount to a customer list,” which New York administrative action of specified federal or Life argued was protected from disclosure state regulators.117 under GLBA.110 The state court judge granted New York Life’s motion to quash, order- At the time of the writing of this Article, ing that Filo was not entitled to a customer the Fifth Circuit had not ruled on the issues list.111 in Gavel.118 The New York v. Filo case was In the federal court proceeding, New closed May 22, 2003 and the decision was York Life alleged that, despite the state not appealed.119 court’s ruling, Filo continued to obtain and disseminate nonpublic personal information VII. Conclusion of its customers and that Filo sent hundreds In the event that pending legislation is of “advertisements” to those customers in an enacted into law, insurers and other financial 112 effort to develop more clients. Customers institutions may be required to revise their of New York Life allegedly called New York disclosure policies. GLBA’s effect on the Life to inquire as to how Filo had obtained business of insurance and other financial 113 their name and address. institutions has been significant and will In arguing to the federal court that continue to be. Judicial interpretations of injunctive relief was appropriate, New York GLBA are inconsistent and should be of Life, conceding that GLBA does not grant a interest to all companies subject to its provi- private right of action, stated: “New York sions.

107. See id., Complaint. 112. Id. at 19. 108. See id., Motions to Dismiss filed by Filo and Blount. 113. See id. 109. See id., Complaint, at 8. 114. Id., Complaint, at 28 (emphasis added). 110. Id., Complaint, 9, 13. In Union Planters v. Gavel, the 115. See id., Opposition to Defendant’s Motion to Dismiss, District Court for the Eastern District of Louisiana noted at 13-14, 16. that the records sought by plaintiffs regarding Union 116. See id., Ruling, at 6. Planters’ customers “constitutes a ‘grouping’ of non-public 117. Id., at 4-5 (emphasis added). personally identifiable financial information which is pre- 118. See supra notes 104-05. cluded by the GLBA.” 2002 WL 975675, at *6. 119. See New York Life v. Filo, No. 02-CV-2556 at 111. See New York v. Filo, Complaint, at 14. http://pacer.lawd.uscourts.gov. 23 The Privacy Project II Protection Against Discovery in Civil and Criminal Proceedings in Clergy Sexual Abuse Claims

By Ralph M. Streza IADC member Ralph Streza is a member of and L. Gino Marchetti, Jr. the firm Porter, Wright, Morris & Arthur, In recent years, allegations of sexual abuse LLP in Cleveland. He has litigated product liability class actions, multi-district federal by priests have spread from a few relatively court product liability actions and complex isolated instances to a crisis of national and individual product liability cases in state international proportions. In addition to the and federal courts. He received his law emotional and psychological (not to men- degree cum laude from the Cleveland- tion public relations) issues presented by Marshall College of Law. He has taught these cases, counsel retained to defend the trial and appellate advocacy as an adjunct diocese, parish or religious institution professor at the Cleveland-Marshall which employed the offending cleric is pre- College of Law. sented with complex constitutional issues L. Gino Marchetti, Jr. is a partner at which must be applied judiciously to be Taylor, Pigue, Marchetti & McCaskill, PLLC in Nashville. His primary areas of effective in the evaluation and defense of practice include tax exempt entities, these claims. employment law, commercial and business Added to the problems of defending the litigation and corporate representation. He merits of these claims are the procedural serves as a general counsel to various for- and discovery related issues presented by profit, as well as not-for-profit, entities, competent plaintiff’s counsel who often including the Roman Catholic Diocese of collaborate with other counsel who special- Nashville, Tennessee. He is a member of ize in molestation cases as well as with the IADC Executive Committee. prosecuting attorneys pursuing the offending cleric in the criminal arena. through the Fourteenth Amendment, pro- Certain Constitutional prohibitions can vide that: “Congress shall make no law be applied in the discovery process. Indeed, respecting an establishment of religion, or perhaps the most basic form of protection prohibiting the free exercise thereof . . . .”1 against document discovery may be provid- U.S. Const. Amend. I. The First ed by noting at the outset that certain sub- Amendment’s “wall of separation” between ject matters cannot be decided by civil Church and State remains “high and courts due to these constitutional prohibi- impregnable.” McClure II.2 460 F.2d at tions. 558. For well over 100 years courts have applied First Amendment principles in lim- I. Actions Taken By a Religious Entity iting the role of civil courts in resolving Are Constitutionally Protected By the religious controversies that incidentally First and Fourteenth Amendments of affect civil rights and remedies of individu- the United States Constitution als.3 See, e.g., Watson v. Jones, 80 U.S. (13 Wall.) 679 (1872); Presbyterian Church v. The religious freedom clauses of the Hull Church, 393 U.S. 440 (1969); Serbian First Amendment, as applied to the States Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976).

1. U.S. Const. Amend. I. Presbyterian Church v. Hull Church, 393 U.S. 440 (1969); 2. McClure II. 460 F.2d at 558 Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 3. Watson v. Jones, 80 U.S. (13 Wall.) 679 (1872); 696 (1976) 24 The “wall of separation” between ples of the free exercise clause of the First Church and State underlying these impor- Amendment: tant constitutional principles is particularly An application of the provisions of Title VII applicable to disputes such as those raised to the employment relationship which exists by the Plaintiffs in a case involving the rela- between The Salvation Army and Mrs. tionship between a church and its ministers McClure, a church and its minister, would or priests: involve an investigation and review of these practices and decision and would, as a result, The relationship between an organized cause the State to intrude upon matters of church and its ministers is its lifeblood. The church administration and government minister is the chief instrument by which the which have so many times before been pro church seeks to fulfill its purpose. Matters claimed to be matters of the singular ecclesi- touching this relationship must necessarily astical concern. Control of strictly ecclesias- by recognized as of prime ecclesiastical tical matters could easily pass from the concern. Just as the initial function of select- church to the State. The church would then ing a minister is a matter of church adminis- be without the power to decide for itself, free tration and government, so are the functions from state interference, matters of church which accompany such a selection. It is administration and government.5 McClure unavoidably true that these include the determination of a minister’s salary, his II, 460 F.2d at 560. place of assignment, and the duty he is to perform in the furtherance of the religious The same reasoning was applied in the mission of the church. U.S. Supreme Court’s decision in It has long been the practice of The Milivojevich, rejecting the attempt by a Salvation Army, as with many other reli- defrocked bishop of the Serbian Eastern gious denominations, to determine these Orthodox Church to challenge his church’s matters which deal with the very terms of a actions as being procedurally and substan- minister’s calling. Such a practice must be tively defective and in violation of the classified as both basic and traditional. church’s internal regulations. The Illinois Supreme Court held that the actions of the 4 McClure II 460 F.2d at 558-559. Thus, church were arbitrary and invalid. The U.S. in McClure II the Court upheld the dis- Supreme Court reversed and found the missal of employment discrimination action of the Illinois Court to be an imper- claims brought by Mrs. McClure, a former missible interference by a civil court with Salvation Army minister who was dis- the affairs of the church: charged by The Salvation Army. After The fallacy fatal to the judgment of the reviewing the holdings in Watson v. Jones, Illinois Supreme Court is that it rests upon as well as other subsequent precedents an impermissible rejection of the decisions holding that matters of church government of the highest ecclesiastical tribunals of this and administration are beyond the purview hierarchical church upon the issues in dis- of civil authorities, the McClure II court pute, and impermissibly substitutes its own found that application of the provisions of inquiry into church polity and resolutions Title VII to the employment relationship based thereon of those disputes. between The Salvation Army and its former Consistently with the First and Fourteenth minister would result in an encroachment Amendments “civil courts do not inquire whether the relevant (hierarchical) church by the State into an area of religious free- governing body has power under religious dom which is forbidden under the princi- law (to decide such disputes) . . . . Such a

4. McClure II 460 F.2d at 558-559 ernment interest applied in the least restrictive means in 5. McClure II, 460 F.2d at 560. The special protections order to substantially burden a person’s exercise of religion. attached to the religious freedom clauses of the First See EEOC v. Catholic University of America, 83 F.3d455 Amendment were recognized by Congress in 1993 by the (D.C. Cir. 1996) (holding inter alia that RFRA barred a passage of the Religious Freedom Restoration Act, 42 U.S.C. Catholic nun’s Title VII sex discrimination claim based on § 2000bb et seq. (“RFRA”). This Act codified the standard denial of tenure and that the application of secular standards of review applied to adjudication of free exercise claims by to a church’s employment of its ministers burdens the free requiring the government to demonstrate a compelling gov- exercise of religion. 25 determination . . . frequently necessitates the priest? Resolution of these and other relat- interoperation of ambiguous religious law ed questions underlying the Plaintiffs’ alle- and usage. To permit civil courts to probe gations would thrust the Court into second- deeply enough into the allocation of power guessing the decisions of the Diocese to with a (hierarchical) church so as to decide deal with and eventually dismiss a priest . . . religious law (governing church polity) and examining the Diocese’s interpretation . . . would violate the First Amendment in much the same manner as civil determina- of its own discipline, faith, and ecclesiasti- tion of religious doctrine.” Milivojevich, cal rules as well as its internal organization 426 U.S. at 708-709 (citation omitted).6 and administration. This is the very type of inquiry and interference prohibited by Many cases involving ministers accused Milivojevich, McClure and numerous other of abuse directly invoke the doctrine, rules, judicial precedents. regulations, administration and disciplinary The fact that Plaintiffs may cast their process of the Catholic Church governing claims in the form of common law torts for the relationship between the church and its battery, outrageous conduct, negligence per bishops and its priests, all of which are se and negligent infliction of emotional dis- clearly ecclesiastical matters. tress does not remove these allegations The questions raised by the allegations from the principles of law prohibiting civil in these cases as to what a Diocese did or court interference with a church’s ecclesias- did not do or should or should not have tical policies, rules, discipline and adminis- done, would require examination, interpre- tration. The Supreme Court rejected the tation and review of the doctrines, policies, injunctive and declaratory claims brought rules and regulations of the Catholic by the defrocked Serbian Eastern Orthodox Church. What are the Catholic Church’s bishop in Milivojevich; the Fifth Circuit religious doctrines directly applicable to the rejected the reinstatement and damage conduct of its bishops in the appointment, claims for employment discrimination disciplining, treatment and dismissal of a asserted by a former minister of The priest? How does the Catholic Church Salvation Army in McClure; and other interpret its religious doctrines, policies, courts have adopted the same reasoning in order and regulations enunciated in the rejecting common law tort claims brought Catholic Church’s law and doctrine as it by ministers against their churches. relates to the ordination, discipline, assign- In Hutchison v. Thomas,7 789 F.2d 392 ment and dismissal of its priests? How are (6th Cir. 1986), the Court refused to inter- the confidentiality provisions of these vene in a dispute between a Methodist min- processes applied to its bishops and priests ister and his church involving Hutchison’s and were those applicable to the investiga- claims that he was wrongfully expelled tion and actions taken by the Diocese from his ministry by fraudulent, collusive regarding a priest’s conduct? Did the or arbitrary application of the rules, laws Diocese and its representatives follow the and doctrinal provisions known in the substantive and procedural policies and Methodist religion as The Discipline. protocols of the Catholic Church for inves- Hutchison claimed his church and several tigating and dealing with the allegations of of its ministers and representatives acted misconduct in connection with their investi- improperly and misapplied Methodist rules gation of an accused priest? What were the and regulations governing the conduct of its bases for the decision of a Diocese to disci- ministers. Hutchison, like other Plaintiffs, pline, treat, assign and dismiss an accused framed his claims in the form of common

6. The Supreme Court has been particularly reluctant to a chaplain are and whether the candidate possesses them”); interfere with a church’s selection of its own ministers. See, Milivojevich, 426 U.S. at 717 (“questions of church disci- e.g., Gonzalez v. Roman Catholic Archbishop of Manila, pline and the composition of the church hierarchy are at the 280 U.S. 1, 16 (1929) (“it is the function of the church core of ecclesiastical concern”). authorities to determine what the essential qualifications of 7. Hutchison v. Thomas, 789 F.2d 392 (6th Cir. 1986) 26 law torts (defamation, intentional infliction 664 (6th Cir. 1995) (no jurisdiction to hear of emotional distress, and breach of con- claim of defamation brought by a Lutheran tract). Relying on Watson, Milivojevich and minister); cf. Paul v. Watchtower Bible & related cases, the Court dismissed Tract Society of New York, Inc., 819 F.2d Hutchison’s claims and refused to intervene 875 (9th Cir.), cert. Denied, 484 U.S. 926 in the relationship between Hutchison and (1987) (summary judgment granted dis- the Methodist church: missing common law claims of defamation, Appellant [Hutchison] is really seeking civil invasion of privacy, fraud and outrageous court review of subjective judgments made conduct brought by disassociated member by religious officials and bodies that he had arising from church’s requirement that become “unappointable” due to recurring members “shun” her).11 problems in his relationships with local Even in the highly emotional cases congregations. This court cannot constitu- involving clergy abuse, most courts have tionally intervene in such a dispute.8 Hutchison, 789 F.2d at 393. recognized this prohibition against state courts reviewing actions by a church Similarly, in Lewis v. Seventh Day regarding the assignment, treatment, disci- Adventists Lake Region Conference,9 978 pline or dismissal of its clergy. The F.2d 940 (6th Cir. 1992), the Court declined Tennessee Court of Appeals for the Middle to exercise jurisdiction over common law Section in Tidman v. Salvation Army,12 1998 tort claims for breach of contract, promis- WL 391765 (Tenn.Ct.App.) dismissed the sory estoppel, intentional infliction of emo- Plaintiffs’ action on First Amendment tional distress and loss of consortium grounds. The Tidman court cited with brought by a former Seventh Day Adventist approval the doctrines espoused by minister and his wife. The Court refused to McClure, Milivojevich and their progeny. intervene in the employment dispute The Court found particular substance in the between the Seventh Day Adventist Church case of Higgins v. Maher,13 210 Cal.App.3d, and its minister: 1168, 258 Cal.Rptr. 757 (Cal.App. 1989). We conclude that the First Amendment bars The Tennessee Court of Appeals cited with civil courts from reviewing decisions of approval the basis for the dismissal of religious judicatory bodies relating to the Plaintiff’s claims in Higgins: employment of clergy. Even when, as here, Regardless of the church’s motives or objec- the plaintiff alleges that the religious tives, or the circumstances giving rise, we tribunal’s decision was based on a misappli- would probably agree that torts such as cation of its own procedures and laws, the battery, false imprisonment or conversion civil courts may not intervene.10 cannot be perpetrated upon its members with civil impunity. We find, however, that at Id. at 942-943; see also Natal v. least in the context of Higgin’s averments, Christian and Missionary Alliance, 878 the torts recited are simply too close to the F.2d 1575 (1st Cir. 1989) (failure to state peculiarly religious aspects of the transac- claim for losses of business and mental tion to be segregated and treated separately - anguish by a clergyman); Yaggie v. Indiana- as simple civil wrongs. The making of accusations of misconduct; the discussion of Kentucky Synod Lutheran Church, 860 F. same within the order; the recommendation Supp. 1194 (W.D. Ky. 1994), aff’d, 64 F.3d of psychological or medical treatment; the

8. Id. At 393 Court of Appeals determined that the common law of New 9. Lewis v. Seventh Day Adventists Lake Region York prohibited the Patriarch’s appointees from exercising Conference, 978 F.2d 940 (6th Cir. 1992) the control granted to them by Canon Law. The Supreme 10. Id. at 942-943 Court again reversed, holding that the judiciary, as well as 11. In Kreshik v. St. Nicholas Cathedral, 344 U.S. 94 the legislature, was prevented by constitutional principles (1952), legislation had been passed which transferred con- from interfering with the free exercise of religion. Kreshik trol of the Russian Orthodox churches in North American v. St. Nicholas Cathedral, 363 U.S. 190 (1960). from the Patriarch of Moscow to officials selected by a con- 12. Tidman v. Salvation Army, 1998 WL 391765 vention of North American churches. The Supreme Court (Tenn.Ct.App.) held the legislation to be an unconstitutional interference 13. Higgins v. Maher, 210 Cal.App.3d, 1168, 258 Cal.Rptr. with the free exercise of religion. On remand, the New York 757 (Cal.App. 1989). 27 infliction, whether intentionally or negli- would constitute an excessive entanglement gently, of emotional distress - these are all in its affairs.” However, the Court went on activities and results which will often, if not to state that the plaintiff would be permitted usually, attend the difficult process by which to proceed with an express contract claim so priestly faculties are terminated. If our civil long as he did not resort to “impermissible courts enter upon disputes between bishops avenues of discovery,” which were and priests because of allegations of defamation, mental distress and invasion of privacy, described as being those that would create 18 it is difficult to conceive the termination case an excessive entanglement. The court was which could not result in a sustainable law very explicit in this case: it limited the suit.14 appropriate boundaries of litigation to only those areas legitimate for court inquiry and A plaintiffs’ common law claims against resolution, and then clearly limited permis- a Diocese and its bishops fall squarely with- sible discovery to those areas.19 in the same category of claims brought by Similar reasoning was applied in United the Salvation Army minister in McClure, Methodist Church v. White.20 In that case the Serbian Eastern Orthodox bishop in the court wrote: “The First Amendment’s Milivojevich, the Methodist minister in Establishment Clause and Free Exercise Hutchison, the Seventh Day Adventist min- Clause grant churches immunity from civil ister and his wife in Lewis and in numerous discovery and trial under certain circum- other actions brought by ministers against stances in order to avoid subjecting reli- their churches and in litigation based upon a gious institutions to defending their reli- church’s actions regarding a minister. gious beliefs and practices in a court of Therefore Courts should decline jurisdic- law.”21 Thus, when faced with these issues, tion over claims based on treatment by a the more easily one can fit a situation into Church of its ministers, for to do otherwise the Minker/White mold, the more effective- would be a constitutionally impermissible ly one will be able to resist document or infringement of defendants’ First records discovery. Amendment religious freedom rights to deal with, assign and discipline it priests. II. Keeping the Grand Jury In his article in The Catholic Lawyer, Confessional Private: History Requires Jeffrey Moon discusses the protection of Secrecy documents and records of churches and other religious institutions.15 Two cases Consider the following scenarios: involving the selection of ministers are I. After an extensive grand jury inquiry, instructive as to what limitations apply to a prosecutor of a major metropolitan area civil courts in these types of disputes decides against seeking indictments of sev- involving churches and religious organiza- eral clergymen because the indictments tions. The first ministerial non-selection would be time barred by the applicable case is Minker v. Baltimore Annual statute of limitations. Conference of United Methodist Church,16 II. In preparation of an anticipated where the court rejected the claims made by grand jury investigation, a prosecutor gath- a Protestant minister that he had been ers an extensive file but decides to present refused a pastor’s position because of his only segments of the file to the grand jury. age and in breach of an implied contract.17 After some indictments are returned, the The court stated that “any inquiry into the prosecutor sets aside that portion of his file Church’s reasons for asserting that Minker not presented to the grand jury. was not suited for a particular pastorship

14. Tidman, citing Higgins at 1176 18. Id. 15. 39 Catholic Lawyer, No. 1, 27 (Winter 1999) 19. See id. at 1358-60 16. 894 F. 70 1354 (D.C. Cir. 1990) 20. 571 A. 70 790 (D.D.C. 1990) 17. See id. at 1358 21. Id. at 792 28 III. After an 18-month grand jury inves- caused anxiety and public ridicule of tigation, extended by the supervising court priests.22 The media frenzy and the public twice with six month terms, the grand jury spotlight shining on allegations of sexual does not believe any indictments of the cler- abuse by Catholic clergy, has, in at least one gy are appropriate based on the evidence instance, caused priests to be indicted for presented to the grand jury. offenses that had nothing to do with an indi- IV. The criminal trials of several priests vidual’s function as a priest.23 have ended in acquittals and the prosecutor The media attention and the correspon- does not seek an additional grand jury ding public interest of the alleged abuse has investigation into alleged sexual abuse of fueled emotional arguments that this secre- minors in his jurisdiction, despite public cy should be relaxed, especially when the outcries of injustice. grand jury efforts do not result in an indict- Each of these situations involves factors ment or where a prosecutor does not use its that may cause an interested party to try to litigation file.24 Despite the reality that only invade the grand jury proceedings, or obtain a small percentage of the clergy have been the prosecutor’s file, both of which usually identified with this issue, a mindset has are not open to public review. In each developed that as a class, priests are pre- instance, news media, indicted defendants, sumed to have been involved in abuse. This lay persons, putative plaintiffs, civil trial has caused serious erosion of the legal attorneys or others may have an interest in objective of preserving privacy of those the information gathered for, or provided to, investigated but not accused. Despite these the grand jury. Through public records circumstances, the media spotlight should requests, discovery subpoenas or special not shine on what occurred before the grand proceedings, these individuals might jury or into the prosecutor’s file. attempt to gain access to the prosecutor’s file to obtain either: the trial preparation Criminal Rule Six and its Exceptions files as they relate to evidence presented to The vast majority of states have a crimi- the grand jury; evidence prepared for but nal procedure rule or statute that prohibits not presented to the grand jury; or, evidence grand jurors, government attorneys or their that was gathered for trial whether or not it assistants from disclosing matters occurring was introduced at trial. before the grand jury, which is substantially Legal objectives of promoting legitimate similar to the provisions of Rule 6(e) of the government investigation and protecting Federal Rules of Criminal Procedure.25 privacy of witnesses and of the unaccused Matters occurring before the grand jury have long justified maintaining secrecy of include identities of witnesses, jurors, or grand jury proceedings. These same goals targets of the investigation, substance of have created exceptions to legal definitions testimony, actual transcripts, strategy, sub- of public records under open records laws. poenas issued, and direction or pattern of The shear anticipation of the results of a investigation and deliberations, and ques- high profile grand jury investigation has tions and concerns of jurors.26

22. Megan Garvey, Priest Accused of Abuse Dies in (iv) an operator of a recording device; Apparent Suicide, Los Angeles Times, April 5, 2002. (v) a person who transcribes recorded testimony; 23. Scott Hiaasen, Priest Gets Probation For Paying Teen (vi) an attorney for the government; or Boy For Sex, The Plain Dealer, June 27, 2003. (vii) a person to whom disclosure is made under Rule 24. See e.g., In re Investigation, SD 03 075617, Cuyahoga 6(e)(3)(A)(ii) or (iii); County, Ohio Common Pleas. 26. In re Sealed Case 98-3077, 151 F. 3d 1059, 1072 n. 12 25. In pertinent part, FED. R. CRIM. P. 6(e)(2) provides: (D.C. Cir. 1998); Samaritan Health Sys. v. Superior Court, (2) Secrecy. 182 Ariz. 219, 895 P. 2d 131 (1994) (subpoenas issued by a (A) No obligation of secrecy may be imposed on grand jury and responsive documents not submitted to the any person except in accordance with Rule 6(e)(2)(B). grand jury protected from disclosure); but see, Phillips v. U. (B) Unless these rules provide otherwise, the fol S., 843 F. 2d 438 (11th Cir. 1988) (documents obtained by a lowing persons must not disclose a matter occurring before grand jury subpoena that were not submitted to the grand the grand jury: jury and which were determined not to indicate the pattern (i) a grand juror; of the grand jury investigation was not a matter before the (ii) an interpreter; grand jury subject to secrecy requirements). (iii) a court reporter; 29 Secrecy of grand jury proceedings statutory exceptions is that matters before encourages witnesses to come forward and the grand jury may be disclosed when testify truthfully and freely, stops potential ordered by the court and preliminary to or defendants from fleeing, promotes com- in connection with a judicial proceeding.31 plete deliberation and protects targets from public knowledge that they were under Disclosure Allowed by Express investigation.27 Where there has been a per- Exceptions ception by a grand jury witness that the pro- Many reported decisions relate to efforts ceeding would not remain secret, i.e. where by private parties to release grand jury there is a threat of an actual impairment of materials preliminary to or in connection grand jury secrecy, there may be “just with a judicial proceeding. In United States cause” for refusing to testify before the v. Procter & Gamble Co., the court bal- grand jury.28 anced the competing needs for secrecy and Despite the historical emphasis on secre- disclosure by ruling that a private party cy, the obligation is not absolute and there must demonstrate need “with particularity,” are express statutory and judicially created so that a court could “discretely and limit- exceptions to the prohibition against disclo- edly” lift the secrecy of the proceedings.32 sure.29 The court supervising the grand jury Need could be demonstrated if without the investigation may allow disclosure upon a grand jury material “a defense would be showing of particular need but only after greatly prejudiced or that without reference the court weighs the need for secrecy to it an injustice would be done.”33 against the need for the information. The Subsequently, the Supreme Court court decides whether justice can only be refined the standard in Dennis v. United done by disclosure.30 One of the express States.34 The Dennis court held that the

27. United States v. Sells Eng’g, Inc., 463 U.S. 418, 424, (E) The court may authorize disclosure--at a time, in a man- 425 (1983); Douglas Oil Co. v. Petrol Stops Northwest, 441 ner, and subject to any other conditions that it directs--of a U.S. 211, 219 (1979). grand-jury matter: 28. See, In Re Grand Jury Proceedings, 797 F.2d 906 (10th (i) preliminarily to or in connection with a judicial proceed- Cir. 1986) (upholding a witnesses refusal to testify where a ing; new reporter stood at the door of the grand jury room). (ii) at the request of a defendant who shows that a ground Witnesses who testify before the grand jury are free to waive may exist to dismiss the indictment because of a matter that their concerns about their participation in a grand jury inves- occurred before the grand jury; tigation and they are not governed by the secrecy require- (iii) at the request of the government if it shows that the ments and are allowed to freely discuss their testimony. See, matter may disclose a violation of state or Indian tribal Butterworth v. Smith, 494 U.S. 624, 634-636 (1990); United criminal law, as long as the disclosure is to an appropriate States v. Sells Eng’g, Inc., 463 U.S. 418, 424, 425 (1983). state, state subdivision, or Indian tribal official for the 29. See, FED. R. CRIM. P. 6(e)(3): purpose of enforcing that law; or (3) Exceptions. (iv) at the request of the government if it shows that the (A) Disclosure of a grand-jury matter--other than the grand matter may disclose a violation of military criminal law jury’s deliberations or any grand juror’s vote--may be under the Uniform Code of Military Justice, as long as the made to: disclosure is to an appropriate military official for the pur- (i) an attorney for the government for use in performing pose of enforcing that law. that attorney’s duty; See also, In re Biaggi, 478 F. 2d 489, 494 (2d Cir. 1973) (ii) any government personnel--including those of a state (establishing that there are “special circumstances” in which or state subdivision or of an Indian tribe--that an attorney release of grand jury materials is appropriate outside the for the government considers necessary to assist in per boundaries of Rule 6(e)); In re Hastings, 735 F. 2d 1261 forming that attorney’s duty to enforce federal criminal (11th Cir. 1984); In re Grand Jury Proceedings, Miller law; or Brewing Co., 687 F.2d 1079 (7th Cir. 1982) (“a court must (iii) a person authorized by 18 U.S.C. § 3322. balance the need of the party seeking disclosure against the (B) A person to whom information is disclosed under Rule effect such disclosure would have on the policies underlying 6(e)(3)(A)(ii) may use that information only to assist an grand jury secrecy.”). attorney for the government in performing that attorney’s 30. See, e.g. Petition for Disclosure of Evidence Presented duty to enforce federal criminal law. An attorney for the to Franklin County Grand Juries in 1970, 63 Ohio St. 2d 212, government must promptly provide the court that impan- 407 N.E. 2d 513 (holding that disclosure to a civil litigant eled the grand jury with the names of all persons to whom could be made after a careful weighing of the need for secre- a disclosure has been made, and must certify that the attor- cy and the needs of the civil litigant.) ney has advised those persons of their obligation of secre- 31. See, e.g. Rule 6(e)(3)(E)(i). cy under this rule. 32. United States v. Procter & Gamble Co., 356 U.S. 677 (C) An attorney for the government may disclose any (1958). grand-jury matter to another federal grand jury. 33. Id. at 682, 683. * * * 34. Dennis v. United States, 384 U.S. 855 (1966). 30 defendant in a criminal proceeding should important historical interests in In re have received the grand jury testimony of Craig.39 Craig involved a doctoral candidate four witnesses who had appeared before the writing a dissertation about a government grand jury that investigated him several official 48 years after he was accused of years earlier as the defendant demonstrated being a communist spy. The government that it was likely the witnesses gave trial official appeared before a grand jury to testimony that was inconsistent with their answer charges against him, but he was not grand jury testimony. Because these four indicted before he died. After his death, witnesses had testified in public concerning more evidence surfaced showing that infor- the same matters, and the grand jury had mation he had provided to the American completed its investigation, “none of the Communist Party was funneled to foreign reasons traditionally advanced to justify communist governments. nondisclosure of grand jury minutes” The federal appellate court described a applied to maintain the secrecy of the pro- court’s role in deciding whether to make ceedings.35 public the ordinarily secret proceedings of a The most often cited precedent of the grand jury investigation as “one of the Supreme Court is Douglas Oil Co. v. Petrol broadest and most sensitive exercises of Stops Northwest, which concluded that the careful judgment a trial judge can make.”40 district court appropriately disclosed grand It did not establish a per se rule denying a jury material requested by corporate defen- “historical interest” exception to the secre- dants in a civil antitrust proceeding.36 The cy presumption, but it articulated that such Supreme Court recognized that the legal an interest carried an exceptional burden of objective of secrecy was reduced, but not persuasion: eliminated, after the grand jury investiga- [T]he “special circumstances” test cannot be tion ends, finding: satisfied by a blanket assertion that the disclosure is appropriate only in those cases public has an interest in the information where the need for it outweighs the public contained in the grand jury transcripts. interest in secrecy, and that the burden of Indeed, by concluding that “the ‘public demonstrating this balance rests upon the interest’ exception urged by the Petitioner private party seeking disclosure. It is [that any garden-variety public interest equally clear that as considerations compels disclosure if it outweighs the need justifying secrecy become less relevant, a for secrecy in the particular grand jury party asserting a need for grand jury tran- proceeding in question] would swallow the scripts will have a lesser burden in showing general rule of secrecy” the district court justification.37 made clear it was not closing off all historical interest arguments...41 Does the Public Have a Right to Know? Recognizing that there was no “talis- In addition to the express exceptions manic formula” to follow, the court identi- found in Criminal Rule 6(e), the veil of fied many factors it deemed to be relevant secrecy has been lifted in isolated cases whenever a court was “confronted with involving issues of great historical or public these highly discretionary and fact sensitive interest, but only after the petitioner for ‘special circumstances’” requests: such release demonstrated exceptionally (i) the identity of the party seeking disclo- compelling reasons or “special circum- sure; (ii) whether the defendant to the grand jury proceeding or the government opposes stances.”38 An appellate court upheld the the disclosure; (iii) why disclosure is being denial of disclosure based on allegedly sought in the particular case; (iv) what

35. Id. at 872. al hundred pages of grand jury transcript testimony from 36. Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. two special grand juries convened in 1947 and 1950 relat- 211, 219 (1979). ing to perjury indictments and ultimately convictions of 37. Id. at 223. Alger Hiss). 38. See, e.g. In re American Historical Association, 49 F. 39. In re Craig, 131 F. 3d 99 (2nd Cir. 1997). Supp 2d 274 (S.D.N.Y. 1999) (tailoring disclosure of sever- 40. Id. at 104. 41. Id. at 105. 31 specific information is being sought for dis sure due to “the magnitude of the public’s closure; (v) how long ago the grand jury loss of funds and loss of confidence in gov- proceedings took place; (vi) the current ernment and financial markets” and “each status of the principals of the grand jury and every citizen’s . . . inalienable right to proceedings and that of their families; (vii) the disclosure of this information.”45 the extent to which the desired material - Unlike the majority of states, a either permissibly or impermissibly - has been previously made public; (viii) whether California statute automatically provides witness to the grand jury proceedings who for disclosure of grand jury proceedings to might be affected by disclosure are still the public 10 days after an indicted defen- alive; and (ix) the additional need for dant received a copy of the grand jury mate- maintaining secrecy in the particular case in rials.46 The automatic disclosure can be question.42 blocked but only if a defendant’s right to a fair trial would be compromised by public The court emphasized that the identity of disclosure.47 The California Supreme Court the party seeking disclosure carries great held that the statute had no application weight: “if a third-party stranger wishes to where there was no indictment and the court obtain release of data about secret meetings applied the traditional reasons for secrecy over the objection of the defendant, who, surrounding grand jury proceedings. perhaps, was never indicted by the grand In the absence of an indictment, without the jury, then the trial judge should be extreme- protections of the court process, the inno- ly hesitant to grant release of the grand jury cently accused and even witnesses are more material.”43 vulnerable to a risk of adverse consequences Where the party seeking disclosure was ranging from reputational injury to retalia- the news media and the grand jury target tion. . . . we remain persuaded of the contin- objected to disclosure, and no indictment uing importance of maintaining the heritage of grand jury secrecy when there has not was returned, the California Supreme Court been an indictment, in order to preserve the in Daily Journal Corporation v. Superior effectiveness of the grand jury process, as Court, reversed an order disclosing grand well as to protect witnesses against the jury testimony.44 The case arose out of the adverse consequences, including damage to Orange County bankruptcy petition and a reputation, of disclosing their testimony.48 subsequent grand jury investigation of the underwriter of several debt offerings issued The California Supreme Court also held by the county. The underwriter provided that absent statutory authorization, testimony and documents over an eleven- California courts have no “inherent” month investigation, but no indictments fol- authority to disclose grand jury proceed- lowed because the underwriter entered into ings.49 Furthermore, the court determined a civil settlement with the county on the eve the public’s “right to know” as a constitu- of the grand jury deliberations. tional argument to be “unpersuasive.” The news media thereafter submitted a The news media tackled head on the request for release of all grand jury materi- constitutionality of a Massachusetts statute al. Citing “the public’s right to information that sealed all records of grand jury pro- under the First Amendment and the ceedings that resulted in a “no bill” - or a California Constitution” and the court’s decision not to prosecute in Globe “inherent equity, supervisory and adminis- Newspapers Company v. Pokaski.50 The trative powers,” the court ordered disclo- press argued that it had a First Amendment

42. Id. at 106. 45. Id. at 1121, 979 P. 2d at 984. 43. Id. at 106; the appellate court ultimately affirmed the 46. Cal. Penal Code §938.1 trial court’s sound exercise of discretion because there had 47. Id. not been an extensive exposure of grand jury proceedings by 48. Daily Journal, 20 Cal. 4th at 1132, 979 P. 2d at 992. way of criminal trial testimony and because many of the 49. Id. at 1128, 979 P. 2d at 989. grand jury witnesses would be identified. Id. at 107 50. Globe Newspapers Co. v. Pokaski , 868 F. 2d 497 (1st 44. Daily Journal Corp. v. Superior Court, 20 Cal. 4th 1117, Cir. 1989). 979 P. 2d 982 (1999). 32 right to such records, especially where a detailed analysis of why records that filter press release or a publicly filed complaint through a prosecutor’s file should not be preceded the grand jury proceeding. The disclosed to the public.52 In this case, the press argued that an across the board seal- Court unanimously reversed the federal ing was impermissible and that the First appellate court for the District of Columbia. Amendment required the court to conduct After the denial of its Freedom of an analysis of each request for release of Information Act (“FOIA”) request, a records in order to determine whether the national broadcasting news group and a release of such records would hinder the public interest group filed suit in the district functioning of the grand jury process. The court seeking a private citizen’s “rap sheet” appellate court disagreed and held: compiled by the Federal Bureau of The public has no right to attend grand jury Investigation (“FBI”). The Pennsylvania proceedings, and therefore has no right to Crime Commission had identified the citi- grand jury records. In contrast to criminal zen’s family business as a legitimate busi- trials, grand jury proceedings have tradition- ness dominated by organized crime figures, ally been closed to the public and the and the business allegedly received numer- accused, and the Supreme Court has stated ous government contracts with a repeatedly that the proper functioning of our Congressman accused of corruption. The grand jury system depends on the secrecy of grand jury proceedings. . . . We conclude plaintiffs alleged that the public interest that, regardless of any prior publicity that required disclosure of the rap sheet. may have occasioned a grand jury proceed- FBI rap sheet information is a compila- ing, the public has no constitutional right to tion of publicly available data, but official the cases ending with a no bill, and therefore distribution of the actual rap sheet is limit- . . . the automatic sealing requirement is ed. The Supreme Court noted it was constitutional as applied to such records.51 required to balance the Congressional intent of “full agency disclosure” against three Are Grand Jury Materials Available “arguably relevant” exemptions found in as Public Records? the FOIA.53 The Supreme Court focused on the law As a general proposition, most records enforcement compilation exemption and or documents in a prosecutor’s file should described it as a broader exemption than the be exempted from disclosure as confiden- other two arguably relevant exemptions. It tial law enforcement investigation or as then analyzed whether the citizen’s interest records gathered in reasonable anticipation in the nondisclosure of a rap sheet was the of litigation - predominantly because these sort of “personal privacy” interest Congress exemptions are intended to protect the per- intended to protect by the exemption. The sonal privacy of citizens until their convic- Supreme Court rejected the plaintiff’s claim tions become a matter of public record. A that there was no privacy interest at stake separate issue is whether a prosecutor can because the information was a compilation voluntarily disclose the contents of his file, of publicly available data as a “cramped regardless of the existence of a request. notion of personal privacy.”54 In United States Department of Justice v. Plainly, there is a vast difference between the Reporters Committee for Freedom of the public records that might be found after a Press, the Supreme Court provided a diligent search of courthouse files, county archives, and local police stations through

51. Id. at 509, 511. U.S.C.S. § 552(b)(6). Exemption 7(C) excludes records or 52. United States DOJ v. Reporters Comm. for Freedom of information compiled for law enforcement purposes, but the Press, 489 U.S. 749 (1989). only to the extent that the production of such materials could 53. “Exemption 3 applies to documents that are specifical- reasonably be expected to constitute an unwarranted inva- ly exempted from disclosure by another statute. 5 U.S.C.S. sion of personal privacy. 5 U.S.C.S. § 552(b)(7)(C).” Id. at § 552(b)(3). Exemption 6 protects personnel and medical 755-756. files and similar files the disclosure of which would consti- 54. Id. at 763. tute a clearly unwarranted invasion of personal privacy. 5 33 out the country and a computerized summa- Thompson Newspapers, Inc. v. Martin, a ry located in a single clearinghouse of infor- newspaper sought to unseal a file related to mation. a criminal investigation of a unidentified * * * elected official.57 The judge who sealed the Both the common law and literal under file concluded that the file was exempted as standings of privacy encompass the individ- a public record and as a confidential law ual’s control of information concerning his enforcement investigatory record. The or her person. . . . .the extent of the protection accorded a privacy right at common law Ohio Supreme Court agreed: “[I]n order for rested in part on the degree of dissemination law enforcement records to be subject to of the allegedly private fact and the extent to disclosure we have required some action which the passage of time rendered it beyond the investigatory stage where sus- private. . . . According to Webster’s pects have either been arrested, cited, or [dictionary] initial definition, information otherwise charged with an offense.”58 The may be classified as ‘private’ if it is ‘intend- decision not to file formal charges by the ed for or restricted to the use of a particular prosecutor against the suspect did not take person or group or class of persons: not the record outside the exception provided freely available to the public.’55 for confidential law enforcement investigatory records: “Just because formal charges After defining the privacy interest at were not filed in this instance does not stake, the Supreme Court affirmatively rec- change the status of the individual as a sus- ognized that the release of the rap sheet was pect . . .there is no reason why the suspect an unwarranted invasion of personal priva- should be subjected to potential adverse cy: publicity where he or she may otherwise Our previous decisions establish that have never been implicated in the investiga- whether an invasion of privacy is warranted tion.”59 cannot turn on the purposes for which the information is made. . . . the identity of the Whether investigatory records or trial requesting party has no bearing on the preparation materials are available after an merits of his or her FOIA request . . .. Thus acquittal or conviction has not been decided whether disclosure of a private document directly in any reported decision. From . . . is warranted must turn on the nature of other fact patterns, such records should still the requested document and its relationship remain confidential and exempt from public to ‘the basic purpose of the Freedom of record disclosure. In Daily Journal v. Information Act to open agency action to the Police Department of Vineland, the court light of public scrutiny.’ refused to allow the newspaper to obtain police investigation reports that were pre- The Supreme Court made clear that the sented to the grand jury.60 The court held “public interest” in law enforcement that the reports were lost their status as pub- records about individuals was not the type lic records when the records were presented of information afforded by the FOIA - and to the grand jury and aided the grand jury in presumably by state public records laws. returning indictments against the investiga- The purpose of open record laws, like tion targets. Thus, even though the identity FOIA, is to allow “public understanding of of the targets of the investigation became the operations and activities of the govern- public upon presentment of the indictments, ment” and not to allow a look into the lives the investigation files retained their non- of individuals investigated by the prosecu- public character. 56 tor. In Samaritan Health Systems v. Superior Several leading state court opinions fol- Court, the Arizona Appellate Court ruled low this rationale. In State, ex rel.

55. Id. at 764. 58. Id. at 31, 546 N.E. 2d at 942. 56. Id. at 775. 59. Id. 57. State, ex rel. Thompson Newspapers, Inc. v. Martin, 47 60. Daily Journal v. Police Dept. of Vineland, 351 N. J. Ohio St. 3d 28, 546 N.E. 2d 939 (1989). Super. 110, 797 A. 2d 186 (2002). 34 that the portion of the prosecutors’ investigation file that was not presented to the grand jury remained secret, not as an exception to the public records law, but as a part of the grand jury proceeding. The Samaritan court reasoned: “The grand jury proceeding includes the preliminary review and investigation by the grand jury’s agent, the prosecutor. . . . The public policy reasons for grand jury confidentiality apply to the case in which the grand jury does not review the material, as well as in those cases in which the grand jury reviews it and returns a no bill, or a true bill, i.e. an indictment.”61

Conclusion

Despite the emotional nature of the allegations and the glaring publicity and international attention aimed at the clergy, public interest should not justify an invasion into the grand jury proceedings or the prosecutor’s file. The time honored tradition in the United States, a tradition “older than our Nation itself,”62 is that proceedings before the grand jury generally remain secret in order to continue the success and effectiveness of grand juries and the protection of witnesses who testify before them.

61. Samaritan Health Sys. v. Superior Court, 182 Ariz. 219; 895 P. 2d 131 (1994). 62. Pittsburgh Plate Glass Co. v. United States, 360 U.S. 395, 399 ( 1959). 35 The Privacy Project II Personnel Records, Pedophiles and Priests: An Addendum to Discovery in Sexual Abuse Claims

By William G. Porter II and IADC member William G. Porter II is a Michael C. Griffaton senior partner at Vorys, Sater, Seymour Sunlight is said to be the best of disinfec- and Pease LLP in its Columbus, Ohio, office, where he concentrates his trial tants.1 practice in business and employment disputes. He is a graduate of Amherst For I must talk of murders, rapes, and College (1978) and Case Western Reserve massacres. Acts of black night, abominable University School of Law (1984). deeds.2 Michael C. Griffaton is an associate in the same firm and concentrates in employ- To resist grand jury subpoenas, to sup- ment law. He is a graduate of Ohio press the names of offending clerics, to Wesleyan University (1990) and Case deny, to obfuscate, to explain away; that is Western Reserve University School of Law the model of a criminal organization, not (1993). The authors thank Ken Rubin, who clerked at Vorys during 2003, for his my church.3 invaluable research on this topic. Introduction While there are reports of clergy of all In the previous article, Ralph Streza and L. faiths molesting children and adolescents, Gino Marchetti, Jr. discussed the constitu- the Catholic Church institutionally has been tional issues that may limit (some would involved in the most highly publicized say, thwart) the discovery process in clergy cases and has borne the brunt of public molestation cases. Messrs. Streza and indignation when such behavior comes to Marchetti specifically focused on the sanc- light.4 This is not without cause as the tity of grand jury proceedings and on scope of the priest sexual abuse scandal in restricting a plaintiff's access in a civil case the Boston Archdiocese makes pellucid.5 from the information in those proceedings Historically, the Catholic Church has dealt and in the prosecutor's file. As an adden- with accusations of priest pedophilia by dum to Messrs. Streza and Marchetti’s arti- counseling the accused priest, and then cle, we discuss whether priests’ personnel transferring him to another parish (often records are discoverable in civil molesta- without informing that other parish of the tion lawsuits.

1. LOUIS D. BRANDEIS, OTHER PEOPLE'S MONEY, Sexual Misconduct: Confronting the Difficult Constitutional AND HOW THE BANKERS USE IT 62 (Nat'l Home Libr. and Institutional Liability Issues, 7 ST. THOMAS L. REV. ed., 1933). 31 (1994) (citing reports of clergy molestation by priests, 2. WILLIAM SHAKESPEARE, TITUS ANDRONICUS rabbis, Presbyterian, evangelical, and Methodist ministers, Act v, sc. 1, lines 63-64 (Gustav Cross ed., Penguin Books and Buddhist teachers). While this article refers to the 1966) (1594). Catholic Church, the same issues apply to all clergy regard- 3. Former Oklahoma Governor Keating made this state- less of their religious affiliation. ment when he resigned as chair from an independent board 5. “[I]t soon became clear that clergy abuse was, in fact, a appointed by the U.S Catholic bishops that is charged with systemic problem in the Boston Archdiocese, involving holding bishops publicly accountable for implementing poli- scores of priests and hundreds of victims across the metro- cies to remove all abusive priests, protect children, support politan area.” The Boston Globe website contains exhaus- victims, and study the scope and causes of abuse. tive documentation, including depositions and letters from http://www.usatoday.com/news/nation/2003-06-16-keating priests' personnel files, pertaining to the priest sexual abuse _x.htm (last visited November 24, 2003). scandal in the Boston Archdiocese. See 4. See James T. O'Reilly and Joann M. Strasser, Clergy http://www.boston.com/globe/spotlight/abuse/documents/ (last visited November 23, 2003). 36 priest’s misdeeds), where frequently the mine whether the documents are relevant priest molests again. This pattern has and not otherwise privileged, and so discov- repeated itself again and again, in what has erable, before disclosing them to plaintiffs. been called a Church cover-up. “Indeed, documents uncovered in lawsuits show I. The Purpose of Discovery bishops recommending the purging not of priests but of their personnel files, lest they Parties may obtain discovery regarding become weapons in lawsuits.”6 any matter, not privilegedthat is relevant to This is not surprising. When a priest is the claim or defense of any party…8 accused of molesting a child or adolescent, One way in which the Catholic Church criminal prosecution and civil lawsuits soon has attempted to resist discovery of relevant follow. When these suits commence, plain- information in civil molestation actions is tiffs and prosecutors are eager to see inter- by placing personnel records and related nal Church documents, especially personnel information such as the Church’s investiga- records of the accused priests and records of tion and handling of prior complaints the Church’s investigation and handling of against the priest in a place that is designat- the priest. In the many cases involving the ed by canon law as a “secret archive.” Boston Archdiocese, for example, “thou- According to the Code of Canon Law No. sands of pages of personnel documents 489 of the Roman Catholic Church: “There detailed allegations of priests abusing is to be a secret archive ... or at least a safe women and girls and exchanging drugs for or file in the ordinary archive, completely sex.”7 And in many cases, the Church has closed and locked and which cannot be steadfastly resisted the disclosure of such removed from the place,” for “documents to documents. be kept [and] protected most securely.” The Church generally raises two defens- Canon 490 states further that “[o]nly the es when faced with a motion to compel the bishop” governing the diocese may possess production of personnel and related records. the secret archive's key and that “docu- First, the Church argues that producing ments are not to be removed from the secret priests’ personnel records violates the archive or safe.”9 priest-penitent privilege. Failing that, the It is axiomatic that the purpose of dis- Church argues that the First Amendment to covery is to bring out the facts prior to trial the United States Constitution and similar so the parties will be better equipped to state constitutional provisions prohibit a decide what is actually at issue. The United court from interfering with the inner work- States Supreme Court long ago noted that ings of the Church by compelling such pro- “[m]utual knowledge of all relevant facts duction. gathered by both parties is essential to prop- The Church has been consistently er litigation.”10 Discovery is the logical unsuccessful with both arguments. method of preventing surprise and permit- However, the courts recognize the Church’s ting both the court and counsel to have an legitimate interests advanced in those posi- intelligent grasp of the issues to be litigated tions. Consequently, courts balance those and knowledge of the facts underlying interests with plaintiffs’ interests in full dis- them. covery by conducting in camera inspec- This is the prevailing view among the tions of the requested documents to deter- courts and the drafters of the state and fed-

6. Lisa M. Smith, Lifting the Veil of Secrecy: Mandatory Abusers, (Dec. 24, 2002) http://www.thebostonchannel. Child Abuse Reporting Statutes May Encourage the Catholic com/news/1854448/detail.html (last visited November 24, Church to Report Priests Who Molest Children, 18 LAW & 2003). PSYCHOL. REV. 409, 412 (1994) (quoting Aric Press, et 8. FED. R. CIV. P. 26. al., Priests and Abuse, NEWSWEEK, Aug. 16, 1993, at 42- 9. See Hutchison v. Luddy, 414 Pa. Super. 138, 144-45 43). (1992). 7. Kirk Enstrom, Sex Abuse Scandal Rocks Catholic 10. Hickman v. Taylor, 329 U.S. 495, 507 (1947). Church: Personnel Files Reveal Church Knowledge of 37 eral rules of civil procedure. As one court pedophilic tendencies. Hutchinson sought has noted, “[T]here has been a consistent discovery of Luddy’s personnel file as well trend since 1959 favoring broad pretrial dis- as documents that pertained to actual covery for the purpose of enabling litigants reports of sexual involvement with minor to prepare themselves fully for trial and to male children by priests in the diocese. The enhance their ability to present to the jury Church resisted, claiming among other and the trial court all the pertinent facts and things, that the information was protected legal theories so that a just decision will be from disclosure under the priest-penitent rendered.”11 privilege.14 Likewise, Rule 26(A)(1) of the Ohio As a doctrine of some faiths, including Rules of Civil Procedure provides that “[i]t Roman Catholicism, clergy have an obliga- is the policy of these rules to preserve the tion to maintain the confidentiality of pas- right of attorneys to prepare cases for trial toral communications.15 The clergy-peni- with that degree of privacy necessary to tent privilege is an evidentiary rule derived encourage them to prepare their cases thor- from the common law that protects a peni- oughly and to investigate not only the tent’s communications with his or her priest favorable but the unfavorable aspects of from revelation in court. The privilege is such cases.” In light of this, “[i]nsofar as recognized in the United States by statute in the canons of the Church are in conflict every state and by the federal government.16 with the law of the land, the canons must As the United States Supreme Court yield.”12 Simply placing information into a explained, the privilege “recognizes the “secret archive,” therefore, is not sufficient human need to disclose to a spiritual coun- in itself to preclude discovery. selor, in…confidence, what are believed to be flawed acts or thoughts and to received II. The Priest-Penitent Privilege priestly consolation and guidance in return.”17 Like all evidentiary privileges, the The mere fact that a communication was priest-penitent privilege is not absolute.18 made to a clergyman or documentation was Courts have limited the priest-penitent transmitted to a clergyman is insufficient in privilege in civil and criminal molestation itself to invoke the privilege.13 cases. Pennsylvania courts, for example, In 1988, Samuel C. Hutchison com- “have interpreted [the] clergy-communicant menced a civil action to recover damages privilege as applying only to confidential against the Reverend Father Francis Luddy communications between a communicant for alleged pedophilic sex acts performed and a member of the clergy in his or her while Father Luddy was serving as his roles as confessor and spiritual coun- priest. Hutchinson also alleged that the selor.”19 The Pennsylvania Supreme Court, Bishop, several Monsignors, the local in determining the parameters of the privi- Diocese, and the Catholic Church had neg- lege, found its “review of the relevant case ligently hired or retained Father Luddy and law reveal[ed] no jurisdiction extending the had assigned him to a pastorate when they privilege to communications that are not knew or should have known of his penitential or spiritual in nature.”20 Thus, in

11. Vythoulkas v. Vanderbilt University Hosp., 693 S.W.2d 16. See Ronald J. Colombo, Forgive Us Our Sins: The 350, 353 (Tenn. Ct. App. 1985). Inadequacies of the Clergy-Penitent Privilege, 73 N.Y.U. L. 12. Hutchinson, 414 Pa. Super. at 145. REV. 225, 231 & n. 39 (1998) (collecting statutes); Cox v. 13. Id. at 148. Miller, 296 F.3d 89, 102 (2nd Cir. 2002). 14. Id. at 138. 17. Trammel v. U.S., 445 U.S. 40, 51 (1980). 15. Under the Code of Canon Law No. 1388, a priest who 18. “Evidentiary privileges are not favored; ... exceptions directly violates the seal of confession is automatically to the demand for every man's evidence are not lightly cre- excommunicated and only the Holy See can lift the ban. ated nor expansively construed, for they are in derogation of See Fr. William P. Saunders, Excommunication: A Call to the search for the truth.” Herbert v. Lando, 441 U.S. 153, Grace, THE ARLINGTON CATHOLIC HERALD, (Feb. 175 (1979) (quoting United States v. Nixon, 418 U.S. 683, 20, 2003), available online at http://www.catholicherald. 710 (1974)). com/saunders/03ws/ws030220.htm (last visited November 19. Pennsylvania v. Stewart, 547 Pa. 277, 283 (Pa. 1997) 25, 2003). (emphasis in original). 20. Stewart, 547 Pa. at 287. 38 many instances, the Church’s knowledge of penitent privilege. “This privilege protects a priest’s pedophilia would not be privi- ‘priest-penitent’ communications; it does leged because “Church leaders who receive not protect information regarding the man- information about sexual misconduct by ner in which a religious institution conducts clergy seldom learn of this information its affairs or information acquired by a solely in a privileged setting, such as when church as a result of independent investiga- the offending minister confesses or seeks tions not involving confidential communi- spiritual counseling form his superior. cations between priest and penitent.”25 The Much more frequently, church leaders learn court next addressed the Church’s con- of the abuse from parents of the children tention that the documents sought were pro- affected, or other clergy members who are tected from disclosure by the First reporting misconduct by their peers.”21 Amendment. A notable exception to this involves the Catholic Church’s Vicar of Priests, who III. The First Amendment serves as a confidant to priests in need of counsel and support regarding matters relat- Although the freedom to believe is ed to their position.22 In Corsie v. absolute, the freedom to act cannot be.26 Campanalonga, victims of alleged sexual The Establishment and Free Exercise molestation by a former priest sought pro- Clauses of the First Amendment prohibit duction of documents contained in the excessive government entanglement with priest's personnel files which were held by religious organizations. The First the Vicar. The court held that only state- Amendment “forbids civil courts from ments made by the priest in confidence to deciding issues of religious doctrine or the Vicar were protected by the priest-peni- ecclesiastical polity.”27 Courts have long tent privilege; other documents did not held that civil courts lack jurisdiction over obtain a privileged or protected status sim- purely spiritual matters, the administration ply because they were possessed by the of church affairs that do not affect the civil Vicar.23 or property rights of individuals, internal In Hutchinson, the court first determined church conflicts, and the imposition of that the information the plaintiff sought church-related discipline on its members.28 from the Church pertaining to Father This is because there is a perceived danger Luddy’s alleged sexual molestation was rel- that in resolving intrachurch disputes the evant to his claims. Similarly, the circum- state will become entangled in essentially stances involved in the Church’s handling religious controversies or intervene on of Father Luddy and other named priests behalf of groups espousing particular doc- who were known to be pedophilic would be trinal beliefs.29 relevant to plaintiff’s claim that the Church At the same time, the courts have consis- was negligent in concealing such tenden- tently held that the First Amendment is not cies and that this contributed causally to his a defense to disclosure of personnel own molestation.24 The court then found records. Unlike reviewing a Church's deci- that the information sought was not privi- sion whether and how severely to discipline leged because there was no evidence that a member, for example, priest sexual abus- the information was privileged within the es cases do not require interpreting or meaning of Pennsylvania's statutory clergy- weighing Church doctrine and neutral prin-

21. R. Michael Cassidy, Sharing Sacred Secrets: Is It (Past) Attorney General v. Bailey, 386 Mass. 367, 375 (1982)) Time for a Dangerous Person Exception to the Clergy- (internal quotation marks omitted). Penitent Privilege?, 44 WM. & MARY L. REV. 1627, 1699 27. Elmora Hebrew Ctr., Inc. v. Fishman, 125 N.J. 404, 413 (2003). (N.J. 1991). 22. Corsie v. Campanalonga, 317 N.J. Super. 177, 182 (N.J. 28. See, e.g., Chavis v. Rowe, 93 N.J. 103, 109 (N.J. 1983); Super. A.D. 1998). Hutchison v. Luddy, 414 Pa. Super. 138 (Pa. Super. Ct. 23. Id. 1992);. 24. Hutchinson, 414 Pa. Super. at 146. 29. See The Serbian Eastern Orthodox Diocese for the 25. Id. at 147. United States of America and Canada v. Milivojevich, 426 26. Alberts v. Devine, 395 Mass. 59, 73 (1985) (quoting U.S. 696, 709-10 (1976). 39 ciples of law (i.e., the rules of discovery) requested from that file interferes with the can be applied. In Corsie v. exercise of religious freedom.”31 The appel- Campanalonga, the New Jersey Court of late court agreed-finding that there “is not Appeals aptly summarized this view: one iota of evidence” that the court-ordered [T]he maintenance of personnel files, discovery of documents in the secret generally speaking, is nothing more than archive will impermissibly intrude upon a normal administrative procedure of either theological doctrine or the practice of any organization, whether it be religious religion.32 or secular. It can hardly be argued that the ordinary maintenance of such files is Conclusion a practice which is rooted in religious belief. Maintenance of the files does not The discovery of documents deemed rel- involve religious doctrine. Discovery evant and non-privileged does not imper- would not impinge upon the administra- missibly intrude upon the Church’s exercise tion of the church or its customs or its of its religious beliefs and practices.33 practices. There is no usurpation of the Courts have rejected the Catholic Church’s decision-making function of a religious claim that personnel records of pedophiliac organization. Simply put, there is no priests are protected from disclosure by the religious dispute involved in the produc- First Amendment. At the same time, the tion of personnel files in the discovery courts have also narrowly construed the phase of trial. Thus, there is no occasion priest-penitent privilege to permit the dis- for the church defendants to claim a closure of priests’ personnel files in civil lit- privilege of nondisclosure under the igation. To balance the competing interests First Amendment.30 against excessive entanglement in Church affairs with a plaintiff’s need for full dis- Similarly, courts have rejected the Church’s covery, courts often conduct in camera attempt to use the First Amendment to cloak review of the requested Church documents, any and all documents contained in the whether they are personnel records or other Church's “secret archive” with inviolate records from the Church's “secret archive.” protection from disclosure. In Hutchinson, In Corsie, for example, the appellate court the Church argued that the First directed the trial judge to conduct an in Amendment precluded the disclosure of camera review of documents to determine such documents. The trial court noted that if the requested documents were privileged, “[t]he relevant inquiry is not whether the were relevant to plaintiffs’ claims, or Church gives a file a particular name, but involved the privacy interests of unrelated whether disclosure of the information third parties.34

30. Id. at 185-86 (internal citations omitted). 33. Pennsylvania v. Stewart, 547 Pa. 277, 291 (Pa. 1997); 31. Hutchinson, 414 Pa. Super. at 152. Niemann v. Cooley, 93 Ohio App.3d 81, 89-92 (Ohio App. 32. Id. 1 Dist. 1994). 34. Corsie v. Campanalonga, 317 N.J. Super. 177, 182 (N.J. Super. A.D. 1998).

41 The Privacy Project II Family Unity or Family Crisis: Revisiting the Need for a Parent-Child Communication Privilege

By Mark D. Fox and Mark D. Fox: United States Magistrate Michael L. Fox Judge, United States District Court for the “Privilege” is derived from the Latin Southern District of New York. Former member of the Committee on Security and phrase, “privata lex.”…Although privata Facilities, Judicial Conference of the lex was a term developed in the days of United States (1996-2002). JD, 1967, ancient Rome, privileges protecting special Brooklyn Law School; BA, 1964, State relationships existed centuries before Rome University of New York at Buffalo. coined a term for them. 1 Michael L. Fox: JD, 2003, Harlan Fiske I. Introduction: Stone Scholar, Columbia University School The Privilege Rules in Evidence of Law; BA, 2000, summa cum laude and Phi Beta Kappa, Bucknell University. Americans take pride in having a justice Litigation Associate with the law firm of Stroock & Stroock & Lavan LLP, in system that has as one of its foremost and Manhattan (awaiting admission to the New most professed goals the protection of indi- York State Bar as of the date of publica- vidual rights. We also profess a true con- tion). (This article reflects the thinking and cern for the maintenance of family solidari- opinions of the author alone, and does not ty and values, and the protection and preser- reflect the positions or opinions of Stroock vation of those values from intrusion. & Stroock & Lavan LLP, or any of its attor- While few would argue our commitments to neys.) these goals, that commitment becomes less credible when re-examined in the context of lege, depending upon the application of the state of our law regarding the protection choice of law provisions - whether or not, in of confidences and communications a civil matter, “State law supplies the rule of exchanged between children and their par- decision” - and the application of the Erie ents. doctrine and the line of cases stemming In the United States, and the several from it.2 However, at least one United States, there exist a number of both settled States Court of Appeals has ruled that the and unsettled evidentiary privileges. Federal Rules will apply if a federal court Among them are the Attorney-Client case presents both state law and federal law Privilege, the Physician-Patient Privilege, claims - any other result would be “unwork- the Psychotherapist/Psychologist-Patient able.”3 If the Federal Rules govern in a Privilege, the Clergy-Penitent Privilege, particular case, Federal Rule of Evidence and the dual Spousal Immunity and 501 applies to all issues concerning testi- Confidential Marital Communication monial privileges. However, the rules are Privileges. In the Federal Courts of the often non-specific when it comes to estab- United States, either State or Federal Rules lishing such privileges. For example, in rel- may govern evidentiary matters of privi- evant part, Rule 501 states:

1. Wendy Meredith Watts, The Parent-Child Privileges: Court’s Erie decision include the seminal choice of law and Hardly a New or Revolutionary Concept, 28 WM. & MARY procedure case Hanna v. Plumer, 380 U.S. 460 (1965). L. REV. 583, 590 (1987). 3. Pearson v. Miller, 211 F.3d 57, 66 (3d Cir. 2000) (citing 2. FED. R. EVID. 501 (2002); and see Erie v. Tompkins, Wm. T. Thompson Co. v. General Nutrition Corp., 671 F.2d 304 U.S. 64 (1938). Among those cases stemming from the 100, 104 (3d Cir. 1982)). 42 Except as otherwise required by the and then refers the reader to the law of evi- Constitution of the United States or provided dence on privileges, specifically Article 45 by Act of Congress or in rules prescribed by of the CPLR.7 But, neither Article 45 nor the Supreme Court pursuant to statutory the Federal Rules contain a statutory authority, the privilege of a witness [or] per- Parent-Child Privilege - a protective device son…shall be governed by the principles of that could be applied to shield parents and the common law as they may be interpreted children from being forced to testify against by the courts of the United States in the light of reason and experience. However, in civil each other. The comment to section actions and proceedings, with respect to an 3101(b) does state, however, that “any evi- element of a claim or defense as to which dentiary exemption that fits broadly under State law supplies the rule of decision, the the ‘privileged’ category, whether it privilege of a witness [or] person…shall be emanates from CPLR Article 45 or any determined in accordance with State law.4 other law (or the constitution itself), is within CPLR 3101(b).”8 This broadening lan- In other words, the Federal Rules contain guage has cleared the way for a few lower no particular or specified privileges. At one court cases in New York that have expand- time, during the 1970’s, Congress set out to ed on a familial or parent-child evidentiary codify certain privileges in the Federal privilege - as we will see below. Rules, among them the Attorney-Client Furthermore, there is a guiding principle Privilege (later proposed Rule 503), the concerning the creation and existence of the Spousal Privilege (later proposed Rule evidentiary privileges, recently reaffirmed 505), and the Clergy-Penitent Privilege by the United States Court of Appeals for (later proposed Rule 506). This attempt at the Second Circuit, that should be kept in codification failed, however, and left us mind throughout this article: only with the generality of Rule 501, Because claims of privilege derogate from supra.5 To identify privileges under the the public’s “‘right to every [person’s] evi- Federal Rules, therefore, one must look dence,’”[sic]… “they must be strictly con- either to case law or to federal statutes. strued and accepted ‘only to the very limited Similarly, in New York, Civil Practice Law extent that permitting a refusal to testify or and Rules (“CPLR”) section 3101 states, in excluding relevant evidence has a public relevant part: “Privileged matter. Upon good transcending the normally predomi- nant principle of utilizing all rational means objection by a party privileged matter shall for ascertaining truth,’”[sic].9 not be obtainable.”6 Nothing more is stated on the issue in this section of the CPLR. Many cases and law review and journal The commentary to § 3101(b) acknowl- articles have discussed, proposed, defended edges that this section simply invokes the or refuted the need for or existence of testi- rules of evidence normally applied in court, monial privileges, including a parent-child 4. FED. R. EVID. 501 (2002). privilege.10 The law of privacy and of priv- 5. Yolanda L. Ayala & Thomas C. Martyn, To Tell or Not to Tell? An Analysis of Testimonial Privileges: The Parent- Fam. Ct. 1984); Three Juveniles v. Commonwealth, 455 Child and Reporter's Privileges, 9 ST. JOHN'S J. LEGAL N.E.2d 1203 (Mass. 1983); People v. Harrell, 450 N.Y.S.2d COMMENT. 163, 166 & n. 9 (1993). 501 (2d Dept. 1982), aff'd, 449 N.E.2d 1263 (N.Y. 1983) 6. N.Y. C.P.L.R. 3101(b) (McKinney 2002). (declining to rule on the privilege issue); People v. Fitgerald, 7. N.Y. C.P.L.R. 3101(b), cmt. C3101:25 (McKinney 2002). 422 N.Y.S.2d 309 (Cty. Ct., Westchester Cty., 1979); In re 8. Id. Application of A. & M., 403 N.Y.S.2d 375 (4th Dept. 1978); 9. Cox v. Miller, 296 F.3d 89, 107 (2d Cir. 2002). Susan Levine, Comments, The Child-Parent Privilege: A 10. Among the many cases and articles are: Jaffee v. Proposal, 47 FORD. L. REV. 771 (1978-79); Ann M. Stanton, Redmond, 518 U.S. 1 (1996); Trammel v. United States, 445 Child-Parent Privilege for Confidential Communications: An U.S. 40 (1980); In re Grand Jury, 103 F.3d 1140 (3d Cir. 1997); Examination and Proposal, 16 FAM. L.Q. 1 (1982); Ellen In re Erato, 2 F.3d 11 (2d Cir. 1993); Port v. Heard, 764 F.2d Kandoian, The Parent-Child Privilege and Parent-Child 423 (5th Cir. 1985); United States v. Ismail, 756 F.2d 1253 (6th Crime: Observations on State v. DeLong and In re Agosto, 36 Cir. 1985); In re Matthews, 714 F.2d 223 (2d Cir. 1983); United ME. L. REV. 59 (1984); Philip Kraft, The Parent-Child States v. Jones, 683 F.2d 817 (4th Cir. 1982); Clark v. Greiner, Testimonial Privilege: Who's Minding the Kids?, 18 FAM. No. 97-CV-2483(JG), 2001 WL 135732 (E.D.N.Y. Feb. 2, L.Q. 505 (1985); Watts, supra note 1; and Ayala & Martyn, 2001); In re Agosto, 553 F.Supp. 1298 (D. Nev. 1983); In re supra note 5. Mueller & Kirkpatrick also provide an inform- Greenberg, 11 Fed. R. Evid. Serv. (Callaghan) 579 (D. Conn. ative and in-depth discussion of the status of familial privilege 1982); State v. Anderson, 28 P.3d 662 (Or. Ct. App. 2001); in their treatise on federal evidence. CHRISTOPHER B. Bond v. Albin, 28 P.3d 394 (Kan. Ct. App. 2000); In re E.F., MUELLER & LAIRD C. KIRKPATRICK, 2 FEDERAL 740 A.2d 547 (D.C. 1999); In re Ryan, 474 N.Y.S.2d 931 (N.Y. EVIDENCE § 208 (2d ed. 1994). 43 ileges (“privata lex”) has existed for sever- II. The Current Status of the Parent- al millennia, and none of the issues Child Privilege addressed herein are novel ideas. Professors Watts, Stanton and Kraft, and The legal history of a Parent-Child Ms. Levine, have presented their own pro- Privilege11 is, apparently, a contentious one. posals for a Parent-Child Privilege statute, However, in the Federal courts alone there with defenses and justifications, in their is but one well-worn path, and that path respective articles. However, because little leads away from any full-fledged recogni- has been accomplished in the past several tion of a parent-child privilege in the law of decades since their articles were written, we evidence.12 The Supreme Court of the felt that it was time to re-ignite the debate. United States has never squarely ruled on In doing so, we have re-thought the privi- the existence of such a privilege, and the lege, and set forth in Section III, infra, a set United States Congress has passed no legis- of proposed guidelines that we feel should lation on the issue in conjunction with the be incorporated into an appropriate and nec- provisions of Federal Rule 501. In fact, no essary Parent-Child Privilege Statute. federal appeals court has expressly While reference is made to the works of acknowledged the existence of any sort of Watts, Stanton, Levine and others, in parent-child privilege in the law of evi- attempting to outline and create a workable, dence. Only certain select rulings from two recognized and protective privilege for United States district courts have attempted families (other than spouses), this article to expand the field, and shield parents and proposes a privilege narrowed in some children from compelled testimony by or respects and broadened in others, and con- against family members.13 But, unfortunate- structed with the express purpose of uniting ly the Courts of Appeals have subsequently the two sides of the road on a median of disapproved of these lower court rulings.14 both public justice and privacy. For purpos- Among the States, only four have recog- es of this discussion, a brief overview of the nized some form of a parent-child privilege, state of the law on the issue of familial evi- either through common law decisions or dentiary privilege will be helpful. Then, legislative action. No High Court of any after consideration of the law at both the state has recognized the existence of, or has state and federal levels, we propose the offered to create, a parent-child privilege. 15 establishment of a Parent-Child And, do not think that the decisional impor- Confidential Communication Privilege for tance of this lack of positive federal and the readers’ consideration. The proposed state case law has been lost on other privilege will be strong, shielding, and courts.16 In actuality, only New York State, more reasonable than some of the all-or- by way of the rulings of several of its lower nothing privileges sought by litigants in the courts, recognizes the existence of a judi- cases, or discussed by authors in the cially-created parent-child privilege to reviews and journals. some extent. At the same time, Idaho and

11. While we use “Parent-Child Privilege” as a shorthand ruling by the Second Department below, the Court of label, this Privilege should be made to apply to parents or to Appeals declined to rule on the existence or non-existence of legal guardians - whomever is legally responsible for the the parent-child privilege in the common law of the State of welfare and upbringing of the child. New York. People v. Harrell, 449 N.E.2d 1263 (N.Y. 1983). 12. In re Grand Jury, 103 F.3d 1140, 1146 (3d Cir. 1997). In the second case the Court, while not expressly stating that 13. In re Agosto, 553 F.Supp. 1298 (D. Nev. 1983); and In a privilege either does or does not exist for parent-child com- re Greenberg, 11 Fed. R. Evid. Serv. (Callaghan) 579 (D. munication, held that the privilege would likely not apply to Conn. 1982). a defendant who is not a minor, whose communications were 14. MUELLER & KIRKPATRICK, supra note 10, at § 208 made in the presence of other family members, whose moth- & n.9. er freely testified before the Grand Jury, and whose crime 15. The New York State Court of Appeals has heard two was against another member of the household. People v. appeals in cases that included a claim of parent-child privi- Johnson, 644 N.E.2d 1378 (N.Y. 1994). But, to this day we lege. However, in the first case the Court determined that lack any definitive and affirmative ruling by the High Court because no objection, as to the confidential communication on the matter of a parent-child privilege. between defendant and his mother, was raised at either the 16. In re Grand Jury, 103 F.3d 1140, 1146 (3d Cir. 1997); suppression hearing or at trial, the claim for the privilege In re E.F., 740 A.2d 547, 549 (D.C. 1999). had not been properly preserved for appeal. Thus, despite a 44 Minnesota are the only two states out of the being sought by the State to testify as to fifty in the Union that have acted through overt acts witnessed, but only to testify as to their legislatures to create a limited Parent- communications made between the parents Child Privilege.17 Massachusetts has a and the child. The Erie County Court both statute that prevents a minor child from expanded the marital privilege to encom- forced testimony against a parent in a crim- pass communications from children made inal case, but the statute does not recognize in the privacy of the home, and found a an actual parent-child privilege. Rather, the basis for constitutionally protected privacy, statute has been characterized as a witness- thereby quashing the subpoenas that had disqualification rule, and it is said that the been served on the parents.21 The Fourth statute only applies to minors, and only Department reversed the lower court on the under certain conditions.18 Still other state expansion of the marital privilege, and also courts and legislatures refuse to recognize a reversed the lower court on the law, remit- parent-child privilege at all. ting the matter for further proceedings. But, Even in the states where the privilege the Court did not completely denounce a has been acknowledged, it is at best barely protectable interest in private communica- viable. One can look to the case law of tions between parents and children. New York as a standard by which to meas- Instead, the Court ruled, ure the success of those who advocate the Although the communication is not protect- creation of the privilege. Though the New ed by a statutory privilege, we do not con- York Court of Appeals has not yet ruled on clude that it may not be shielded from dis- the issue, a few trial courts in New York closure. It would be difficult to think of a have created or acknowledged the privilege, situation which more strikingly embodies the intimate and confidential relationship along with one or two of the Appellate which exists among family members than Divisions. In March 1978, the Appellate that in which a troubled young person, per- Division, Fourth Department, a panel com- haps beset with remorse and guilt, turns for prised of then-Presiding Justice Cardamone counsel and guidance to his mother and and Justices Simons, Dillon, Denman and father. There is nothing more natural, more Witmer, handed down a decision that was consistent with our concept of the parental the first to recognize something resembling role, than that a child may rely on his parents a parent-child privilege.19 A.&M. concerned for help and advice. Shall it be said to those an important issue - whether parents could parents, “Listen to your son at the risk of be required to testify before a Grand Jury as being compelled to testify about his confidences?”22 to communications made to them in confidence by their minor son. At the time, the The Court acknowledged that there is a Court admitted the issue was one of first certain “realm of family life which the state 20 impression in New York. The son was cannot enter,” and cited United States accused of arson at a local college, and it Supreme Court precedent concerning was suspected by prosecutors that the son, parental responsibilities for the education, seeking guidance, went to his parents - a care, nurturing, and custody of children that “first stop” that many in such a situation are fall within the ambit of constitutional priva- likely to make. His parents were not at the cy, and emanate from the “penumbra” of scene of the fire, and therefore were not specifically enumerated constitutional

17.103 F.3d at 1146 & nn.13, 15 (citing, among others, In children would have to testify against their father in his trial re Ryan, 474 N.Y.S.2d 931 (N.Y. Fam. Ct. 1984); People v. for murder. The Court granted no privilege or disqualifica- Harrell, 450 N.Y.S.2d 501 (2d Dept. 1982); and People v. tion to the children, so the Legislature chose to act and pass Fitgerald, 422 N.Y.S.2d 309 (Cty. Ct., Westchester Cty., this somewhat weak and narrow statute. See Ayala & 1979); Idaho Code § 9-203(7) (1990 & Supp. 1995) (2003); Martyn, supra note 5, at 170. and Minn. Stat. § 595.02(1)(j) (1988 & Supp. 1996) (2003)). 19. In re Application of A. & M., 403 N.Y.S.2d 375 (4th 18.103 F.3d at 1146, n.13 (citing Mass. Gen. L. ch. 233, § Dept. 1978). 20 (1986 & Supp. 1996) (2003)). This Massachusetts 20. 403 N.Y.S.2d at 377. statute was passed in response to the case Three Juveniles, 21. Id. at 377. 455 N.E.2d 1203 (Mass. 1983), in which the Court ruled that 22. Id. at 378 (emphasis added). 45 rights, thereby creating autonomy for the “private realm of family life which the state family unit.23 The realm of family unity cannot enter.” That is not to say, however, and the issue of privacy can be employed to that parents in this setting are immune from protect communications between child and Grand Jury process. When a witness is sum parent from being used as ammunition by moned to the Grand Jury by subpoena ad tes- opposing counsel. In order to invade the tificandum, he…may assert a privilege at the time of questioning, CPL 190.30(1),(5) family unit, “the governmental needs ….There is no invasion of privacy in requir- asserted must be carefully examined in ing the respondents to appear before the order to insure that there exists a legitimate Grand Jury….there may be questions… purpose in abridging [the] familial inter- which would not invade the area of family est.”24 The Court held that the integrity of confidentiality….When respondents appear the family is entitled to constitutional pro- before the Grand Jury, they will be entitled tection, and cites several authorities that to the advice of counsel…and may then emphatically state the importance of par- assert their constitutional rights…when and ents and children being able to “talk out” if they are asked questions concerning com- problems and concerns in a confidential and munications made to them by their son in confidence. If the court is then asked to rule trusting environment, enabling the children on such claim, it may find it necessary to to properly develop emotionally and men- hold an evidentiary hearing to determine 25 tally in relation to the world around them. whether the factual context in which the Indeed, as Justice Denman wrote for the statements were made mandates that the Court, information sought be given constitutional If we accept the proposition that the foster- protection….27 ing of a confidential parent-child relationship is necessary to the child's development However, just eight months later, in of a positive system of values…there can be November of 1978, another panel of the no doubt what the effect on that relationship Fourth Department, including Justices would be if the State could compel parents to Cardamone, Simons and Witmer (who also disclose information given to them in the context of that confidential setting. Surely presided over the A.&M. case), rejected the the thought of the State forcing a mother and application of a parent-child privilege to a father to reveal their child's alleged mis communication made from a son to his deeds, as confessed to them in private, to father concerning the son's guilt for the provide the basis for criminal charges [or crime of criminal mischief.28 The trial court civil damages] is shocking to our sense of had overruled defendant's objection of priv- decency, fairness and propriety.26 ilege to the questioning of his father concerning son's admissions, and following the While the A.&M. Court did not express- father’s testimony enough corroborating ly create a privilege for parent-child com- evidence existed to secure a conviction. munications, in closing its decision the The Fourth Department, citing to A.&M., Court illuminated the path to be taken in reaffirmed that no statutory parent-child order for constitutional protection to be privilege exists in New York, and that con- extended to parent-child communications: stitutional protection may only be extended …we believe that the creation of a privilege to communications in limited circum- devolves exclusively on the Legislature. We stances. The Court concluded, though, that conclude, however, that communications such circumstances did not exist in the case made by a minor child to his parents within the context of the family relationship may, at Bar, finding that “[i]t does not appear that under some circumstances, lie within the respondent made the statement to his father

23. Id. at 378-379 (citing, among others, Pierce v. Society 25. Id. at 380. of Sisters, 268 U.S. 510; Roe v. Wade, 410 U.S. 113; 26. Id. at 380 (emphasis added). Wisconsin v. Yoder, 406 U.S. 205; and Griswold v. 27. Id. at 381-382 (internal citations omitted). Connecticut, 381 U.S. 479). 28. In the Matter of Mark G., 410 N.Y.S.2d 464 (4th Dept. 24. 403 N.Y.S.2d at 378. 1978). 46 in confidence and for the purpose of obtain- family,” and that the courts cannot hide ing support, advice or guidance…”; and the behind the “tendency” not to expand the Court also found that the father’s willing- categories of privileges while disregarding ness to testify to the son’s admissions at “situations where the foundations of certain trial illustrated that he did not otherwise Basic relationships, such as those between wish to remain silent or keep his son’s con- family members may be threatened.”33 And, fidences private.29 in citing A.&M., the Court reiterated that, One year after Mark G., another New if it is determined that the information York Court advanced the parent-child priv- sought…was divulged by the (child) in the ilege with a firm step forward. In context of the familial setting for the purpose November 1979, County Court Judge of obtaining support, advice or guidance Gerard Delaney, of Westchester County, …(then) the interest of society in protecting and nurturing the parent-child relationship is decided the seminal case of People v. of such overwhelming significance that the 30 Fitzgerald. Following remand from an State interest in fact-finding must give way.34 earlier appeal, a second trial was had on the charges of criminally negligent homicide Judge Delaney also ruled that since the and third degree assault. Testimony was protections flow directly from both sought from the father of the 23-year-old Constitutions, and federally protected defendant, after it was discovered that the rights, the issue of a parent-child privilege two had had a private Christmas Eve con- is a matter of law, fit for a court to decide versation about the accident from which the regardless of whether or not the Legislature charges stemmed. The Court faced a ques- chooses to act.35 This opinion can be cited tion of “whether there exists a ‘parent- in opposition to the many other court deci- child’ privilege which would prevent forced sions from across the nation that leave the disclosure by the State of confidential com- creation of new privileges, especially the munications between a parent and a child of contested Parent-Child Privilege, exclu- any age when the parties to such communi- sively in the hands of legislatures. 31 cation mutually assert such a privilege.” The final two New York cases, which fill Judge Delaney ruled that “such a privilege in the field, serve to both expand and solid- can and does exist, grounded in law, logic, ify the common law privilege established morality and ethics,” and found protection by those few progressive judges. First, in stemming directly from both the Federal People v. Harrell,36 the Appellate Division, and State Constitutions and the “right to pri- Second Department, dealt with a claim of vacy” - a protection the judge found to be so parent-child privilege arising from a con- compelling that the privilege was broad- versation between an arrested youth and his ened by the Court to include children of any mother, in a police station, that was over- age still engaged in familial relationships heard by an officer. The Court determined with parents, since the State may not erect that the law prevents the police from isolat- “artificial barriers” to facilitate the over- ing a minor from contact with his or her 32 turning of constitutional protections. In parents or family after arrest. Furthermore, support of its ruling, the Court cited author- although the parent-child privilege is not as ities from across the board, including those deeply imbedded in constitutional law as stating that privileges are designed to “pro- the attorney-client privilege, the Court tect relationships deemed socially desir- determined “[the] privilege is rarely more able,” that it has been established that the appropriate than when a minor, under arrest Constitution “protects the sanctity of the for a serious crime, seeks the guidance and

29. Id. at 465-466. 33. Id. at 311-312 (internal citations omitted). 30. 422 N.Y.S.2d 309 (Cty. Ct., Westchester Cty., 1979) 34. Id. at 313 (citing A.&M., 403 N.Y.S.2d at 380). (Delaney, J.). 35. Id. at 313. 31. Id. at 310 (emphasis added). 36. 450 N.Y.S.2d 501 (2d Dept. 1982). 32. Id. at 310, 312, 313-315 (emphasis added) (internal citations omitted). 47 advice of a parent in the unfriendly environs serve in a parental capacity to the defen- of a police precinct….for such a youth, his dant. parent is the primary source of assistance Even though we are not presently confront- [even before a lawyer].”37 Therefore, a ed with a parent and child, the relationship as youth must be provided with access to par- testified to by respondent's grandmother, ents after arrest. In addition, applying the leads to the inference that she stands in the same measure of respect that must be place and stead of his parent. To infer other wise would destroy the familial setting and accorded to attorneys and clerics, self-image of the child, who should be enti- when [a] defendant seeks to communicate tled to discuss his plight without fear that his with a person and that communication would confidences will subsequently be revealed to ordinarily be deemed privileged, those who others.41 hold him in custody should either (1) afford him the right to make that communication in In finding such a privilege, the Court conditions of privacy or (2) warn him that if his utterances are overheard, they may be concluded that the communications made testified to by the person overhearing them, while defendant suffered from remorse and or (3) bar all hearers from testifying to con- guilt were shielded, since the injury to the fidential communications overheard by them relationship of child and [grand]parent when conditions of privacy are not accorded would be much greater than the benefit to and appropriate additional warnings are not the disposal of the State's litigation.42 given.38 Although at this time the state of New York case law is fairly settled, it is sparse, (It should be noted, however, that the and can result in varied outcomes depend- Court subsequently refused to reverse ing on a case-by-case application of the defendant's conviction based upon the erro- law.43 One thing is certain, however, and neous admission of the privileged testimo- that is that the New York courts have creat- ny, given the weight of the remaining evi- ed a privilege. The same cannot be said for dence against the defendant, finding that the the courts in other parts of the country, save admission of such evidence was otherwise one ruling from the United States District harmless. And, again, as mentioned in foot- Court for the District of Nevada, and one note 15, supra, the New York Court of from the United States District Court for the Appeals, on the appeal from the Second District of Connecticut (both from the early Department in this case, declined to rule on 1980s): the existence of the privilege claiming that In the summer of 1982, the United States the lack of objections at earlier proceedings District Court for the District of 39 failed to preserve the issue for review. ) Connecticut, United States District Judge Finally, in 1984 Judge Affronti, of the Burns presiding, decided In re Grand Jury New York Family Court, presided over a Proceedings (Greenberg) recognizing a case in which one of the issues was whether limited and convoluted privilege before the or not to expand the parent-child privilege, Grand Jury. This grant was based solely on previously recognized by the other courts, the religious beliefs of the mother-witness to include communications between a that prevented her, she argued, from either defendant youth and the grandmother with willing or forced testimony regarding whom he had lived for practically all of his incriminating information communicated to 40 life. The Court ruled that the privilege the mother by the defendant daughter.44 does, indeed, include those people who This case was one of first impression in the

37. Id. at 504. 42. Id. at 931 (citing Fitzgerald, 422 N.Y.S.2d at 312 (cit- 38. Id. at 505. ing Wigmore)). 39. See also People v. Edwards, 521 N.Y.S.2d 778 (2d 43. In fact, several more recent rulings, especially at the Dept. 1987) (citing Harrell, and ruling that the failure to federal level, appear to cut back on the New York privilege. make objections based upon parent-child privilege at earlier See Clark v. Greiner, No. 97-CV-2483(JG), 2001 WL 135732 proceedings did not preserve the issue for review on appeal). (E.D.N.Y. Feb. 2, 2001). 40. In re Ryan, 474 N.Y.S.2d 931 (N.Y. Fam. Ct. 1984) 44. In re Greenberg, 11 Fed. R. Evid. Serv. (Callaghan) 579 (Affronti, J.). (D. Conn. 1982) (Burns, J.). 41. Id. at 931. 48 District, and raised a number of the impor- tionship must be protected and sedulously tant issues already discussed, supra. The fostered by the courts….There is no reason- Court did not recognize a full First able basis for extending a testimonial privi- Amendment defense to a Grand Jury sub- lege for confidential communications to poena, but only a limited privilege, based spouses, who enjoy a dissoluble legal contract, while yet denying a parent or child the on the mother's religion, where the informa- right to claim such a privilege to protect tion communicated in confidence was communications made within an indissolu- believed to be protected by the First ble family unit, bounded by blood, affection, Amendment.45 Judge Burns did not, howev- loyalty and tradition. And…if the rationale er, create or recognize a common law par- behind the privilege of a witness-spouse ent-child privilege46 as the New York courts …serves to prevent the invasion of the have done, and thus following In re harmony and privacy of the marriage…then Greenberg the parent-child privilege was affording the same protection to the parent- not much more developed in the federal child relationship is even more compelling courts. Although we do not rest our pro- ….Furthermore, the parent-child relationship exhibits similarities not only to the posed Privilege on a basis of religious con- spousal relationship…but to the psychother- victions, it is important to note that In re apist-patient relationship, which is based Greenberg does exist, and was among the upon the guidance and “listening ear” which first of the federal court cases to begin plac- one party…provides to the other….Open ing stones into the foundation of a greater communication has a therapeutic value in privilege. the parent-child, spousal, and psychothera- In January of 1983, however, a very pist-patient settings….The family, as the important (and so far singular) step forward basic unit of American society, is the milieu was taken by then-Chief District Judge in which such values [morals, ethics, decen- Claiborne of the United States District cy] are inculcated into individuals, and thus into society….If the state drives a wedge Court for the District of Nevada, in the between a man and his family, the state will 47 landmark case of In re Agosto. In this ultimately suffer….allowing the government case, Movant sought to quash a Grand Jury to coerce testimony by parent and child subpoena, or in the alternative receive a against one another [will result in] individu- protective order from the Court preventing als totally uninvolved in and innocent of the his forced testimony against Movant’s alleged wrongdoing [being] jailed for con father. Among the arguments advanced by tempt, solely because of a strong sense of Movant were claims of constitutional priva- family loyalty….Indifference to personal cy protections, as well as religious beliefs liberty is but the precursor of the State’s 49 (“honor thy father and mother”) protected hostility to it. by the First Amendment.48 The District Unfortunately, as stated earlier, most of Court provided a very thorough and the courts in the United States do not sup- detailed decision, full of the historical roots port a privilege for parents and children. of evidentiary privileges, and the case law The majority view tends to be one of favor- of the nation both for and against the cre- ing the plaintiff’s/prosecutor’s ability to ation of new privileges - too much to review gather evidence over the individual or fam- here. Much of the material is incorporated ily’s right to privacy and protection from in other parts of this article. However, we intrusion. The following few cases are pre- should note the Court’s very scholarly and sented to provide a brief review of some of convincing conclusion: the major case law and justifications oppos- There can be little doubt that the confidence and privacy inherent in the parent-child rela- ing the creation of a family/parent-child privilege.

45. Id. 48. Id. at 1299-1300. 46. Id. 49. Id. at 1325-1331 (emphasis added) (internal citations 47. In re Agosto, 553 F.Supp. 1298 (D. Nev. 1983) omitted). (Claiborne, C.J.). 49 In 1998, the Colorado Court of Appeals protection granted was thus only weak and handed down People v. Agado,50 in which temporary, and no privilege was positively the Court affirmed the trial court’s denial of created. parent-child privilege to statements made Another case from the year 2000, this by the defendant to his parents regarding one in Kansas, also refused to create or rec- the crime charged. The defendant acknowl- ognize a common law parent-child privi- edged that the Colorado Legislature had lege. In Bond v. Albin, the Court of Appeals created no such privilege, but he relied of Kansas ruled that a father held no privi- upon both Fitzgerald and In re Agosto in lege based upon the father-son relationship arguing for constitutional protection, and that existed with his offspring.56 In a section recognition of the importance of the family of the opinion comprising only a handful of unit in society. The Court was not persuad- sentences, the Court quickly disposed of the ed that the defendant’s rights had been issue stating that Kansas statute abolished trampled, and, noting that few jurisdictions all privileges except for those expressly had adopted the parent-child privilege, provided for by statute; that no Kansas instead ruled that “[t]estimonial privileges statute contains a parent-child privilege; are not lightly created nor expansively con- and that the father failed to present any strued, for they are in derogation of the authority that supported granting the privi- search for truth.”51 lege at common law based upon constitu- The Massachusetts Supreme Judicial tional or statutory protections (apparently Court ruled in 1983, in Three Juveniles v. overlooking the several cases discussed ear- Commonwealth, that three children would lier, including In re Agosto, Fitzgerald, and have to appear and testify against their A.&M.).57 father, without constitutional protection for In addition to these cases from the courts communications made within the family of the several states, many others have also unit.52 The Court followed this ruling with directly and indirectly dealt with the issue a somewhat different one in 2000 in In the of parent-child privilege, and the creation of Matter of a Grand Jury Subpoena.53 In its common law privileges.58 However, space 2000 ruling, the Court determined that it and time prevent further discussion of them was unwilling to create a privilege at com- here. Moreover, the many federal cases that mon law on the facts provided, but the address the issue of parent-child privilege, Court also acknowledged the many argu- and subsequently deny relief, use similar ments made for the creation of such a priv- justifications to those employed by the state ilege. However, because the Legislature of court judges. The majority of cases, many Massachusetts had not yet acted on the mat- of them Circuit cases, seem set against the ter, and because the Court recognized the creation of any common law privilege, importance of the issue concerning the con- although some of the judges seem to infer fidential communications that had been that if the factual bases of the cases were made between the juveniles and their par- different, and the privilege sought narrowed ents, the Court granted a stay as to the testi- (such as applied only to minors, etc.), per- mony sought on the confidential matters.54 haps the cases would have had a different The stay was only effective until the end of result. Among the many cases that the read- the legislative session, though, and was er might find to be of interest are: In re The only intended “to afford the Legislature an Grand Jury Empaneling of the Special opportunity to address the issue…”55 The Grand Jury,59 United States v. Dunford,60 In

50. 964 P.2d 565 (Colo. Ct. App. 1998). 56. 28 P.3d 394 (Kan. Ct. App. 2000). 51. Id. at 568 (citing, among others, United States v. 57. Id. at 397. Davies, 768 F.2d 893 (7th Cir. 1985)). 58. See also State v. Anderson, 28 P.3d 662 (Or. Ct. App. 52. 455 N.E.2d 1203 (Mass. 1983). 2001); and In re E.F., 740 A.2d 547 (D.C. 1999). 53. 722 N.E.2d 450 (Mass. 2000). 59. 171 F.3d 826 (3d Cir. 1999). 54. Id. 60. 148 F.3d 385 (4th Cir. 1998). 55. Id. at 457-458. 50 re Grand Jury,61 In re Erato,62 Port v. Judge Moreno concludes the discussion Heard,63 United States v. Ismail,64 United by ruling that even if defendant had stand- States v. Davies,65 and In re Matthews.66 ing to challenge the subpoena, and even if One last case deserves mentioning the privilege did exist, it should not have because of its ruling that no parent-child or been applied in Red Elk. The judge found family privilege existed to prevent defen- that, again, the state is entitled to “every dant's son from testifying against him. This man's evidence,” there must be a great bal- was the product of United States v. Red ancing of interests between the State and Elk,67 a 1997 decision by United States the defendant (and here, the scales were District Judge John Jones adopting the found to tip in favor of the State), and addi- Report and Recommendation of United tionally, the crime occurred within the States Magistrate Judge Mark Moreno, both household, against another child in the of the United States District Court for the household, preventing application of any District of South Dakota. In Red Elk, privilege to bar the child’s testimony Magistrate Judge Moreno found that “[a]s a against the father as to the accused’s alleged threshold matter, any claim of prosecutorial crime.71 Thus, the Court disavowed the exis- misconduct [before the Grand Jury], based tence of the privilege, and its application in on a violation of the ‘parent-child/family’ the case at Bar even if it did exist. privilege must fail because there is no such privilege which defendant is entitled to III. The Proposed “Parent-Child assert under these circumstances.”68 Judge Communication Privilege” and Its Moreno continued, even if a privilege exist- Parameters ed the defendant could not invoke it, because he was seeking to block the testi- We believe that a Parent-Child mony of his son. To invoke the privilege, Confidential Communication Privilege the party asserting it must have been the one should be created in both the federal courts served with the subpoena ad testifican- and in the States, to shield parents from dum.69 Judge Moreno then rejected defen- forced testimony (in criminal or civil mat- dant's argument, based upon In re Agosto, ters) against their children72, and vice versa, that constitutional rights emanating from as to private communications that take the penumbras of the Bill of Rights offer place between them. Under this Privilege, greater protection. The Court instead stat- both the child and the parent would have to ed: consent before either could testify (much Because the [Agosto] court quashed the like the Confidential Marital subpoena prior to the child having to testify, Communication Privilege). The Privilege the defendant's standing to assert the we propose, however, should not extend to privilege never became an issue. More non-testimonial acts that are witnessed by importantly…Agosto has never been parents, even if those acts occur in private, followed by the Eighth [sic] Circuit and has and the Privilege should not apply to shield been rejected by virtually every other federal court that has been called upon to communications between parents and chil- recognize…a parent-child/family privilege.70 dren that are made in public, in the presence of third-persons (including siblings who are

61. 103 F.3d 1140 (3d Cir. 1997). 71. Id. at 1178-1180 (citations omitted). 62. 2 F.3d 11 (2d Cir. 1993). 72. We use the terms “child” and “children” to refer to any 63. 764 F.2d 423 (5th Cir. 1985). individual (natural, adopted or stepchild) who is still, under 64. 756 F.2d 1253 (6th Cir. 1985). the laws of a particular jurisdiction, supported by parents or 65. 768 F.2d 893 (7th Cir. 1985). legal guardians. In some states, parents may be required to 66. 714 F.2d 223 (2d Cir. 1983). support a child until age 21, although the age of majority is 67. 955 F.Supp. 1170 (D.S.D. 1997) (Jones, D.J.; Moreno, 18. Therefore, depending on the jurisdiction, the term M.J.). “child” in the Privilege may apply up until that person’s 21st 68. Id. at 1178 (citations omitted). birthday, regardless of whether they are actually under the 69. Id. at 1178. care and control of the parent, or regardless of whether the 70. Id. at 1178 (citations omitted). parents are the child's sole means of economic support (i.e. the child works to contribute to his or her own support). 51 not attorneys, physicians or therapists fit- When considering whether to create a ting the description below), or in places new privilege by common law, courts must where there is no reasonable expectation of consider several different tests. The Third privacy - unless such communications are Circuit has reasoned, “Congress manifested made in the presence of an Attorney, an affirmative intention not to freeze the Physician, or Therapist with the express law of privilege [under Rule 501]. Its pur- purpose of assisting in the representation, pose rather was to ‘provide the courts with treatment, or safeguarding of the interests the flexibility to develop rules of privilege of the child (when the parents or guardians on a case-by-case basis’…and leave the are acting as agents or protectors of the door open to change.”75 Of course, the Court child). The proposed parent-child privilege goes on to assert that any recognition of a should not be deemed to apply, though, to new privilege must overcome the centuries any intra-familial crimes or civil wrongs. old tradition of the state’s entitlement to the Both the New York spousal privilege evidence of every man,76 and the law’s rule and the Idaho Code provide language heavy dependence on receiving all existing that could be modified and adapted in a new evidence.77 According to the Supreme Court Model Parent-Child Privilege to better pro- in Trammel, Federal Rule 501 “requires that tect the liberty interests and privacy of the court engage in a balancing process, defendants and party-witnesses. weighing the need for confidentiality in a New York: particular communication against the need (b) Confidential communication privileged. for relevant evidence in a criminal proceed- A husband or wife shall not be required, or, ing.”78 However, Judge Mansmann goes on without consent of the other if living, to also reference Wigmore’s four-part test allowed, to disclose a confidential communi- for determining when to recognize a new cation made by one to the other during privilege. For privilege to attach, Dean marriage.73 Wigmore stated that: (1) the communications must originate in a Idaho: confidence that they will not be disclosed; (7) Any parent, guardian or legal custodian (2) this element of confidentiality must be shall not be forced to disclose any communi- essential to the full and satisfactory mainte- cation made by their minor child or ward to nance of the relation between the parties; (3) them concerning matters in any civil or the relation must be one which, in the criminal action to which such child or ward opinion of society, ought to be sedulously is a party. Such matters shall be privileged fostered; and (4) the injury that would inure and protected against disclosure; excepting, to the relation by the disclosure of the this section does not apply to a civil action or communication must be greater than the proceeding by one against the other not to a benefit thereby gained for the correct criminal action or proceeding for a crime disposal of litigation.79 committed by violence of one against the person of the other, nor does this section Given the justifications contained in the apply to any case of physical injury to a minor child where the injury has been opinions of the New York Courts (especial- caused as a result of physical abuse or ly the Fourth Department in A.&M.), supra, neglect by one or both of the parents, and the great societal concerns and ratio- guardian or legal custodian.74 nales expressed herein and in the cited

73. N.Y. C.P.L.R. 4502(b) (McKinney 2002). 77. Pearson, 211 F.3d at 67 (internal citations omitted). 74. IDAHO CODE § 9-203(7) (Michie 2003). Note that 78. In re Grand Jury, 103 F.3d 1140, 1159 (3d Cir. 1997) the language quoted from New York and Idaho is similar to (Mansmann, J., concurring & dissenting) (citing Trammel v. the privilege provisions proposed in this article, but that United States, 445 U.S. 40, 50 (1980)). some language has been altered, and several other important 79. 103 F.3d at 1160 n.5 (citing 8 John Henry Wigmore, provisions have been changed, added or deleted accordingly. Evidence § 2285 (J. McNaughton rev. ed. 1961); and In re 75. Pearson v. Miller, 211 F.3d 57, 66-67 (citing, among Grand Jury Investigation, 918 F.2d 374, 383-84 (3d Cir. others, Congressional Record entries). 1990)); and 403 N.Y.S.2d at 381. Note the similarity 76. See In re Greenberg, 11 Fed. R. Evid. Serv. (Callaghan) between Dean Wigmore’s fourth prong and the Trammel 579 (D. Conn. 1982) (citing In re Cueto, 554 F.2d 14, 15 (2d Court’s balancing test. Cir. 1977)). 52 authorities, we believe that the Parent-Child parents concerning things discussed in the Privilege that we have proposed could more household - in the interest of fortifying and than likely survive the Trammel and elevating the level of privacy, unity and lib- Wigmore tests, and become an integral part erty enjoyed by the American family unit.84 of the law of evidence. In fact, when ren- Indeed, Professor Watts may have stated it dering its decision, the Court in Fitzgerald best when she wrote: applied Wigmore’s test, and concluded in …parent-child privileges, and the testimoni- that particular case and under those facts al privileges in general, are conspicuously that the test was met.80 absent in totalitarian regimes. Nazi First, as has been said by one learned Germany had no such privileges….Without jurist, to force parents to testify against chil- adoption of a parent-child privilege in the United States, we face a similar intrusion dren, or reveal confidences disclosed to into the privacy of the family….it is impor- them “is inconsistent with the way of life tant that we prevent any further harm to the we cherish and guard…and raises the individual’s integrity and the family’s specter of a regime which encourages autonomy.85 betrayal of one’s offspring. And…the alter- natives faced by the parents, i.e., risk of Although Professor Watts wrote this prosecution for contempt or commission of over a decade and a half ago, nothing more perjury, could seriously undermine public has been accomplished by the courts and trust in our system of justice.”81 The same legislatures in the way of creating a parent- could be said of forcing children to so testi- child privilege. It is time to reawaken the fy against their parents. At specific times in public and the justice system with regard to history, regimes have used similar tactics to the need for this privilege, especially at this secure State convictions of defendants. The time when we must be ever vigilant to reader is familiar with the memory of those guard individual and family liberty and pri- undemocratic regimes, including Nazi vacy interests against intrusion by govern- Germany and the former Soviet Union. ment agents who may be seeking to “We know that one of the horrors of Nazi encroach on them under the guise of com- Germany was children snitching on their bating terrorism. Must we continue to offer parents. It seems to me common decency little more protection for the family unit, that you don’t put a child before the grand and confidences expressed therein, than did jury on her mother’s conduct.”82 Truly, how the Soviets and Nazis?86 The slow uptake by beneficial can it be for the mental and emo- most courts and legislatures on this point is tional development of a child, and for the truly perplexing in its perseverance. integrity of the family, if children are Many European nations, including required to testify against parents?83 Sweden, Germany (the former West Therefore, we recommend that the privilege Germany), and France have very strict go both ways, and prevent parents from familial privileges - which spring from both being forced to testify against children and the Corpus Juris Civilis (Roman Body of children from being forced to testify against Civil Law) and the Napoleonic Code of old

80. 422 N.Y.S.2d 309, 312 (Cty. Ct., Westchester Cty., self as his father’s confidante is a powerful step in the 1979). growth process and the feeling of mutuality and respect 81. 403 N.Y.S.2d at 380 (emphasis added). within the relationship….It can even be argued that there is 82. Watts, supra note 1, at 583 (quoting Burke, Nevada a role reversal in the parent-child relationship, as the parent Girl, 16, Ordered to Testify Against Mother, NAT'L L.J., grows older and becomes more reliant on the child. In this Mar. 9, 1981, at 3, col. 2 (quoting Irving Younger)). regard, the parent becomes a child…and the child assumes 83. “Our cases make clear that an asserted privilege must the role of parent and protector….” In re Agosto, 553 also ‘serve public ends’….The mental health of our citizen- F.Supp. 1298, 1329 (D. Nev. 1983). ry, no less than its physical health, is a public good of tran- 85. Watts, supra note 1, at 593-594. scendent importance.” Jaffee v. Redmond, 518 U.S. 1, 11 86. See In re Agosto, 553 F.Supp. 1298, 1302 (D. Nev. (1996) (citing, among others, Upjohn Co. v. United States, 1983), for a discussion of a litigant’s argument that a family 449 U.S. 383, 389 (1981); and United States v. Nixon, 418 privilege ought to be created to avoid the resurrection of a U.S. 683, 705 (1974)). “Hitlerian” society “in which the right of privacy, inherent in 84. “A son feels, perhaps, even a greater duty to listen to the family unit, is completely ignored where it is deemed the confidences of his father, in that his perceptions of him- inconsistent with the state’s purposes.” 53 - and which often extend far beyond even the people is the greatest law.”90 the model U.S. rules to include grandpar- Moreover, in many states, such as New ents, in-laws and even spouses post- York, parents are responsible for the sup- divorce.87 All in all, Professor Watts claims port (especially financial support) of their that the idea of a parent-child or familial children until ages 18 or 21, depending privilege has been in existence for 3,500 upon the jurisdiction. It is not reasonable to years or more! The Books of Moses (the expect parents to fully and effectively exer- first five books of the Bible, or Pentateuch), cise their responsibilities if children cannot and the subsequent development of the freely confide in their parents regarding any Judaic common law, contain provisions for- concerns, issues, or even improper or illegal bidding parents to testify against children, actions, without fear that their parents will and other prescriptions for family unity.88 then become the star witnesses against them But perhaps the best story of all is one that at a later civil or criminal proceeding. poignantly illustrates how the creation and Today, we hear a lot about the decline of preservation of a strong privilege law is for “family values” and the need to reestablish the good of the many, and therefore the and secure “family values.” In reality, par- good of the few (in this case, the govern- ents are, and should be, the first people chil- ment or civil plaintiff) must bow to it. As dren will turn to when a serious event has Professor Watts relates it, the great Roman occurred in their lives. If a child commits a orator and philosopher Cicero was prose- crime, or is involved in a civil legal prob- cuting the Roman Governor of Sicily for lem, they are very likely to be confused and bribery. The Roman Civil Law contained a frightened - just as if they were victims of a provision known as testimonium domes- crime or civil wrong.91 Parents can be a ticum (a parent-child, or domestic, testimo- source of advice, guidance, and consola- nial privilege). Cicero was therefore pre- tion. That role, however, can be chilled if vented from calling the Governor’s one part of their mind is waiting for the patronus (father or father-figure) to testify prosecutor or process-server to ring the against the Governor at trial. Instead of doorbell and subpoena their testimony. lamenting the restriction on the prosecution, Furthermore, spouses, depending on the or heatedly seeking legislative appeal, jurisdiction, receive testimonial privileges Cicero instead “regretted not being able to (either Spousal Immunity or Confidential call the patronus but understood and advo- Marital Communication, or both).92 This is cated the potential social policy considera- because society through its legislatures and tions for the exclusions of the testimony.”89 courts, has determined that it is of the After all, Cicero himself said, “The good of utmost importance to shield a marriage, and

87. Watts, supra note 1, at 593 (citing and quoting, among rower privilege for spouses, providing for a very limited others, Article 248 of the French Civil Code). See also In re ability for spouses to testify in adultery cases, and recogniz- Agosto, 553 F.Supp. at 1306, for a discussion of the Roman ing only the Confidential Communication Privilege - a priv- testimonium domesticum, and its application. ilege that protects only confidential communications, not 88. Watts, supra note 1, at 591-592. acts, made between spouses during the marriage. See N.Y. 89. Id. at 592-593 (emphasis added). C.P.L.R. 4502 (McKinney 2002); In re Donald Sheldon & 90. De Legibus, bk. 3, ch. 3, § 8, quoted in THE COLUM- Co., Inc., 191 B.R. 39, 47 (Bankr. S.D.N.Y. 1996) (citing BIA DICTIONARY OF QUOTATIONS 507 (1993). People v. McCormack, 104 N.Y.S.2d 139, 143 (1st Dept. 91. See Ayala & Martyn, supra note 5, at 179 (“[W]hen 1951), for the existence of the marital communication priv- children are faced with a serious problem and are unsure ilege in New York). However, in New York, the communi- about how to handle themselves, their first reaction is usual- cation privilege is not applicable in all circumstances, such ly to seek assistance and advice from their parents. Because as when frauds are being perpetrated under the cover of the children are inclined to confide in their parents, there exists marital privilege. The communication must be one that a need for the free flow of highly personal information.”). would not otherwise have been made “but for the absolute 92. The Federal courts grant spouses both the Confidential confidence in, and induced by, the marital relationship.” In Marital Communications Privilege and Spousal Immunity re Sheldon, 191 B.R. at 47-48 (citing People v. Melski, 176 Privilege, except that while both party and witness-spouse N.E.2d 81 (N.Y. 1961)). We model our proposed Parent- hold the privilege when it comes to communications, the Child Confidential Communication Privilege largely after privilege lies only in the witness-spouse when the Spousal both the New York spousal privilege and IDAHO CODE § Immunity privilege is involved. Trammel v. United States, 9-203(7) (Michie 2003), supra. 445 U.S. 40 (1980). In contrast, New York has a much nar- 54 not interfere with the private relationship ent-child privilege to protect those confi- that exists between a husband and wife in dences and communications made in the the “marital castle.” Just as the need for privacy of what should be that most sacred encouraging “full and frank communication of institutions in our nation - the family between attorneys and their clients” to pro- unit. mote greater justice and protection of indi- Considering all of the arguments and vidual liberty justifies the attorney-client justifications, it would appear that the privilege, so too “the spousal privilege, as Parent-Child Privilege model proposed modified in Trammel, is justified because it herein would meet the four-prong test set ‘furthers the important public interest in out by Wigmore and the balancing test of marital harmony.’”93 But, what about soci- the Trammel Court for the creation of a new ety’s children? Children are related to par- privilege in evidence law.96 ents by blood (or in the case of adoption, by a legal order that creates a link as if by IV. Conclusion blood).94 This relationship is, and should be, just as important as marriage to the well- We are left with a very uncertain and being of the citizenry - at least to the limit- unsettled area of law that impacts on the ed extent of the Privilege outlined above. lives of civil and criminal defendants, and Much like the justification for the Attorney- could potentially touch the lives of many, Client Privilege, children must have the many more. For this reason, we have ability to openly communicate with their addressed the issue of creating a Parent- parents in an environment free from the fear Child Privilege head-on, and we encourage that they will be exposing themselves to Congress and the Legislatures and High adverse testimony by parents, and to better Courts of the several states to consider such facilitate their access to parental advice, a privilege. This Privilege, if created, guidance, and protection.95 would greatly strengthen the justice system, Indeed, given the current state of affairs the institution of the family, and the exis- in the clergy of some religions, and the tur- tence of family values in America. Given bulent nature of our world in general, it the clear and compelling justifications out- makes no sense to continue to insist that the lined above, reading the persuasive opin- clergy-penitent privilege be enforced ions of those progressive Courts that have between two strangers united only in faith, begun to construct the foundation of a or that the attorney-client privilege be familial privilege in the law, and consider- enforced between two strangers united only ing the important role that a Parent-Child in business, or that the physician-patient Communication Privilege would play in the privilege be enforced between two American Justice System, we see no other strangers united only in treatment (or insur- justifiable position to take on this issue. ance coverage), and yet not insist, with out- The Pax Romana may exist no longer, rage at their apathy, that the legislators in but the Privata Lex should remain viable in Congress and the states at once create a par- the interests of preserving family values.

93. Jaffee v. Redmond, 518 U.S. 1, 11 (citing Trammel, 445 tion to their attorneys, allowing lawyers to better U.S. at 53; United States v. Nixon, 418 U.S. 683, 705 (1974); advise…clients.” Michael L. Fox, Note, To Tell or Not to and Wolfle v. United States, 291 U.S. 7, 14 (1934)). Tell: Legal Ethics and Disclosure After Enron, 2002 94. See also In re Agosto, 553 F.Supp. 1298, 1325 (D. Nev. COLUM. BUS. L. REV. 867, 900-901 (2002) (Part of 1983). Survey, Breaking Rocky Ground: Issues in Investment and 95. Attorney-Client Privilege and Confidentiality “…have Ethics in a Shaken Economy, 2002 COLUM. BUS. L. REV. been designed to assure that clients can speak openly with 793 (2002)), (citing, among other sources, Paul R. Rice, The their attorneys, secure in the knowledge that they cannot be Corporate Attorney-Client Privilege: Loss of Predictability harmed by words spoken or any incriminating facts disclosed Does Not Justify Crying Wolfinbarger, 55 BUS. LAW. 735, to attorneys when legal assistance is sought. ‘This, in turn, 739 (2000)). will result in more informed legal advice…’ It is hoped that, 96. See pages 51-52 & nn.78-80, supra. as a result, clients will be more forthcoming with informa- 55 The Privacy Project II The Deliberative Process Privilege: What is it? When can it be asserted? How can this shield be pierced?

By Cathy Havener Greer, William T. IADC member Cathy Havener Greer is a O’Connell and Kirsten J. Crawford member of Wells, Anderson & Race LLC, In the post-Watergate era, “transparency” of Denver, where her practice emphasizes employment and civil rights litigation. She became a watchword of government. is a graduate of Randolph-Macon Woman’s Freedom of information, open records, College (B.A. 1973) and the University of open meetings are considered by the media Kansas School of Law (J.D. 1976). and to some extent, the public, the standards by which government should exercise its William T. O’Connell is an associate at responsibilities. In spite of the desire of the Wells, Anderson & Race LLC, where his media and the public for totally open gov- practice emphasizes employment and civil ernment, the deliberative process privilege rights litigation. He graduated from protects government officials and govern- Norwich University (B.S. 1992) and ment documents from “full disclosure.” Suffolk University Law School (J.D. 1997). The Deliberative Process Privilege is a Kirsten J. Crawford, formerly an associate widely-recognized confidentiality privilege of Wells, Anderson & Race, LLC, is now an that is unique to the government. See Assistant County Attorney, Adams County, Coastal States Gas Corp. v. Dept. of Colorado. She is a graduate of DePauw Energy, 617 F.2d 854, 866 (D.C. Cir. 1980). University (B.A. 1993) and the University This privilege in the United States is of Denver (J.D. 1996). thought to have derived from the “crown privilege” in England. See Russell L. Weaver and James T. Jones, The L.Ed.2d 1429 (1941) (Morgan II); Capital Deliberative Process Privilege, 54 MO. L. Info. Group v. Alaska, 923 P.2d 29, 33 REV. 279, 283 (1989). (Alaska 1996); Colorado Springs v. White, Two primary theories form the justifica- 967 P.2d 1042, 1047 (Colo. 1998). tion for the privilege: First, in order to Although the privilege is recognized to maintain the integrity of administrative have a constitutional and common law processes, decisions made by agency basis, both federal and state legislators have administrators should be protected from incorporated this privilege into exceptions discovery in the same way that the decision- to freedom of information and open records making processes of judges are protected; laws. In addition, a number of state courts and second, in order to maintain frank and have recognized this privilege. See, e.g., open exchange of opinions and recommen- Capital Info. Group v. Alaska, supra; Times dations between government officials, con- Mirror Co. v. Superior Court, 53 Cal.3d sultation between such officials and the 1325, 283 Cal. Rptr. 893, 813 P.2d 240, government’s decision makers should be 248-51 (Cal. 1991); Hamilton v. Verdow, protected from disclosure. See McGoldrick 287 Md. 544, 414 A.2d 914, 924 (Md. v. Koch, 110 F.R.D. 153, 155 (S.D.N.Y. 1980; Ostoin v. Waterford Township Police 1986); Morgan v. United States, 304 U.S. 1, Dep’t, 189 Mich. App. 334, 471 N.W.2d 18, 58 S.Ct. 773, 82 L.Ed. 1129 (1938) 666, 668 (Mich. Ct. App. 1991); Nero v. (Morgan I); United States v. Morgan, 313 Hyland, 76 N.J. 213, 386 A.2d 846, 853 U.S. 409, 422, 61 S.Ct. 999, 1004, 85 (N.J. 1978); State ex rel. Attorney Gen. v. 56 First Judicial Dist. Court, 96 N.M. 254, which the privilege may be raised is very 629 P.2d 330, 333-34 (N.M. 1981); broad: from an inquiry into the basis for a Dorchester Master Ltd. Partnership v. quasi-judicial decision such as a zoning Cabot Pipeline Corp., 137 Misc.2d 442, appeal or personnel grievance hearing, to an 521 N.Y.S.2d 209, 210-11 (N.Y.Sup.Ct. executive decision including “advisory 1987); Killington, Ltd. v. Lash, 153 Vt. 628, opinions, recommendations and delibera- 572 A.2d 1368, 1373-74 (Vt. 1990). See tions comprising part of a process by which also 5 U.S.C. § 552(b)(5), Federal Freedom governmental decisions and policies are of Information Act (FOIA). formulated.” Carl Zeiss Stiftung, et al. v. In Morgan II, 313 U.S. 409 at 421-422, V.E.B. Carl Zeiss Jena, et al., 40 F.R.D. the United States Supreme Court decisively 318, 324 (D.D.C. 1966). confirmed the justification for the delibera- Significantly, the privilege applies not tive process privilege. Criticizing the dis- only to the process of the decision maker in trict court’s authorization of the deposition reaching his decision, but to the advice of the U.S. Secretary of Agriculture, Justice given to the decision maker. Carl Zeiss Frankfurther, writing for the majority, said Stiftung v. V.E.B. Carl Zeiss, Jena, 40 . . . [T]he short of the business is that the F.R.D. 318 (D.D.C. 1966). As the District Secretary should never have been subjected Court judge in Carl Zeiss Stiftung stated: to this examination. The proceeding before The judiciary, the courts declare, is not the Secretary ‘has a quality resembling that authorized ‘to probe the mental processes’ of of a judicial proceeding’. Morgan v. United an executive or administrative officer. [*] States, 298 U.S. 468, 480, 56 S.Ct. 906, 911, This salutary rule forecloses investigation 80 L.Ed. 1288. Such an examination of a into the methods by which a decision is judge would be destructive of judicial reached, [*] the contributing influences, [*] responsibility. We have explicitly held in or the role played of the work of others, [*] this very litigation that ‘it was not the func- - results demanded by exigencies of the most tion of the court to probe the mental process- imperative character. No judge could toler- es of the Secretary’. 304 U.S. 1, 18, 58 S.Ct. ate an inquisition into the elements compris- 773, 776, 82 L.Ed. 1129. Just as a judge can ing his decision [*]--indeed, ‘[s]uch an not be subjected to such a scrutiny, compare examination of a judge would be destructive Fayerweather v. Ritch, 195 U.S. 276, 306, of judicial responsibility’ [*] --and by the 307, 25 S.Ct. 58, 67, 49 L.Ed. 193, so the same token ‘the integrity of the administra- integrity of the administrative process must tive process must be equally respected.’ [*] be equally respected. See Chicago, B. & Q. Identically potent reasons dictate that protec- Ry. v. Babcock, 204 U.S. 585, 593, 27 S.Ct. tion no less extensive be afforded the 326, 327, 51 L.Ed. 636. It will bear repeat- processes by which the Attorney General’s ing that although the administrative process responsibilities for decisional and policy for- has had a different development and pursues mulations, legal or otherwise, are dis somewhat different ways from those of charged. [*] (footnotes omitted) courts, they are to be deemed collaborative instrumentalities of justice and the appropri- Id. at 325-26. The court in Carl Zeiss ate independence of each should be respect- also noted: ed by the other. United States v. Morgan, 307 U.S. 183, 191, 59 S.Ct. 795, 799, 83 Inextricably intertwined, both in purpose L.Ed. 1211. and objective, are these two principles. The This privilege, which has been cited rule immunizing intra-governmental advice safeguards free expression by eliminating under the names of “administrative deliber- the possibility of outside examination as an ative thought process privilege,” “official inhibiting factor, but expressions assisting information privilege,” “governmental the reaching of a decision are part of the privilege,” “executive privilege” and decision-making process. [*] Similarly, the “deliberative process privilege,” is asserted so-called ‘mental process rule’ impresses the to protect documents from disclosure and to stamp of secrecy more directly upon the protect a witness from providing testimony decision than upon the advice, but it extends at a deposition or trial. The context in to all phases of the decision- making 57 process, of which the advice is a part. [*] investigation of the incident. Id. at 443. Each rule complements the other, and in Defendants objected on the basis that the combination they operate to preserve the requested documents were “official, confi- integrity of the deliberative process itself. It dential, deliberative, and/or investigatory in is evident that to demand pre-decision data is nature and thus are privileged from discov- at once to probe and imperil that process. ery.” Id. (footnotes omitted) The court held that the deliberative ele- Subsequent case law further refined the ment of the privilege had been met for three privilege. See Kaiser Aluminum & primary reasons. First, the Police Chemical Corp. v. United States, 141 Ct. Cl. Department’s “deliberations” were of a 38, 157 F.Supp. 939 (Ct. Cl. 1958); In re continuing nature as evidenced by the Sealted Case, 121 F.3d 729, 736 and 742 Police Department placing the individual (D.C. Cir. 1997). The deliberative process officers involved in the incident on admin- privilege is a qualified, not absolute, privi- istrative leave. Id. Second, the United States lege. Because its purpose is to prevent Department of Justice had begun its own inquiry or disclosure that would undermine investigation which could lead to criminal the free exchange of ideas within an agency indictments. Id. Finally, the Police or would inhibit the integrity of the deci- Department could still issue further disci- sion-making process, it protects only infor- plinary action against the individual offi- mation that is predecisional and delibera- cers. Id. tive. Id. at 737. In Yankee Atomic Electric Company v. United States, 54 Fed. Cl. 306 (Fed. Claims Recent Cases in Which Deliberative 2002), plaintiffs, various electric utilities, Process Privilege Found Applicable filed suit against the United States for breach of contract relating to the disposal of Although recent cases which have nuclear waste. Defendant asserted the delib- applied the deliberative process privilege erative process privilege over a number of lack a common theme, it is likely that the documents described in an affidavit from “deliberative” element of the privilege, the Chief Operating Officer, Civilian more so than the predecisional element, will Radioactive Waste Management, within the 1 command the court’s attention. The reason United States Department of Energy. for this attention stems from the fact that the Plaintiffs argued that the documents at issue predecisional element is often easier to were not privileged because they were establish and more given to a bright line incorporated into an official agency deci- test. In contrast, the deliberative element sion. Id. at 311. usually requires a more careful and thor- The court found Plaintiffs’ argument ough analysis of the nature of the communi- unpersuasive because the documents cation itself, the participants in the commu- described in the affidavit appeared to be nication and the underlying events which non-binding recommendations; were not, as precipitated the communication. best as the court could determine, final dis- In Jones v. City of Indianapolis, 216 positions; were not used as precedent; had F.R.D. 440 (S.D. IN 2003), plaintiff, the no operational effect except to the extent mother of an arrestee who died on the way they informed agency officials; and were to a hospital in an Indianapolis Police not expressly incorporated into or adopted Department paddy wagon, filed suit under by final agency decision. Id. Similarly, the 42 U.S.C. 1983 against the City of Indianapolis and several individual police 1. A secondary issue in the case was whether the head of the agency, the Secretary of Energy, had to personally invoke officers. During discovery, plaintiff served the privilege. The court found no such requirement in order a document request seeking production of to invoke the privilege and further found that the Secretary of Energy was not prohibited from delegating the power to certain document including those generated invoke the privilege. Id. at 311. The proper way to invoke during the Police Department’s internal the privilege will be discussed more fully below. 58 court found no merit to Plaintiffs’ argument Accordingly, the court held that the deliber- that the privilege was negated by defen- ative process privilege did not apply to the dant’s failure to identify a specific agency memoranda. Id. decision that was later based on the docu- Not all cases applying the deliberative ments at issue. Id. at 312. The court process privilege involve highly sensitive observed that the affidavit provided suffi- and significant materials like the internal cient information with which to conclude investigation documents at issue in Jones or that the document was prepared in order to the legislative proposals at issue in Capital offer opinions or recommendations to Information Group. Rather, some cases deal agency decision makers prior to their taking with seemingly mundane materials. action on legal or policy matters. Id. Nevertheless, a challenge to the disclosure In Capital Information Group v. State of of the documents pursuant to the delibera- Alaska, 923 P.2d 29 (Alaska 1996), the tive process privilege may still prove suc- issue before the Alaska Supreme Court was cessful. whether the deliberative process privilege In Tribune-Review Publishing Company applied to legislative proposals sent from v. Dep’t of Community and Economic state departments and agencies directly to Development, 814 A.2d 1261 (Pa.Cmwlth. the Governor and/or budget memoranda 2003), the issue before the Commonwealth sent from each state department to the Court of Pennsylvania was whether unfund- Alaska Office of Management and Budget ed state program applications were public (“OMB”). With respect to the legislative records subject to disclosure pursuant to proposals, the court recognized that they Pennsylvania’s Right to Know Act. The were clearly predecisional and deliberative. court held that the unfunded applications Id. at 37. With those two initial elements were part of the deliberative process and satisfied, the court turned to whether the therefore not subject to disclosure under the privilege should be overcome by weighing Act. Id. at 1264. The court found that the the “interest of the citizen in knowing what unfunded applications reflected the “admin- the servants of government are doing ... istrative machinations” of the state with against the interest of the public in having respect to which grants to fund or not to the business of government carried on effi- fund. Id. “Absent a showing that an agency ciently and without undue interference.” Id. has acted upon the applications, i.e., done at 38 (internal citations omitted). In hold- more than merely characterize, we conclude ing that the privilege was not overcome, the that the mere characterization of grant court found that the consideration of leg- applications as ‘unfunded’ reflects the islative proposals “is one of the most sensi- deliberative process and as such the docu- tive and important functions that the ments are not subject to disclosure.” Id. The Governor performs while in office, and the court also found significant the fact that need for frank discussion of policy matters there was no evidence that the documents at among the Governor’s advisors is perhaps issue formed either the basis for, or a condi- greater here than in any other area.” Id. at tion precedent of, the state’s decision to 38. fund the applications. Id. As such, the court The court likewise found that the budget determined that the documents were not memoranda was both predecisional and essential components of an agency deci- deliberative. Id. at 39. However, unlike the sion. Id. at 1264. The court cautioned, how- legislative proposals, the court held that the ever, that once the applications are acted weighing of interests compelled disclosure upon, i.e., granted, than they are public of the documents. Id. at 39-40. In reaching records subject to disclosure. Id. its determination, the court relied on a state The protection for predecisional and statute, AS 37.07.050, which mandates that deliberative matters remains after the deci- such budget documentation be made and sion is made, although it does not apply to submitted to OMB. Id. at 40. Id. the publicly expressed reasoning of the 59 decision maker underlying the decision steps that may be required by law and does itself. Id., 967 P.2d at 1051-52. not extend to inquiries into the mental In a deposition or in anticipation of a processes of an administrator, which, as deposition seeking disclosure of documents being part of the judgmental process, are reflecting predecisional thought processes not discoverable.” State of Iowa ex rel. and advice, the assertion of the privilege is Miller v. DeCoster, 608 N.W.2d 785 (Iowa. made properly in an objection or motion for 2000). protective order. In an action under the Colorado Open Records Act, “[t]he initial Proper Way to Invoke the Privilege burden of proof falls upon the government entity asserting the deliberative process The method a party uses to invoke the privilege.” Colorado Springs v. White, 967 privilege must be scrutinized because fail- P.2d at 1053 [citations omitted]. “Where ure to properly invoke it will likely result in the government has met the procedural the court’s refusal to rule on the applicabil- requirements [of the Colorado Open ity of the privilege. Records Act] for assertion of the delibera- In Cobell v. Norton, 213 F.R.D. 1 (D.C. tive process privilege, the privilege pre- 2003), the issue before the court was sumptively applies.” Id., 967 P.2d at 1054 whether a document filed by the govern- [citations omitted]. The procedural requirement defendants under seal was protected ments for assertion of the privilege are set pursuant to the deliberative process privi- out in § 24-72-204 (3)(a)(XII), cited above. lege. The court, however, declined to rule Even in the Open Records context, on the issue because the defendants had not where a presumption favoring disclosure is properly invoked the privilege. Id. at 7. the general rule, “a trial court should honor The court observed that in the D.C. the claim of privilege unless the party seek- Circuit, the proper invocation of the privi- ing discovery makes a preliminary showing lege requires: that the material may not be privileged or (1) a formal claim of privilege by the head of that there is some necessity for its produc- the department possessing control over the tion. See Guy v. Judicial Nominating requested information, (2) an assertion of the Com’n, 659 A.2d 777, 785-86 (Del. Super. privilege based on actual personal consider- Ct. 1995) (noting that the executive privi- ation by that official, and (3) a detailed spec- ification of the information for which the lege protects from disclosure both the privilege is claimed, along with an explana- source of and the substance of communication why it properly falls within the scope of tions to and from governor in exercising his the privilege. Id. at 7 citing Landry v. FDIC, power of appointment of judges, and 204 F.3d 1125, 1135 (D.C.Cir.2000). declining to conduct an in camera inspec- tion because plaintiff had not meet his bur- Although the court declined to discuss den to overcome the presumption of protec- the contents of the document and conse- tion; also ruling that allegations that infor- quently the precise reason for finding that mation was “leaked” did not constitute a defendants did not properly invoke the priv- waiver by the governor, as the privilege is ilege, one can derive where the defect lay his only to waive, and that allegations of given the court’s focus on the first element discriminatory treatment did not state any of the three element test. The court noted claim under the Delaware open records that in the D.C. Circuit, the term “head of law); Hamilton v. Verdow, 414 A.2d 914, the agency” has not been narrowly con- 925 (Md. App. 1980). strued. Id. at 8. (citations omitted). If a decision maker is allowed to testify, Nevertheless, the court cautioned that while that person’s testimony concerning the it was unnecessary for the Secretary of the decision must be circumscribed. “When Interior herself to file an affidavit in order pertinent inquiry is allowed, it is limited to to assert the deliberative process privilege, information concerning the procedural the head of the bureau or office within the Interior Department that possesses control 60 over the requested information must file the would shed light upon government miscon- necessary affidavit. Id. at 8. duct.” Id. The plaintiffs pointed to various reports and statistics which plaintiffs Recent Cases in Which Deliberative claimed raised questions about the impar- Process Privilege Found Inapplicable tiality of the chaplain selection boards. Id. at * 6. The court found that Plaintiffs had A recurring theme throughout the recent provided the requisite factual basis, through cases in which the deliberative process priv- these reports and statistics, for their belief ilege has been found inapplicable is the that the testimony of navy chaplain selec- court’s reluctance to apply the privilege tion board personnel would provide evi- when faced with allegations of discrimina- dence of government misconduct. Id. at *6. tion and/or retaliation. In light of the qual- Accordingly, the court held that the govern- ified nature of the deliberative process priv- ment-misconduct exception barred applica- ilege, allegations of this sort may implicate tion of the deliberative-process privilege. the government misconduct exception to In Williams v. City of Boston, 213 F.R.D. the privilege. Of course as employment 99 (D. MA 2003), plaintiff, a Boston police lawyers are well aware, in any case in officer, brought a civil rights action against which a plaintiff alleges discriminatory defendants alleging discrimination and conduct by a defendant, the defendant must retaliation. In response to Plaintiff’s request present “a legitimate nondiscriminatory for production of documents, defendants reason” for the employment action at issue refused to produce, pursuant to the govern- or face an adverse judgment. For that rea- mental/deliberative process privilege, the son, in the face of discrimination allega- reports of hearing officers who conducted tions, a government employer that asserts disciplinary hearings relating to two of the deliberative process privilege does so at its individual defendant police officers. Id. at peril. 100. Defendants contended that the reports In Chaplaincy of Full Gospel Churches were privileged because they reflected v. Johnson, 2003 WL 22048206 (D.D.C. “advisory opinions, recommendations and 2003), plaintiffs, current and former Navy deliberations comprising part of the process chaplains, filed suit against the Navy, the by which governmental decisions and poli- Secretary of the Navy and other Navy offi- cies are formulated.” Id. cials claiming that the Navy’s polices and The court held the governmental or practices favored religious quotas and other deliberative process privilege inapplicable discriminatory practices in violation of the to the reports. “The hearing officers’ recom- First and Fifth Amendments. During dis- mendations, like the facts which are con- covery, Plaintiffs sought the deposition tes- tained in the Reports, is information passed timony of navy chaplain selection board on to the Commissioner for his considera- personnel. Id at *2. Defendants refused tion. It is not supposed to form the subject based in part on the deliberative process of discussion between the hearing officer privilege. Id. and the Commissioner, and its production With respect to the government miscon- should in no way chill the Commissioner’s duct exception to the privilege, the court decision-making process...” Id. at 101. noted “[w]hen there is any reason to believe Accordingly, the court found that disclosure that government misconduct has of the reports would in no way interfere occurred...our court of appeals has made with the decision-making process that the clear that the deliberative-process privilege privilege is designed to protect. Id. at 102. disappears altogether.” Id. (citations omit- Significantly, the court also recognized that ted). To invoke the government misconduct the privilege is particularly disfavored in exception, the party seeking the discovery civil rights cases, especially those against “must provide an adequate factual basis for police departments. Id. at 102 citing Soto v. believing that the requested discovery City of Concord, 162 F.R.D. 603, 612 (N.D. 61 Cal. 1995)(finding deliberative process this was not a situation where the Assistant privilege “inappropriate for use in civil Chief was considering a policy and sought rights cases against police departments”). the Captain’s views on same or a situation Finally, the court noted in conclusion that where the Captain was proposing a policy where the “ ‘decision-making process itself for the Assistant Chief to adopt. Id. at 162. is the subject of the litigation,’” application The court instead viewed the memorandum of the deliberative process privilege is inap- as one in which the Captain was simply propriate since it would act to preclude dis- speaking to a lone, particular case. Id. at covery of relevant information. Id. 163. Moreover, the court noted that the In Waters v. U.S. Capitol Police Board, memorandum could implicate the issue of 216 F.R.D. 153 (D. D.C. 2003), plaintiff, a intent to discriminate or retaliate since the recruit terminated from U.S. Capitol Police memorandum related to the investigation of for cheating on a written examination, plaintiff’s alleged cheating and plaintiff’s brought a Title VII race discrimination primary claim was that the investigator in action. During discovery, Plaintiff sought charge of such investigation discriminated the production of a written report generated him because of his race. Id. “To extend the during the investigation into his alleged deliberative process privilege to a recom- cheating as well as documents generated mendation as to a particular personnel mat- during a second investigation into his claim ter extends it beyond its present form to of discrimination. Id. at 161. With respect to protect from disclosure what would other- the first request, Defendants objected and wise be evidence relevant to a plaintiff’s withheld a memorandum from a Police complaint of discrimination. Extension of Captain to the Assistant Chief. Id. With the deliberative process privilege to such respect to the second request, defendants personnel matters when discrimination is produced all documents with the exception charged is impossible in this Circuit.” Id.2 of the notes made by the officer responsible The specific purpose behind the creation for investigating plaintiff’s discrimination of the document will often determine claims. Id. at 162. whether or not the privilege is applicable. In Turning first to the investigators’ notes, situations where the document is created for the court held that they were not protected the express purpose of addressing a particu- by the deliberative process privilege. The lar policy, it is probable that a court would court found significant the fact that the find the privilege applicable. However, if notes were not claimed to constitute the document was created for another pur- “‘opinions, recommendations and delibera- pose, apart from solely addressing a partic- tions’ that must be shielded lest inferiors in ular policy, it is probable that a court would a government agency be inhibited in the find the privilege inapplicable. advice they give their superiors or the pub- In Tortoricic v. Goord, 216 F.R.D, 256 lic will be misled as to the reasons for the (S.D. N.Y. 2003), plaintiff, the estate of a ultimate adoption of a particular policy.’ “ former inmate at a state psychiatric center Id at 162 citing Taxation with who committed suicide, sought production Representation Fund v. Internal Revenue of quality assurance documents generated Service, 646 F.2d 666, 677 (D.C.Cir.1981). during a review by the psychiatric center. The court also observed that defendants Although defendants conceded that the doc- were not claiming that the notes were creat- uments were generated pursuant to state ed by individuals who had the responsibili- statute which requires a formal review upon ty of recommending the adoption of a par- an inmate’s suicide, they refused production ticular policy by the U.S. Capitol Police. Id. of the documents pursuant to the delibera- With respect to the memorandum, the tive process and self-critical analysis privi- court likewise found that it was not protected by the deliberative process privilege. 2. Since the court had not seen the documents, an in cam- The court was persuaded by the fact that era review was ordered at which time a final decision regarding the privilege would be made. Id. at 163. 62 lege. Id. at 257-58. The court found that overcome: (1) the relevance of the evi- although the documents may have been dence; (2) the availability of other evi- considered in making the determination as dence, (3) the government’s role in the liti- to propriety of a new policy, forcibly med- gation, and (4) the extent to which disclo- icating inmates at risk of suicide, they were sure would hinder frank and independent not created for that express purpose. Id. discussion regarding contemplated policies Rather, the documents were created in order and decisions, (5) the interest of the litigant, to measure the psychiatric center’s compli- and ultimately society, in accurate judicial ance with existing procedures in light of the fact finding, (6) the seriousness of the liti- inmate’s suicide. Id. Thus, the court con- gation and the issues involved, (7) the pres- cluded that while portions of the documents ence of issues concerning alleged govern- may be “deliberative,” they were not pre- mental misconduct, and (8) the federal pared “ ‘in order to assist an agency deci- interest in the enforcement of federal law. sion maker in arriving at his decision,’ ” and Id. at 1122 (internal citations omitted). were not “predecisional.” Id. Accordingly, The court first considered the federal the deliberative process privilege did not interest in the enforcement of federal law apply. and the seriousness of the litigation and the Although far more common when docu- issues involved. Id. at 1123. The court rec- ments are at issue, the deliberative process ognized that the federal interest in the privilege is equally applicable to testimony. enforcement of federal constitutional rights, However, in light of its qualified nature, the in this case equal protection rights, weighed deliberative process privilege may be over- in favor of disclosure despite the fact that come, not just by the government miscon- the litigation and the issues involved were duct privilege as discussed above, but by a not quite as serious as cases involving other host of factors. A number of these factors forms of discrimination. Id at 1123-24. The require the court to engage in a classic bal- court next considered the interests of plain- ancing test. tiff and society in accurate judicial fact In North Pacifica v. City of Pacifica, 274 finding and the relevancy of the evidence. F.Supp.2d 1118 (N.D. CA 2003), plaintiff, a Id at 1124.The court found that the interest developer, filed suit against defendant in accurate judicial fact finding was height- claiming that a certain condition imposed ened because equal protection rights were at on approval of its project violated its equal stake. Id. Moreover, the testimony sought protection rights. Dispute arose, however, by Plaintiff was highly relevant because the as to the scope of the Pacifica City City Council’s motive and intent were cen- Council’s members deposition testimony tral to Plaintiff’s equal protection claim. Id. sought by plaintiff. Id. at 1120. Plaintiff’s With respect to the government’s role in the position was that it should be allowed to ask litigation, the court found that the decision- the City Council members about the deci- making process of the City Council was sion-making process resulting in the essentially the entire case in light of the approval of the condition and, in particular, nature of plaintiff’s claim. Id. the motive and intent of the members in The court then turned to what it consid- approving the condition. Id. Defendant’s ered the most important factor, the avail- position was that the testimony of the City ability of other evidence. Id. The court Council members was protected by the rebuffed defendant’s principal argument deliberative process and attorney-client regarding this factor, namely that the infor- privileges. Id. mation sought by plaintiff could be found in After reviewing the two threshold ele- the administrative record. Id. at 1126. ments of the privilege, predecisional and “...[T]he administrative record before the deliberative, the court considered the fol- City Council does not exhaust the universe lowing eight factors in deciding whether the of information considered by the body. It is deliberative process privilege should be entirely possible that Council members had private conversations with the City’s staff, 63 NP’s representatives, members of the public, tions to applying the privilege are commu- and amongst themselves that are not embod- nications that are predecisional and deliber- ied in the record. Yet this information may ative. Id. at 361. However, the court relying well be relevant in the ascertainment of on Sears, Roebuck & Co., 421 U.S. at 151, motive, which is central to this case.” Id. 95 S.Ct. at 1517, as well as a host of other Finally, the court rejected any possibili- federal and Texas authorities, held that the ty that disclosure would hinder frank and privilege is limited to policy making com- independent discussion regarding contem- munications that are predecisional and plated policies and decisions because it deliberative. Id. at 364. “[I]nterpreting the found that communications in the future deliberative process privilege to exempt were not likely to be chilled by the council any information as long as it is predecision- members’ deposition testimony. Id.3 al and deliberative would exempt all agency Accordingly, the court concluded that the information except postdecisional or purely deliberative process privilege was likely to factual information. Such an interpretation be overcome. Id. at 1125. would allow the exception to swallow the The scope of the privilege and whether it Act. Thus, we cannot interpret the excep- applies to all government communications tion so broadly.” Id. at 364. Accordingly, that are predecisional and deliberative or the court held that the privilege did not only those policy related communications apply to the memorandum because the that are predecisional and deliberative was memorandum did not bear on policymaking at issue in a case before the Texas Supreme but rather simply gave the reasons to termi- Court. nate the city finance director. Id. In City of Garland v. Dallas Morning An additional limitation on a defen- News, 22 S.W.3d 351 (2000), plaintiff dant’s assertion of the deliberative process brought a declaratory judgment action privilege occurs when the plaintiff makes a against defendant seeking a declaration that clear showing of illegal action, misconduct, a memorandum, from the city manager and bias or bad faith on the part of the decision circulated to the city council in order to dis- maker. Officials of an administrative cuss whether to terminate the city finance agency cannot be compelled to testify con- director, was not public information subject cerning the procedure or manner in which to disclosure under the Texas Public they made their findings and rendered a Information Act (“Act”). decision, unless there is an allegation “and After determining that the memorandum there is a clear showing of illegal or unlaw- was public information as contemplated ful action, misconduct, bias, or bad faith on under the Act, the court turned to the ques- the part of the decision maker.” Gilpin tion of whether the memorandum was County Bd. of Equalization v. Russell, 941 exempt from disclosure pursuant to the P.2d 257, 264 (Colo. 1997) , citing Public Act’s agency memoranda exception. Id. at Utilities Com’n v. District Court, 163 Colo. 359. The court observed that since the Act 462, 469, 431 P.2d 773, 777 (1967), and was modeled after the FOIA, the Act’s Tepley v. Public Employees Retirement agency memoranda exception, like FOIA’s Ass’n, 955 P.2d 573 (Colo. App. 1977). Exemption 5, incorporates the deliberative The deliberative process privilege does process privilege. Id. at 360. Having deter- not act as a presumption that may be mined that the privilege may apply to the rebutted merely by an allegation of miscon- memorandum, the court next considered duct; a plaintiff asserting inapplicability of whether the privilege is limited to commu- the privilege must possess and provide evi- nications that reflect policymaking. Id. dence of the alleged misconduct. Russell, Plaintiff argued that the only two condi- supra, 941 P.2d at 265 (holding BOE member could not, under mental process rule, be 3. The court imposed some limitations on plaintiff’s ques- called in proceeding before BAA to explain tioning of the City Council members such as not allowing BOE decision or how decision was plaintiff to inquire as to the members’ subjective uncommu- nicated thoughts. Id. at 1125. reached); Public Utilities Com’n, 163 Colo. 64 at 469, 431 P.2d at 777 (1967) (mere allega- discovery or presentation of evidence tend- tion that the commissioners did not consid- ing to show prejudice .”4 Id. at 199. The er the entire record insufficient to compel Supreme Court of Maine concluded that, them to testify concerning procedure or although canceling the depositions alto- manner in which they made their findings gether was improvident, a narrow protec- and rendered decision in given case); tive order permitting the deposition while Tepley, 955 P.2d at 578 (Colo. App. 1977) precisely delineating certain limited areas (board cannot be compelled to testify as to in which inquiry would be proscribed, was how and why they had reached their deci- appropriate. Id. In making its determina- sion). tion, the Supreme Court acknowledged that Other jurisdictions that have addressed “the general rule prohibits such inquiry the issue of probing the mental process of [into the mental processes of an administra- an administrative official through discovery tive decision maker] in the absence of a requests have determined that there must be prima facie showing of misconduct.”5 Id. evidence of illegality before the court will at 200. (citing Citizens To Preserve Overton even consider such requests. See Keyes v. Park, Inc. v. Volpe, 401 U.S. 402, 420, 91 Lenoir Rhyne College, 552 F.2d 579 (4th S.Ct. 814, 28 L.Ed.2d 136 (1971)). Cir.), pet. for cert. den., 434 U.S. 904, 98 In Carl L. Cutler Co., Inc. v. State S.Ct. 300 (1977) (noting by implication Purchasing Agent, 472 A.2d 913 (Me. that, in action by college faculty member 1984), the court elaborated on the general for alleged employment discrimination, rule forbidding inquiry into the mental where allegations of discrimination are not processes of an administrative decision supported by prima facie evidence, college maker. Id. at 918. The court stated: not required to produce confidential evalua- This general rule may be abrogated only tions of each faculty member on grounds when a showing of bad faith or improper that confidentiality of such evaluation behavior is strong enough to justify intrusion records was necessary to enable college to into the administrator’s province. The receive honest and candid appraisals of requirement that the complainant adduce at least a prima facie evidence of such impro abilities of faculty members by their peers); priety serves to protect the administrator Ryan v. Town of Camden, 582 A.2d 973, from “fishing expeditions” undertaken by an 975 (Me. 1990) (affirming superior court’s disappointed bidder. denial of plaintiff’s discovery request to depose Board members in an attempt to Id. The Maine Supreme Court affirmed establish their bias and predisposition the lower court’s decision finding that the against him). plaintiff’s bare allegations that the State In Frye v. Inhabitants of Town of Purchasing Agent and vendor awarded the Cumberland, 464 A.2d 195, 198 (Me. contract were “social friends” was not a suf- 1983), a police officer challenging his ter- ficient showing to entitle plaintiff to con- mination alleged, on appeal from the supe- duct discovery of the administrator. Id. rior court, that the Town Manager acting as the officer hearing his appeal was biased FOIA Exemption 5 and the Deliberative against him. Plaintiff contended that “the Process Privilege superior court’s failure to permit either a deposition of the Town Manager or an evi- The federal Freedom of Information Act dentiary hearing on the Town Manager’s (“FOIA”), 5 U.S.C. § 552, states in perti- possible bias, improperly prevented any nent part:

4. The bias alleged by Plaintiff, in Frye, consisted of his should serve as grounds for this or any court to grant him allegation that the Town Manager’s involvement in the reinstatement or immunity from any further proceedings investigation of the officer's alleged violations of depart- with respect to these particular charges is patently erro- ment regulations. neous.” Id. at 198. (citing Barber v. Inhabitants of the 5. As a side note, the court further stated that “Frye's sug- Town of Fairfield, 460 A.2d 1001 (Me. 1983). gestion that a temporary lapse in procedural regularity alone 65 (b) This section does not apply to matters and the United States Department of the that are - Interior addressing tribal interests subject to state and federal proceedings, were exempt ****(5) inter-agency or intra-agency memo- from the disclosure requirements of FOIA randums or letters which would not be avail- because of their status as “intra-agency able by law to a party other than an agency memorandums or letters.” in litigation with the agency. The case arose out of the Department of In order for a document to qualify under Interior’s Bureau of Indian Affairs (“the Exemption 5, two conditions must be satis- Bureau”) filing claims on behalf of the fied. First, the source of the document must Klamath Tribe and other tribes in a state be a Government agency. Dep’t of the court suit intended to allocate water rights. Interior v. Klamath Water Users Protective Prior to filing suit, the Bureau consulted Ass’n, 532 U.S. 1, 8, 121 S.Ct. 1060, 1065, with and exchanged written memoranda 49 L.Ed.2d 87 (2001). Second, the docu- with the tribes regarding potential claims. ment must fall within the bounds of a civil Id. at 5. The Klamath Water Users discovery privilege. Id. One of the privi- Protective Association, whose interest were leges contemplated by the second condition adverse to the interests of the tribes, filed a is the deliberative process privilege. Id. In series of requests with the Bureau under the order to come within the deliberative FOIA seeking access to the memoranda and process privilege of Exemption 5, a govern- other communications exchanged between ment document must be both “predecision- the Bureau and the tribes. Id. at 6. Despite al” and “deliberative.” Parke, Davis & Co. producing some documents, the Bureau v. Califano, 623 F.2d 1, 6 (6th Cir. 1980). A withheld others as exempt under the attor- document is predecisional when it is ney work-product and deliberative process “received by the decision maker on the sub- privileges pursuant to Exemption 5 of the ject of the decision prior to the time the FOIA. Id. at 6. decision is made,” N.L.R.B. v. Sears, On certiorari review of the Ninth Roebuck & Co., 421 U.S. 132, 151, 95 S.Ct. Circuit’s opinion that Exemption 5 did not 1504, 1517 (1975); and deliberative when it apply to bar disclosure of the documents, “reflects the give-and-take of the consulta- 189 F.3d 1034 (1999), the Supreme Court tive process.” Coastal States Gas Corp. v. found the Department’s apparent position, Department of Energy, 617 F.2d 854, 866 that the inter-agency or intra-agency com- (D.C. Cir. 1980). munications condition should be placed on Over the years, the first condition of any document the Government would find Exemption 5 has been interpreted broadly valuable to keep confidential, untenable. Id. by some Courts of Appeals to include com- at 12. “There is, however, no textual justifi- munications between Government agencies cation for draining the first condition of and outside consultants. See Government independent vitality, and once the intra- Land Bank v. GSA, 671 F.2d 663 (1st Cir agency condition is applied, it rules out any 1982); Hoover v. U.S. Dept. of Interior, 611 application of Exemption 5 to tribal com- F.2d 1132 (5th Cir. 1980); Lead Industries munications on analogy to consultants’ Assn. v. OSHA, 610 F.2d 70 (2nd Cir. 1979). reports.” Id. The Supreme Court, however, recently nar- The Court was not persuaded by the rowed the first condition in a case where the Department’s argument that the tribes were government attempted to stretch the defini- akin to outside consultants whose records tion of “outside consultant.” played essentially the same part in the In Dep’t of the Interior v. Klamath Water Department’s deliberation as those docu- Users Protective Ass’n, 532 U.S. 1, 121 ments prepared by the Department itself. Id. S.Ct. 1060, 149 L.Ed.2d 87 (2001), the at 10. The Court observed that those con- issue before the Court was whether docu- sultants whose communications have typi- ments, exchanged between Indian Tribes cally been held exempt had not been com- 66 municating with the Government in their not only on the intrinsic character of the own interest or on behalf of any person or document itself, but also on the role it group whose interest might be affected by played in the administrative process.’ ” Id. the Government action addressed by the at 78 quoting Lead Industries Assn. v. consultant. Id. The tribes, however, com- OSHA, 610 F.2d 70 (2nd Cir. 1979). Unlike municated with the Bureau with their own the tribes in Klamath, who clearly had their interest in mind. Id. “While this fact alone own interests in mind in communicating distinguishes tribal communication by sev- with the Bureau of Indian Affairs, the court eral Courts of Appeals, the distinction is observed that the Webster Commission was even sharper, in the Tribes are self-advo- not acting on its own behalf in requesting cates at the expense of others seeking bene- the memorandum at issue. Id. Rather, the fits inadequate to satisfy everyone.” Id. The Webster Commission was acting as a con- Court concluded that there was simply no sultant to the IRS in order to assist the IRS support for the “Indian trust” exemption with developing policy recommendations. sought by the Department given the FOIA’s Id. at 78. As such, the court found that the mandate of broad disclosure. Id. at 16-17. memorandum generated by the Southern In a recent case from the Second Circuit, District was an inter-agency communica- the Government, armed with far better tion because it was intended to assist the facts, successfully utilized the same argu- Webster Commission with its responsibili- ment for the non disclosure of documents ties to the IRS. Id. at 79. “To conclude that that the Supreme Court rejected in Klamath. the deliberative process privilege does not In Tigue v. Dep’t of Justice, 312 F.3d 70 apply when an outside consultant to an (2nd Cir. 2002) the court found that a mem- agency receives information from another orandum prepared by an Assistant U.S. agency effectively would condition the use Attorney in the Southern District of New of consultants on both agencies’ willingness York and forwarded to the Criminal to disclose any information the consultant Investigation Division Review Task Force, reviews in the process of its work and established by the IRS and known as “the would unreasonably hamper agencies in Webster Commission,” was shielded by their decision-making process.” Id. FOIA’s Exemption 5 as reflecting an With respect to the predecisional issue, agency’s deliberative process. The memo- the court found that the memorandum was randum at issue outlined the Southern not simply a part of a routine and ongoing District’s opinions and recommendations process of agency self-evaluation as was the with respect to how the IRS should conduct case in Maricopa Audubon Society v. criminal tax investigations. Id. at 73. United States Forest Service, 108 F.3d 1089 Plaintiff, while conceding that the memo- (9th Cir. 1997)(holding that the government randum was at least in part deliberative, must show that the predecisional material argued that the memorandum was not pro- was prepared to assist the agency in the for- tected by the deliberative process privilege mulation of a specific decision). Id. at 80. because it was neither an inter-agency or Rather, the memorandum was specifically intra-agency document nor a predecisional prepared for use by the Webster document. Id. at 76. Commission in advising the IRS on its Turning first to the inter-agency or intra- future policy with respect to the Criminal agency issue, the court initially noted that Investigation Division. Id. Accordingly, the the Supreme Court in Klamath cautioned court found that the memorandum was pre- that the term “intra-agency” is not “ ‘ just a decisional despite the fact that the IRS may label to be placed on any document the not have made a specific decision in Government would find it valuable to keep reliance on the memorandum. Id. confidential.’ ” Id. at 77 quoting Klamath, Given the rulings in Klamath and Tigue, 532 U.S. at 12. “ ‘ [W]hether a particular proper application of FOIA’s Exemption 5 document is exempt under (b)(5) depends as it relates to the deliberative process priv- 67 ilege and the Government’s ever increasing Security Administration could not obtain a reliance on outside consultants should now memorandum prepared by Administrative be easier to define. Appellate and trial Law Judges for the Social Security courts, however, will likely view the Administration responsive to criticism of Government’s characterization of an entity their operations because it was protected by as an outside consultant with a more jaun- Exemption 5. Schell, 843 F.2d at 940. The diced eye. As such, the Government will be 6th Circuit further determined that the forced to spend substantially more time memorandum was protected as part of the convincing the court that its communica- deliberative process whether or not it was tions with outside consultants constitute solicited, and whether or not it actually was inter-agency or intra-agency materials. considered in making decisions. Schell, State courts often look to the law of the 843 F.2d at 941. The 6th Circuit reasoned Federal Freedom of Information Act in that allowing disclosure in any circum- interpreting the deliberative process privi- stances would run afoul of the very reason lege as it applies to Open Records Act for application of the deliberative process, requests. See, e.g., Colorado Springs v. that is, to encourage frank and open com- White, 967 P.2d at 1049. munication among public officials and In two cases interpreting the exemptions employees. Id. under FOIA, predecisional deliberative documents were withheld from plaintiffs. Cases in Which the Deliberative Process In American Federation of Gov’t Privilege May Play a Role Employees, Local 2782 v. U.S. Dep’t of Commerce, 907 F.2d 203 (D.C. Cir. 1990). The recent events involving Vice Unsuccessful promotional applicants President Richard Cheney and the group sought production of copies of forms and known as “The Energy Task Force” provide promotion-related memoranda reflecting or the opportunity for consideration of the potentially reflecting opinions and discus- applicability of the deliberative process sions regarding job performance of the privilege to the highest reaches of the feder- plaintiffs and other candidates for promo- al government. The United States Supreme tion. AFSCME v. Dep’t of Commerce, 907 Court granted certiorari on the propriety of F.2d at 206-208. The District of Columbia discovery concerning the Vice President’s Circuit held that the requested material was task force. See Cheney, Vice President of subject to the deliberative process privilege, U.S. v. USDC DC, ___ S.Ct. ___ (Mem), and thus not available to the plaintiffs. Id. 2003 WL 22251301 (U.S.), 72 USLW 3248. Similarly, the U.S. 11th Circuit Court of In the underlying case, Judicial Watch, Appeals determined that an attorney who Inc. v. National Energy Policy Development served as a Deputy Regional Attorney but Group, 219 F.Supp.2d 20 (D.D.C, 2002), was the unsuccessful candidate for the posi- plaintiffs filed suit against Vice President tion of Regional Attorney was not entitled Cheney, the National Energy Policy to the entire contents of his promotional file Development Group (“NEPDG”), various under the Freedom of Information Act. federal officials and private individuals to Stephens v. Dep’t of Health & Human enforce certain requirements of the Federal Services, 901 F.2d 1571, 1577 (11th Cir. Advisory Committee Act (“FACA”), the 1990). Freedom of Information Act (“FOIA”), the In a similar vein, in Schell v. United Administrative Procedures Act (“APA”) States Dep’t of Health & Human Services, and the federal mandamus statute. 843 F.2d 933 (6th Cir. 1988), the United Specifically, plaintiffs sought information States Court of Appeals for the Sixth Circuit concerning the activities of the NEPDG and determined that the plaintiff, an attorney- its members in developing and recommend- advisor in a field office of the Official of ing a national energy policy to President Hearings and Appeals for the Social Bush. Id. at 24. Defendants moved to dis- 68 miss raising a number of jurisdictional, issue. As the court observed, FACA, pur- statutory and constitutional objections. suant to the FOIA exemptions, has two One of the more interesting objections important exceptions to the requirement raised by the defendants related to the sepa- that the public have access to meetings and ration of powers. “The constitutional ques- documents. Id. at 53-54. Those exceptions tion suggested by this case is whether are deliberative process and national securi- Congress can pass a law granting the public ty concerns. Id. Again, however, the court access to the deliberative process of a for- chose not to address those questions until mally constituted group of the President’s further factual development had taken place advisors when at least one of those advisors including a determination of who partici- is a private individual without violating pated in the deliberations of the NEPDG, Article II.” Id. at 44. Due to the complete the nature of the interactions with the pres- absence of any discovery, the court declined ident, the role of the Vice President in the to substantively address this issue until fur- deliberations and the proximity of these ther factual development. Id. at 46. individuals and the NEPDG to the Nevertheless, the court observed that once President. Id. at 44, 53. the constitutional issue is properly before it, it will have to carefully balance whether Conclusion FACA’s requirements would infringe the President’s ability to perform his constitu- The deliberative process privilege is a tional functions and whether that impair- protective shield for lawyers defending ment is outweighed by any constitutionally governmental agencies and officials. Its authorized Congressional purposes. Id. at protection, however, is not without limits. 50. Lawyers who deal with governmental agen- The deliberative process privilege may cies or who litigate against those agencies end up playing a significant role in the must prepare themselves with counter court’s determination of the constitutional measures to pierce the privilege. 69 The Privacy Project II The Self Critical Analysis Privilege in Medical Care: The Law is One Thing in Rome and Another in Athens

By Paul E. Svensson Paul Edward Svensson, an associate at and George S. Hodges Boeggeman, George, Hodges & Corde, Introduction P.C. of White Plains, NY, and graduated from Pace Law School. He attended Holy Cross College and has a M.P.H. in Health Health information is among the most Administration from the University of personal and sensitive of any maintained Pittsburgh. Prior to practicing law, he was about an individual. As the nation's medical a hospital administrator. He is licensed to care system continues to develop and share practice law in New York, Connecticut and its informational database with a wide vari- New Jersey. ety of providers, insurance payers and regu- George S. Hodges is managing partner latory agencies, the susceptibility of that of Boeggeman, George, Hodges & Corde, information to disclosure also increases. P.C. He is a graduate of Fordham The federal government has taken prelimi- University School of Law, having received his J.D. degree in 1973. Mr. Hodges is the nary steps to protect this information with President-Elect of the IADC. He is also the the enactment of the Health Care Quality chair of the Privacy Project editorial 1 Improvement Act (HCQIA), and the board. Health Insurance Portability and Accountability Act (HIPAA)2 and its component Federal Privacy Rule.3 However, neither HCQIA nor HIPAA provide sufficient statutory protection of data used for self-critical analysis as privileged, its pro- medical peer review, or self-critical analy- tection must promote an important interest sis, purposes. The gap has been partially that outweighs the need for probative evi- 4 filled by a diverse mix of state statutory dence. privileges. Medical peer review is a function performed by members of the medical and The Significance of Privileged Analysis nursing staffs to address quality care issues. Such reviews may include identifying cor- At tension in the law of privileges is, on rectable trends in the standard of medical the one hand, the public benefit that comes care delivered by individual physicians and from keeping certain information confiden- nurses, evaluating adverse events, estab- tial and, on the other hand, the public bene- lishing clinical guidelines and evaluating fit that comes from ascertaining the truth of applicant qualifications for the award the matter, as facilitated by the discovery of and/or renewal of medical and nursing staff all relevant information. Thus, to recognize privileges. Peer review has been used since 1952, when the Joint Commission on the

1. 42 U.S.C. §§ 11101-11145 (West 2003); see also H.R. 3. Standards for Privacy of Individually Identifiable Health Rep. No. 99-903 (1986), reprinted in 1986 U.S.C.C.A.N. Information, 45 C.F.R. 160, 164 (2003). 6384 (explaining the need to improve the quality of health 4. See Trammel v. United States, 445 U.S. 40 (1980)(cler- care by conducting peer review, identifying and reporting gy-penitent privilege); UpJohn Co. v. U.S., 449 U.S. 383 review actions affecting clinical privileges to a national data- (1981)(attorney-client privilege); University of Pa. v. bank in order to identify incompetent physicians and restrict EEOC, 493 U.S. 182 (1990)(no academic peer review priv- their movement). ilege); Jaffee v. Redmond, 518 U.S. 1 (1996)(psychothera- 2. 42 U.S.C. 1320d-8 (West 2003). pist-patient privilege). 70 Accreditation of Hospitals first imposed the PART I requirement on the medical staffs of its member hospitals.5 State regulatory agen- Status of Peer Review Privilege in cies had mandated peer review activities Federal Common Law and established reporting requirements before the enactment of HCQIA in 1986, It is well settled that there is no physi- but HCQIA expanded the application of cian-patient privilege recognized in the fed- reportable incidents involving medical eral common law.6 Even though the U.S. practitioners to a national database. As Supreme Court has opined that the physi- such, medical peer review is one of the pri- cian-patient privilege is “rooted in the mary means of ensuring the continued imperative need for confidence and trust,”7 improvement of quality patient care within to date, Congress has not codified this con- the medical and nursing professions. cept in a federal statute. On the contrary, this privilege has been codified by essen- Purpose of this Paper tially all state legislatures. Likewise, no medical peer review, or This paper discusses the availability and self-critical analysis, privilege is found in application of a self-critical analysis privi- the federal common law.8 While states have lege in the medical peer review context. In been aggressive in developing statutory general, and specifically for the purposes of authority, such medical peer review privi- this paper, the terms self-critical analysis leges are not conclusive in cases brought in and peer review are considered analogous federal court under federal law.9 and may be used interchangeably. In Jaffee v. Redmond, the Supreme Court Part I will acknowledge the absence of a set forth principles to be considered in medical self-critical analysis privilege in determining when Fed. R. Evid. 501 author- the federal common law and discuss the izes federal courts to define new privileges application of the federal law of privileges under the federal common law.10 As noted under Fed. R. Evid. 501. Part II will review above, the privilege must promote “suffi- the historical role of the states in forming ciently important interests to outweigh the health policy, the doctrine of federal pre- need for probative evidence.”11 Moreover, emption, the development of federal legis- the analysis must be made on a case-by- lation to protect limited aspects of medical case basis, and take into account both the peer review and patient privacy interests, private and public interests that the privi- and the preemptive effect of the federal leg- lege serves, as well as the evidentiary bene- islation on state statutes. Part III will dis- fit that would result if the privilege were cuss the relevant federal court decisions denied.12 Finally, the Court has explained which have addressed the application of a that any privilege must be strictly con- medical peer review privilege. Part IV will strued.13 review representative state statutes provid- In accordance with this directive, the ing medical peer review privileges and dis- Court enumerated a four-part test for judg- cuss a rationale for extending state privi- ing whether such a self-critical analysis leges to federal court claims. Part V will privilege applies. First, the information conclude that the absence of a uniform self- must be self-critical analysis undertaken by critical analysis privilege has serious rami- the party seeking the protection. Second, fications for medical care providers. the public must have a strong interest in maintaining the flow of the information.

5. The Joint Commission on the Accreditation of Healthcare 385, 388 (S.D. Iowa 1997); see also Von Bulow v. Von Organizations (JCAHO), formerly JCAH, still requires its Bulow, 811 F.2d 136, 141 (2d Cir. 1987). member facilities to participate in a peer review process. 10. 518 U.S. at 8. 6. See Whalen v. Roe, 429 U.S. 589, 602 n. 2 (1977). 11. Id. at 9; see also Univ. of Pa. supra note 4. 7. 445 U.S. at 51. 12. Id. at 8. 8. Univ. of Pa. supra note 4. 13. 493 U.S. at 189. 9. See Holland v. Muscatine General Hospital, 971 F. Supp. 71 Third, the information must be of a type Mattice v. Mem. Hosp. of South Bend distin- whose flow would be curtailed if discovery guished this finding and clarified that the St. were allowed. Fourth, the information must Joseph’s court had upheld the peer review have been created with the expectation that privilege under the particular circumstances it would be kept confidential, and it has in of that case because the plaintiff had failed fact been kept confidential.14 Although fed- to allege facts from which an inference of eral courts have applied a similar methodol- workplace discrimination could arise.21 In ogy in determining whether a self-critical other peer review cases, St. Joseph’s has analysis relative to peer review material met with criticism based upon its interpreta- exists, as will be discussed below, there is tion of Fed. R. Evid. 501.22 This does not, lack of unanimity in finding a privilege.15 however, question the view of the Supreme Finally, as will be discussed more fully Court that Fed. R. Evid. 501 is designed to below, the presence and breath of a federal be flexible. statutory privilege has been widely contest- In cases where state law claims are ed. To date, only one federal court has rec- raised pendent to federal claims, the ques- ognized and incorporated state statutory tion of choice of law becomes more diffi- privileges in finding that the state policy cult.23 Literally read, Fed. R. Evid. 501 was consistent with the federal policies would appear to require the Court to apply implicated in the case.16 the federal common law of privileges with respect to the federal claims and the state Evidentiary Considerations law of privileges with respect to state in Federal Court claims. However, such dual application was It is well settled that when resolving an not the clear intent of Congress. A review of action involving a federal question, the fed- the legislative history shows that Fed. R. eral common law of privileges would apply Evid. 501 was developed based on the understanding: under Fed. R. Evid. 501.17 Conversely, in a diversity case in which only state claims (1) privilege rules were and should continue to be considered substantive for Erie were raised, state law would govern.18 purposes; There is, however, one contrary federal (2) privilege rules were outcome determina- court decision in which a state medical peer tive; review privilege was applied to a federal (3) where State law supplied the rule of deci- civil rights claim.19 Consistent with the sion, State rules of privilege should be Supreme Court dicta in Jaffee, the court in applied because there is no Federal interest Does v. St. Joseph found that Fed. R. Evid. substantial enough to justify departure from 501 was intended to permit the considera- State policy; and tion of state law and policy and encourage (4) State policy regarding privilege should “flexibility to develop rules of privilege on not be thwarted merely because of diversity jurisdiction, a situation, which, if allowed, a case-by-case basis.”20 However, in a later would encourage forum shopping.24 decision, the same Indiana District Court in 14. Dowling v. American Haw. Cruises, 971 F.2d 423, 425- 18. Fed. R. Evid. 501 concludes: “However, in civil actions 26 (9th Cir. 1992). and proceedings, with respect to an element of a claim or 15. See Holland supra note 8 (action alleging a hostile defense as to which State law supplies the rule of decision, work environment in violation of the Civil Rights Act of the privilege of a witness, person, government, State, or 1964, 42 U.S.C.S. § 2000e et seq., and Iowa Code § 216); political subdivision thereof shall be determined in accor- Pagano v. Oroville Hosp., 145 F.R.D. 683 (E.D. Cal. dance with State law.” See also Morse v. Gerity, 520 F. Supp. 1993)(court declined to recognize self-critical privilege 470 (D. Conn. 1981). where the peer review process itself was under attack) and 19. Does v. St. Joseph's Hosp., 113 F.R.D. 677 (N.D. Ind. compare Bredice v. Doctors Hosp., Inc., 50 F.R.D. 249 1987). (D.D.C. 1970)(peer review materials privileged in medical 20. Id. at 679 (citing Trammel, 445 U.S. at 47). malpractice action), Weekoty v. United States, 30 F. Supp. 21. Mattice v. Memorial Hosp. of South Bend, 203 F.R.D. 2d 1343 (D.N.M. 1998)(self-critical privilege extended to 381 (N.D. Ind. 2001). morbidity and mortality analysis), 22. See e.g., Nilavar v. Mercy Health System - Western 16. See Wei v. Bodner, 127 F.R.D. 91, 94-5 (D.N.J. 1989). Ohio, 210 F.R.D. 597 (S.D. Ohio 2002). 17. Fed. R. Evid. 501 states, in part, that privilege “shall be 23. See generally, Krolikowski v. Univ. of Massachusetts, governed by the principles of the common law as they may 150 F. Supp. 2d 246 (D. Ma. 2001). be interpreted by the courts of the United States in light of 24. H.R. Rep. No. 650, 93rd Cong., 1st Sess. 9 (1973). reason and experience.” 72 Thus, it is commonly held that in feder- and (4) the injury that would inure to the al question cases, even where pendent state relationship from disclosure of the commu- claims are raised, the federal common law nication must be greater than the benefit to governs all claims of privilege raised in the be derived for purposes of litigation.28 litigation.25 This was the approach suggest- The law of privileges is not just a rule ed by the Senate Judiciary Committee and governing the admissibility of evidence. Its is generally acknowledged to be the primary purpose is to protect the confiden- approach most consistent with the policy of tiality of communications in circumstances Fed. R. Evid. 501. That policy, simply stat- where such confidentiality serves broad ed, is that “in non-diversity jurisdiction societal goals. Once confidentiality is bro- civil cases, federal privilege law will gener- ken, the basic purpose of the privilege is ally apply.”26 Nonetheless, Jaffee authoriz- defeated. The self-critical analysis privilege es federal courts to define new privileges is premised upon the philosophy that frank under the federal common law where the and potentially damaging self-criticism privilege promotes an interest that out- should be confidential and protected from weighs the need for probative evidence. discovery in order to encourage the per- To date, there has only been one federal formance of an activity with obvious social court decision where a state law peer review benefits.29 As such, the policies behind the privilege has been applied to a pendent state medical peer review privilege and liberal law claim.27 As will be discussed more fully discovery conflict, and federal courts have below, the position of the court in Cohn v. struggled mightily while reaching divergent Wilkes Gen. Hosp. is insupportable because outcomes as to whether documents created the plain language of the HCQIA immunity and reviewed during peer review are dis- provision relied upon by the court does not coverable for use in civil litigation. State include materials produced under peer legislatures have enacted laws in the review. absence of a single federal authority and, these statutes combined with the case law, The Importance of Confidentiality to the form a crazy quilt of regulations that fails to Medical Self-Critical Analysis Privilege define a uniform national policy.

Confidentiality is essential to meaning- PART II ful and effective medical peer review. The importance of confidentiality in the law of The Historical Role of the States in privilege has long been recognized. Forming Health Policy Professor John Henry Wigmore is generally credited with having articulated the require- In a compromise between competing ments for recognizing common law privi- ideologies, the United States Constitution leges most frequently cited by courts. established a union among states with broad These include: (1) the communications sovereign powers and a national govern- must originate in a confidence that they will ment of supreme, albeit enumerated, pow- not be disclosed, (2) the element of confi- ers. The sovereign powers retained by the dentiality must be essential to the full and states under the Constitution, collectively satisfactory maintenance of the relation known as the police powers, constitute the between the parties, (3) the relationship primary source of governmental authority must be one which in the opinion of the for the states to act to protect the public 30 community should be diligently fostered, health. 25. See S.Rep. No. 1277, 93d Cong., 2d Sess. 12 n.16 did self-examination will deter or suppress socially useful (1974), reprinted in 1974 U.S.C.C.A.N. 7059 n.16. investigations and evaluations or compliance with the law”). 26. H.R. Rep. No. 1597, 93d Cong., 2d Sess. 7 (1974), 30. See Sporhase v. Nebraska ex. rel. Douglas, 458 U.S. reprinted in 1974 U.S.C.C.A.N. 7101. 941 (1982) (“a state’s power to regulate . . . for the purpos- 27. Cohn v. Wilkes General Hosp., 127 F.R.D. 117 es of protecting the health of its citizens . . . is at the core of (W.D.N.C. 1989). its police power”). See also, e.g., Medtronics, Inc. v. Lohr, 28. See 8 John Wigmore, Wigmore on Evidence 2285, at 518 U.S. 470, 474-75 (1996)(“the State’s traditionally have 527 (3 ed. 1940). had great latitude under their police powers to legislate as to 29. Sheppard v. Consolidated Edison Co., 893 F. Supp. 6, the protection of the . . . health . . . of all persons”). 7 (E.D.N.Y. 1995)(“disclosure of documents reflecting can- 73 In Jacobsen v. Massachusetts,31 the The Federal Preemption Doctrine Supreme Court asserted the primacy of state authority in enacting public health Federal preemption of state law relates laws,32 in holding that such regulations are to the proper distribution of federal and permissible when they were: (1) “necessary state power. Federal laws generally include of the case,” (2) not exercised in “an arbi- express preemption language as well as trary, unreasonable manner,” (3) “reason- savings provisions, limiting the breath of ably required for the safety of the public,” express statutory preemption. In the and (4) “tend[ed] to promote the general absence of an express congressional intent welfare.”33 This deferential standard of to preempt state law, federal law can still review requires that the governmental pur- serve as a barrier to the application of state pose be valid, the means reasonable, and the law under the theory of implied preemp- means reasonably directed towards achiev- tion.38 ing the objective. The Supreme Court has Implied preemption arises in two con- established more exacting standards where texts. In both cases, the crucial inquiry is certain individual rights are affected by whether Congress, in establishing the par- public health measures, including the appli- ticular statute, intended to exercise its con- cation of procedural and substantive due stitutionally delegated authority to set aside process under the Fifth34 and Fourteenth35 the laws of the states. In the first instance, Amendments, and equal protection of the implied preemption will be found if a feder- law under the Fourteenth36 Amendment in al enactment occupies a field so completely determining whether to uphold public “as to make reasonable the inference that health regulations that affect personal liber- Congress left no room for the states to sup- ties.37 plement it.”39 The Court has held that when The federal government essentially left the field is one traditionally occupied by a exclusive control of matters affecting the state, the historic police powers of the state public health to the states until the early should not be lightly superseded,40 unless twentieth century when several factors led Congress expresses a clear and manifest to a shift in political philosophy. The more intent to occupy the entire field of regula- notable factors included the change in the tion.41 Alternatively, implied preemption economic nature of the country from an may arise when state law actually conflicts agrarian to an industrial society resulting in with federal law. This occurs where: (1) great population increases in urban areas “compliance with both federal and state and an increased reliance on interstate com- regulations is a physical impossibility,”42 or merce. In healthcare, the determinative rea- (2) when state law “stands as an obstacle to son for federal involvement has been the the accomplishment and execution of the growth of federal government expenditures full purposes and objectives of Congress.”43 as an insurer of medical care services. Thus, any incompatibility between state and federal law required the courts to con-

31. 197 U.S. 11 (1905) ment through the Due Process Clause of the Fifth 32. Id. at 34. Amendment). 33. Id. at 28. 37. Washington v. Glucksberg, 521 U.S. 702, 713 34. U.S. Const. amend. XIV (“No state shall . . . deprive any (1997)(requiring “a careful description” of the individual person of life, liberty, or property, without due process of liberty interest, and that the interest be “deeply rooted in the law. . .”). Nation's history and tradition.”). 35. U.S. Const. amend. XIV (“No state shall . . . deny to any 38. See Shaw v. Delta Airlines, Inc., 463 U.S. 85 (1983). person within its jurisdiction the equal protection of the 39. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 laws.”); see also Bolling v. Sharpe, 347 U.S. 497 (1954) (1947). (holding that equal protection applies to the federal govern- 40. See Jones, 430 U.S. at 525. ment through the Due Process Clause of the Fifth 41. See Philadelphia v. New Jersey, 437 U.S. 617, 621 n.4 Amendment). (1978). 36. U.S. Const. amend. XIV (“No state shall . . . deny to any 42. Florida Lime & Avocado Growers, Inc. v. Paul, 373 person within its jurisdiction the equal protection of the U.S. 132, 142-43 (1963). laws.”); see also Bolling v. Sharpe, 347 U.S. 497 (1954) 43. Hines v. Davidowitz, 312 U.S. 52, 67 (1941). (holding that equal protection applies to the federal govern- 74 duct a plain language reading of the federal review process under 42 U.S.C. § 11111.48 statute, and determine whether Congress Importantly, HCQIA does protect, as intended the federal law to have precedent confidential information, reports of adverse effect.44 Federal courts have generally acted actions taken against physicians made to judiciously in applying the preemption doc- the national practitioners data bank, with trine so as not to risk ousting state power in the exception that confidentiality does not areas where the state has a substantial inter- extend to unidentifiable health information est in regulating the conduct at issue.45 regarding physicians, health care entities or patients.49 As will be developed more fully Federal Health Legislation below, federal courts have split in their decisions whether the federal peer review As noted above, two federal laws impli- privilege under 42 U.S.C. § 11137 extends cate the medical self-critical analysis privi- to all materials arising from the medical lege, but neither HCQIA nor HIPAA ade- peer review process. quately address the need for a medical peer As regards the preemptive status of review privilege. HCQIA relative to state laws, in 1987 Congress amended 42 U.S.C. § 11115 by The Health Care Quality adding language stating that nothing in the Improvement Act statute “shall be construed as changing the liabilities or immunities under law or as The purpose of HCQIA was to identify preempting or overriding any state law” incompetent physicians and to report them that affords members of the review process to a national data bank where this informa- greater “immunities or protection” than tion could be disseminated to other those found within the statute.50 Thus, providers. The primary method for identifi- HCQIA does not limit either the defenses or cation of these physicians was, and contin- immunities available to physicians, nor ues to be, the medical peer review process. does the statute affect the rights and reme- As an incentive to encourage peer review dies afforded patients to seek redress for activities, HCQIA provides a qualified medical malpractice,51 under any provision immunity for participants in the peer review of federal or state law. process relative to federal and state civil The addition of this savings language, actions arising from these activities on or protecting state immunity provisions, is sig- after October 14, 1989.46 Immunity, howev- nificant. By acknowledging the existence er, is not available where peer review par- of greater state law immunities and protec- ticipants fail to provide the minimum pro- tions and not providing a federal privilege cedural safeguards outlined by HCQIA.47 to limit the discovery of peer review docu- More importantly, only one federal court ments, it is arguable that Congress demon- has found that this immunity extends to strated an intent not to establish a federal materials arising from the medical peer privilege. However, it is equally arguable

44. 505 U.S. 504, 523 (1992)(the Supreme Court indicated 47. See 42 U.S.C. § 11112(b)(listing guidelines relative to that it need “not look beyond” the plain language of the pre- hospitals for review to trigger immunity and standard of emption provision to examine congressional intent where review for immunity to attach). These procedural safe- the provision was unambiguous); see also 518 U.S. 470, 484 guards include that the professional review action is taken to (1996)(the Supreme Court, in finding that the statutory lan- further enhance quality health care, necessary facts are guage was ambiguous, insisted that the congressional intent obtained and the subject of the review has had adequate underlying the statute be considered to determine whether it notice and a hearing and there is reasonable belief that the supported the preemption of state law). facts warranted the action.). On the contrary, physician 45. See Farmer v. United Bhd. Of Carpenters, 430 U.S. groups and HMOs are covered only if they have a formal 290, 302 (1977). peer review process that meets established criteria. See 42 46. See 42 U.S.C. § 11151(11)(defined as a “health care U.S.C. § 11151(4)(a)(i)(ii); C.F.R. 60.2 (2003). entity and the governing body or any committee of a health 48. Cohn supra note 26. care entity which conducts professional peer review activi- 49. See 42 U.S.C. § 11137(b)(1). ty, and includes any committee of the medical staff of such 50. Pub. L. No.: 100-177, § 402(c) codified at 42 U.S.C. § entity when assisting the governing body in a professional 11115(a). review activity.”) 51. See 42 U.S.C. § 11115(d). 75 that Congress recognized that since states plete right to privacy. This is particularly had developed laws regarding confidential- interesting in light of federal court rulings ity of peer review materials there was no based upon constitutional claims of privacy. reason to alter the effect of these laws. In Whalen v. Roe, the Supreme Court The problem for the defendant attempt- squarely faced the question whether the ing to assert a state privilege occurs, how- constitutional right to privacy encompasses ever, when pendant state claims are the collection, storage and dissemination of resolved in federal court and a limited fed- health information in government data eral privilege is applied under a strict inter- banks. The Court failed to provide a mean- pretation of Fed. R. Evid. 501. ingful constitutional remedy but did acknowledge that a duty to avoid unwar- The Health Insurance Portability and ranted disclosure was rooted in the federal Accountability Act Constitution.55 Federal courts have generally interpreted the dicta of the Supreme The purpose of HIPAA, and its Federal Court as affording a tightly circumscribed Privacy Rule, is to grant patients greater right to informational privacy or have access to their medical records and more grounded the right to privacy in state consti- control over how their individually identifi- tutions.56 able health information52 is used. Second, a restrictive delegation of HIPAA utilizes a similar issue preemp- authority leaves several entities which col- tion scheme with respect to state laws as lect health information unprotected. HCQIA. State laws that are contrary and HIPAA covers only certain entities engag- less protective than the federal regulations ing in the electronic transmission of data, are preempted.53 Whereas, state laws that including health plans, health care clearing- are (1) contrary but “more stringent” than houses and health care providers.57 Thus, the federal regulations, or (2) deemed nec- health care providers who really solely on essary to assist with state supervision over paper claims, employers, life insurers, and health care delivery or otherwise serve a entities who receive health information compelling need relating to public health, from covered health care providers, such as safety or welfare are not preempted.54 third-party administrators, researchers, pub- Thus, HIPAA, and the federal Privacy lic health officials and contractors, are Rule enacted under its authority, establish a excluded.58 floor for protecting the privacy of health Under HIPAA, covered entities are information, granting states the flexibility required to disclose identifiable health to establish comparable or greater privacy information in two circumstances, but may protections. Unfortunately, HIPAA neither use or disclose identifiable health informa- requires state action nor demands the devel- tion whenever authorized by the individual opment of uniform protections when states patient, or otherwise permitted under the choose to act. Privacy Rules.59 HIPAA also has several limitations per- Disclosure is mandated where an indi- mitting the unprotected use of both identifi- vidual patient requests his or her own pro- able and de-identifiable health information tected information, and when the Secretary which may indirectly have a chilling effect of Health and Human Services is investigat- on medical peer review activities. ing a complaint or determining a covered First, HIPAA does not guarantee a com- entity compliance with the HIPAA Privacy

52. 45 C.F.R. 164.501 (2003). 56. But see J.P. v. DeSanti, 653 F.2d 1080, 1090 (6th Cir. 53. 45 C.F.R. 160.203 (2003)(detailing the process of pre- 1981)(holding that the right to privacy does not extend to a emption). general right to nondisclosure of personal information) 54. 45 C.F.R. 160.203(b); 45 C.F.R. 202 (2003). 57. 45 C.F.R. 160.102 (2003); see 42 U.S.C. 1320D-2 55. 429 U.S. at 605; see also Nixon v. Administrator of (2003). General Services, 433 U.S. 425 (1977)(hesitantly acknowl- 58. 64 Fed. Reg. 59924 (Nov. 3, 1999) edging a narrow right to privacy); 59. 45 C.F.R. 164.502(2003). 76 Rules. Generally, a covered entity is per- statutory language and, as such, is a ques- mitted to use or disclose identifiable health tionable decision. On its face, 42 U.S.C. § information for the purpose of its health 11111(a)(1) only grants a limitation on care operations (including business purpos- damages for those who participated in the es and medical peer review activities) or peer review process, unless the entity or when the information has been de-identi- person seeking protection violated the civil fied. rights of the person subject to review and Identifiable information may also be seeking disclosure of the materials.61 As used or disclosed for judicial and adminis- such, the relevant sections of HCQIA relied trative proceedings, under protective order, upon by the Cohn court fail to create a fed- so long as the individual has an opportunity eral privilege for documents prepared in the to object and those objections have been course of peer review activities. resolved.60 On the other hand, there is a difference In medical peer review activities, identi- of opinion between federal courts whether fiable patient information is used, under 42 U.S.C. § 11137(b)(1) extends to all doc- HIPAA authority, but is routinely de-identi- uments arising from the medical peer fied as part of the analysis of the care deliv- review process. Section 11137(b)(1) pro- ered by the health care provider. HIPAA vides a privilege for the information which fails to protect de-identified data. Health entities are required to “report” to the care providers are therefore left to seek pro- national data bank.62 As will be seen, courts tection under HCQIA and state statutory which have denied the availability of a priv- protections. As noted above, HCQIA ilege emphasize that the plain language extends certain protection where informa- does not extend to information “gathered” tion, used for peer review purposes, has during the peer review process. However, been de-identified as to patients but practi- as noted above, decisions as to the preemp- tioners and/or health care entities remain tive effect of federal statutes extend beyond identifiable. The question is: what protec- a mere plain language reading of the statute. tion does HCQIA actually offer? Courts are also charged with the duty to ascertain the intent of Congress in enacting PART III the legislation and to consider whether this is an area where they should apply a flexi- Representative Federal Court Decisions ble interpretation of Fed. R. Evid. 501 as the Supreme Court encouraged in Jaffee. As discussed above, federal courts have Decisions regarding this statute have split in their decisions whether either been reached in cases as diverse as employ- HCQIA peer review privilege, referenced in ment discrimination, civil rights, antitrust, 42 U.S.C. § 11111(a)(1) and 42 U.S.C. § Federal Tort Claim Act and medical mal- 11137(b)(1), extends to all materials arising practice actions. from the medical peer review process. Courts that have denied a peer review With the exception of the decision in privilege have considered the applicability Cohn, no federal court has found that the of state privilege laws63 but, as noted above, limited immunity provided by 42 U.S.C. § the St. Joseph’s case remains the only appli- 11111(a)(1) extends a privilege to materials cation of state laws to this federal question. developed or reported as a result of peer Most courts emphasize that the HCQIA review activities. The Cohn court relied privilege provided under 42 U.S.C. § more heavily on the mere existence of 11137(b)(1) is limited to information HCQIA rather than focusing on the actual “reported” to the national data bank.64 Thus,

60. See e.g., Ex. Rel. Mary Jane Stewart v. The Louisiana 61. 42 U.S.C. § 11111(a)(2); see also Patrick v. Burget, 486 Clinic, 2002 U.S. DIST. LEXIS 24062 (E.D.La. Dec. 12, U.S. 94 (1988) and Summit Health, Ltd. v. Pinhas, 500 U.S. 2002)(In this False Claims Act case, the court allowed the 322 (1991). government to use protected patient information for this lit- 62. 42 U.S.C. § 1131-1133 (2003). igation and its health oversight activities after resolution of 63. See e.g., 791 F. Supp. 188. objections to redact and for protective order.) 64. See e.g., 198 F.R.D. 1. 77 the omission by Congress to expressly pro- 42 U.S.C. § 11137(b)(1) and relied on the vide a privilege for all materials produced finding in University of Pa. v. EEOC that in peer review has been cited as a rationale there was no federal common law self- for denying protection, however, an equally analysis privilege.72 thorough analysis as to whether the individ- On the other hand, other federal courts ual case requires a flexible interpretation of have applied a flexible approach as to Fed. Fed. R. Evid. 501 has not consistently been R. Evid. 501 and concluded that Congress conducted to confirm this interpretation.65 intended state medical peer review privi- It is well settled that federal courts will leges to apply. These courts support the permit the disclosure of peer review materi- application of the self-critical analysis priv- als in federal question cases involving dis- ilege.73 In Weekoty v. United States, the crimination,66 civil rights67 and antitrust court noted that forty-six states and the actions.68 In these cases, the courts general- District of Columbia had laws prohibiting ly hold that the federal interest in discovery the disclosure of peer review material and outweighs any interest in confidentiality, stated that “the nearly unanimous state leg- because otherwise the plaintiff may not be islative recognition of the self-critical able to prove a valid claim. analysis privilege in the medical peer Federal court opinions are split in review context confirms the appropriate- actions involving the Federal Tort Claim ness of recognizing the privilege in this Act (FTCA).69 Here, where Congress estab- forum.”74 lished a forum in which liability claims, Federal courts, sitting in diversity juris- such as medical malpractice, can be pur- diction, have permitted a peer review privi- sued against the government in accordance lege under state law in all cases involving with local state law, the Supreme Court has medical malpractice.75 Two of these cases held that the language of the FTCA “assim- Gen. Hosp., 138 F.R.D. 691 (N.D. Cal. 1991). ilates into federal law the rules of substan- 69. 28 U.S.C. § 2671 et seq. (2003). tive law of the several states.”70 Certain 70. Feres v. United States, 340 U.S. 135, 142 (1950). 71. See e.g., Feres supra note 71; Menses v. United States federal courts have interpreted this to mean, Postal Service, 942 F. Supp. 1320, 1321 (D. Nev. 1996); “federal law still supplies the ‘rule of the Galarza v. United States of America. 179 F.R.D. 291 (S.D. decision’ under Fed. R. Evid. 501 and state Cal. 1998); Young v. United States, 149 F.R.D. 199, 202 (S.D. Cal. 1993)(the legislative history of Fed. R. Evid. 501 privilege law does not apply to FTCA supports the conclusion that Congress intended federal priv- cases.”71 In Syposs v. United States, the ilege law to apply to claims brought under the FTCA); Syposs v. United States, 179 F.R.D. 406 (W.D.N.Y. 1998); court did not find a peer review privilege in Tucker v. United States, 143 F. Supp. 2d 619 (S.D.W.Va. 2001); 65. See e.g., 169 F.R.D. 550. 72. 179 F.R.D. at 410. 66. See e.g.,Virmani v. Novant Health Inc., 259 F.3d 284 73. See e.g., Weekoty supra note 15 (the self-critical analy- (4th Cir. 2001)(racial discrimination); Mattice supra note 21 sis privilege requires the confidentiality of its products); (ADA discrimination in employment); Johnson v. Nyack Mewborn v. Heckler, 101 F.R.D. 691 (D.D.C. 1984)(finding Hosp., 169 F.R.D. 550 (S.D.N.Y. 1996)(racial discrimina- that the availability of raw factual data is sufficient for the tion); Robertson v. Neuromedical Ctr., 169 F.R.D. 80 (M.D. purposes of discovery and the results of peer review are La. 1996)(ADA action); Marshall v. Spectrum Medical privileged); Whitman v. United States, 108 F.R.D. 5 (D. group, 198 F.R.D. 1 (D. Me. 2000)(ADA action). N.H. 1985)(finding a privilege but not enforcing it due to 67. See e.g.,LeMasters v. Christ Hosp., 791 F. Supp. 188 procedural waiver); Gillman v. United States, 53 F.R.D. 316 (S.D. Ohio 1991)(Title VII action based upon alleged termi- (S.D.N.Y. 1971)(holding that an administratrix was not enti- nation of staff membership after participation in EEOC pro- tled to government reports made by a board of inquiry estab- ceedings and sex discrimination); Smith v. Alice Peck Day lished to conduct an investigation into the death of dece- Memorial Hosp., 148 F.R.D. 51 (E.D. N.H. 1993)(civil dent); see also Virmani supra note 67 (discussing the appli- rights § 1981 action); Leon v. The County of San Diego, 202 cation of peer review privilege in a malpractice action). F.R.D. 631 (S.D. Cal. 2001)(civil rights § 1983 action with 74. 30 F. Supp. 2d at 1346-47. pendant state claim for medical malpractice); Krolikowski 75. See e.g., Bredice supra note 15(provided a qualified supra note 23 (Title VII action). privilege for peer review material unless extraordinary cir- 68. See e.g., Memorial Hosp. For McHenry County v. cumstances warranted discovery); Armstrong v. Dwyer, 155 Shadur, 664 F.2d 1058 (7th Cir. 1981); Swarthmore F.3d 211 (3rd Cir. 1998)(court held federal statute 42 U.S.C. Radiation Oncology, Inc. v. Lapes, 1993 U.S. Dist. LEXIS § 1320 covering Professional Peer Review Organizations 17555, 1993 WL 517722 (E.D. Pa. Dec. 1, 1993); Nilavar expressly barred disclosure); Laws v. Georgetown supra note 22; Wei supra note 17; Pagano, supra note 15; University Hosp., 656 F. Supp. 824 (D. D.C. 1987)(qualified Salamon v. Our Lady of Victory Hosp., 202 U.S. Dist. privilege if actual raw data is available to plaintiff following LEXIS 4207 (W.D.N.Y. Feb. 12, 2002); Teasdale v. Marin Bredice); Morse supra note 18(state law privilege applied to state law claim). 78 have been criticized by other courts for two promotes an interest that outweighs the principle reasons.76 First, the seminal case need for probative evidence. Courts which of Bredice v. Doctor’s Hospital is criticized have been critical of a peer review privi- because it was decided prior to the most lege, or reluctant to grant a privilege due to recent enactment of Fed. R. Evid. 501. This concerns over satisfying the federal inter- criticism reflects a restrictive view of Fed. ests of discovery, can achieve a more equi- R. Evid. 501 and ignores the dicta in Jaffee table resolution by following this path. that courts have the flexibility to fashion The federal common law peer review equitable resolutions. privilege continues to be criticized and Second, both Bredice and Laws v. developed in federal courts. Privileges Georgetown Univ. Hosp. are criticized have been recognized where plaintiffs are because they involved medical malpractice not prohibited from pursuing their federal cases sited in the District Court of the claims or denied access to raw actual data District of Columbia, which in a different for purposes of their malpractice actions. jurisdiction would have been heard in a This is particularly important as an state court applying the state law of privi- increased amount of aggregate health infor- leges. These criticisms ignore the rationale mation is made available through data col- applied by the courts that confidentiality of lection and automated processing. peer review materials is necessary to devel- Since Congress has not expressly acted op the peer review process and achieve the to create a federal privilege for peer review public interest in the improvement of materials, the burden is on the federal healthcare.77 courts to consider the dicta in Jaffee, and Moreover, these criticisms do not seek equitable resolutions to conflicting address the difficulty that arises where state demands for information by balancing medical malpractice actions attach with plaintiff’s need for actual data with defen- federal claims, such as in actions involving dant’s interest in maintaining a confidential the Emergency Medical treatment and review process. Otherwise, medical care Active Labor Act (EMTALA),78 the providers will have a disincentive to ana- Employment Retirement Income Security lyze raw data in hopes of improving med- Act (ERISA),79 as well as 42 U.S.C. § 1983 ical care delivery when the results of this civil rights actions.80 In Leon v. The County study may be made available to the plain- of San Diego, a federal jurisdiction case, the tiff’s bar for the development of litigation court permitted disclosure of peer review strategies. The federal courts are not pro- materials for the purposes of plaintiff’s civil hibited from acting in this area, although rights claim, and issued a protective order they remain reluctant to do so. limiting its use to support the pendent state Similarly, the federal courts will eventu- malpractice action.81 ally have to address what limitationsare The use of a protective order in these available as to the use and disclosure of types of cases allows the court to fashion a identifiable or de-identified data made remedy which satisfies the federal interest available to, and processed by, researchers, in facilitating discovery to allow the plain- since HIPAA provides no express protec- tiff to pursue her federal cause of action tion over the results of study. Furthermore, while protecting peer review materials from Congress must recognize that the courts are use in litigating medical malpractice claims. reluctant to provide protections in this sen- As discussed above, Jaffee authorizes fed- sitive area and it should act prospectively to eral courts to define new privileges under insure that the federal interest in medical the federal common law where the privilege peer review is secured.

76. Nilavar supra note 22 at 603. state malpractice claim). 77. 656 F. Supp. at 826. 79. See e.g., Cicio v. Does, 321 F.3d 83 (2d Cir. 2003)(med- 78. See e.g., Gatewood v. Washington Healthcare Corp., ical malpractice claim not preempted by ERISA). 933 F.2d 1037 (D.C. 1991)(court found no viable federal 80. See e.g., Leon supra note 68. cause of action under EMTALA and dismissed pendent 81. Leon supra note 68. 79 PART IV much information in the state health care system unprotected.83 As noted above, The development and support for a peer although HIPAA provides a minimum floor review privilege in the states has continued for the protection of patient privacy, it does during a time when the federal courts have little or nothing to protect the confidentiali- largely disfavored privileges and Congress ty of peer review proceedings. As such, a has only provided limited immunities. decision such as the one made by the state of Hawaii to repeal its state privilege law State Statutory Efforts to Establish and rely exclusively on the Federal Privacy Medical Peer Review Privileges Rule is misplaced and leaves many entities unregulated.84 States have created varying degrees of In contrast to Hawaii, other states have privileges and immunities in order to compared their statutes with HIPAA regula- encourage peer review activities that are tions and created “preemption charts” substantially, if not completely, in harmony which reflect where HIPAA preempts state in recognizing a medical peer review privi- law and where state law supercedes lege.82 The protections offered under these HIPAA.85 For example, the New York State state statutes are not uniform, but generally, Department of Health has concluded that as in HCQIA, offer some limited immunity “none of the peer review information which to members of the peer review committees must be kept confidential under Public from civil damages. Further, the majority Health Law § 2805-m is part of an individ- of states extend this privilege to discovery ual’s designated record set under HIPAA of documents and provide for confidentiali- and, therefore, the New York State law ty of the information obtained in the peer supercedes HIPAA.”86 review process. As indicated above, state law will be State statutes restricting the use and dis- protected whenever it is more stringent than closure of medical information tend to be the HIPAA requirements. Since HIPAA either specific to (1) certain health care fails to adequately address the protection of providers or (2) medical conditions for the peer review documents most, if not all, of purpose of public health reporting, leaving the state laws will be more stringent and thus survive HIPAA preemption.

82. See, e.g., 735 Ill. Comp. Stat. 5/8-2101-2102 (2003) which are the subject of evaluation and review by such com- (providing that all information obtained “shall be privileged, mittee”); Tex. Rev. Civ. Stat. Ann. art. 4495 5.06 (Vernon strictly confidential and shall be used ... [for] evaluation and 2003) (allowing physician who is denied privileges to obtain improvement of quality care, or granting, limiting or revok- copy of final decision and “except as otherwise provided ... ing staff privileges ... [and] shall not be admissible as evi- all communications made to a medical peer review commit- dence, nor discoverable in any action of any kind”); La. Rev. tee are privileged”); Va. Code Ann 8.01-581.17 (Michie Stat. Ann. 13:3715.3 (West 2003) (providing confidentiality 2003) (providing privilege and freedom from discovery with and privilege of peer review committee records, except when respect to all “proceedings, minutes, records or reports” of requested by physician whose staff privileges are affected); any “medical staff committee, utilization review committee, Md. Code Ann., Health Occ. 14-501(d) (2003) (providing or other committee ... that provides a centralized credential- statutory exception for actions initiated by physicians ing service, together with all communications, both oral and aggrieved by committee decision to obtain records for use in written, originating in or provided to such committees or that physician's challenge to peer review conclusions); N.Y. entities”); Ga. Code Ann. 31-7-143 (2003) (protecting com- Pub. Health Law § 2805-m (McKinney 2003) (providing mittee records from discovery); Oh. Code Ann. 2305.251 similar exemption for discovery); N.C. Gen. Stat. 131E- (2003)(prohibiting discovery of peer review records); Cal. 95(b) (2003) (granting civil immunity to members of med- Evid. Code § 1157 (2003)((granting immunity from discov- ical review committee and privilege from discovery or intro- ery to records of hospital peer review activities); Ala. Code duction into evidence of any records and material committee 22-21-8 (2003)(medical self-critical analysis privilege). produces provided that process is performed without “malice 83. Pritts, Joy L., Developments and Trends In The Law: or fraud”); Fla. Stat. 395.0193 (2003) (providing good faith Altered States: State Health Privacy Laws and the Impact of participants with immunity from retaliatory suits and federal the Federal Privacy Rule, 2 Yale J. Health Pol'y L. & Ethics antitrust suits); Pa. Stat. Ann. tit. 63, 425.4 (West 2003) (stat- 325 (Spring 2002). ing that “proceedings and records of a review committee 84. See 2001 Haw. Session Laws 244. shall be held in confidence and shall not be subject to discov- 85.See http://www.health.state.ny.us/nysdoh/hipaa/ hipaa_ ery or introduction into evidence in any civil action against a preemption_charts.htm (last visited May 19, 2003). professional health care provider arising out of the matters 86. Id. 80 The Fourth Circuit Court of Appeals ble application of Fed. R. Evid. 501. Decision in Virmani v. Novant Health Inc. Virmani also exemplifies the inconsistency Sets Forth an Argument for the in the application of state peer review priv- Application of the State Peer Review ilege when a case is heard in federal court Privilege rather than state court. Here the court recognized that the North Carolina statute In Virmani the court analyzed the split would have been applied if the case were between other federal and state courts in heard in North Carolina state court, but determining whether to apply the North denied the application of the state statute Carolina statutory peer review privilege.87 because the privilege would have limited That privilege, similar to many other states, disclosure in this discrimination matter. grants privilege from discovery of any records and material a peer review commit- PART V tee produces, provided that the peer review process is performed without “malice or The absence of a federal self-critical analy- fraud.”88 sis privilege, together with an uneven set of Notably, the Virmani court supported a state laws, has serious ramifications for flexible interpretation of Fed. R. Evid. 501. medical care providers. This is further While agreeing with the holdings in state complicated by the lack of federal protec- court cases, the Virmani court found that the tion afforded by, and potential disclosure of state privilege was not applicable in a dis- data under, HCQIA and HIPAA. crimination suit because of the overwhelm- Attorneys representing clients in federal ing federal interest in ferreting out discrim- courts must argue that Fed. R. Evid. 501 is ination. The court opined, however, that the a flexible rule, pursuant to the interpretation privilege may be applicable in medical mal- provided by the Supreme Court in Jaffee, practice actions.89 and not a restrictive rule as certain courts The court reasoned that in a discrimina- have held. Applying a flexible balancing tion case, the claim arises from within the approach, federal courts can recognize that peer review proceedings. This establishes a neither HCQIA nor HIPAA prohibits the need in discrimination cases for plaintiff’s federal courts from applying state privilege access to peer review records. On the con- laws, that health care has long been the trary, in a malpractice action the claim province of the states and that the states occurs from events outside of the proceed- have uniformly recognized the need for a ings. Therefore, preventing the plaintiff’s peer review privilege. access to peer review records will not Counsel should encourage federal courts impact greatly on the ability of the plaintiff to follow the rationale of the Bredice, Laws to obtain necessary evidence.90 Thus, the and Virmani courts and provide state statu- Virmani court reinforced the argument for tory peer review privilege protection to finding a medical peer review privilege in materials prepared as part of a medical pendent medical malpractice actions in fed- facility’s self-critical analysis process, at a eral courts by following the reasoning of the minimum, in any pendant medical malprac- Supreme Court in Jaffee and using a flexi- tice actions in federal court.

87. Virmani supra note 67. 90. Id. 88. N.C. Gen. Stat. 131E-95(b). 89. 279 F.3d at 291. 81 The Privacy Project II

European Data Protection: Impact on U.K.-U.S. Data Transfers

By Ian MacDonald Ian MacDonald graduated with an LLB and Julia Graham from Dalhousie University (Nova Scotia) Personal data has become an increasingly in 1990. Having qualified in Toronto with Davies Ward & Beck, where he became a valuable commodity as e-commerce partner in 1994, he then re-qualified as a expands. Its use in Europe is regulated by UK solicitor and joined the London firm of 1 the Data Protection Directive (the Arnander Irvine & Zietman. MacDonald “Directive”) which has been implemented has been a partner in the London office of throughout the European Economic Area2 Shook Hardy & Bacon since 2002 and has and was brought into effect in the UK by worked extensively on corporate security the Data Protection Act 1998 (which came and commercial transactions as well as into force in March 2000). Crucially, from undertaking forensic legal work on com- the perspective of an American company mercial fraud matters. with U.K. (or any European) operations, the Julia Graham studied law at the University of Toronto, graduating with an Directive significantly affects the ability of LLB in 1996. She is qualified as a solicitor the company’s European affiliates or dis- in both the UK and Canada and works on tributors to transmit consumer data back to a range of non-contentious commercial headquarters. matters, with a particular focus on copy- This paper will outline the key provi- right, trademarks, technology licensing, sions of the Directive before considering data protection and e-commerce. the various ways in which Anglo-American data transfers can be legally undertaken, including the solution which has been fash- updating and destruction of data, and ioned between the European Commission applies to “data controllers” (the parties and the U.S. government, the so-called controlling the purpose and manner of the “Safe Harbor” self-certification system. processing) as well as the “data processors” acting on their behalf. Personal data is Purpose and Application of the Directive defined as data that allows individuals (referred to as “data subjects”) to be identi- In contrast to the more laissez-faire fied personally, as opposed to aggregated approach adopted in the United States, the anonymous data. Directive introduced an entire regulatory regime designed to (i) protect the rights and Core Principles freedoms of individuals, particularly in the context of processing of personal data, and Both the Directive and the Data (ii) facilitate the free flow of personal data Protection Act 1998 establish eight core within the EU. The Directive governs all principles that govern the collection, pro- forms of processing of personal data, cessing and use of personal data. The prin- including the collection, storage, disclosure, ciples are:

1. Properly, it is the Directive 95/46/EC of the European 2. The EEA currently comprises the 15 member states of Parliament and of the Council of 24 October 1995 on the the European Union (Austria, Belgium, Denmark, Finland, protection of individuals with regard to the processing of France, Germany, Greece, Ireland, Italy, Luxembourg, personal data and on the free movement of such data. Netherlands, Portugal, Spain, Sweden and the UK) plus Liechtenstein, Norway and Iceland. 82 1. Personal data shall be processed fair- sophical beliefs, trade union membership ly and lawfully. and health or sex life - are considered “sen- 2. Personal data shall be obtained only sitive personal data” and require the explic- for one or more specified and lawful pur- it consent of the data subject before they are poses, and shall not be further processed in processed. any manner incompatible with that purpose In addition, the requirement that person- or those purposes. al data be processed in accordance with the 3. Personal data shall be adequate, rele- rights of data subjects means that the sub- vant and not excessive in relation to the pur- ject has the right to know who is collecting pose or purposes for which they are and processing the data, the purposes of the processed. processing and the recipients of the data. 4. Personal data shall be accurate and, The subject also has a right of access to the where necessary, kept up to date. data and the right to require the correction 5. Personal data processed for any pur- of data which is incomplete or inaccurate. pose or purposes shall not be kept for longer than is necessary for that purpose or those International Transfers of Data purposes. 6. Personal data shall be processed in Because the Directive has ensured a uni- accordance with the rights of data subjects form degree of protection for personal data under the Directive (and national imple- throughout the European Economic Area, menting legislation). the movement of personal data within the 7. Appropriate technical and organiza- EEA is unrestricted, as long as data con- tional measures shall be taken against unau- trollers register with the data protection reg- thorised or unlawful processing of personal istries where they are operating and other- data and against accidental loss or destruc- wise comply with the laws of the member tion of, or damage to, personal data. states where they are established. However, 8. Personal data shall not be transferred in order to ensure that data controllers do to a country or territory outside the not avoid European regulatory require- European Economic Area, unless that coun- ments simply by transferring data outside try or territory ensures an adequate level of the EEA, the Directive restricts the transfer3 protection for the rights and freedoms of of personal data to countries outside the data subjects in relation to the processing of EEA. personal data. As expressed by the eighth data protection principle, data can be transferred only Additional Requirements to non-EEA countries that ensure “an adequate level of protection for the rights and Personal data can be collected and freedoms of data subjects in relation to the processed only if (i) the subject has unam- processing of personal data.” The difficulty biguously consented; or (ii) if the process- lies in identifying whether a non-EEA coun- ing is necessary to meet a contractual obli- try ensures an adequate level of protection gation to which the subject is a party; or (iii) for this purpose. The Directive authorises if it is necessary to meet a legal or public the European Commission to publish find- interest obligation. Where data has been ings as to the adequacy (or lack thereof), but collected for one purpose, it cannot be used since the Commission has opted only to for another without the consent of the sub- publish a “white list” of approved countries, ject. Certain types of data - relating to med- and has listed only Switzerland, Hungary, ical or health conditions, racial or ethnic Argentina and Canada (in part), there origin, political opinions, religious or philo- remains considerable uncertainty in relation

3. It is important to distinguish the “transfer” of data to a opposed to in aggregated anonymous form) both before and country from the “transit” of data through a country. A after its completion. While a transfer is regulated under the “transfer” requires personal data to be held as such (as eighth data protection principle, the mere transit of data is not. 83 to transfers to other non-EEA countries. Choice: An organization must allow Notably, the Commission has not designated individuals to choose whether to have their United States as a country that provides personal information (i) disclosed to a third “adequate” protection for personal data. party, or (ii) used for a purpose that is incompatible with the purpose(s) for which Safe Harbor it was originally collected or any purpose(s) subsequently authorized. For sensitive To avoid the severe disruption of data information (corresponding to “sensitive flows that this position threatened to cause, personal data” in Europe), specific consent in July 2000 the Commission and the U.S. must be given to any such disclosure or use. government reached a compromise in the In other cases, individuals must be provided form of the “Safe Harbor” scheme which, with clear, conspicuous and affordable notwithstanding rejection by the European mechanisms by which to opt out of such Parliament, became operational on 1 disclosure or use. November 2000. Onward Transfer: To transfer informa- Participation in the Safe Harbor scheme tion to a third party acting as an agent, an is voluntary, and involves a self-certifica- organization must verify that the third party tion process. To receive the benefits of the complies with the Safe Harbor require- scheme, an organization must either self- ments or is subject to the Directive or certify to the U.S. Department of another adequacy finding. As an alterna- Commerce (on an annual basis) that it will tive, the organization must enter into a writ- abide by the Safe Harbor requirements, or ten agreement requiring such third party to be a member of a self-regulatory organiza- provide at least an equivalent level of priva- tion that so certifies. In either case, U.S. cy protection. If the organization complies companies that comply with these require- with these requirements, as a general rule it ments will be deemed, for the purposes of will not be held responsible if the third the Directive and relevant national imple- party processes the information in a way menting legislation, to provide adequate that is contrary to any restrictions or repre- protection for personal data. sentations (although in certain cases excep- In brief, the Safe Harbor requirements tions may apply). are as follows:4 Security: Organizations creating, main- Notice: An organization must inform taining, using or disseminating personal individuals about (i) the purposes for which information must take reasonable precau- it collects and uses information about them, tions to protect against loss, misuse, disclo- (ii) how to contact the organization with sure, alteration or destruction of, or unau- any inquiries or complaints, (iii) the types thorized access to, such information. of third parties to which it discloses the Data Integrity: Personal information information, and (iv) the choices and means must be relevant for the purpose(s) for the organization offers individuals for limit- which it is to be used. An organization may ing the use and disclosure of their informa- not process personal information in a way tion. This notice must be provided in clear that is incompatible with these purpose(s) and conspicuous language, ideally when or any purpose(s) subsequently authorized individuals are first asked to provide per- by the individual and, to the extent neces- sonal information to the organization or as sary for those purpose(s), should take rea- soon as possible thereafter, but in any event sonable steps to ensure that data is accurate before the organization uses such informa- and complete. tion for a purpose other than that for which Access: Individuals must have access to it was originally collected or discloses it to personal information held about them by an a third party. organization and be able to correct or delete

4. Source: Safe Harbor Privacy Principles issued by the at: http://www.export.gov/safeharbor/SHPRINCIPLESFI- U.S. Department of Commerce on July 21, 2000, available NAL.htm. 84 any inaccurate information, except where Harbor. Notably, therefore, organizations the burden or expense of providing access operating in the financial industry are not would be disproportionate to the risks to the eligible to sign up to the scheme. In other individual’s privacy in the case in question, cases, eligible organizations have been or where the rights of persons other than the reluctant to sign up in light of the perceived individual would be violated. cost and difficulty of compliance. Enforcement: Organizations must have in place (i) readily available and affordable Self Assessment of Adequacy independent recourse mechanisms to facilitate the investigation and resolution of indi- Notwithstanding that the European vidual complaints and disputes, (ii) proce- Commission has not approved the United dures that will allow the organization’s States as providing adequate protection for compliance with the Safe Harbor require- personal data, the export of data from the ments to be monitored, and (iii) systems to U.K. to the U.S. may be permissible on ensure that problems arising out of compli- alternate grounds. In particular, because the ance failures are remedied. Whatever the Directive provides that the adequacy of pro- dispute resolution/compliance system, it tection in relation to any given transfer of must ensure that sufficiently severe sanc- data or set of transfers is to be determined tions are imposed for non-compliance with “in light of all circumstances surrounding the Safe Harbor requirements. the data transfer”, the U.K. Data In general, Safe Harbor functions as a Commissioner (the “Commissioner”) takes self-regulatory scheme, with organizations the view that a data controller is free to satisfying their obligations with respect to draw its own conclusions as to adequacy. enforcement by such methods as (i) volun- According to the Commissioner, a country tarily complying with government supervi- can be considered to provide adequate pro- sory authorities, (ii) committing to cooper- tection for a particular transfer or set of ate with European data protection authori- transfers if the level of protection in the parties, or (iii) complying with a private sector ticular case “is commensurate with the developed privacy seal program (provided potential risks to the rights of the data sub- such program incorporates and satisfies the jects.”5 Safe Harbor requirements). Private sector In making this determination, a U.K. regulation must then be backed up as need- data controller will need to take various faced by government enforcement of federal tors into account. Sensitive personal infor- and state laws prohibiting unfair or decep- mation will, for example, require more tive acts or practices, with persistent fail- stringent protections to be in place in the ures to comply resulting in loss of certified country to which the data is to be exported. Safe Harbor status for the organization in The country of origin of the data at issue question. may also be relevant, particularly where the One of the perceived advantages of the data actually derives from a country outside Safe Harbor scheme is, thus, that all the EEA where it would not originally have enforcement takes place in the U.S., under been entitled to the same protection as it U.S. law. However, the requirement for will have acquired by virtue of having effective government sanctions to back up entered the EEA. The final destination of self-regulation has meant that only organi- the data will similarly be relevant. Other zations that are regulated by the Federal factors will include the purposes for which Trade Commission or the Department of and the period during which the data are Transportation (with respect to air carriers intended to be processed, the law in force in and ticket agents) can participate in the the recipient country and any security meas- scheme, since only these bodies have committed to take enforcement action in 5. Source: U.K. Information Commissioner, International Transfers of Personal Data: Advice on Compliance with the response to non-compliance with Safe 8th Data Protection Principle at http://www.dataprotection.gov.uk/dpr/dpdoc.nsf. 85 ure taken in respect of that data in the recip- company policies or codes of conduct, but ient country (e.g., encryption). in other cases binding contractual provi- In the Commissioner’s view, certain sions will have to be put in place.7 types of data transfer are more problematic However, because no mechanism exists than others6. Transfers to a third party with for pre-clearing arrangements made on the whom the data controller remains in an basis of a self-assessment, self-assessment ongoing relationship tend to be less risky remains potentially risky for data con- than, for example, transfers that amount to a trollers seeking to export data from the sale of data to an unrelated third party. In U.K., particularly in cases where no pre- fact, the Commissioner has indicated that in sumption as to adequacy arises. In addition, certain circumstances, a presumption of and as noted by the Commissioner, it may adequacy can be made. Thus, in the case of not be efficient in terms of either time or a transfer within a multi-national company resources for data controllers to have to or group of companies, or a transfer assess every single data transfer they pro- between lawyers or accountants in relation pose to undertake. to clients whose affairs are international in scope, or a transfer to a data processor con- Standard Contractual Clauses trolled by the data exporter, personal data will be considered adequately protected as To reduce some of the legal uncertainty long as there exist adequate controls and associated with international data transfers, procedures for ensuring the transferred data the European Commission introduced a is given proper treatment. series of standard contractual clauses that The Commissioner recommends that, can be incorporated into contracts provid- before effecting a transfer to an “inade- ing for the transfer of data outside the EEA.8 quate” country, a data controller consider Although data controllers are not obliged to certain general criteria (principally relating use these model clauses, any transfer of per- to the nature and purpose of the transfer), as sonal data made on the basis of such terms well as legal criteria (relating primarily to will be deemed to comply with the eighth the laws of the jurisdiction to which the data data protection principle, provided the par- will be transferred). Once the risks involved ties to the relevant contract fulfil their con- in the transfer have been assessed in this tractual obligations. way, the data controller can determine (i) Data Controller Clauses: The first set whether contractual or self-regulatory of standard contractual clauses is for use by measures are necessary to ensure that the data controllers exporting data to other data transferred data receives adequate protec- controllers. The obligations imposed by the tion, and (ii) assuming that such measures model clauses on the data exporter include are required (as they will be in most cases), confirming that it has complied with nation- how to implement measures that will ensure al data protection legislation prior to the an appropriate degree of protection for the transfer and notifying the data subjects if transferred data. In the case of a multi- sensitive personal data are to be transferred. national company or group of companies, Although data exporters may not be able to suitable measures may take the form of provide such notices where large transfers

6. U.K. Information Commissioner, The Eighth Data code, its legal enforceability and the procedures the corpora- Protection Principle and Transborder Data Flows July tion has implemented for ensuring compliance), any person- 1999, at http://www.dataprotection.gov.uk/dpr/dpdoc.nsf. al data transferred from one entity in the corporate group to 7. The EU Article 29 Working Party - consisting of repre- another outside the EEA will be deemed to be adequately sentatives of the data protection authorities in EU member protected. See Working Document: Transfers of personal states - has recently made a proposal that, if adopted, would data to third countries; Applying Article 26(2) of the EU facilitate the use of binding corporate rules to govern intra- Data Protection Directive to Binding Corporate Rules for corporate transfers of personal data. According to the pro- International Data Transfers, adopted 3 June 2003, available posal, if a multi-national corporation can show that it has in at www.europa.eu.int/comm/privacy. place a code of corporate conduct meeting certain specified 8. See Decisions 2001/497/EC and 2002/16/EC, available criteria (these relate principally to the binding nature of such on the Commission’s website at http://europa.eu. 86 of data are involved, it is arguably the through bankruptcy, winding up or other- importing data controller who is made sub- wise). Although the drafters of the relevant ject to the more onerous obligations. In clause apparently intended to hold the data general, the data importer must comply processor responsible only for damage aris- with the eight European data protection ing out of the data processor’s breach, principles (although in certain cases full ambiguous wording could also render the compliance may not be necessary) and data processor liable for damage caused by accept any directions given by the national the data controller. data protection authority (or “supervisory Perhaps for the reasons suggested above, authority”) established in the jurisdiction of the Commission’s standard contractual the data exporter. Both parties are obliged clauses have not been as widely adopted as to make a copy of model clauses available was hoped. Nonetheless, if they are not to data subjects upon request and to assist already, they appear set to become the de with compliance queries. facto standard against which all contracts In addition, the model clauses render the relating to overseas transfers of data will be data exporter and importer jointly and sev- assessed and for this reason are relevant to erally liable for any breach of their obliga- all parties contemplating the transfer of per- tions and specifically designate data sub- sonal data outside the EEA. jects as third party beneficiaries of the contracts who can therefore sue for any breach. Permitted Derogations As a result, any data exporter or importer is potentially liable for a failure by the other Consideration must also be given to the party to the contract to fulfil its obligations. exceptions to this principle that are set out While this solution has the advantage of in the Directive and reflected in the Data protecting data subjects, in reality it is like- Protection Act 1998. For example, the ly to be acceptable to data importers and transfer of personal data to countries with- exporters only where they are related com- out an “adequate level of protection” can panies. take place: (i) with the consent of the data Data Processor Clauses: The model subject; (ii) when it is necessary for the per- clauses for use by data controllers contract- formance or conclusion of a contract with ing with data processors are similar to those or on behalf of the data subject; (iii) when prescribed for contracts between data con- legally required on public interest grounds; trollers. But whereas an importing data or (iv) in order to protect the “vital inter- controller is required to comply generally ests” of the data subject. with the eight data protection principles, an Of these exceptions, the first may be the importing data processor must agree to most useful, but the consent of the data sub- process the data in accordance with the data ject must be unambiguous, freely given and exporter’s instructions and to implement informed. In some cases, the requirement certain agreed technical and organizational for consent to be “informed” may oblige measures to protect the data. In exchange, data controllers to advise data subjects of the data exporter must warrant that its pro- the potential risks involved in the transfer of posed security measures are appropriate, their data outside the EEA. In addition, despite the fact that in many cases the data consent must be “signified,” and so should exporter will be relying on the data not be inferred from mere failure to object. importer’s expertise in this regard. As a result, reliance on consent as the legal Even more controversially, the model basis for a transfer may not always be pos- clauses impose liability on the data proces- sible, particularly in cases involving the sor for any damage suffered by data sub- transfer of large existing databases or the jects in cases where the exporting data con- sale of direct marketing lists. troller has “disappeared factually” (whether 87 Conclusions

Data controllers can export personal data from Europe to the U.S. in compliance with the Safe Harbor scheme, on the basis of a self-assessment of adequacy made by a U.K. based data controller, by using the European Commission’s model contractual clauses or by relying on one of the exceptions provided for under European law. In any of these cases, both the party transferring the data and its recipient should give careful consideration to the circumstances surrounding the transfer, and in particular any factors that might jeopardize the security of the data being transferred and the protective measures that should or must be implemented. While the cost and inconvenience of doing so may seem high, it should be borne in mind that, as data protection authorities become increasingly active in enforcement, and individuals increasingly protective of their personal information, the potential cost of non-compliance is rising.

89 The Privacy Project II Managing Privacy and Security Risks in Your Business: Are You Properly Protected?

By Kathy J. Maus, Michael G. IADC member Kathy J. Maus is a partner in Haire, Jr. and Emily Freeman the state-wide law firm of Butler Pappas Weihmuller Katz Craig LLP, practicing in its As the global concerns over security and Tallahassee office. She heads its third-party personal privacy increase, opinion and pol- liability, first and third party automobile cov- icy continue to generate legislation defining erage, and extra-contractual litigation depart- and expanding an individual's right to pri- ments in that office. She graduated with hon- vacy. Each codified expansion of privacy ors from FSU College of Law in 1991. Michael G. Haire, Jr. is an associate with the simultaneously creates new corresponding Tallahassee office of Butler Pappas, joining duties and obligations. Often these duties the firm in 2001. Mr. Haire practices in the and obligations impact businesses in unan- property coverage department, primarily ticipated or even unintended ways, creating focusing on first party fire and theft cases. unknown liability and litigation traps for Emily Q. Freeman, ARM, AU, is Vice the uninformed. With the advent of civil President-Western Region and Executive liability and criminal penalties imposing Director of Consulting for American International Group (AIG) eBusiness Risk jail time and fines reaching hundreds of Solutions. She has been a key drafter of cyber- thousands of dollars, the stakes are high space insurance products and a senior con- indeed. sultant for e-business risk management. The For the business owner, no business views and opinions expressed are those of the decision is without risk. By making use of author and do not necessarily reflect those of state of the art security models and tech- American International Group, Inc. or its sub- sidiaries, business units, or affiliates. nologies, companies have been able to reduce costs, improve the quality of products and services, and increase profits. Constitution, no such right is found there. Even after all cost-effective safeguards are Instead, such a right has been judicially cre- in place, however, security and privacy ated, based in the Fourth Amendment. The risks still remain and cannot be reduced to Fourth Amendment provides as follows: zero, based upon the current state of tech- Amendment IV. Search and Seizure - The nology, people and processes controls. The right of the people to be secure in their organization must continue its business persons, houses, papers, and effects, against notwithstanding the remaining risks. unreasonable searches and seizures, shall not This paper will address not only the be violated, and no Warrants shall issue, but recent developments in the areas of security upon probable cause, supported by Oath or and personal privacy, but the coverage con- affirmation, and particularly describing the place to be searched, and the persons or cerns businesses may encounter. By better things to be seized. understanding the relationship between the expansion of personal privacy and the asso- In the 1960s, the United States Supreme ciated obligations, businesses are better Court revised its approach to the Fourth informed, prepared and protected. Also, Amendment, recognizing an individual’s innovative insurers have recognized these right to privacy against unreasonable risks and assistance is available to alleviate searches and seizures. The Court employed some of the concerns. a balancing test in which it weighed the Although popular opinion may ascribe government’s powers and desire to search, our rights to privacy to the U.S. against the potential for abuse of discretion 90 by police against an individual’s privacy.1 Usually, a standard Commercial General Most states currently protect an individ- Liability (hereinafter “CGL”) policy will ual’s right to privacy by permitting third- not protect the alleged “invader.” Whether party claims resulting from the disclosure searching for coverage under the “bodily of personal information. Importantly, in the injury,” “property damage,” “personal insurance claims arena, an insurer must injury” or “advertising injury” sections of weigh its right and duty to investigate a the traditional CGL policy, such claims will claim (including gathering past claims his- likely be denied. tory, medical records and surveillance on a Where invasion of privacy claims are claimant) against the claimant’s/insured’s asserted, most insureds look to the defini- right of privacy. From the individual busi- tions and insuring agreements for personal ness/insured’s standpoint, coverage for a or advertising injury under their policies. third-party breach of privacy claim way not For example, in the standard CGL coverage exist or coverage might be denied. The next form, CG 00 01, personal injury is defined section will explore several examples of as “(1) oral or written publication of mate- permitted privacy claims and some exam- rial that slanders or libels a person or organ- ples of insurance coverage defenses that ization or disparages a person’s or organiza- recent history shows may be asserted. tion’s goods, products, or services, and (2) oral or written publication of material that 1. Potential Claims violates a person’s right of privacy.” Advertising injury is defined as “(1) oral or As noted above, in the third-party claim written publication of material that slanders setting, where invasion of privacy is or libels a person or organization or dispar- alleged, special concerns arise. The com- ages a person’s or organization’s goods, mon law torts of negligent or intentional products, or services, (2) oral or written infliction of emotional distress for privacy publication of material that violates a per- violations are based on one or more of the son’s right of privacy, (3) misappropriation four following elements: of advertising ideas or style of doing busi- 1. Unreasonable intrusion upon ness, and (4) infringement of copyright, Plaintiff’s seclusion. title, or slogan.” In this day and age, of par- 2. Public disclosure of private facts. ticular concern is where internet or elec- 3. Publicity which places one in a false tronic communications are the source of the light. privacy invasion, because “publication” 4. Violation of a privacy statute. must occur to trigger coverage. Trespass, defamation, bad faith from Privacy violations on the internet can invasion of privacy and interference with occur when private information is sold to a business relationships are also in this cate- few businesses. “Publishing,” or making gory. On the immediate horizon relating to private information public in this context is security, a growing concern is the potential similar to the standard defamation determi- for allegations of negligence in failing to nations, i.e., the information is made public prevent the spreading of a computer virus when it is communicated to at least one per- that results in lost or damaged data. Such son. However, a different standard applies claims will certainly be based on improper, with e-commerce. “Publication” in the e- inaccurate, and/or incomplete virus soft- commerce environment usually means ware, virus protection policies and imple- more than disclosure to just one-or even a mentation. few.2 If there is no publication, either

1. Three landmark cases stand out in the development of the Mich. 1999). In Lane, a student, not employed by Ford, right to privacy as interpreted by the U.S. Supreme Court. posted Ford’s confidential documents and trade secrets on Katz v. United States, 389 U.S. 347 (1967); Camara v. his Web site, disclosing photographs of unreleased products, Municipal Court, 387 U.S. 523 (1967); and Terry v. Ohio, 392 blueprints, and other confidential information. The court U.S. 1 (1968). denied plaintiff’s motion for a preliminary injunction against 2. The complexities and uncertainties regarding online pub- the use, copying or disclosure of Ford’s internal documents, lication issues and privacy are also revealed in trade-mark lit- holding that such an injunction would constitute an invalid igation. Ford Motor Co. v. Lane, 67 F. Supp. 2d 745 (E.D. prior restraint in violation of the First Amendment. Id. at 753-754. 91 because it is not required or because its The Green Tree decision illustrates a scope is insufficient to constitute a “public hesitancy in some courts to preclude cover- publishing,” then there may be no coverage age for torts based on invasion of privacy, because the policy terms have not been met. even where publication has not actually In addressing whether claims arising occurred. Curiously, the 1998 CGL policy under these provisions are covered, courts redefined “advertisement” to constitute will weigh the facts and circumstances of a broad dissemination, however, the word particular business, including the nature of “publication” was not similarly redefined.9 activities in which the business is generally Therefore, if no advertising occurred, then engaged. In St. Paul Guardian Insurance the personal injury coverage section should Co. v. Centrum GS, Ltd.,3 (applying Texas be triggered. On the other hand, an adver- law), the court considered whether a termi- tising injury exclusion of which to be aware nated employee’s breach of privacy claim is the broadcasting exclusion for companies was covered under the insurance policy of in the business of advertising, broadcasting, the employer, a building owner/manager. or publication: if a disclosure is deemed an After terminating the employee, the advertisement made by an entity in the busi- employer posted “wanted posters” includ- ness of advertising, coverage is specifically ing the photograph, name, home address, excluded. driver’s license, automobile tag and Social Such was the determination of the court Security numbers of the terminated in American Employers’ Insurance Co. v. employee. The insurance company argued DeLorme Publication Co., Inc.10 In that the claim was not covered because the DeLorme, the policy excluded coverage for privacy violation did not stem from the advertising injury “arising out of ... [a]n “business activity” of the insured. offense committed by an insured whose However, the Fifth Circuit held that the business is advertising, broadcasting, pub- claim was covered because the insured’s lishing or telecasting.”11 The court held that actions were “consistent with their business the exclusion applied, but only because the of owning and managing property.”4 insured was a “publisher” engaged in the In another case involving the violations business of publishing.12 of privacy under Texas law, the court in St. An unresolved issue at this point is Paul Fire & Marine Ins. Co. v. Green Tree whether a website is an advertisement. Financial Corp.,5 determined there was That is, it remains unclear whether there is coverage for “rude and abusive” telephone coverage for defamation, slander or injury calls made by a collection agency over an resulting from the disclosure of private eight-year period.6 The policy provided information through a website. This is par- coverage for personal injury arising out of ticularly important for law firms, where “written or spoken material made public many states’ bar rules classify websites as which violates an individual’s right of pri- advertisements.13 vacy.”7 The court disagreed with the insur- The 2001 CGL amended advertising er’s argument that the pleadings did not injury exclusions to ensure it only provided specifically allege an invasion of privacy, exclusions for those in the primary, chief holding that the factual allegations support- business of advertisement.14 Accordingly, ed a cause of action for invasion of privacy the intentional acts exclusion includes an under Texas law.8 intentional inclusion of privacy information

3. 283 F.3d 709 (5th Cir. 2001). 1107 (2002). 4. Id. at 714. 10. 39 F. Supp. 2d 64 (D. Me. 1999). 5. 249 F.3d 389 (5th Cir. 2001). 11. Id. at 72. 6. Id. at 394. 12. Id. 7. Id. at 393. 13. See, e.g., Fla. St. Bar Rule 4 7.6(d) (2003). 8. Id. at 394-95. 14. For further discussion of the 2001 CGL changes 9. For additional discussion of potential litigation issues impacting issues of advertising, see Robert H. Jerry, II and arising out of the 1998 CGL changes, see Matthew J. Michele L. Mekel, Cybercoverage for Cyber Risks: An Schlesinger and Jason M. Silverman, Insuring Privacy: Is Overview of Insurers’ Responses to the Perils of E Your Company Covered?, 37 Tort & Ins. L.J. 1101, 1105- Commerce, 8 Conn. Ins. L.J. 7 (2002). 92 which appears to be a violation of the business the policies and practices for protect- nesses’ own privacy policy. Although an ing private information. Such policies and argument exists that data is not “tangible practices must be provided at the time of property,” problems remain in the area of e- engaging the relationship and at least annu- commerce. Damage can occur too easily ally thereafter.18 The customers must be pro- and the potential audience can be unusually vided with an opt-out application.19 Even if large. Additionally, reinsurers are pressur- no information will be shared, the customer ing insurers to exclude e-commerce or to must receive the privacy policy. However, place a small sub-limit on such coverage. these provisions apply only to customers Therefore, knowing your policy is the key with a regular, continuing relationship.20 In in determining how to navigate these issues. the case of an isolated transaction, such information is not required. Of course, if II. Regulatory Environment the business is anticipating that the customer will engage in regular business with As noted above, the legislature on both them, the corporation’s privacy policies the state and federal levels are continuously must be shared. The act requires the addressing the right to privacy and creating remaining customers to get notice if the more protections. Consequently, these information is actually shared. same legislatures are creating additional Thus, there are a total of three types of liability traps. notices required by the act: initial, annual and opt-out to non-affiliates. The initial and 1. Graham-Leach-Bliley (GLB) Act annual notices require providing the follow- A leading piece of legislation in this ing four categories of information: 1) cate- debate is the Graham-Leach-Bliley (GLB) gory of customer information collected, 2) Act of 1999.15 Effective in November 1999, category of information disclosed, 3) cate- the GLB Act was primarily aimed at the gory of affiliates and non-affiliates to whom banking industry. However, “financial disclosed, and 4) the company’s policies institutions” as defined in the act include all and practices regarding security and confi- businesses engaging in financial activities, dentiality.21 including appraisal and insurance services.16 Reserving the right to disclose to non- Another element of the act is its impact on affiliate (opt-out to non-affiliates), requires lending securities. The act permits insur- providing the following five categories of ance companies to affiliate with banks and information: 1) timely notice, 2) advice that permits “financial institutions” to share he/she/it can opt-out, 3) a reasonable non-public customer information17 with method to opt-out, 4) a reasonable time to affiliates within the holding company. opt-out, and 5) notice that the decision to Protections also exist against disclosure opt-out is binding until revoked. to non-affiliates. As of July 1, 2001, the act The act encourages all states to provide requires all financial institutions to disclose similar privacy protection as long as it is at to each consumer with whom it does busi- least equal to those provided in the act

15. 15 U.S.C. §§6801, et seq., also known as the Financial 18. The Act defines a “consumer” as “an individual who Service Modernization Act of 1999. obtains, from a financial institution, financial products or 16. Specifically, § 6809 of the Act defers to the definition services which are to be used primarily for personal, family, contained in 12 U.S.C. §1843(k)(4)(B), which specifically or household purposes, and also means the legal representa- identifies the following as activities that are financial in tive of such an individual.” 15 U.S.C. §6809(9). nature: “Insuring, guaranteeing, or indemnifying against 19. 15 U.S.C. §6809(b)(1). loss, harm, damage, illness, disability, or death, or providing 20. Essential in determining the nature of the relationship and issuing annuities, and acting as principal, agent, or bro- is when the “customer relationship” actually begins. ker for purposes of the foregoing, in any State.” Accordingly, “in the case of a financial institution engaged 17. The Act defines such non-public information as “per- in extending credit directly to consumers to finance purchas- sonally identifiable financial information (i) provided by a es of goods or services,” the phrase “time of establishing a consumer to a financial institution; (ii) resulting from any customer relationship” is defined as “the time of establishing transaction with the consumer or any service performed for the credit relationship with the consumer.” 15 U.S.C. the consumer; or (iii) otherwise obtained by the financial §6809(11). institution.” 15 U.S.C. §6809(4)(A). 21. 15 U.S.C. §6803(b)(1)-(4). 93 itself.22 It is clear that broader and greater 2003 WL 22098021 (Miss. Sept. 11, 2003). protections than those offered in the act will The Equitable court, specifically confirm- be upheld. The National Association of ing that insurers are deemed financial insti- Insurance Commissioners (NAIC) has tutions under the Act, held that an insurer promulgated rules to guide state depart- may not be compelled to release its cus- ments of insurance in preserving opt-out tomer’s private information without their rights for financial products and an opt-in consent. In that case, the plaintiff success- provision for health information.23 These fully obtain an order from the trial court rules are known as the Privacy of Consumer which required the insurer to release a list- Financial and Health Information ing of all policy holders who purchased Regulations.24 Approximately forty-three “vanishing premium” policies. The pur- states have adopted these rules in one form pose of plaintiff’s request for such an order or another.25 These regulations expand the was to permit plaintiff to demonstrate a pat- GLB Act in at least four key areas. First, tern and practice of the insurer at issue in the definitions of “consumer” and “cus- that case. Importantly, however, the tomer” create two protected classes to Mississippi Supreme Court, applying this whom privacy protection must be provided: federal law, held as follows: applicants, as well as, policyholders.26 The intent of the GLBA is to protect the cus- Second, the NAIC model regulation also tomers of financial institutions from inva- extends to commercial lines insurance.27 sions of their privacy. Part of the purpose of Third, the model regulation provides this Act was to stop solicitations generated requirements for disclosure of nonpublic by customer lists, and this would include solicitation by an attorney to be a witness or personal health information.28 Fourth, the for any other purpose. Thus, the GLBA pre- standards apply to all entities licensed empts the issuance of the circuit court’s under insurance laws, rather than only order. financial institutions.29 One recently positive way in which the As such, the insurer was protected from GLB Act was applied was in The Equitable producing these lists as was the insurers’ Life Assurance Society v. Irving, - So. 2d -, customers.30

22. 15 U.S.C. 6807(b). § 307.2 (2001); OR. Admin. R. 836 080 0501 to 836 080 0551 23. NAIC’s Priv. of Cons. Fin. and Health Info. Reg. No. (2002); Pa. Admin. Code Title 31 §§ 146a.1 to 146a 44 (2001); 672-1 §§2-3 (NAIC 2000). R.I. Regs. R27 99 001 to R27 99 021 (2001) (Financial); R27 24. Id. 100 001 to R27 100 013 (2001) (Health); S.C. Ins. R. 69 58 25. See Ala. Ins. Dept. Reg. 122 (2000/2001); Alaska Admin. (2001); S.D. Admin. R. § 20:06:45 (2001); S.D. Codified Laws Code Title 3 §§ 21.06.05 to 21.06.749 (2001); Alaska Stat. § Ann. § 58 2 41 (2001); Tenn. Admin. Comp. ch. 0780 1 72 21.36.162(2001); Ark. Ins. Rule & Reg. 74 (2002) SB 286 (2001); Tenn. Code Ann. § 56 8 119 (2001); 28 Tex. Admin. (2001); Cal. Admin. Code Title 10 §§ 2689.1 to 2689.24 (2002); Code §§ 22.1to 22.26 (2001); 22.51 to 22.67 (2002); Tex. Ins. Colo. Admin. Ins. Reg. 6 4 1(2000/2001); Conn. Admin. Code Code Ann. art. 28A.1 to 28A.102; 28B.01 to 28B.12 (2001); Title 38a 8 105 to 38a 8 123 (2002); Del. Ins. Reg. 84 (2001); Utah Ins. R590 206 1 to 590 206 26 (2000/2002); Utah Code Del. Code Ann. Title 18 § 535 (2001); D.C. Regs Title 26 § Ann. § 31A 23 317 (2001); VT. Admin. Comp. Ins. Dept. R. H 3600.1 to 3614 (2000), Act 13 444 (2000); Fla. Admin. Code §§ 01 1 (2001); Wash. Admin. Code R. §§ 284 04 120 to 284 04 620 4 128.001 to 4 128.024 (2001); Fla. Stat. § 626.9651 (2001); Ga. (2002); W. Va. Regs. §§ 114 57 1 to 144 57 22 (2001/2002) Admin. Comp. Ch. 120 2 87 (2001); Hawaii Rev. Stat. §§ W.Va. Code § 33 6f 1 (2001); Wis. Admin. Code § Ins. 25.01 to 431:3A 101 to 431:3A 504 (2001); Idaho Ins. Regs. 48 (2001); 25.95 (2001/2002); Wyo. Ins. Regs. ch. 54 (2001); Wyo. Stat. § Ill. Admin. Reg. Title 50 §§ 4002.10 to 4002.240 (2001); Ill. 26 2 133 (2001). Admin. Reg. Title 50 §§ 4001.10 to 4001.50 (2000); Ind. Admin. 26. NAIC’s Priv. of Cons. Fin. and Health Info. Reg. No. Title 760 R. 1 67 1 to 1 67 20 (2001); Iowa Admin. Code §§ 191 672-1 § 4I, J (NAIC 2000). Specifically, section 4F(1) 90.1 to 191 90.26 (2001/2002); Kan. Admin. Regs. § 40 1 46 defines consumer as one who “seeks to obtain ... or has (2001/2002); Kan. Stat. Ann. § 40 2404 (1955/2001); 806 Ky. obtained an insurance product or service.” (Emphasis Admin. Regs. 3:210 to 3:220 (2001/2002); La. Admin. Code added.) This definition expands the GLB Act definition of 37:XIII.9901 to 37:XIII.9953 (Regulation 76) (2001); Me. Rev. insurance consumers who are “customers” of a financial Stat. Ann. Title 24 A § 2220 (2001); Mich. Comp. Laws §§ institution who obtain financial products or services for 500.501 to 500.547 (2001); Miss. Ins. Reg. 2000 1 (2001); Miss. “personal, family or household purposes.” 15 U.S.C. § Code Ann. § 83 1 45 (2001); Mo. Admin. Code Title 20 § 100 6809(9), (11). The GLB Act requires a privacy notice only 6.100 (2002); Mo. Rev. Stat. 362.422 (2001); Neb. Rev. Stat. § “[a]t the time of establishing a customer relationship with a 44 901 to 44 925 (2001); Nev. Admin. Code (Uncodified) LCB consumer” followed by an annual notice thereafter. 15 File R130 01 (2002); Nev. Rev. Stat. § 686A.025 (2001); N.H. U.S.C. § 6803(a). Admin. Code Ins. §§ 3001.01 to 3006.05 (2001); 13 N.M. 27. NAIC’s Priv. of Cons. Fin. and Health Info. Reg. No. Admin. Code §§ 13.1.3.1 to 13.1.3.29 (2002); N.M. Stat. Ann. § 59A 2 9.3 (2001); N.Y. Admin. Code Title 11 §§ 420.0 to 420.24 672-1 § 4F(2)(d)(ii) (NAIC 2000). (Reg. 169) (2001); N.D. Admin. Code §§ 45 14 01 01 to 45 14 28. Id. at §§ 17-22. 01 25 (2001); N.D. Cent. Code § 26.1 02 27 (2001); Okla. Ins. 29. Id. at §§ 2A. Regs. §§ 365:30 1 1 to 365:30 1 54 (2002); Okla. Stat. Title 36 30. Id. 94 2. Health Insurance Portability And who conduct certain financial and adminis- Accountability Act (HIPAA) trative transactions electronically, even if Another act that has wreaked havoc on they contract other “business associates” to the insurance, medical, internet technology perform some of their essential functions. and numerous other industries is the Health This law is not intended to provide authori- Insurance Portability and Accountability ty to the HHS to regulate other private busi- Act (HIPAA). The aim of this act is to limit nesses such as employers, life insurance use and release of private health informa- companies, workers compensation carriers, tion without the patient’s consent.31 It pro- automobile medical payment carriers, auto- vides patients with the right of access to mobile or general liability carriers, accident their medical records and to know if anyone or disability income carriers, credit-only else has accessed them. In November 1999, insurance, or public agencies that deliver the U.S. Department of Health and Human social security or welfare benefits.36 Services (HHS) published the Standards for Although the HIPAA Privacy Rule only Privacy of Individually Identifiable Health regulates covered entities and not business Information (“Privacy Rule”)32 which mod- associates who transact business for a cov- ified the requirements in four significant ered entity, the covered entity must provide areas: 1) eliminated the requirement for ample protection in the business associate patient consent, 2) modified the definition contract for the rights of access, amendment of “marketing,” 3) provided “incidental and accounting with respect to individuals’ uses and disclosures” of protected informa- rights.37 tion, and 4) provided additional time for compliance with the business associate pro- 3. Electronic Communications Privacy Act visions.33 Civil and criminal sanctions are Formerly known as the Federal available for violations of the standards Wiretapping Act, this act allows an employ- imposed.34 er to monitor employee e-mails as long as Who must comply with these standards? such monitoring is business related.38 Stored What types of insurance are not covered messages must be protected from disclosure under HIPAA?35 Although varied interpreta- absent a search warrant (except as to the tions of this act and its regulations abound, system operator) but cannot be divulged to it should be limited to health plans, health others.39 The penalties for violation estab- clearing houses, and health care providers

31. Health Insurance Portability and Accountability Act of sor asking her for sex. Furthermore, mere removal from an 1996 (HIPAA). Pub. L. No. 104 191, 110 Stat. 1936 (1996). e-mail mailing list may be sufficient to state a cause of As early as 1976, the U.S. Supreme Court recognized priva- action against an employer by an employee. Hunt v. cy concerns created by the existence of large databases, say- Rapides Healthcare Sys., LLC, 277 F.3d 757, 769 (5th Cir.) ing, “[w]e are not unaware of the threat to privacy implicit 39. However, numerous courts have held that the acquisi- in the accumulation of vast amounts of personal information tion of stored electronic data, including e-mails, pager mes- in computerized data banks or other massive governmental sages and even voice mail, does not violate the elements of files.” Whalen v. Roe, 429 U.S. 589, 605 (1976). 18 U.S.C. § 2510 regarding “interception” of electronic 32. Standards for Privacy of Individually Identifiable communications because the messages are no longer in the Health Information, 64 Fed. Reg. 59,918-60,065 (Nov. 3, process of being transferred. See, e.g., United States v. 1999). Reyes, 922 F. Supp. 818, 836 37 (S.D.N.Y. 1996) (citing 33. 45 C.F.R. §§ 160-164 (2002). United States v. Meriwether, 917 F.2d 955, 960 (6th Cir. 34. The standards are outlined in 45 C.F.R. § 160.306, 308. 1990) (retrieving numbers stored in a pager’s memory did The civil penalties are $100.00 per violation up to not constitute interception of electronic communications); $25,000.00 for multiple violations per year. The criminal Bohach v. City of Reno, 932 F. Supp. 1232, 1236 (D.Nev. penalties are up to $250,000.00 and ten years in prison. 1996) (retrieval of alphanumeric pager messages stored in 35. http://answers.hhs.gov/cgi-bin. computer files did not constitute interception of electronic 36. 2791(c)(1) of the Public Health Service Act, 42 U.S.C. communications); United States v. Moriarty, 962 F. Supp. 300gg-91(c)(1). See 45 C.F.R. 160.103. 217, 220 (D.Mass. 1997) (listening to stored voice mail mes- 37. 45 C.F.R. 164.524, .526, and .528. sages is not interception because that form of access does 38. 18 U.S.C. §§ 2510-2522. Conversely, employers also not take place while information is in transmission); Wesley risk liability by failing to monitor e-mails sent by employ- Coll. v. Pitts, 974 F. Supp. 375, 387 (D.Del. 1997) (“the ees. In Knox v. Indiana, 93 F.3d 1327 (7th Cir. 1996) a suit plain language of the ECPA [18 U.S.C. § 2510 et seq.] brought by a female corrections officer survived dismissal, reflects [that] Congress did not intend for ‘intercept’ to apply summary judgment and was allowed to go to trial based in to electronic communications in ‘electronic storage’”). As a part on e mails the plaintiff had received from her supervi- matter of first impression and relying partly on the “flight” 95 lish a private cause of action.40 Also, where communication, the duration of the call, a lawsuit occurs, e-mails potentially rele- and even includes the preferences of com- vant to the subject matter thereof may be munication chosen.44 The directive provided disclosed.41 an October 31, 2003 deadline for businesses to provide policies to users and to pre- 4. International Privacy Protection vent security breaches.45 The international community has also taken steps toward establishing greater pri- 5. Spam vacy protections. While there is consensus Unsolicited commercial e-mail, or that privacy protection is beneficial and “spam,” now comprises 41 percent of all desirable, many steps taken so far appear to Internet e mail.46 It is one of the most uni- be inviting litigation on this issue. versally hated aspects of the new technolog- On July 12, 2002, the European ical advances we have seen over the last Communities of European Parliament decade.47 A study by Ferris Research, passed their Electronic Communications reported in January 2003, estimates the Directive or “E-Privacy Directive,” which annual cost of spam to U.S. corporations provides for the confidentiality of commu- alone at $8.9 billion.48 Several pieces of pro- nications as a guaranteed matter of human posed legislation addressing the spam prob- rights and fundamental freedoms.42 lem have emerged. In 2003, in the House of Currently, the most celebrated part of the Representatives, HR 122 was introduced to directive is the anti-spam measures, which prohibit use of the text, graphics or image prohibit e-mail solicitations without prior messaging systems of wireless telephone approval of the recipient.43 The directive systems to transmit unsolicited messages.49 also extends to computers, wireless trans- The proposed E-Mail Act of 2001, prohibit- mission (including e-mails), cell phones, ed all unsolicited communication. The act on-star, pagers, vehicle tracking data, allowed for an opt-out provision to be pro- names and numbers. It also protects data vided at the senders’ website.50 regarding the parties contacted during the Spam also has potential impact on wire- requirements of interceptions, the Eleventh Circuit did not unlimited. The Italian law imposes a fine up to $101,600.00 find a basis to suppress unlawfully intercepted electronic and imposes a maximum prison term of three years. communications in the conviction of a child molester whose 44. C.D. 2002/58/EC, at Recital 15. identity had been given to law enforcement by an anony- 45. C.D. 2002/58/EC, Art. 17. mous computer “hacker” who gained access to the defen- 46. John B. Kennedy and Trey Hatch, Recent Developments dant’s computer through the use of a virus or “trojan horse.” in Consumer Privacy: Focus on Spam and Identity Theft, U.S. v. Steiger, 318 F.3d 1039 (11th Cir. 2003); see notes 72- Practicing Law Institute PLI Order No. G0 01A2, Fourth 74 below with accompanying discussion. Annual Institute on Privacy Law 2003: Protecting Your 40. Damages are available to include the greater of “any Client in a Security Conscious World (June, 2003). profits the violator made as a result of the violation” or 47. The problem is truly a global one, as the international statutory damages of either $100.00 per day or $10,000.00, community continues to adopt anti-spamming measures. By plus reasonable fees and costs. 18 U.S.C. § 2520. October 31, 2003 the following twenty-six (26) countries 41. However, 18 U.S.C. § 2517 does not authorize pretrial were scheduled to forbid spam, without prior consent, by disclosure of wiretap evidence to private civil litigants. either fax or e-mail: Argentina, Australia, Austria, Belgium, Nat’l. Broadcasting Co. v. U.S. Dept. of Justice, 735 F.2d 51 Brazil, Canada, Czech Republic, Denmark, Finland, France, (2d Cir. 1984). Germany, Greece, India, Ireland, Italy, Japan, Luxenburg, 42. Council Directive 2002/58/EC of 12 July 2002, Netherlands, Norway, Portugal, Russia, South Korea, Spain, Concerning the Processing of Personal Data and the Sweden, the United Kingdom and Yugoslavia. Protection of Privacy in the Electronic Communications 48. John B. Kennedy and Trey Hatch, Recent Developments Sector, 2002 O.J. (L 201) 37. The new Directive particular- in Consumer Privacy: Focus on Spam and Identity Theft, ly concerns itself with: 1) ensuring that individuals’ rights Practicing Law Institute PLI Order No. G0 01A2, Fourth and freedoms are protected with regard “to the increasing Annual Institute on Privacy Law 2003: Protecting Your capacity for automated storage and processing of data relat- Client in a Security Conscious World (June, 2003). ing to subscribers and users” of electronic communications 49. The “Wireless Telephone Spam Protection Act” (HR services and 2) “minimizing the processing of personal data 122) was introduced in January 2003 by Rush Holt (D NJ). and of using anonymous or pseudonymous data where pos- 50. Incoming Senate Commerce Communications sible”. Id. at Recital 7 and 9. Subcommittee Chairman, Conrad Burns (R MT), named 43. Britain and Italy have swiftly enacted legislation based spam a centerpiece of his agenda. Burns sponsored the CAN upon the Directive imposing strict penalties. Under the new SPAM Act, which was placed on the Senate Calendar for a British law, violators face a fine of $8,057.00 if convicted by vote in October 2002, but a vote never occurred. a magistrate judge. However, a fine from a jury trial is 96 less telephone communications. The Anti- paper to print it, it was not sufficiently bur- Spamming Act was concerned with protec- densome to require protection.54 Going even tion of children from unsolicited e-mails. further, a Missouri court actually struck Without federal protections against spam, down its state’s anti-spamming law as an states have been left to adopt their own unconstitutional violation of advertisers’ measures of protection. Although numer- first amendment freedoms. Missouri ex rel ous states (27) have adopted SPAM legisla- v. American Blast Fax.55 tion. (Unfortunately for this writer, Florida In response to the divergent approaches is not among them.) by different states and courts, on June 11, Disappointingly to some, recent inter- 2003, a bill entitled “Stop Pornography and pretations of these statutes reveal that they Abusive Marketing Act” or the “SPAM do not have the “teeth” many would like. Act” was introduced into the Senate.56 The California courts have addressed the issue SPAM Act is intended to eliminate the bur- of e-mail solicitations under protection pro- dens and costs associated with spam by vided by state statute. In Ferguson v. specifically targeting “unsolicited commer- Friendfinders,51 the court considered e- cial electronic mail (UCE).”57 In many ways mails that were deceptively misleading, in a similar to the March 11, 2003, Do Not Call purported attempt to be declared “non- Implementation Act58 which created the advertisement.” At issue was the applica- widely publicized “National Do-Not Call tion of section 17538.4, California Statutes, Registry” (DNCR), discussed below, the which prohibits e-mail advertisements. Spam Act calls for the creation of a Although the e-mail in that case did not National No-Spam Registry by the Federal state it was an advertisement, no opt-out Trade Commission.59 The SPAM Act does provisions were provided therein and the e- not contain a provision for criminal penal- mail headers were altered to mask the iden- ties, but provides for a $5,000.00 fine for tity of the sender. The action was based on each UCE sent to an e-mail address listed negligence per se, trespass, unfair business on the national No-Spam Registry60 and practices and unlawful advertisement pro- imposes a maximum fine of $100,000.00 tection. The trial court dismissed the for each unauthorized use of the registry.61 action. On appeal, although the California However, the SPAM Act does not actually Fourth District Court of Appeal held the prohibit spam, but instead requires all state statute constitutional, it upheld the dis- advertisements to contain “clear and con- missal, reasoning that no independent duty spicuous identification ... by providing, as was mandated by the statute sufficient to the first characters in the subject line, create a private cause of action.52 ‘ADV:’”62 By inclusion of such information Similarly, in Aronson v. Brite Teeth,53 a in the subject line, all advertisement e-mails Pennsylvania court held that no privacy could be easily screened by the recipient’s protections against spam received via e- e-mail program and deleted automatically. mail exist. In that case, the court held that By imposing only content requirements, the spam protections were only applicable to SPAM Act does not appear to be subject to faxes. Because the recipient did not have to the same constitutional challenges as the read or print the e-mail, tie up the phone DNCR, which actually prohibits telemar- line until it was received, or waste ink or keting calls as discussed below.63 However,

51. 94 Cal. App. 4th 1255 (Cal. App. 1st 2002) 58. Do Not Call Implementation Act, Pub. L. No. 108 10, 52. Id. 117 Stat. 557 (2003), codified at 15 U.S.C. §§ 6101 6108 53. 57 Pa. D & C 4th 1 (Pa. Com. Pl. 2002) (2003). 54. Id. 59. S.1231, s. 101. 55. 196 F. Supp 2d 920 (E.D. Mo. 2002). 60. S.1231, s. 102(b)(1). 56. Introduced by Senator Charles Schumer of New York, 61. S.1231, s. 102(b)(2). the bill was referred to the Committee on Commerce, 62. S.1231, s. 201(a). Science and Transportation on June 11, 2003. The bill was 63. See, F.T.C. v. Mainstream Marketing Services, Inc., - co-sponsored by Senators Graham (South Carolina) and F.3d - , 2003 WL 22293798 (10th Cir. 2003) and Mainstream Feingold (Wisconsin). Marketing Services, Inc. v. F.T.C., --- F. Supp. 2d , 2003 57. S.1231, s. 2(1). WL 22213517, 15 (D. Colo. 2003), at notes 76 and 77 below with corresponding discussion. 97 a positive ruling as to the constitutionality 7. USA PATRIOT Act of the DNCR, may likely increase momen- The USA PATRIOT Act is an acronym tum and facilitate passage of the SPAM Act. for Uniting and Strengthening America (U.S.A.) by Providing Appropriate Tools 6. California SB 1386 Required to Intercept and Obstruct One concern is that our pursuits for pri- Terrorism (P.A.T.R.I.O.T.). It probably vacy protections may have unintended con- took longer to come up with the acronym sequences and costs that threaten to out- than it did to write the entire bill. After weigh the benefits of such protections. One September 11, it seemed everyone was in recent example of this occurred in favor of the act based on the title alone. It California, a state which is a typical fore- was enacted and signed by President runner on many issues that other states tend George W. Bush on October 26, 2001. to follow. Therefore, a discussion of The stated purpose of the act was to California’s recent legislation is warranted. strengthen the country by creating an abili- In California, SB 1386 passed on ty to combat terrorism and prevent money September 25, 2002 (effective July 1, 2003) laundering (allegedly to terrorist groups).67 to regulate the dissemination of personal Normally, race, ethnicity, religious beliefs information by state agencies and business- and financial information are considered es, and to ensure an accurate accounting of private. However, the act requires all finan- all disclosures.64 The act provides for a strict cial institutions (of which insurance compa- retention period and requires all businesses nies are a part) to develop anti-money laun- to destroy all personal information when dering programs and to adopt minimum the business can no longer retain it. standards regarding the identities of cus- However, the act does not define “personal tomers opening accounts and/or customers information” and the statutory retention purchasing policies of insurance. The act period is mandatory. The act requires busi- requires financial institutions to develop nesses that own or license computer data to customer verification and documentation notify California residents if personal infor- procedures and to determine whether the mation is disseminated as a result of a secu- customer appears on the government’s lists rity breach.65 The stated goal of the act is to of known or suspected terrorists.68 Such prevent or reduce identity theft delay notifi- information gathering raises obvious ques- cation, providing only one exception: where tions of racial and ethnic profiling. informing the individual would impede a These requirements were effective as of criminal investigation.66 April 24, 2003. The act permits disclosure The act also provides civil causes of and access to the following types of infor- action. However, questions exist regarding mation: the appropriate statute of limitations appli- 1. Interceptions of wire, oral and cable under the act. For example, if the electronic data. cause of action is assumed to be based in 2. Grand jury testimony and argument contract, then the privacy policy could be (historically considered sacro sanct). interpreted to create a promise. The result 3. Criminal investigation information. is a blurred distinction between an inten- 4. Surveillance without a warrant.69 tional sale of data and a negligent dissemi- 5. Physical searches. nation of data. The potential for litigation 6. Voice mail messages. as a result of this legislation is enormous.

64. Codified at Cal. Civ. Code s. 1798.29 and s. 1798.82 115 Stat. 272 (codified as amended in 31 U.S.C. § 5318). (2003). 69. The act’s broad powers have potential impact on a vari- 65. Cal. Civ. Code s. 1798.29(a) and s. 1798.82(a) (2003). ety of other legislation. An initial concern was the expan- 66. Cal. Civ. Code s. 1798.29(c) and s. 1798.82(c) (2003). sion of the Foreign Intelligence Surveillance Act (FISA) as 67. USA PATRIOT Act of 2001, Pub.L. No. 107 56 § 302, amended by the Patriot Act. The determination was that 115 Stat. 272 (codified at 18 U.S.C. § 1993). such amendment was, in fact, constitutional. In Re Sealed 68. USA PATRIOTAct of 2001, Pub. L. No. 107 56 § 326, Case 310 F.3d 717, U.S. FlSA Ct. of Review. 98 7. Foreign intelligence. rules governing police surveillance of polit- 8. Business Records. ical groups be placed under the court’s 9. Trap and Trace devices /pen registers. supervision.74 The court based its decision 10. Nationwide service of search requiring a “strengthening of the Judgment” warrants. because of the “operational ignorance on the part of the NYPD’s highest officials Under the Act, law enforcement agen- with respect to an investigatory technique cies can force internet service providers to resonant with constitutional overtones.”75 disclose the methods and sources of pay- In US v. Steiger, the Eleventh Circuit, ments for services, session times and dura- considering an Alabama case, determined tion.70 This includes all network addresses, that the Patriot Act amended the Wiretap stored e-mail addresses, and whom they Act to only provide protection while com- visit. Such disclosures will not violate the munication is “in progress.”76 In that case, GLB Act (discussed supra). The act pro- the defendant was convicted based upon vides limited immunity under section 2707 tips provided to law enforcement from an (g)(1), Title 18 United States Code. anonymous computer “hacker” who gained The act also provides for civil penalties access to the defendant’s computer through if privacy is violated. However, the action the use of a virus. The Eleventh Circuit can be stayed if it would adversely affect an found no basis to suppress what it deter- on-going investigation. If there is a reason- mined to be lawfully intercepted electronic able belief that an emergency exists involv- communications.77 Relying partly on the ing danger of death or serious physical “flight” (active transmission) requirements injury, all information may be disclosed. of interceptions, the fact that the hacker Several courts have interpreted and obtained the information did not violate the upheld the USA PATRIOT Act. In Wiretap Act because the information gath- Handschu v. Special Services Division,71 a ered was “stored” rather than obtained dur- New York court heard a class action suit ing active transmission. The Court also claiming certain surveillance activities vio- specifically noted that Congress considered lated constitutionally protected rights to pri- amending section 2515 in the USA Patriot vacy. Although this same issue was settled Act to “extend the statutory exclusion rule in New York over three decades ago, the in 18 U.S.C. § 2515 to electronic communi- NYPD requested modification. The court cations;” however, the Act was passed with- noted that, “No basis is discernable for out such an amendment and therefore it doubting ... that law enforcement’s ability must be construed to reflect that such provi- to detect and guard against future terrorist sion was specifically rejected.78 attacks depends in large part upon the abili- In Global Relief v. O’Neill, Powell, and ty to collect, share and analyze informa- Ashcroft,79 the court considered the case of tion.”72 The court further recognized the Global Relief, an Islamic humanitarian restrictions on the NYPD’s ability to dis- relief organization whose assets were seminate information and stated, “It is diffi- frozen subsequent to a search by the FBI. cult to imagine a state of affairs more out- In denying Global Relief’s preliminary dated by the events of September 11th or injunction, the court reasoned that matters out of step with the urgent needs of our law related to the conduct of foreign relations enforcement agencies.”73 On August 6, are so exclusively entrusted to the political 2003, the court ordered that departmental branches to be largely immune from judi-

70. USA PATRIOTAct of 2001, Pub. L. No. 107 56 § 210, 76. 318 F.3d 1039 (11th Cir. 2003). 115 Stat. 272 (codified as amended in 18 U.S.C. § 2703(d). 77. Id. at 1050. 71. 273 F. Supp. 2d 327 (S.D.N.Y 2003). 78. Id. at 1050, citing H.R.Rep. No. 236(I), at 8 (2001), 72. Id. at 341. with USA PATRIOT Act, Pub.L. No. 107 56, 115 Stat. 272 73. Id. (2001). 74. --- F. Supp. 2d -, 2003 WL 21880456 (S.D.N.Y. 2003). 79. 207 F. Supp. 2d 779 (N.D. Ill. 2002). 75. Id. at 6. 99 cial inquiry or interference. The holding considered an action brought for trespass demonstrates how “exceptionally strong”80 against an investigator who trespassed on the showing necessary to challenge the Plaintiff’s property to obtain film of the Executive Branch of government must be, Plaintiff.81 The court dismissed the even raising concerns over whether such a Plaintiff’s complaint because Plaintiff did showing can ever be met. not know the surveillance was on-going at the time. Conversely, an Alabama court 8. Surveillance determined that an investigation conducted Most corporations have the occasion to from neighboring property, using high pow- utilize surveillance techniques in their busi- ered binoculars to film inside plaintiff’s nesses, but it is not without a fear of litiga- home was unreasonable.82 In a particularly tion arising our of privacy violations. As egregious case, a California court consid- noted above, the common law torts of neg- ered the case of a Plaintiff that was ligent or intentional infliction of emotional befriended by an investigator.83 The investi- distress for privacy violations are based on gator then took her to Disneyland while a the four following elements: 1) unreason- co-investigator filmed them at the park. able intrusion upon Plaintiff’s seclusion; 2) The court held the insurance company public disclosure of private facts; 3) public- responsible for the lack of surveillance con- ity which places one in a false light; and 4) trol. violation of a privacy statute. Surveillance Consequently, surveillance activities can create a cause of action for all four which are taken without regarding to the areas. plaintiff’s right to privacy can come back to First, in considering whether an intru- adversely affect the entire claim which sion on seclusion occurred, a determination Plaintiff instituted in the first place. must be made whether the observations were contained in the private or public 9. National Do Not Call Registry (DNCR) view. Second, surveillance on Plaintiff’s Finally, the creation of the National Do property or viewing plaintiff inside his or Not Call Registry (DNCR) is a tool which her home may implicate a trespass. Third, many hope to be substantially beneficial, publishing contents to state investigative but it is not without its litigation traps for agencies, insurance agents or co-workers the unwary. The DNCR is a national data- with no claim handling responsibility or base administered by the Federal Trade business need to receive such information Commission (FTC), with enforcement may give rise to defamation claims. Fourth, shared between the FTC and the Federal surveillance conducted unreasonably may Communication Commission (FCC). In be a sufficient basis for a bad faith action. less than one week from the date of imple- Fifth, talking with clients, customers, mentation, the FCC had received 2,379 and/or business associates regarding the complaints about alleged violations of the nature of a plaintiff or suggesting plaintiff Do Not Call rules.84 With such voluminous burned down his own house, for example, data and regulatory issues shared between can create a claim based on interference two large federal agencies, questions of with business relationships. coordination and application are certain to A few courts have addressed the issue arise. However, implementation by the sep- regarding legal liability for surveillance arate agencies in consideration of other leg- activities. For example, an Oregon court islative issues - not to mention its constitu-

80. Id. at 788, quoting Palestine Info. Office v. Shultz, 674 82. Alabama Electric Cooperative, Inc. v. Partridge, 225 F.Supp. 910, 918 (D.D.C.1987), aff’d, 853 F.2d 932 (1988) So. 2d 848 (Ala. 1969). (citing Washington Metro. Area Transit Com’n v. Holiday 83. Unrah v. Truck Insurance Exchange, 498 P.2d 1063 Tours, Inc., 559 F.2d 841, 843 (D.C.Cir.1977)). (Cal. 1972). 81. McLain v. Boise Cascade Corp., 533 P.2d 343 (Or. 84. FCC News Release, October 8, 2003 (the release also 1975). notes that during the same period the FCC logged 5,879 inquiries about the rules). 100 tionality - has already created questions of tionality of a New York Public Service applicability to various industries.85 Commission regulation that banned all The development of the DNCR occurred advertisements by utilities. In striking on two separate plains, involving two sepa- down the regulation as unconstitutional, the rate pieces of legislation. The Court identified a four-part test for deter- Telemarketing and Consumer Fraud and mining whether restrictions on commercial Abuse Prevention Act of 1994, directed the speech are constitutional.96 The first ques- FTC to “prescribe rules prohibiting decep- tion is whether the speech in question con- tive telemarketing acts or practices and cerns illegal activity or is misleading, in other abusive telemarketing acts or prac- which case the government may freely reg- tices.86 The Act required that the rules pro- ulate the speech. If the speech is not mis- vide “a definition of deceptive telemarket- leading and does not involve illegal activi- ing acts or practices,”87 and include “a ty, the court applies the rest of the four part requirement that telemarketers may not test to the government’s regulation. The undertake a pattern of unsolicited telephone second question is whether the government calls which the reasonable consumer would has a substantial interest in regulating the consider coercive or abusive of such con- speech. Third, the government must show sumer’s right to privacy.”88 On January 29, that the restriction on commercial speech 2003, the FTC issued the amended directly and materially advances that inter- Telemarketing Sales Rule (TSR).89 The est. Finally, the regulation must be narrow- 2003 amendment modified the original ly tailored to achieve that interest. TSR,90 by the inclusion of the highly publi- On September 25, 2003, the FTC rule cized creation of the National DNCR.91 was stricken as unconstitutional by a On March 11, 2003, the Do Not Call Federal District Court in Colorado.97 Using Implementation Act (Do Not Call Act) the Central Hudson criteria, the District amending the Telemarketing and Consumer Court found the FTC rule unconstitutional Fraud and Abuse Prevention Act was signed because it granted certain exemptions, as into law.92 The Act also required the FCC to the court saw it, based solely on content. issue a final rule and to consult and coordi- Therefore, the court concluded that nate with the FTC to maximize consistency “[b]ecause the do not call registry distin- with the FTC’s 2002 amended TSR.93 On guishes between the indistinct, it is uncon- July 3, 2003, the FCC released a Report and stitutional under the First Amendment.”98 Order in CG Docket 02 278 revising the The Tenth Circuit Court of Appeals dis- telemarketing rules and establishing the agreed. Instead of applying the Central Do-Not-Call Registry with the FTC.94 Hudson criteria independently, the court The constitutional limitations of regulat- combined the final two criteria into a “rea- ing commercial speech are articulated in sonable fit” analysis, thereby staying the Central Hudson Gas & Elec. Corp. v. District Court’s Order.99 In so doing, the Public Service Commission.95 In Central Court stated, “there is a substantial likeli- Hudson, the Court considered the constitu- hood that the FTC will be able to show a

85. For example, the National Association of Independent 92. Do Not Call Implementation Act, Pub. L. No. 108 10, Insurers’ official position is that insurers are not required to 117 Stat. 557 (2003), codified at 15 U.S.C. §§ 6101 6108 comply with the National DNCR. Life Outlook: (2003). Clarification. Insurance Accounting, Vol. 14, No. 41 93. Pub.L. 108 10, §3, 117 Stat. 557 (March 11, 2003). (October 20, 2003). 94. Rules and Regulations Implementing the Telephone 86. 15 U.S.C. § 6102(a)(1) (2003). Consumer Protection Act (TCPA) of 1991, CG Docket No. 87. 15 U.S.C. § 6102(a)(2) (2003). 02 278, Report and Order, 68 FR 44144 88. 15 U.S.C. § 6102(a)(3)(A) (2003). 95. 100 S. Ct. 2343 (1980). 89. The Telemarketing Sales Rule is codified in 15 U.S.C. 96. Id. at 2351. §§ 6101 6108 (2003); the Rules and Regulations of the 97. F.T.C. v. Mainstream Marketing Services, Inc., -F.3d-, Federal Trade Commission are found at 16 CFR Part 310 2003 WL 22293798 (10th Cir. 2003). (2003). 98. Mainstream Marketing Services, Inc. v. F.T.C., - F. 90. The FTC adopted the original Rule on August 16, 1995. Supp. 2d - , 2003 WL 22213517, 15 (D. Colo. 2003) 60 FR at 43842 (codified at 16 CFR 310 (1995)). 99. F.T.C. v. Mainstream Marketing Services, Inc., -F.3d-, 91. 16 CFR 310.4(b)(1)(iii)(B) (2003). 2003 WL 22293798, 2 (10th Cir. 2003). 101 reasonable fit between the substantial gov- the extent to which state law regulates the ernmental interests it asserted and the telemarketing at issue and whether enforce- national do not call list or, in other words, ment of the TSR would conflict with, and that the list directly advances the govern- effectively supersede, those state regula- ment’s substantial interests and is narrowly tions. tailored.”100 The FTC was requested to clarify the Some in the insurance industry have exemption of registered broker dealers and argued that the Do Not Call rules do not insurance companies directly in the amend- apply to entities engaged in the business of ed rule.105 In response, the FTC stated that insurance, not on First Amendment it was “unnecessary to exempt them by grounds, but because such rules conflict rule” because it “believes that the explicit with the McCarran Ferguson Act (MFA) statement of [its] jurisdictional limitation which provides that, “[t]he business of over broker dealers is abundantly clear in insurance ... shall be subject to the laws of the Telemarketing Act itself.”106 the ... States which relate to the regulation Furthermore, the FTC’s position on its ... of such business.”101 Additionally, the jurisdiction is that the MFA’s limitations are MFA provides that “[n]o Act of Congress “clear, and thus no express exemption for shall be construed to invalidate, impair, or [insurance businesses] is necessary.”107 supersede any law enacted by any State for Thus, unlike the jurisdictional exemptions the purpose of regulating the business of for banks and non profit organizations, insurance ... unless such Act specifically which do not extend to third party telemar- relates to the business of insurance.”102 The keters making calls on their behalf, in the argument is that since insurers’ marketing case of the telemarketing of insurance prod- activities are extensively regulated at the ucts and services, the TSR does not neces- state level, the Do-Not-Call rules “intrude sarily apply simply because the campaign is upon the insurance regulatory framework conducted by a third party telemarketer. established by the states and, therefore, The FCC’s jurisdictional position is sim- should not be applicable to insurers under ilarly contingent upon the amount of state McCarran Ferguson.”103 Although such regulations of the individual insurance busi- arguments have led some in the industry to ness. Although the FCC states explicitly take official positions that the current Do- that no additional authority is needed to reg- Not-Call rules do not apply to insurance ulate insurance under the new Do-Not-Call businesses, it remains an untested and rules, it does so with a cautionary foot- unproven argument at this point.104 note.108 The FCC clarifies that such an The FTC’s position on the extension of extension is based on their conclusion that the Do-Not-Call rules to the business of the “McCarran Ferguson Act does not nec- insurance is that the MFA provides that the essarily prohibit the application of the FTC Act, and by extension, the TSR, are national registry to insurance companies.”109 applicable to the business of insurance to Instead, the FCC determinations will be the extent that such business is not regulat- made given “the implications of the ed by state law. Whether the MFA exemp- McCarran Ferguson Act [and] will need to tion removes insurance related telemarket- be evaluated on a case by case basis.”110 ing from coverage of the TSR depends on

100. Id. at 9. 106. Id., citing 15 U.S.C. 6102(d)(2) (2002). 101. 15 U.S.C. § 1012(a) (2002). 107. Id., citing 15 U.S.C. 1012(b) of the McCarran 102. 15 U.S.C. § 1012(b) (2002). Ferguson Act, for the proposition that “the business of insur- 103. Comments of the American Council of Life Insurers ance, to the extent that it is regulated by state law, is exempt (ACLI) as quoted in FCC Report and Order, 03-153, 33 from the Commission’s jurisdiction pursuant to the FTC (July 3, 2003). Act.” 104. Life Outlook: Clarification, Insurance Accounting, 108. FCC Report and Order, 03-153, 29, note 152 (July 3, Vol. 14, No. 41 (October 20, 2003). 2003). 105. Citigroup and NAIFA comments as referenced by 16 109. Id. CFR 310, Fed. Reg. Vol. 68, No. 19, 4587 (Jan. 29 2003). 110. Id. 102 III. Protections Against These Traps was written for a world that no longer exists. Attempting to fit cyber risks into tra- No business decision is without risk. By ditional insurance is like putting a square making use of state of the art security mod- peg into a round hole. The key issues with els and technologies, companies have been traditional insurance are as follows: able to reduce costs, improve the quality of Elimination of computer virus coverage products and services, and increase profits. at meaningful limits from commercial Even after all cost-effective safeguards are property policies; in place, however, security and privacy Non-Physical Business Interruption risks still remain and cannot be reduced to (such as denial of service attacks) are not zero, based upon the current state of tech- considered a direct physical loss; nology, people and processes controls. The Contingent Risks (from external hosting, organization must continue its business etc.) are not addressed by current notwithstanding the remaining risks. policies; The risks associated with security and Crime policies require intent and do not privacy are increasingly a boardroom issue cover stealing information (scope of and certainly can impact operations, assets, coverage is money, security and tangible financials, and brand equity. All that being property); said, technology and operations are certain- Data is not “tangible property” under a ly an important aspect of Sarbanes-Oxley, Commercial General Liability policy as IT underlies financial processes and the (which has been upheld in most court reliability of financial statements. Also decisions)111. Therefore, theft or security and privacy risks can represent an disclosure of third party information is unforeseen, major impact on financials (if not covered; and, risk transfer through insurance is not part of Intentional acts exclusions in errors and a risk management program). For example, omissions policies and the “occurrence” the current Directors & Officers Liability definition would remove coverage for policies contain a “failure to maintain insur- the majority of security incidents, as ance” exclusion which could be invoked if inside perpetrators are frequently senior management neither purchases or involved in these incidents. maintains adequate insurance to address its security and privacy risks. Since 2000, a few insurers have introduced Traditionally, contracts and insurance “cyber risks” insurance products to address provide a means by which an organization security and privacy risks associated with can shift significant residual risk to a third network and Internet technologies. The party. With regard to contracts provided by majority market share of network security technology and outside vendors, there is lit- liability insurance is provided by AIG tle to no risk transfer for consequential and through its eBusiness Risk Solutions liquidated damages. The contracts simply Division.112 Other insurers include Lloyds of state that the vendor will make reasonable London and Zurich. The policies offered efforts to provide secure services, but with- are non-admitted, and there are significant out a transfer of risk. Therefore, a serious differences in policy terms and conditions need exists for new insurance requirements between carriers. Be aware that insurance and protections. Some of the protections, policies do not cover all possible losses and and their limitations, are discussed below: liabilities that an organization may sustain. Traditional insurance - commercial The deductible or “outside the policy property, general liability, professional liability and crime insurance - will not provide 111. See America Online, Inc. v. St. Paul Mercury Ins. Co., the necessary coverage required to Civ. Action No. 01-1636-A (E.D. Va. Jun. 20, 2002) (insurer had no duty to defend under comprehensive general lia- addressed security and privacy risks in a bility insurance policy covering “property damage” because networked world. Traditional insurance software, data, and systems are not “tangible property”). 112. Forbes; Business Week 103 scope” is the risk the organization assumes. vendors have coverage to address their The coverage offerings available security breaches that impact your cus- include: tomers or other third parties. This is partic- Web Content Liability: Covers media ularly important in industries that collect offenses, intellectual property infringement financial or health-related information of (copyright, trademark, service mark) and consumers. The discussion above concern- invasion of privacy arising from the display ing traditional insurance should prompt a of media on a web site. Patent infringement review of insurance required of vendors and is specifically excluded. business partners. An example of a pre- Internet Technology Professional ferred security-focused insurance require- Liability: Covers technology professional ment in a vendor contract is as follows: services of Internet focused companies, Internet Liability Insurance including, with- such as application service providers, inter- out limitation, unauthorized access, unau- net service providers, e-commerce transac- thorized use, virus transmission, denial of tion services, PKI services, managed secu- service, personal injury, advertising injury, rity services, internet media services, host- failure to protect privacy; and Intellectual Property Infringement covering the liability ing services, internet auction services, etc. of the Vendor and the liability of [Company Network Security Liability: Covers legal xxx] and its Affiliates arising out of the liability and legal costs for claims arising design, development, and/or maintenance of out of computer attacks caused by failures the systems used to operate and maintain the of security including theft of client informa- Services; with a minimum limit of not less tion, identity theft, negligent transmission than $5,000,000 per occurrence. of computer viruses and denial of service liability. Cyber-terrorism coverage options IV. Conclusion are available (as required under TRIA or broad form terrorism). As noted above, privacy and security Data/Electronic Information Loss: interests remain a valued commodity inter- Covers the cost of recollecting or retrieving nationally as well as for U.S. citizens. As first party data destroyed, damaged or cor- privacy and security issues necessarily rupted due to a computer attack. develop among individuals and business Business Interruption or Network entities, the solutions offered in the form of Failure Expenses: Covers cost of lost net regulations and statutory efforts are contin- revenue and extra expense arising from a uing to expand. Each adjustment in this virus or denial of service attack. Especially area creates further rights and liabilities to valuable for computer networks with high all involved. Understanding the current availability needs. atmosphere surrounding privacy and securi- Cyber-extortion: Covers both the cost ty legislation and potential violations of of investigation and the extortion demand such is the first step towards protecting your amount related to a threat to commit an business. Adding the appropriate risk trans- intentional computer attack, implant a fers will instill even more confidence that virus, etc. your business is protected. As part of a sound risk management program for security and privacy risks, it is important for risk managers and General Counsel to review their insurance requirements for vendors, particularly vendors who provide technology services or who have sensitive network access/access to sensitive third party data. Liability will fall on the owner of the web site or the computer network, but it is important to make sure

105 The Privacy Project II How Good is Your Confidential Settlement Agreement? Why defendants now need to be wary of how and where they enter into sealed settlement agreements and how they enforce them.1

By William B. Crow IADC member William B. Crow joined Schwabe, Williamson & Wyatt in Portland Although often criticized for privatizing as a shareholder of the firm in 2003, justice, sealed settlement agreements are adding his internationally-recognized useful tools in resolving disputes outside of expertise to expand one of the most elite court, and, if entered into without the product liability practices in the nation. court's assistance, should never become His trial and arbitration experience public record. During the past ten years, includes antitrust litigation, a variety of however, there has been an increasing trend commercial disputes, securities claims, products liablity litigation, and insurance granting the public access to court records, coverage issues. For the past ten years, Mr. even those the parties intend to be confiden- Crow's peers have selected him as one of tial. This is especially true of documents The Best Lawyers in America. In 2000, he that contain information related to what was named one of Oregon’s ten best litiga- some would characterize as a disclosure of tors by the National Law Journal. “public hazards,” thus placing the public interest above the litigants’ right to privacy. Fueled by media sensationalism and backed ments. It also argues that courts and legis- by the plaintiffs’ bar, this latest trend has latures should not expand the acts to apply been marked by the enactment of many so- to agreements sealed without court involve- called “sunshine” acts. These acts create a ment, even those agreements that might more critical approach to granting sealing contain information relating to so-called orders and require a balancing of the liti- public hazards. gants’ interests in confidentiality against the Before discussing why privately sealed public interest in disclosure. The majority settlements should remain confidential and of the laws currently in force only restrict not be subject to disclosure, let us first the sealing of settlement agreements examine why parties typically seek to seal entered into with the courts’ assistance. settlement agreements. Therefore, parties may still privately agree Proponents of the public’s right of to seal settlement agreements out of court access often bolster their argument against and incidentally prevent their agreement sealed settlements by claiming that sealed from coming within the provisions of most, settlements are used primarily to hide but not all, of these sunshine acts. However important information from the public,2 but parties, defendants especially, still need to in making that argument these proponents be aware that should they ask the court to overlook the many valid reasons why enforce their privately sealed settlement defendants may seek confidentiality. agreement it could become public record. Defendants often seek to seal settlement This article examines various state agreements to avoid becoming a “target statutes, court rules and circuit case law that defendant.”3 If settlement amounts are restricts the courts’ ability to seal settle-

1. The author would like to give credit to Kathleen Blaner 2. Arthur Miller, Private Lives or Public Access?, 77 for her article The Emperor Has No Clothes: How Courts A.B.A.J. 65, 66 (Aug. 1991) hereinafter Miller. Deny Protection for Confidential Information, 70 Def. 3. Sharon L. Sobczak, To Seal or Not to Seal? In Search of Couns. J. 12 (Jan. 2003) hereinafter Blaner. The author Standards, 60 Def. Couns. J. 406, 411 (July 1993) here- would also like to give credit and a special thanks to inafter Sobczak. Christiane Rauh, for her invaluable assistance. 106 released to the public, defendant corpora- documents related to it. Furthermore, when tions and companies may be inundated by the public is denied the opportunity to see similar lawsuits filed by similarly situated the judicial process in action, its ability to plaintiffs looking to settle for the same understand the process is diminished, mak- amount of money.4 Likewise, defendants ing the judicial process appear secretive and look to protect trade secrets and certain pro- “mysterious.”12 prietary information about their companies There are fundamental flaws in both of from being released to the public.5 The these arguments. First, simply because a release of this type of information could litigant files a claim in a public court it does allow defendants’ competitors to gain an not follow that that litigant should then have unfair advantage, thus diminishing the com- to give up his right to privacy in order to mercial value of the information and the have a conflict resolved.13 Second, as far as security provided by sealing.6 privately sealed settlements are concerned, Not often discussed is why plaintiffs those agreements are reached without the agree to seal settlements. It certainly can- assistance of a judge in issuing a sealing not be the case that plaintiffs settle only order; thus, there is no longer a public mat- after being strong-armed by defendants, or ter present, but a private contract to settle. that plaintiffs agree to seal a settlement as As with private contracts entered into their only avenue for pecuniary gain.7 between businesses, the public should not Sealed settlements and protective orders be allowed access to the details of privately provide plaintiffs with privacy as well.8 sealed settlements; public resources were Plaintiffs are protected from charities, not used in reaching the agreement and the investment advisors, and family members parties did not appear in a public forum to seeking money post settlement.9 have a sealing order issued. Third, when a Additionally, plaintiffs that are parties to case is settled out of court, the public does cases of a sensitive nature such as sexual not lose an opportunity to gain a greater harassment or employment related claims understanding of the judicial process. can avoid publicity regarding facts related Settlement agreements replace the process to their personal lives, medical and employ- either in whole or part; thus, you cannot ment histories.10 lose an opportunity that never presented Although sealed settlements offer pro- itself. As Arthur Miller points out in his tection for both plaintiffs and defendants, article Private Lives or Public Access?, there is an ongoing debate as to whether “[t]here has never been any right of public they should be allowed. Below are the access to the activities, discussion and arguments often raised in opposition to, and papers of the parties outside of the court in favor of, sealed settlement agreements. during discovery or settlement;”14 therefore, the public loses nothing by being left out of Arguments Against Sealing the details of settlement agreements. Additionally, the argument that settle- At the heart of the anti-sealing move- ments preclude the public from a learning ment is a belief that litigation serves an opportunity largely overstates the general inherently public function,11 such that the public’s interest in litigation. The public public should have unrestricted access to all may not have been aware that a claim was

4. Id. Philosophical and Democratic Defense of Settlement (In 5. Miller, supra note 2 at 68. Some Cases), 83 Geo. L.J. 2663, 2684 (1995) hereinafter 6. Id. Meadow. 7. Often a plaintiff’s agreement to silence is their biggest 9. Neil, supra note 8 at 22. bargaining chip and many choose to use it to their economic 10. Meadow, supra note 8 at 2684. advantage. 11. Sobczak, supra note 3 at 407 8. Martha Neil, Confidential Settlements Scrutinized: 12. Id (this is often noted as one of the reasons why the Recent Events Bolster Proponents of Limiting Secret Case public has a distrust for the judicial system). Resolutions, 88 A.B.A.J. 20, 22 (July 2002) hereinafter Neil; 13. Miller, supra note 2 at 68. Carrie Menkel Meadow, Whose Dispute is it Anyway? A 14. Id. at 65. 107 ever filed. Aside from highly publicized check their right to privacy at the door sim- criminal and civil trials, it is unlikely that ply because they filed a lawsuit.24 Whether the public remains apprised of the thou- parties enter into a court-assisted sealed set- sands of cases filed in our nation’s courts on tlement or agree to seal their settlement out a daily basis. of court and later seek the court’s assistance Next, those against sealing orders, the to enforce it, their right to privacy should media especially, like to argue that much of remain the paramount concern. the information contained in sealed settle- In addition to maintaining litigants’ ment agreements affects the public health rights to privacy, confidential settlement and safety, making it necessary for the pub- agreements promote the free exchange of lic to access such information.15 But often information between the parties and aid the the important information that the media resolution of disputes.25 They also provide claims is present in sealed agreements is not relief to courts with crowded dockets.26 If there at all. Take the well-known Xerox parties are forced to reveal sensitive infor- case for example.16 Xerox had allegedly mation despite an agreement to keep the hidden, within a sealed settlement, informa- terms of the settlement confidential, they tion related to the contamination of a neigh- may be deterred from entering into a settle- borhood by hazardous waste.17 It became ment agreement at all.27 Courts ought not be known later that the only information con- overburdened with cases that could have tained within the settlement agreement was been settled out of court had this sensitive medical records of the plaintiff.18 information remained confidential. Finally, those against sealing often argue More important than freeing up court that discovery of cash settlement amounts is dockets, however, is the integrity of the necessary to facilitate trial strategy and sealed agreement itself. If the parties agree, preparation.19 While the broadly drafted dis- between themselves, to seal their agreement covery rules were created to aid dispute res- it is not the courts’ place to intervene and olution, they certainly were not created to decide that such an agreement shall not be assist attorneys in filing copycat lawsuits honored. If the plaintiff is the master of his with similar claim amounts against deep- or her complaint then both the parties pocket defendants.20 The courts are split in should be the masters of their decision to their treatment of this issue.21 But theTexas seal their settlement agreement. The courts Court of Appeals, for example, has held that should not engage in evaluating whether a a litigant requesting discovery of a settle- sealed settlement should be opened. By ment amount must demonstrate some rele- doing so their dockets will only become vancy beyond simply utilizing the informa- overburdened by actions to unseal agree- tion as a “comparative bargaining tool.”22 ments, thus both diminishing the benefit that settling out of court originally provided Arguments in Favor of Sealing and causing the parties to feel that they do not own or control their own dispute. Those in favor of sealed settlements Finally, if information from sealed set- believe that litigation serves an inherently tlement agreements is released to the pub- private function, to which the public should lic, there is a distinct possibility that follow- not be granted access unless the parties ing such disclosure adverse publicity might allow it.23 Litigants should not be forced to taint future juries hearing cases related to

15. Id. at 66-67. (D.R.I. 1986) (accepting the trial preparation argument) with 16. Id. at 67; Sobczak, supra note 3 at 412. Baby Doe v. Methacton Sch. Dist., 164 F.R.D. 175, 176-177 17. Id. (E.D. Pa. 1995) (rejecting the trial preparation argument). 18. Id. 22. Tomko, supra note 20 at 843; see Palo Duro Pipeline 19. Christine M. Tomko, Student Author, Can You Keep a Co., Inc. v. Cochran, 785 S.W.2d 455, 457 (Tex. App. 1990). Secret?: Discoverability and Admissibility of Confidential 23. Sobczak, supra note 3 at 407. Settlement Amounts in Ohio, 52 Case W. L. Rev. 833, 841 24. Id. at 411; Miller, supra note 2 at 68. (2002) hereinafter Tomko. 25. Neil, supra note 8 at 20. 20. Miller, supra note 2 at 68. 26. Id. 21. Compare Bennett v. LaPere, 112 F.R.D. 136, 141 27. Sobczak, supra note 3 at 411. 108 the same product, manufacturer or compa- ing economic fraud are not public hazards.35 ny.28 This publicity would hinder the ability In comparison, Florida also refused to of certain companies to receive fair trials enforce a protective order issued by a feder- and damage their professional reputations al district court at the joint request of all in general. parties.36 In ACandS v. Askew, 597 So. 2d The courts and legislatures are engaged 895, 896 (Fla. App. 1992), the respondent in an ongoing debate between a litigant’s brought an asbestos action against ACandS right to privacy and the public’s right to in state court and wished to introduce infor- information, some siding with the public mation subject to the federally issued pro- and deciding that greater restrictions need tective order.37 The Florida Court of to be placed on the ability to obtain a sealed Appeals refused to enforce the protective settlement. Below are some of the most order because some of the information pro- notable statutes and court rules currently in tected related to a public hazard, asbestos.38 effect that create some of these new restric- ACandS argued that because the public was tions. already well aware of the danger of asbestos, the protective order didn’t violate Florida Fla. Stat. § 69.081, but the court disagreed, stating that the statute prohibits a court Florida enacted its “Sunshine in order which conceals any information relat- Litigation Act” in 1990.29 This statute ed to a public hazard.39 By disallowing the makes it unlawful for a court to seal any sealing of documents that contain any infor- information that has the effect of “conceal- mation related to a hazard, it would seem ing a public hazard or any information con- that a party could merely allude to a hazard cerning a public hazard . . . .”30 Public haz- or product defect in its complaint and the ards are defined as “[any] instrumentality, court would refuse to grant a sealing, including . . . any device, instrument, per- and/or, protective order. This is very trou- son, procedure, or product . . . or condition blesome and invades valid claims of a right of a device, person, procedure, or product to privacy. that has caused and is likely to cause injury.”31 The statute creates a special Texas exception for trade secrets, however, stating that trade secrets are not, by definition, pub- Texas Rule of Civil Procedure 76a, sim- lic hazards.32 As applied, if a settlement ilar to the Florida statute, applies only to agreement is found to contain information court records containing information that regarding a public hazard then the court will could have an adverse effect on the health unseal that information only -- the entire and safety of the public.40 This rule operates agreement will not be disclosed in whole.33 to create a presumption that all court Florida courts interpreted this statute in records are “open to the general public.”41 2000 and refused to unseal a private settle- This presumption may be overcome only by ment agreement, holding that economic a showing of a substantial interest that out- fraud in the leasing of vehicles was not a weighs the presumption of openness and public hazard.34 Florida case law has contin- any adverse affect that sealing may have on ually held that financial practices constitut- the public.42 Additionally, the party in favor

28. Id. 35. State Farm Fire and Casualty Co. v. Sonsnowski, 830 29. Fla. Stat. § 69.081 So. 2d 886, 887 (Fla. App. 2002). 30. Id. § 69.081(3) (emphasis added). 36. ACandS, Inc. v. Askew, 597 So. 2d 895, 896 (Fla. App. 31. Id. § 69.081(2). 1992). 32. Id. § 69.081(5). 37. Id. 33. Id. § 69.081(7). 38. Id. at 896-897. 34. See Stivers v. Ford Motor Credit Co., 2000 Fla. App. 39. Id. at 898-899. LEXIS 16980 (2000) (Ford sought to enforce the confiden- 40. See generally Tex. R. Civ. Proc. 76a. tiality agreement between itself and the appellant; appellant 41. Id. at 76a(1). claimed the agreement was not enforceable under Fla. Stat. 42. Id. at 76a(1)(a). § 69.081; the court disagreed). 109 of sealing must demonstrate that there is no implications of this rule, that it would be less restrictive means of protecting the sub- “farfetched” to assume that a person’s med- stantial interest asserted.43 This rule makes ical history or condition, for example, could exceptions for documents to which access be considered public health and safety is otherwise restricted by law, such as doc- information.48 He goes on to say that in the uments from adoption, juvenile, mental case of protecting someone’s medical histo- health, and family cases.44 Moreover, refer- ry or condition a judge would certainly ence to settlement amounts, or monetary invoke one of the exceptions to 76a and consideration, is not defined as a “court grant a sealing order.49 But, the Texas Court record” subject to the presumption created of Appeals actually refused to overturn a under the rule.45 lower court decision declining to grant a Those parties concerned only with the protective order despite the appellant’s release of settlement amounts can breathe a desire to keep confidential his medical con- sigh of relief because this rule would not dition.50 The trial court judge in this case restrict their ability to keep that information had found that this litigant’s privacy interest confidential. Parties sealing out of court was not an exception to the rule, and that it settlement agreements may also be inclined did not outweigh the public interest in dis- to relax, but they should note that this rule closure. Luban’s hypothetical is not so far- is also applicable to settlement agreements fetched after all. “not filed of record.”46 Therefore, if a Texas court, asked to interpret or enforce a pri- New York vately sealed settlement, found that the protected interests did not outweigh the public New York will only allow courts to seal interest in disclosure, the agreement could records, in whole or part, if the party in 51 become public knowledge. This radically favor of sealing shows good cause. affects the confidence with which parties Unfortunately, the rule does not define may enter into a sealed settlement out of “good cause” other than to state that in court, knowing that such a contract might determining its presence, the courts shall later be undermined. consider the public interest and the interests 52 David Luban argues that this rule, and of the parties. This rule does not apply, 53 other sunshine acts, do not do away with however, to discovery or protective orders, protective orders, but merely shift the bur- nor does it apply to settlements filed out of 54 den necessary to obtain a protective order to court. The New York courts applied this rule in the requesting party.47 But the burden of 55 proof to overcome the presumption of a 1992 case. The court determined that openness in these cases is so great that good cause was demonstrated by a couple describing it as a simple “shift” is to under- wishing to seal the records in their son’s state what these rules entail. Moreover, the wrongful death case because the records Texas rule applies to settlements not filed contained no information relating to defec- 56 with the court; this doesn’t shift the burden tive products or public safety. Good cause of proof, but creates one. Luban also was also shown in a case involving the 57 argues, in response to those alarmed by the abortion pill RU-486. The court found

43. Id at 76a(1)(b) (redaction or sealing only certain docu- whereby a substantial interest that outweighs the public ments for example) interest must be shown). 44. Id. at 76a(2)(a) 51. See id. 45. Id. at 76a(2)(b) (including settlement agreements not 52. Miller, supra note 2 at 66. filed of records in the definition of court records, but exclud- 53. Luban, supra note 47.at n. 128. ing references to monetary consideration). 54. In re Estate of RR, 53 Misc. 2d 747; N.Y.S.2d 644 46. Id. (1992). 47. David Luban, Settlements and the Erosion of the Public 55. See id. (sealing allowed to guard against curiosity of Realm, 83 Geo. L.J. 2619, 2654 (1995) hereinafter Luban. third parties, etc.). 48. Id. 56. Danco Lab, Ltd. v. Chemical Works of Gedeon Richter, 49. Id. Ltd., 274 A.D.2d 1 (N.Y. App. Div. 2000) 50. D.B. v. Rodriguez, 2000 Tex. App. LEXIS 8120 (2000). 57. Id. at 8. N.Y. CLS Unif. R. Tr. Cts. § 216.1 (similar to the Texas rule 110 good cause for keeping business informa- courts to do so, they are not well equipped tion confidential as well as the names of to decide when it is appropriate, and it parties involved in the case who could undermines the integrity of this type of con- become subject to harassment if their tract. names were revealed.58 However, the court The Seventh Circuit has already held held that the appropriate remedy was not a that when a party asks the court to interpret total sealing order, as had been granted by its confidential settlement agreement, the the trial court, but to redact the protected agreement becomes a public record. That information.59 court stated that the desire to avoid dissemination of a settlement amount is “not near- South Carolina ly on a par with national security and trade secret information.”63 Likewise, the Third The South Carolina federal district court Circuit has stated that “in some circum- has issued the strictest rule pertaining to stances, a private agreement to keep terms sealed settlements, Local Civil Rule of a settlement confidential may be unen- 5.03(c). In fact, no settlement agreements forceable because it violates public poli- filed in the district courts are to be sealed, cy.”64 Furthermore, the Texas rule, as dis- with no exceptions.60 It should be reiterated cussed above, applies the presumption of that this is a federal district court rule; thus, openness to records not filed with the court, the rule does not apply to settlements filed which most likely includes confidential set- in South Carolina State courts.61 Nor does tlement agreements reached outside of the rule apply to settlements reached out of court.65 court.62 Assume, for the sake of argument, that it This rule is unambiguous and leaves lit- is the courts’ job to preside over privately tle room for interpretation; there are no sealed documents and to unseal them if they sealed settlements in this court. The rule contain information relating to a public haz- does not apply to settlements reached out of ard. What will be the standard by which the court, but it doesn’t designate how the courts determine if a public hazard is pres- courts are to treat out-of-court sealed settle- ent? What methodology will be employed ments when the parties ask the court to to ensure that the courts are not unsealing enforce or interpret them. documents based on naked allegations of These statutes and court rules give us hazardous products or defects with only some idea as to how certain jurisdictions scant evidentiary support? Will judges do might treat a request for a court issued more than draw an arbitrary line in the sand sealed settlement agreement. However, before declaring the presence of a public they leave uncertainty as to how courts will hazard? treat requests to enforce, or unseal, sealed It is not, and should not become, the settlement agreements reached without courts’ role to spend precious judicial court assistance, privately, by the parties to resources determining when a sealed docu- a controversy. But whatever uncertainties ment should become public record simply have been created, courts should not engage because it makes mention of something in the unsealing of private confidential set- affecting the public health and welfare. tlement agreements. It is not the role of the Courts already have a difficult time decid-

58. Id. 63. Pansey v. Borough of Stroudsburg, 23 F.3d 772, 788 n. 59. D.S.C. Local Civ. R. 5.03 21(3rd Cir. 1994). 60. Andrews Publications, S.C. Federal Court Bans 64. See discussion at page 9 infra. Secrecy in Court Approved Settlements, 8 No. 6 Andrews 65. Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. Health Care Fraud Litig. Reptr. 6 (Jan. 2003). 579, 113 S. Ct. 2786 (1993) (creating a new standard to 61. Id. judge the reliability of scientific evidence, including 62. Herrnreiter v. Chi. Hous. Auth., 281 F.3d 634, 636-637 whether the theory in question can, and has, been tested, (2002) (holding that an interest in non-disclosure of a settle- whether the theory has been the subject of peer review or ment amount could not overcome presumption of openness, publication, the known or potential rate of error associated unlike the interest in protecting trade secrets). with the method, the degree of acceptance in the relevant scientific community). 111 ing whether or not scientific evidence is the public that the Audi 5000 suffered from credible and spend a great amount of time an acceleration defect that caused numerous and money in deciding whether it should be accidents and deaths.72 This information admissible, even post Daubert.66 Judges do caused the public to cease buying the car not often hold technical or scientific and inflicted severe damage on Audi’s rep- degrees; thus, they are no better equipped utation.73 It was only after the media hype, than the average person to determine what and several trials, that it was revealed that a reliable scientific evidence and methodolo- driver error, not an acceleration defect, was gy look like. It would seem that the same is the cause of the accidents and deaths.74 true of their ability to spot a legitimate pub- Audi would have benefited greatly from a lic hazard. As Sharon Sobczak put it, “even sealing order, and the public would not have if judges had the scientific or medical suffered. Likewise it is easy to see from expertise necessary to evaluate the data usu- this example the destructive result that ally implicated when health and safety are would have been produced had Audi settled at issue, they would be undertaking tasks before trial and the court later unsealed the not even remotely related to their primary agreement. There would have been no trial function of deciding the cases before them to flush out the true cause of the accident and presiding over settled cases.”67 and the erroneous preliminary information Even if judges had the skills required to would have been disseminated to the pub- make decisions related to the public health lic. and safety, the use of notice pleading might The media would have the public well make the allegations upon which these believe that sealed settlements always con- judges base their decisions to unseal settle- tain information related to public hazards ments the deciding factor in unsealing a set- and that public access is proper to protect tlement agreement, thus making the allega- the public welfare. While it may be the tions sufficient to avoid summary dismissal media’s job to keep the public informed, it the criteria in questions of public hazard.68 is not the media’s job to step into the realm Arthur Miller argues that “although the alle- of the federal regulatory bodies and attempt gations made in a complaint may raise to cure societal wrongs by gaining access to issues that appear to implicate matters sealed information.75 Nor is it the role of affecting public health and safety, and infor- the courts to act as the arbiters charged with mation produced in discovery may appear maintaining public safety, instead of the to confirm that, the truth of the allegations administrative agencies dedicated to that can be known only after they have been very purpose.76 As Sobczak argues, these tested through the full litigation process.”69 agencies have the power to “investigate, To unseal information contained in a docu- subpoena documents and demand ment, like a settlement agreement, that was answers.”77 Until sealed settlement agree- created in place of a full trial could be as ments prevent these agencies from perform- Miller says “premature . . . and destructive ing their job, then the information within to a litigant’s reputation or business . . . .”70 sealed settlements should not be dissemi- The Audi 5000 case is an example of the nated to the public. destructive effects that premature disclo- In conclusion, despite the trend to sure of information can have.71 Before the restrict courts’ ability to grant sealing/pro- case against Audi had been fully tried, the tective orders, many states have rejected media disclosed preliminary information to similar legislation, including Arkansas,

66. Sobczak, supra note 3 at 412-413. 71. Miller, supra note 2 at 67.; Sobczak, supra note 3 at 412. 67. Discovery is where claimants typically gain the bulk of 72. Id. their evidentiary support. 73. Id. 68. Miller, supra note 2 at 67. 74. Sobczak, supra note 3 at 412. 69. Id. 75. Id. 70. Blaner, supra note 1 at 14; Miller supra note 2 at 67; 76. Id. Sobczak, supra note 3 at 412. 77. Miller, supra note 2 at 66. 112 Colorado, Hawaii, Idaho, Iowa, Kansas, Michigan, Montana, New Mexico, South Dakota, and Virginia.78 In fact, very few states are even considering legislation to place restrictions on sealed settlements.79 In light of this it seems unlikely that sealed settlements will cease to exist anytime soon. Likewise, it seems unlikely that the courts will unseal settlement agreements to satisfy the idle curiosity of third parties. But, as for their decisions when the requesting party presents more than idle curiosity as the reason for unsealing, the answer is less certain. The bottom line is that parties need to be aware that if they agree to seal their settlement in a state with an active sunshine act, they need to prepare themselves for the possibility that the information therein could become public record.

78. Neil, supra note 8 at 22. 79. Neil, supra note 8 at 22. 113 The Privacy Project II

Expanding Tort Liability of Information Providers: How Far Can Forseability Be Stretched?

By Dennis T. Ducharme IADC member Dennis T. Ducharme is a Partner and head of the Insurance A. Introduction Practice Group at Wiggin & Nourie, P.A. in Manchester, N.H. He is a member of the Technological advancements have creat- IADC Products Liability and Drug, Device ed ever-expanding capacities for the collec- and Biotechnology Committees. He is a tion and dissemination of private informa- 1982 graduate of The Massachusetts tion. As the ability to collect and use such College of Liberal Arts (B.A., summa cum data has increased, so has its marketability. laude, 1982) and The Georgetown While general concerns about the erosion of University Law Center (J.D., 1985). privacy caused by such practices have been voiced by many, it has been suggested that the protection of privacy rights for the peo- which warned of “mechanical devices” ple about whom this information is gathered which “threatened to make good the predic- are lacking. Many scholars and privacy tion that ‘what is whispered in the closet advocates have suggested that neither statu- shall be proclaimed from the house-tops.’”2 tory nor common law remedies for those Widely recognized as the seminal work in who believe their privacy rights have been the development of “privacy law,” the invaded are adequate. Warren and Brandeis note was concerned In one recent case, Remsburg v. primarily with yellow journalism and the 1 Docusearch Inc., the New Hampshire over zealousness of the press. While those Supreme Court acknowledged a cause of particular concerns are as prevalent as ever, action against an internet information technology has played a significant role in provider based solely on a foreseeability creating an ever-expanding list of concerns analysis. The Court did so without reliance about the erosion of privacy in our lives. on either a statutory remedy or any of the Warren and Brandeis could not have con- recognized “privacy” torts under the ceivably foreseen the “mechanical devices” Restatement, (Second) of Torts. While which dominate our lives just over 100 some authors have hailed the Remsburg years later, much less the myriad uses of the decision as a positive step in the protection information collected and stored by those of privacy rights, this article considers devices or the volume of debate concerning whether the New Hampshire Supreme Court their impact on privacy rights. may have gone too far in its decision; open- Day after day, we engage in transactions ing far too many parties who process private which leave an information trail behind us. information to potential tort liability. While that information may not be “proclaimed from the house-tops,” it is collect- B. The Expansion of Information ed, sorted, sold and resold with mind numb- Gathering Technology ing regularity. A trip to the grocery store In 1890 Warren and Brandeis showed where we use a preferred customer card incredible foresight when they wrote a note adds our name, and the types of products

1. Remsburg v. Docusearch Inc., 816 A.2d 1001; 2003 N.H. 2. Warren and Brandeis, The Right to Privacy, 4 Har. L. Lexis 17 (February 18, 2003) Rev. 193, 195 (1890) 114 we buy to a database.3 Use of an “easy pass” data.8 Another area where information is card on the highway tells those who control gathered about us without much awareness data where we were and when.4 In many is airbag technology which is in place in automobiles, we are the press of a button many motor vehicles. Sensors installed in away from being tracked by the manufac- many cars record data such as speed and the turer who sold us the car. Records of the status of other mechanical systems in cars books we buy or check out at libraries are in the last few seconds leading up to the kept with greater and greater regularity. deployment of an airbag. Emerging issues When we use the Internet, we leave an array arising out of that technology include ques- of information behind which is tracked, col- tions as to just who “owns” the information, lated, and then bought and sold time and how reliable the data is, and how it may be time again.5 Much of our biographical discovered and used during civil and crimi- makeup is collected and collated without nal proceedings.9 our knowledge, and then sold for a variety While intrusions on our privacy result- of purposes by those doing the collecting ing from generally benign data gathering and collating.6 are usually no more than a nuisance - we In addition to the many types of data col- just do not like having the cash register lection of which we are vaguely aware, clerk ask for our zip code or phone number; there are emerging technologies which cre- the data collected is frequently used in ate additional means by which our privacy much more insidious ways. Michael could be invaded about which most of us Froomkin, author of The Death Of Privacy? are completely in the dark. “Locator chips” takes an in depth look at the dark side of are being used with greater regularity. “data mining,” a phenomenon that takes the These chips are somewhat like the tracking collection of personal data to extremely devices we have seen James Bond use in intrusive and potentially harmful levels.10 movies over they years. One common use Froomkin discusses the ability of one to buy of such technology is the timing device lists based on anything from broad cate- used in large road races which allow offi- gories such as ethnicity, political opinion or cials to track the entire field with greater sexual orientation to narrow categories such efficiency and accuracy. In addition, how- as lists of college students sorted by major, ever, this same technology is being used to children who have subscribed to a particu- track product inventory in many settings.7 lar magazine, or those who purchase Concerns have been raised about the poten- skimpy underwear, among others.11 Parties tial misuse for such technology including collecting, collating, and selling data of this the potential for consumers to be “tracked” type are doing so not simply for the sake of in the interest of future market research doing so but because somebody wants the

3. At least one form of seemingly benign data, who buys generally, Daniel Solove, Modern Studies In Privacy Law; small plastic bags and baking powder, became a lead for the Notice, Autonomy and Enforcement of Data Privacy DEA and the subject of press in a major newspaper. The Legislation, 86 Minn. L. Rev. 1137 (2002); Will Thomas DEA sought this information because those products are com- DeVries, Annual Review Of Law And Technology: III. monly the tools of drug dealers. See Berman and Mulligan, Protecting Privacy In The Digital Age 18 Berkley Tech. L. Privacy In The Digital Age: Work in Progress, 23 Nova L. J. 283 (2003) Rev. 549 (1999) (Discussing Washington Post Article and 7. Yue, Tags Pit Efficiency vs. Privacy, Chicago Tribune, DEA activity) It is easy to imagine any number of logical July 15, 2003. links between products and “suspicious” activity based on 8. Id. profiles which the DEA, FBI or other police agencies may 9. See e.g. David Uris, Big Brother and a Little Black Box: develop. The Effect of Scientific Evidence on Privacy Rights, 42 4. In at least one jurisdiction, the State of Virginia, Santa Clara L. Rev. 995 (2002); David M. Katz, Privacy in Department of Transportation officials have received discov- the Private Sector: Use of the Automotive Industry’s “Event ery requests for such data, as of this date, primarily in the Data Recorder” and Cable Industry’s “Interactive criminal context. See Is Big Brother In The Tollbooth? The Television” In Collecting Personal Data, 29 Rutgers Hampton Daily Press, November 14, 2002. Computer & Tech. L. J. 163 (2003) 5. See, e.g. Berman and Mulligan, supra 23 Nova L. Rev. 10. See A. Michael Froomkin, Symposium: Cyberspace 549, 554 (1999) (Discussing Internet data trails and “digital and Privacy; A New Legal Paradigm? The Death Of fingerprints” left behind by use of the Internet) Privacy? 52 Stan. L. Rev. 1461 (2000) 6. For excellent overviews of the scope of information col- 11. Id. at 1470, n.22. lected and their impact of biographical “aggregation,” see 115 data and is willing to pay for it. 2. Public disclosure of embarrassing While most of the buyers of data proba- private facts about the plaintiff; bly purchase it for relatively harmless pur- 3. Publicity which places the plaintiff poses i.e. to try to sell us something, the in a false light in the public eye; risks of such data being used for more inva- 4. Appropriation, for the defendant’s sive and harmful purposes are obvious. advantage, of the plaintiff’s name This is particularly so when lists lend them- or likeness.15 selves to targeting by buyers motivated to The third and fourth privacy torts, now harm members of an ethnic group or to have codified in the Restatement at sections 652 a “hit list,” based on some other personal D and E have been, to a great extent, sub- trait common to the people making up the sumed in to the substantive body of defama- list. tion law. Most claims for libel or slander Significant public policy questions are will have parallel claims for either false presented as to just what rights and reme- light, misappropriation of the plaintiff’s dies we have as individuals about whom name or likeness, or both.16 Claims for this data is being collected and then sold. improper dissemination or use of collected To whom may we turn when we believe we biographical data lend themselves more have been harmed? What damages may we readily to claims based on the first two torts recover when we believe we have been identified by Dean Prosser and then codi- harmed? One very important question is fied in the Restatement at sections 652 B the extent to which modern tort law will be and C. As the collection and redissemina- able to keep pace with the continuing tion of facts about individuals becomes expansion of this market place for informa- more and more prevalent, the risk of harm, tion.12 or perceived harm from such dissemination has gone through a natural expansion. C. “Privacy Law” as a Protection? Much as we are living in an age of information explosion, we are also living in an “Privacy law” as a substantive body of age marked by an explosion of commentary law has many divergent threads, all of on privacy law issues. A number of com- which many commentators would suggest mentators considering the potential reme- trace their roots in some fashion back to the dies for either intrusion upon seclusion or Warren and Brandeis article.13 With regard the public disclosure of embarrassing facts to torts, most agree that Dean Prosser’s share the parallel views that the courts have work, both his landmark article in 1960, and underutilized the restatement torts as a tool his work as the reporter for the second to protect privacy interests and that privacy restatement, provides the foundation for law in its current state cannot keep pace virtually all-existing case law.14 with growing technological encroachments The privacy torts include four distinct on people’s privacy rights.17 causes of action originally described by The privacy torts have been criticized as Dean Prosser and eventually codified in the not adequately protecting aggrieved parties restatement, second of torts. As Prosser in such situations. Andrew J. McClurg has described them, they included: argued that the courts have not favorably 1. Intrusion upon the plaintiff’s seclu- received claims based on the privacy torts sion or solitude, or into his private and goes so far as to suggest that the harsh affairs;

12. A number of commentators have addressed the patch- 14. See generally, Solove, supra, 53 Stan. L. Rev. 1393 work nature of statutory remedies available, recognizing the (2001); Andrew J. McClurg, Bringing Privacy Law Out Of substantial number of remedial gaps resulting from the lack The Closet: A Tort Theory Of Liability For Intrusions In of a comprehensive statutory scheme. See generally, Public Places, 73 N.C.L. Rev. 989 (1995). DeVries, supra, pp. 288 - 91; Solove, Privacy And Power: 15. Prosser, Privacy, 48 Cal. L. Rev. 383, 389 (1960); See Computer Databases And Metaphors For Information generally, Restatement (Second) of Torts 652B-652E (1977) Privacy, 53 Stan. L. Rev. 1393 (2001), 1440 - 44. 16. McClurg describes “false light” as the “sickly 13. This article is not intended to be a comprehensive review stepchild” of defamation. of “privacy law.” In particular, it does not address either 17. See generally, DeVries, supra, Froomkin, supra. statutory issues, or Constitutional based privacy theories. 116 treatment plaintiffs receive when making sion of information collected and dissemi- such claims bring into question whether or nated by that technology is exponential. In not a cause of action for invasion of priva- 1995 Andrew J. McClurg published an cy even exists.18 He cites a host of statistics insightful article also opining that the supporting his thesis, including an incredi- Restatement torts had been underutilized by bly high percentage of cases being disposed the courts as a tool to protect the right of of by summary judgment, preventing plain- privacy. At that time, he believed the great- tiffs from even being allowed to present est threat to privacy was the burgeoning use their cases to a jury.19 of the video camera to record individuals’ Daniel Solove is equally critical of the activities in public places and advocated for manner in which the courts have treated a multifactor approach in redefining the tort those alleging privacy torts, pointing out the of “intrusion” in public places.22 In barely inherent conflict in a tort which requires half a decade after that, scores of articles intrusion into private affairs as an element addressed the continuing erosion of privacy and thereby gives inadequate protection to focusing on an even broader range of intru- parties harmed by disclosure of information sions into privacy created by Internet trans- which is in some way public.20 Simply put, actions, cash register transactions, and the Solove articulates a compelling problem ever-expanding network of technologies created by the fact that we live in a society which gather information about us and then where so much information about us is disseminate that information, often for prof- “public.” Because a great deal of informa- it, and usually without our permission.23 tion which we used to consider to be private While Warren and Brandeis wrote of our is now in the public domain, a tort requiring right to be “let alone”24 and Brandeis later disclosure of private facts to sustain a cause expounded on that theory from the bench25 of action allows those who collect and sell one could certainly argue that the notion of data to do so with increasing impunity. If a right to be “let alone” is in many ways no the mere fact that a piece of data appears in more than an historical anomaly.26 While a some public record allows it to be used with patchwork of legislation geared to protect no recourse, claims for public disclosure of privacy in specific subject areas has begun private facts will almost never succeed.21 to emerge,27 we still live in a society where The expansion of technology and explo- more and more people are throwing up their

18. McClurg, supra. framers’ recognizition of “ the right to be let alone” as being 19. Id. at 999 - 1003. the right most valued by civilized men. 20. Solove, supra, at 1181-84. 26. One particularly troubling decision in the manner in 21. If the mere fact that a piece of data appears in some which it cites the Warren and Brandeis article is Bartnicki v. public record allows it to be used with no recourse, claims Vopper, 532 U. S. 514 (2001). In Bartnicki v. Vopper the for public disclosure of private facts will almost never suc- United States Supreme Court considered the degree to which ceed. A number of courts have rejected claims for public the First Amendment protected radio disc jockeys who disclosure of private facts because the facts had some mar- repeatedly replayed a tape of an illegally intercepted cell ginal and often quite stale, connection to the private domain. phone call which they knew was illegally intercepted by an See, e.g., Jenkins v. Bolla, 411 Pa. Super 119, 600 A.2d 1293 unknown third party. In finding that the First Amendment (Pa. 1992) (No privacy right in redisclosure of convictions protected the redisclosure under the circumstances in ques- as old as 35 years); Montesento v. Donrey Media Group, 99 tion, in great part because the subject matter at issue, local Nev. 644, 668 P. 2d 1081 (Nev. 1983) (facts drawn from teacher negotiations, was one of public interest, the Supreme public records cannot form basis for claim for disclosure of Court quoted Warren and Brandeis for the proposition that embarrassing private facts). “the right of privacy does not prohibit any publication of 22. McClurg, supra. matter which is of public or general interest.” The Right To 23. See generally, e.g., Solove, supra, 86 Min. L. Rev. Privacy, 4 Har. L. Rev. at 214. The quote utilized is a direct 1137; DeVries, Annual Review Of Law And Technology: III. quote of a subheading followed by a lengthy discussion of Protecting Privacy In The Digital Age 18 Berkley Tech. L. what is and is not “of public or general interest.” The sec- J. 283 (2003); McClurg, supra, 73 N. C. L. Rev. 989; tion in no way sanctions the use of illegally gotten informa- Solove, Privacy And Power: Computer Databases And tion. Given the overall tenor of the Warren and Brandeis Metaphors For Information Privacy, 53 Stan. L. Rev. 1393 article, it is difficult to imagine that the authors would have (2001); Froomkin, supra, 52 Stan. L. Rev. 1461 endorsed protecting the redisclosure of a private conversa- 24. Warren and Brandeis, supra, at 195, 205. tion illegally recorded. 25. In Olmstead v. United States, 277 U.S. 438, 478 (1928), 27. See, DeVries, supra at 288-90 (discussing narrow writing in the context of a decision concerning government approach of most privacy statutes and lack of broad legisla- action rather than private action, Brandeis discussed the tive solutions) 117 hands and accepting that we have little or tim’s date of birth, social security number no privacy. and employment address.32 That address One corporate CEO, Scott McNealy of was obtained by Docusearch through a sub- Sun Microsystems has been routinely quot- contractor investigator who obtained it by ed as telling an audience “You have zero placing a “pretext” telephone call to the vic- privacy. Get over it.”28 It does seem that we tim.33 The perpetrator used the work are increasingly willing to accept address, drove to the victim’s workplace, McNealy’s view of the world by our contin- fatally shot her, and then shot and killed ued acquiescence and often mindless coop- himself.34 eration with those who seek information Her estate sued in the United States about us. How many of us say “no, you District Court for the District of New cannot have my phone number” when a Hampshire which certified five questions to sales clerk asks for it? Only when the mis- the New Hampshire Supreme Court pur- use of information about us reaches an egre- suant to New Hampshire practice.35 The gious level do we seem to sit up and take court issued a number of interesting rulings notice and try to do anything about it.29 which will not be addressed in depth in this Perhaps this is because in today’s modern article. Those included a finding that mak- society it would be almost impossible to get ing a pretextual phone call to acquire by without participating in activities that address information and then reselling the create this data.30 For whatever reason, how- information constituted a violation of New ever, we all seem to acquiescence in the cre- Hampshire’s Consumer Protection Law.36 ation of an ever-expanding data trail about In addition, the court made interesting rul- us until it is too late to do anything about it. ings with regard to a restatement claim for intrusion upon seclusion. Specifically, it D. A Judicial Response found that the facts of the case set forth no cause of action for intrusion upon seclusion In a recent decision the New Hampshire for the mere act of obtaining address infor- Supreme Court ruled in favor of a plaintiff mation by way of the pretext phone call. In in a claim for intrusion on privacy rights the court’s opinion, where a person works is and did so in manner with potentially broad readily observable by members of the pub- implications.31 In Remsburg v. Docusearch lic; the information is not secret, secluded the executrix of the estate of a murder vic- or private, and therefore we have no reason- tim sued an Internet based investigation and able expectation of privacy in the location information provider which had sold infor- of our employment.37 The court also ruled, mation to the individual who committed the however, that a claim for intrusion upon murder. The information included the vic- seclusion could go forward based on the

28. The quote has been used as the lead to at least two arti- N.H. Lexis 17 (February 18, 2003) cles. See, DeVries, supra 18 Berkley Tech. L. J. 283; 32. Id. at 1005-1006 Froomkin, supra 52 Stan. L. Rev. 1461. The two authors 33. Id. at 1006 attribute a slightly different quote McNealy. According to 34. Id. Froomkin the comment was made in response to a question 35. The certified questions included whether or not a cause at a Sun Microsystems product launch. of action existed under the common law for the sale of infor- 29. Daniel Solove notes in one article that many of us have mation, whether or not the sale of a person’s social security a general unease about privacy being lost as data is collect- number could set forth a cause of action for intrusion upon ed about us, but that we have trouble even articulating what seclusion under the restatement; whether or not obtaining a causes this feeling. Solove, Privacy and Power: Computer person’s work address and selling it pursuant to a pretextual Databases and Metaphors for Information Privacy, 53 Stan. telephone call could set forth a claim for intrusion upon L. Rev. 1393, 1400 (2000) seclusion under the restatement; whether or not sale of a 30. Solove certainly makes a compelling argument that it is social security number could set forth a cause of action for not practical for one to “opt out” of many aspects of modern commercial appropriation pursuant to the restatement and society which lead to the collection of data about us. Id. at whether or not obtaining a person’s work address pursuant to 1426 - 28. In contrast, Berman and Mulligan suggest rather a pretextual phone call set forth a cause of action under New cavalierly that many of our problems with information col- Hampshire’s Consumer Protection Law, New Hampshire lection can be solved by opting out of the credit card/ATM RSA Chapter 358-A. Id. at 1004, 1005. world and simply using cash wherever we go. Berman and 36. New Hampshire RSA Chapter 358-A. Mulligan, supra, at 562. 37. 816 A.2d at 1009 31. Remsburg v. Docusearch Inc., 816 A.2d 1001; 2003 118 defendants’ conduct with regard to the extremely broad implications. The court, decedent’s social security number. Opining relying solely on prior New Hampshire that whether or not the act of disseminating decisions considering the question of duty a social security number would be offensive and foreseeability at its most basic levels to persons of ordinary sensibilities is a found that a common law duty flows from question of fact for the jury, the court an information provider to the person about allowed the claim to go forward.38 whom the information is provided even The willingness of the New Hampshire thought the provider does not know what Supreme Court to recognize a cause of the person seeking information intends to action for intrusion upon seclusion without do with it.42 a physical violation of the plaintiff’s “zone The court analyzed the question present- of privacy” is somewhat of a departure from ed by considering recent New Hampshire the majority rule.39 Most of the commenta- decisions broadly relevant to the question tors in this area have been critical of the ten- of duty, none of which were remotely con- dency by most courts considering the issues nected to privacy issues.43 Recognizing to require a physical violation of privacy that it would find a foreseeable harm, and expectations.40 In that sense, Remsburg is a thus a duty only rarely in cases involving departure from precedent and, arguably, a intervening criminal conduct, the court step forward for those advocating for broad- nonetheless did so.44 It did so based on com- er use of the Restatement torts. monly recognized privacy considerations, The most noteworthy aspect of the specifically, the risks of stalking and identi- Remsburg decision, however, is not based ty theft implicated by information disclo- on application of a Restatement theory. The sure. The court’s analysis was striking in its first certified question from the District brevity and simplicity. It leapt from a horn- Court to the New Hampshire Supreme book treatment of the question of foresee- Court asks: ability to a brief discussion of the societal Under the common law of New Hampshire risks of stalking and information theft and and in light of the undisputed facts presented held that: by this case, does a private investigator or The threats posed by stalking and identity information broker who sells information to theft lead us to conclude that the risk of a client pertaining to a third party have a criminal misconduct is sufficiently foresee- cognizable legal duty to that third party with able so that an investigator has a duty to 41 respect to the sale of information? exercise reasonable care in disclosing a third person’s personal information to a client. That question, and the court’s analysis of And we so hold. This is especially true the question is silent as to the restatement when, as in this case, the investigator does torts and the court’s analysis in answering not know the client or the client’s purpose in that question affirmatively could have seeking the information.45

38. Id. intervene when they observed unruly behavior by teenagers 39. See e.g., Pierson v. News Group Publications, 549 F. and that behavior eventually escalated into an assault on Supp. 635 (D.Ga. 1992) (“essential element” of tort of intru- another patron. Hungerford v. Jones, 143 N.H. 208 (1998) sion is physical intrusion analogous to a free pass), Nelson addressed the duty of care owed by a mental healthcare ther- v. Maine Times, 373 A.2d 1221 (Me. 1977) (claim for intru- apist to the parent of the therapist’s patient, arising out of sion should allege physical intrusion upon plaintiff’s prem- allegations that the therapist committed malpractice leading ises), Froelick v. Werbin, 269 kan. 461, 548 P.2d 482 (1976) to false accusations of childhood sexual abuse. Dupont v. (same). Aavid Thermal Technologies, 147 N.H. 706 (2002) 40. See e.g., Froomkin, supra, at 1535-37, McClurg, supra addressed the duty of care running from employers to at 990-1010. employees to prevent criminal attacks by coworkers. 41. Remsburg, 816 A.2d at 1004. The brief of the plaintiff in the Remsburg case also cites 42. Id. no cases from any other jurisdiction acknowledging a com- 43. The New Hampshire Supreme Court cited four deci- mon law tort in such a fact situation. The section of plain- sions in support of its recognition of a duty in Remsburg. tiff’s brief relevant to the first certified question is essential- Walls v. Oxford Management Co., 137 N.H. 653 (1993) was ly a New Hampshire common law primer on the question of a case dealing with duties running from a landlord to a ten- duty and foreseeability. ant with regard to parking lot security. Iannelli v. Burger 44. 816 A.2d at 1006. King Corp., 145 N.H. 190 (2000) concerned the extent to 45. Id. at 1008 which the operators of a fast food restaurant had a duty to 119 In short, at the very heart of the New If that occurs, should the employer be Hampshire Supreme Court’s decision is a deemed at fault? finding that harm to the party about whom These examples are not far flung by any the information being requested is foresee- stretch of the imagination. Yet, if one takes able where the party providing the informa- the ruling of the Supreme Court to its logi- tion does not know what the requestor cal conclusion, is it any more foreseeable intends to do with the information. The that Internet locator information would be court certainly could have justified a ruling misused to do harm than the type of infor- that recognizes a duty only where individu- mation gathered by the means mentioned als have knowledge that the information above? The New Hampshire Supreme will be misused. Its willingness to recog- Court’s holding is certainly a potential nize a duty in a complete void of knowledge building block for future claims in which opens a potential Pandora’s Box when one aggrieved parties seek to expand tort liabil- considers how far that logic could be taken ity based on a very elemental analysis of the in the current marketplace for information. concepts of duty and foreseeablity. Consider, for example, the emerging Two authors have already cited chip technology that is being used to track Remsburg as a major step forward in pro- product inventory. Warehouse personnel tecting privacy rights.46 Those authors, I will be trained to use that technology to would suggest, are too eager to embrace the keep track of where a given product is at a New Hampshire Supreme Court’s analysis given point in time. Surely the technology and do so without careful consideration of is either at a point where it could be abused, the broader implications of Remsburg. The or will get to that point in the not too distant discussion of Remsburg by Mark Sweet in future. If a warehouse worker in a hard- the Duke Law And Technology Review is ware chain uses the chip technology to track particularly suspect in its advocacy for the and stalk a customer will and should the proposition that Remsburg is a sound deci- employer of that individual be subjected to sion.47 Sweet opines that the Remsburg deci- liability for the worker’s misuse of the tech- sion holds information providers responsi- nology? ble for all conduct by their customers and Phone numbers are requested and that this is a positive step in the absence of entered into databases by retailers to com- legislation in the area. pile customer lists. If a store employee uses That view is certainly not the only view. an individual phone number to do harm to If one accepts the New Hampshire Supreme one customer, or uses a collection of phone Court’s analysis, a party such as numbers to target customers for property Docusearch which has no reason to suspect crimes should the employer be exposed to that the customer in question intends to do liability for gathering that information harm is potentially liable because possible which is later used by an employee bent on harm is “foreseeable.” In the current infor- such conduct? mation based world, the logic of Remsburg Is it “foreseeable” that an employee of could be extended limitlessly to other areas an auto manufacturer with access to global in which information is available for sale, positioning satellite technology could use bought by those with a desire to do harm, that technology to do harm to the people and someone attempts to hold the informa- owning the cars sold by the manufacturers? tion provider liable after the fact.

46. See Reidenberg, Symposium: Enforcing Private Rights: Remsburg in context of tort liability for information Agency Enforcement And Private Rights Of Action: Privacy providers based on conduct of their customers) Wrongs In Search Of Remedies, 54 Hastings L. J. 877 (2003) 47. Sweet’s analysis of the Remsburg decision suggests that (discussing Remsburg in context of liability for misappro- it is an affirmative finding of liability against Docusearch, priation of name or likeness); Sweet, Can The Internet Kill? implying that the Supreme Court did more than simply rec- Holding Web Investigators Liable For Their Criminal ognize the plaintiff’s right to present the claim to the jury. In Customers, Duke L. & Tech. Rev. 11 (2003) (discussing many place, Sweet’s analysis reads as if the Supreme Court had entered summary judgment in Remsburg’s favor. 120 E. Conclusion

The manner in which private information is collected and used creates legitimate concerns for all in our society. As technology has advanced the marketplace for information has flourished. Most agree that remedies for breaches or our privacy rights, both statutory and common law, have struggled to keep pace with the expansion of this marketplace. The New Hampshire Supreme Court’s decision in Remsburg v. Docusearch48 reflects an appropriate level of concern with the need to impose responsibility on those who profit from the sale of information about others. Its application of The Restatement (Second) of Torts to recognize a cause of action for intrusion upon seclusion without a physical trespass is a sound decision. Clinging to a physical trespass requirement in such cases is an outdated notion, not in keeping with modern privacy concerns. A strong argument can be made, however, that the Remsburg Court went too far. By recognizing a cause of action not based on a recognized tort or statutory theory, focusing solely on the concept of “forseeability” it may have created too large a step- ping stone for future claims. The potential uses and misuses of private information are myriad. The concept of “forseeability” is amorphous and very much in the eye of the beholder. The possible application of Remsburg’s analysis are extremely broad and, potentially the opening of a Pandora’s Box of tort liabilities.

48. 816 A.2d 1001 (2003). 121 The Privacy Project II

Romantic Relationships at Work: Does Privacy Trump the Dating Police?

By Rebecca J. Wilson, Christine IADC member Rebecca J. Wilson is a part- Filosa and Alex Fennel ner in the Boston office of Peabody & In today’s work-oriented culture, office Arnold LLP and vice chair of the litigation department, where she concentrates in romances and the related topics of sex and employment law and works with employers privacy have become important issues con- to develop procedures and policies to pre- fronted by most employers. With more vent employment-related claims. She employees working longer days and spend- received her undergraduate degree from ing so much of their time on-the-job, Trinity College in Washington, D.C., and romantic relationships at work are develop- her law degree from Boston College in ing more frequently.1 Workplace romance 1979. may be the only option for employees Christine Filosa, a former associate at whose workload limits their outside activi- Peabody & Arnold, is now associate legal ties; but for employers, this trend may counsel at the Education Development Center Inc. prove problematic as the potential liability Alex Fennel was a summer associate in 2 associated with these relationships rises. 2002 at Peabody & Arnold and is a third- A 1998 survey by the Society for Human year law student at Boston University. Resource Management predicted that 55 percent of office romances would likely result in marriage, but that 28 percent of These policies range from the very strict, these office relationships may result in such as a comprehensive prohibition of dat- complaints of favoritism from coworkers, ing between employees, to the more lenient, 24 percent in sexual harassment claims, and such as a policy that actively discourages, another 24 percent in the decreased produc- but ultimately allows, employees to frater- tivity of the employees involved.3 Statistics nize.4 Even a simple policy requiring such as these have motivated employers to employees to notify management when adopt prophylactic policies in an effort to coworkers are romantically involved pro- avoid the potentially complicated and unsa- vides documentation of a consensual rela- vory outcomes of office affairs and to main- tionship that could be helpful to an employ- tain a strictly professional work environ- er’s defense against a sexual harassment ment. claim, should one arise.5 As protection from litigation and poten- Perhaps daunted by problems of imple- tial liability, some employers adopt policies mentation and enforcement, other employ- directly addressing dating in the workplace. ers have avoided adopting any formal poli-

1. Davan Maharaj, The Birds and the Bees--and the Frowned upon by Employers, available at Workplace, L.A. Times, available at http://cgi.latimes.com/ www.shrm.org/press/releases/980128-3.htm (January 28, class/employ/career/birdsbees991121.htm (March 1, 2002) 1998). 2. Harvey R. Meyer, When Cupid Aims at the Workplace; 4. Jennifer L. Dean, Employer Regulation of Employee Romances Between Coworkers Can Cause Problems for a Personal Relationships, 76 B.U.L. REV. 1051, 1052-53 Company; Be Prepared to Handle Such Situations, Nation’s (1996). Business, available at www.findarticles.com/cf_0/m1154/ 5. Gary M. Kramer, Limited License to Fish off the n7_v86/20797623/print.jhtml (July 1998). Company Pier: Toward Express Employer Policies On 3. Cupid’s Arrows Sometimes Compete with Work Supervisor-subordinate Fraternization, 22 W. NEW ENG. Objectives--SHRM Survey Finds Office Romances Are Often L. REV. 77, 143 (2002). 122 cy explicitly addressing the issue of and productivity - two business elements romance in the workplace, choosing instead that employers have a vested interest in pro- to rely on unwritten rules or other policies tecting.11 already in place. Studies indicate that some These complaints also may trigger a sex- employers choose to “rely on a quiet form ual harassment claim against an employer of persuasion . . . [b]elieving that despite under Title VII of the Civil Rights Act, 42 having no written rules, their employees U.S.C. § 2000e, which enables employees understand that as a matter of corporate cul- to base claims of sexual harassment on, ture or implied policy . . . supervisor-subor- first, a “quid pro quo” argument where an dinate relationships” will be discouraged or employer conditions benefits, promotions simply not tolerated.6 or even employment itself on the receipt of Although employers generally enjoy the sexual favors, or, second, an argument that right to promulgate rules and regulations sexual harassment has produced a hostile restricting dating on the job as they deem work environment.12 Title VII further holds necessary, this right must be weighed an employer vicariously liable for “action- against the countervailing privacy rights of able discrimination caused by a supervisor their employees.7 Courts considering these but subject to an affirmative defense look- issues have balanced the employer’s legiti- ing to the reasonableness of the employer’s mate business interests in avoiding unnec- conduct as well as that of the plaintiff vic- essary litigation and potential legal liability tim,” to quote the U.S. Supreme Court in and in maintaining a fair and professional Faragher v. City of Boca Raton.13 work environment, against the privacy The U.S. Court of Appeals for the Fifth rights of employees.8 Circuit took guidance from the Supreme Court in Defenbaugh-Williams v. Wal-Mart Employers’ Business Interests Stores when it held that employers could be vicariously liable for sexual harassment Many employers adopt anti-fraterniza- committed by supervisors.14 One of Wal- tion policies in an effort to avoid the numer- Mart’s district managers stated during a ous types of liability they might otherwise meeting with other employees that a certain confront.9 Liability may attach to an female, the plaintiff employee, “would employer confronted with an office never move up with the company being romance in a variety of ways.10 First, a associated with a black man.” The manager romantic relationship between a manager or later became the plaintiff’s supervisor and supervisor and his or her subordinate may instituted a series of disciplinary actions result in allegations of favoritism, with co- against her on what she alleged were “fab- workers claiming that the subordinate has ricated workplace-policy grounds,” which received preferential treatment as a result of culminated in her termination. She sued on the relationship. For example, the subordi- a theory of sexual harassment. nate may receive longer breaks, be given The court held that Wal-Mart was vicar- preferred shifts or receive unfairly favor- iously liable for the sexual harassment com- able reviews. Over time, this perception of mitted by the supervisor. Concluding that favoritism could lower employee morale the Supreme Court intended to extend prin-

6. Dean, supra note 4, at 1053; Kramer, supra note 5, at 143. suicide”); Labor & Employment in Massachusetts: A Guide 7. Kramer, supra note 5, at 105. Cf. Shuman v. City of To Employment Laws, Regulations and Practices, §§ 5-6 Philadelphia, 470 F.Supp. 449, 459 (E.D. Pa. 1979) (individ- (Matthew Bender and Co. 2001). ual’s private sexual activities fall within “zone of privacy” 11. Dean, supra note 4, at 1055 and n.23. protected by Constitution so long as they do not substantially 12. Id. at 1054. See also Lisa Mann, Resolving Gender impact individual’s ability to perform job). Conflict in the Workplace: Consensual and Nonconsensual 8. Dean, supra note 4, at 1053. Conduct, available at website of Modrall Sperling-- 9. Kramer, supra note 5, at 77-79. www.modrall.com/articles/article_44.html (October 27, 10. Mary Stanton, Courting Disaster, from Government 1994). Executive, October 1, 1998, available at 13. 524 U.S. 775, 780 (1998). www.govexec.com/features/1098/1098s4.htm (describing 14. 188 F.3d 278, 280 (5th Cir. 1999). dating between supervisors and subordinates as “supervisory 123 ciples of agency liability to “all vicarious repeatedly display sexual favoritism or liability inquiries [brought] under Title VII other inappropriate sexual behavior in the for acts of supervisors,” the court conclud- workplace that results in the creation of a ed that Wal-Mart was liable for damages hostile work environment.16 based on evidence that the manager had Even when the relationship does not acted with malice or reckless indifference involve a manager-supervisor and a subor- by terminating the plaintiff for having been dinate, employers still face potential litiga- involved in an interracial relationship. tion and liability stemming from the Such a ruling exposes employers to romance.17 Problems can arise, for example, increased liability for the acts of supervi- when an employer decides to discipline, sors in various contexts, which may include demote or terminate a party to a workplace the enforcement of anti-fraternization poli- romance even for unrelated reasons. cies. This strict liability under Title VII pro- Employees who previously complained of vides yet another reason for employers to sexual harassment may allege that the disci- implement these policies with great care plinary action was retaliatory. That is, the and to ensure that their staff is well trained employee may bring a claim against the in enforcing the policies.15 employer.18 The affected employee may Another danger is that while two also bring a gender discrimination claim, employees are romantically involved in a alleging that the employer’s action was consensual relationship, neither will claim motivated by favoritism of one gender over harassment, but after the romance ends, one another.19 For example, in Russel v. United party may come forward with the con- Parcel Service, a female supervisor was ter- tention that the association was unwelcome, minated for living with an hourly employee even coerced. This situation presents at in violation of a company policy prohibit- least two problems unique to workplace ing anti-fraternization. The discharged relationships between managers or supervi- employee sued her employer alleging dis- sors and their subordinates, because of the crimination on the basis of her gender and unequal bargaining power of the parties. sexual orientation because women were First, if the subordinate is disciplined, disciplined differently than men for viola- demoted or terminated, he or she may tions of the employer’s anti-fraternization allege retaliation. Second, the party who policy. In Russel, the Court of Appeals of ended the relationship may bring a sexual Ohio held that the record was sufficient to harassment claim based on allegations that create a material issue of fact which pre- the other party is forcing him or her to stay cluded summary judgment for the employ- in the relationship, stalking or continuing to er. 20 make unwanted sexual advances, thus sub- Based on this potential legal liability and jecting the complainer to sexual harass- a reasonable desire to maintain a productive ment. Even if the relationship does not ter- staff, an employer has a legitimate business minate, co-workers may attempt to make a interest in drafting rules and regulations claim against the employer for sexual that will help it to avoid the myriad of prob- harassment. That claim may be viable if the lems that office romances can create.21 For employees involved in the relationship instance, if an employer prohibits its super-

15. Kramer, supra note 5, at 120; Tara Kaesebier discrimination where female manager who violated policy (Comment), Employer Liability in Supervisor Sexual was not terminated). Harassment Cases: The Supreme Court Finally Speaks, 31 20. Russel v. United Parcel Service, 110 Ohio App.3d 95, ARIZ. ST. L.J. 203, 223 (1999). 673 N.E.2d 659, 71 A.L.R. 5th 741 (1996); But see, 16. See for this paragraph Kramer, supra note 9, at 87-94; Shumway v. United Parcel Service, 118 F.3d 60 (2nd Cir. Stanton, supra note 10; Mann, supra note 12; Dean, supra 1997) (Summary judgment properly allowed against note 4, at 1054. employee claiming sex discrimination who admitted violat- 17. Meyer, supra note 2. ing anti-fraternization policy where employee failed to show 18. Kramer, supra note 9, at 96. that male employees who violated same policy were treated 19. See Sanguinetti v. United Parcel Service, 114 differently.) F.Supp.2d 1313 (S.D. Fla. 2000) (male supervisor terminat- 21. Kramer, supra note 9, at 79. ed for violating employer’s no-dating policy sued for gender 124 visors from dating their subordinates, it rearing and education.25 The right to privacy may be less likely to face a quid pro quo also protects the right of individuals to be sexual harassment charge. Similarly, if a free from governmental surveillance and company requires its employees to sign intrusion in their private affairs.26 acknowledgement or consent forms when Every state in the United States now rec- they enter into a romantic relationship with ognizes “some general form of common a coworker, they will have documentation law protection for privacy.”27 Public sector on file to defend themselves from liability if employees in several states also enjoy state a claim against them is later brought.22 constitutional protection of a general priva- However, these rules, intended to shield cy right.28 Florida’s constitution limits the employers from litigation, may, ironically, ability of government employers to invade give rise to other forms of liability when an the privacy of their employees.29 Texas employer enforces them. When an employ- courts have held that the Texas Bill of ee is subjected to an adverse action in con- Rights protects “personal privacy from nection with their job for a violation of an unreasonable intrusion” and have extended anti-fraternization policy, the employee this protection to the rights of public sector may challenge the employer’s rules regard- employees.30 In California, employees may ing employee relationships, arguing that the invoke a public policy exception to at-will regulations constitute an invasion of priva- employment termination by asserting a vio- cy.23 lation of their privacy right under the state constitution.31 Employees’ Privacy Interests In addition to these more conventional forms of protection, more than half the At the heart of employees’ interests in states have legislation protecting employee engaging in consensual workplace relation- privacy with regard to activities conducted ships lies their rights to privacy. In its orig- outside the workplace.32 In Colorado, North inal form, the constitutional right to privacy Dakota and New York these laws are gener- protected individuals from improper acts of al enough to protect almost all legal activi- government officials.24 Since its recognition ties not related to an individual’s employ- in the 1950s, however, the constitutional ment. New York’s, for instance, extends right to privacy has grown to encompass the quite broadly to protect the “legal recre- autonomy individuals enjoy in making cer- ational” activities of employees.33 tain kinds of decisions, especially those of a Colorado’s states that it is an unfair employ- particularly personal nature. Personal deci- ment practice to discriminate against sions likely to be protected by this right to employees for engaging in “lawful activi- privacy include issues surrounding mar- ties,” either outside of the office or while riage, procreation, contraception, child- working.34 North Dakota’s makes it unlaw-

22. Maharaj, supra note 1. 26. Bruce L. Watson, Disclosure of Computerized Health 23. Dean, supra note 4, at 1058; Kramer, supra note 9, at Care Information: Provider Privacy Rights Under Supply 105. Side Competition, 7 AM. J. L. AND MED. 265, 269 (1981), 24. William M. Beaney, The Constitutional Right to citing Roe. Privacy in the Supreme Court, 1962 SUP. CT. REV. 212 27. Michael Z. Green, A 2002 Employment Law Odyssey: (1963) (discussing the meaning of the constitutional right to The Invasion of Privacy Tort Takes Flight in the Florida privacy). Workplace, 3 FLA. COASTAL L.J. 1, 9 (2001). 25. Pierce v. Soc’y of Sisters, 268 U.S. 510 (1925) (extend- 28. Helen M. Richards, Is Employee Privacy an ing constitutional right of privacy to child rearing and edu- Oxymoron? 15 DELAWARE LAW. 20, 20-21 (1997). cation); Prince v. Massachusetts, 321 U.S. 158 (1944) 29. Green, supra note 26, at 14. (extending constitutional right of privacy to decisions 30. Texas State Employees Union v. Texas Dep’t of Mental regarding family relationships); Skinner v. Oklahoma ex. Health and Mental Retardation, 746 S.W.2d 203 (Tex. 1987). rel. Williamson, 316 U.S. 535 (1942) (extending constitu- 31. Semore v. Pool, 1990 Cal.App. LEXIS 94. tional right of privacy to procreation); Loving v. Virginia, 32. Alison J. Chen (Note), Are Consensual Relationship 388 U.S. 1 (1967) (extending constitutional right of privacy Agreements a Solution to Sexual Harassment in the to marriage); Griswold v. Connecticut, 381 U.S. 479 (1965) Workplace, 17 HOFSTRA LAB. & EMP. L.J. 165, 188 (extending constitutional right of privacy to contraception); (1999). Roe v. Wade, 410 U.S. 113 (1973) (extending constitutional 33. N.Y. LABOR LAW § 201-d (2002). right of privacy to abortion). 34. COLO. REV. STAT. ANN. § 24-34-402.5. 125 ful to hire or fire an employee for engaging right to privacy. in a “lawful activity outside work” that does The chief of police had ordered the not interfere with the employer’s business plaintiff to end his relationship with a interests.35 woman who was on probation for a felony offense. The plaintiff had appeared at a city Anti-Fraternization Policies: ribbon-cutting ceremony with the woman, Balancing Competing Interests and a picture of the two at the ceremony appeared in a local paper. The chief thought A. Public Sector Employees that this public appearance both embar- The liberty that employers have to limit rassed the city and violated a general order the activities of employees varies depend- of the department “forbidding as unbecoming on whether they operate in the public or ing conduct . . . [k]nowingly associating, on private sector. There are significant differ- or off duty, with convicted criminals or law- ences between these two arenas as they breakers under circumstances which could relate to the regulation of romantic involve- bring discredit upon the department or ment in the workplace. impair an Officer in the performance of his State and federal constitutional provi- duty.” sions that explicitly protect individual pri- The court held that although the plain- vacy rights apply only to state actions.36 tiff’s relationship with a convicted felon did When the state is the employer, it may not, not impact his job performance, it was not without substantial justification, condition “unreasonable to assume a very real likeli- employment on the relinquishment of con- hood that it could affect the chain of com- stitutional rights, but it nevertheless has mand as well as the public image of the greater latitude in restricting the activities department.” The court ultimately conclud- of its employees than it has in regard to the ed that while such “looser socialties” as dat- activities of its citizens at large.37 ing may be protected, they receive less Accordingly, public sector employees gen- stringent protection from privacy laws than erally enjoy a more rigorously protected other, more formal associations might right of privacy than do employees in the enjoy. private sector. The courts must carefully Relying in the reasoning in Weiland v. consider both the interests of the individual City of Arnold that the interests of a police and the interests of the government when department, as a paramilitary organization, determining whether the private activities outweigh an individual officer’s right to pri- of a public employee constitute valid vacy, the United States District Court for the grounds for action.38 Northern District of Iowa recently affirmed Apparently aware of the intricacies of the grant of summary judgment for a public these issues, the U.S. District Court for the employer which terminated a probationary Eastern District of Missouri opined in police officer involved in an extra-marital Wieland v. City of Arnold that it was affair with a police captain. In Mercer v. “uncomfortable” adopting a general rule City of Cedar Rapids, the Court held that that all dating relationships are constitution- inquiries into a police officer’s off-duty ally protected, especially for government romantic relationship with a superior officer employees working in “sensitive areas” of and termination of her employment because law enforcement.39 In that case, a police of this relationship, even in the absence of a officer challenged a city’s police depart- non-fraternization rule, would not constitute ment regulation prohibiting unbecoming an invasion of privacy given the depart- conduct violated, among other things, his ment’s interest in maintaining order and public confidence in the department. 40

35. N.D. CENT. CODE § 14-02.4-0.8 (1997). 38. Dean, supra note 4, at 1058; Kramer, supra note 9, at 36. Born v. Blockbuster Video Inc., 941 F.Supp. 868, 870 106. (S.D. Iowa 1996). 39. 100 F.Supp.2d 984, 988 (E.D. Mo. 2000). 37. Briggs v. North Muskegon Police Dep’t, 563 F.Supp. 40. Mercer v. City of Cedar Rapids, 104 F.Supp.2d 1130 585, 587 (W.D. Mich. 1983) (citations omitted). (N.D. Iowa 2000). 126 In Shawgo v. Spradlin,41 the Fifth Circuit tional officer’s right to privacy was violated specifically noted that the right to privacy when she was fired as a result of an off-duty does not come without qualification and relationship with a former inmate in contra- that the state has a greater interest in regu- vention of her employer’s code of conduct. lating the activities of its employees than it In so doing, the Court recognized that pri- has in regulating the activities of the gener- vacy rights of public employees should be al population. In Shawgo, two former police evaluated under an intermediate scrutiny officers sued a city and others for an alleged standard of review. In applying this stan- invasion of privacy resulting from the disci- dard of review to the regulation in issue, the plinary action taken against them for dating Court concluded that it failed to pass consti- and allegedly cohabitating in violation of tutional muster.44 In contrast, however, department regulations. One officer was a recall that Wieland held that a city’s order to patrolwoman and the other a sergeant. The a police officer to terminate his relationship patrolwoman did not report directly to the with a known felon pursuant to a policy for- sergeant, so the problems common to bidding association with a convicted crimi- romantic relationships between managers nal did not violate the police officer’s right or supervisors and their subordinates did to privacy. not arise. Since their employees possess some- Finding a rational connection between what stronger rights of privacy in the work- the “exigencies of department discipline place than do their counterparts in the pri- and [the rule] forbidding members of a vate sector, employers in the public sector quasi-military unit, especially those differ- should exercise caution when structuring ent in rank, to share an apartment or to anti-fraternization policies.45 Relevant case cohabit” the court nevertheless concluded law indicates that courts will evaluate anti- that the policy did not offend the plaintiffs’ fraternization policies of government privacy rights. It went on to hold that the employers relative to the type of work investigatory surveillance of the employ- involved, the existence of superior-subordi- ees’ off-duty association in violation of nate relationships and whether one of the department regulations did not impinge two employees directly reported to the upon the right to privacy. other. Similar cases have reached consistent outcomes where the relationship is between B. Private Sector Employees a government employee and a non-govern- Private sector employees receive protec- ment employee. In Briggs v. North tion from invasions of privacy under state Muskegon Police Department, the federal legislation and common law. Several states district court for the Western District of have adopted laws protecting all legal off- Michigan concluded that a city violated a duty activities, provided they do not direct- police officer’s privacy rights when it dis- ly conflict with an employer’s legitimate missed him for cohabitating with a woman business interest.46 Private sector employ- while separated from his wife.42 ees, however, have very few privacy rights A police officer’s right to privacy also that protect them within the workplace. To was violated in Shuman v. City of prevail on an invasion of privacy claim, Philadelphia when the police department there must exist a reasonable expectation of fired him for living with a married woman privacy in the matter at issue. Under this who was not his wife.43 Similarly in Via v. standard, if employees have advance notice Taylor, the United States District Court for of a company anti-fraternization rule, their the District of Delaware found that a correc- claim is substantially weakened.47 An

41. 701 F.2d 470, 482-83 (5th Cir. 1983). 1 Id. at 472. 46. Ann H. Zgrodnik (Comment), Smoking 42. 563 F.Supp. 585 (W.D. Mich. 1983). Discrimination: Invading an Individual’s Right to Privacy in 43. 470 F.Supp. 449 (E.D. Pa. 1979). the Home and Outside the Workplace? 21 OHIO N.U.L. 44. Via v. Taylor, 224 F.Supp.2d 753 (D. Del. 2002). REV. 1227, 1244-45 (1998). 45. Dean, supra note 4, at 1058. 47. Kramer, supra note 9, at 120, 129. 127 employee who knowingly violates an anti- his discharge prevented that marriage from fraternization rule cannot be said to have coming to fruition. had a reasonable expectation of privacy in The U.S. District Court for the Southern the matter. District of Mississippi rejected the claims In Rogers v. International Business and found at least partial support for its Machines Co.,48 the employer dismissed a decision in the manager’s failure to provide, manager for having an alleged relationship or even allege, an “utterly reckless” inva- with a subordinate that “exceeded normal or sion by the company, such as snooping in reasonable business associations, [and] neg- his bedroom or electronically wiring his atively affected the duties of his employ- workspace. ment.” The employer had no policy or rule In Patton v. J.C. Penney Co.,51 a former prohibiting such relationships, and the man- employee sued for wrongful discharge and ager claimed that his termination was intentional infliction of emotional distress improper because it was predicated on an after being terminated for dating a co-work- investigation of a personal matter, which er. One of the employer’s supervisors had invaded his right of privacy. told the plaintiff to end his “social relation- The U.S. District Court for the Western ship” with a female co-worker. The plaintiff District of Pennsylvania concluded that the responded by saying that he did not social- employer acted reasonably, noting that ize while working and that he would contin- nothing on the record indicated any impro- ue to see the co-worker during his own priety and that in fact the manager had par- time. The supervisor later told the plaintiff ticipated in the investigation and had that his job performance was not satisfacto- received timely notice of his termination. In ry and that he would be fired if his perform- support of its decision, the court cited what ance did not improve. The plaintiff employ- it described as the employer’s legitimate ee asked to be transferred to another depart- interest in “preserving harmony among its ment, but the supervisor denied his request, employees and . . . preserving normal oper- and he ultimately was terminated for unsat- ational procedures from disruption.”49 The isfactory job performance. court also rejected the plaintiffs’ tort claim In affirming the lower court’s judgment for invasion of privacy. It underscored the for the employer, the Oregon Supreme fact that the employer had limited its inves- Court held that the dismissal did not violate tigation to interviews with employees and public policy and did not amount to “outra- to an examination of company records, and geous” conduct. it concluded that the employer had not In a similar case, Sarsha v. Sears intruded on the plaintiff’s “seclusion or pri- Roebuck & Co.,52 the plaintiff employee, a vate life.” supervisor, was fired for dating a subordi- Similarly, in Watkins v. United Parcel nate employee, who, however, was not Service,50 the employer fired a manager for fired. The plaintiff sued, alleging age dis- violating the company’s anti-fraternization crimination in violation of the Age policy by having a romantic relationship Discrimination in Employment Act, and a with a U.P.S. truck driver. The manager gender discrimination claim in violation of claimed the company’s conduct was “high- Title VII. In rejecting the claims, the ly offensive” because his personal relation- Seventh Circuit ruled that the employer was ship with the driver did not concern the “entitled to enforce a non-dating policy . . . company because it occurred primarily off against [its] supervisors, who by virtue of the job. He also alleged that he and the co- their managerial positions are expected to worker had contemplated marriage and that know better.”

48. 500 F.Supp. 867, 868 (W.D. Pa. 1980). 50. 797 F.Supp. 1349, 1351 (S.D. Miss. 1992). 49. Quoting Geary v. U.S. Steel Corp., 319 A.2d 174, 178 51. 719 P.2d 854 (Or. 1986). (Pa. 1974). 52. 3 F.3d 1035, 1037 (7th Cir. 1993). 128 Nevertheless, to be upheld, an employer’s business objectives. At the same time, how- anti-fraternizations policies must be ever, courts maintain a clear respect for the enforced consistently and in a gender-neu- individual privacy rights of employees and tral manner. For instance, in Zentiska v. will not allow those rights to be abrogated Pooler Motel Ltd.,53 the employer ordered beyond reason.56 one of its supervisors either to quit his job To arm themselves against various kinds or fire the plaintiff employee whom the of liability, employers should craft policies supervisor was dating. The supervisor that are reasonable in scope and degree and removed plaintiff employee’s name from that can be fairly and consistently enforced. the work schedule. One of the employer’s A reasonable policy will focus on the effect area directors, however, had dated and ulti- the relationship has on the business inter- mately married a co-worker. The employer ests of the employer. For example, there had not enforced its anti-fraternization pol- should be some correlation between the icy with respect to that situation. The area romantic relationship and the employees’ director not penalized was male; the plain- performance on the job. It likely will be tiff who was fired was female. The federal more difficult to defend an anti-fraterniza- district court in Georgia found the defen- tion policy relating to the activities of dant liable for sex discrimination on the employees outside the workplace if the pol- ground that it had treated the female plain- icy does not require that the outside activity tiff differently from a similarly situated impact a legitimate business objective or male employee. interest. Courts that have encountered these issues have consistently decided in favor of C. Off-duty Conduct the proposition that employers must act rea- Another important issue that arises in sonably and consistently, both in the imple- cases involving romantic relationships at mentation and the execution of anti-frater- work centers around the highly controver- nization policies.54 For instance, in Watkins, sial idea that employers have the ability and the plaintiff did not argue that the anti-frat- also the right to regulate the activities of ernization policy itself constituted an inva- their employees outside the workplace. The sion of privacy, but rather that the investiga- best-known case on this issue involves two tion into the relationship violated his priva- former employees of Wal-Mart, New York v. cy rights. As that case demonstrates, the Wal-Mart Stores.57 Both were terminated for manner in which a company enforces its violating the company’s fraternization poli- anti-fraternization policy is equally impor- cy, which prohibited a “dating relationship” tant to an employer seeking to avoid litiga- between a married employee and another tion as the policy itself. employee, other than his or her own spouse. Employers who adopt anti-fraternization In an action seeking the re-instatement policies appear to be fairly well protected of the terminated employees, the New York from liability on invasion of privacy Attorney General argued that the firing vio- grounds, so long as the policy and its imple- lated a New York statute that made it mentation are reasonable.55 Courts have unlawful for any employer to “refuse to demonstrated sympathy for the plight of hire, employ, or license or to discharge from employers facing problems arising from employment or otherwise discriminate fraternization between employees. They against an individual . . . because of . . . an recognize that workplace romances can individual’s legal recreational activities out- have a tangible and often negative impact side work hours, off the employer’s premis- on a company’s ability to achieve legitimate es and without use of the employer’s equip-

53. 708 F.Supp. 1321, 1322-25 (S.D. Ga. 1988). 55. Kramer, supra note 9, at 78, 96. 54. See Sanguinetti v. United Parcel Serv., 114 F.Supp.2d 56. Michael Dworkin, It’s My Life--Leave Me Alone: Off- 1313 (S.D. N.Y. 2000) (dismissing invasion of privacy the-Job Employee Associational Privacy Rights, 35 AM. claim brought by employee fired for violating no-dating BUS. L.J. 47, 95 (1997). rule). 57. 621 N.Y.S.2d 158 (App.Div. 3d Dep’t 1995). 129 ment or property.”58 D. Privacy on the Internet The outcomes of cases interpreting this Another related issue is whether statute have hinged almost entirely on the employees have an expectation of privacy courts’ interpretation of the phrase “recre- with regard to e-mails sent or received on ational activities.” In the Wal-Mart case, the an office computer system. For instance, an trial court had found that the employees employer might discover that its employees may have engaged in recreational activities are fraternizing in violation of a company while dating and that the fact that they policy by intercepting a related e-mail mes- engaged in these “protected leisure activi- sage. In Restuccia v. Burk Technology Inc.,62 ties . . . together did not vitiate their statuto- the Massachusetts Superior Court held in ry protection.” The Appellate Division, 1996 that employees do not have a reason- however, reversed, holding that “dating” is able expectation of privacy regarding e- distinct from and, in fact, bears no resem- mails sent and received at work and that, blance to “recreational activity.” The therefore, an employer did not violate the employees could not receive protection state wiretapping law when it stored and under the statute. reviewed messages from a company server. Critics of the court’s reasoning, howev- More recently, the U.S. District Court er, have argued that this interpretation of the for the District of Massachusetts held that statute “overlooks [its] essential purpose, even where employees may have a reason- which is to protect employees’ off-the-job able expectation of privacy in their office e- activities so long as they [do not bear]” on mail, the legitimate business interests of one’s job performance.59 In contrast, a New their employers will likely trump employee York federal district court’s interpretation privacy interests. In Garrity v. John of the same language concluded that cohab- Hancock Mutual Life Insurance Co.,63 that itation qualified as a recreational activity court noted that both Title VII and state law under the statutory scheme.60 The court require employers take proactive steps to relied on the statute’s legislative history, eliminate harassment from their offices and which it held reflected a “general policy of to investigate any potentially harassing con- protecting employees from discrimination” duct when this conduct is brought to their against employees who happen to engage in attention. activities after work that their employer Similarly, in Smyth v. Pillsbury Co.,64 the does not like. federal district court in the Eastern District Many states have adopted these off-the- of Pennsylvania held that pursuant to job privacy laws in some shape or form, Pennsylvania law, an employee fired for indicating that this type of statute will making disparaging comments on an e-mail remain a force to be reckoned with as written at work did not have an expectation employers confront the issue of romantic of privacy in this communication. In relationships in the workplace and draft McLauren v. Microsoft Corp.65 a Texas anti-fraternization policies.61 Ultimately, it Court of Appeals held that an employee did appears that the outcome of these cases will not have a reasonable expectation of priva- depend on the legislative history of the cy in the contents of an e-mail message that statutes involved and how courts decide to he had saved to a “personal” file. interpret the relevant statutory language. Thus, it appears that an employer who discovers a violation of its fraternization

58. N.Y. LABOR LAW § 201-d. 61. Dworkin, supra note 54, at 55; Dean, supra note 4, at 59. Dworkin, supra note 54, at 53-54. 1067 nn. 114-115. 60. Pasch v. Katz Media Corp., 1995 WL 469710 (S.D. 62. 1996 Mass.Super. Lexis 367 (1996). N.Y.); But see, McCavitt v. Swiss Reinsurance America 63. 2002 U.S.Dist. Lexis 8343 (D. Mass.). Corp., 89 F.Supp.3d 495, 499 (S.D. N.Y. 2000) (where a dif- 64. 914 F.Supp. 97, 101 n.3 (E.D. Pa. 1996). ferent judge of the United States District Court for the 65. No. 05-97-00824-CV (Tex.App. 1999), unpublished Southern District of New York concluded that a dating rela- but available at http://www.5thcoa.courts.state.tx.us/cgi- tionship would not be under the protection of the statute). bin/as_web.exe?c05_99.ask+D+10706510. 130 policy by intercepting an e-mail sent on an ment, termination, reprimand or demotion. office system does not violate the privacy Employers should carefully consider not rights of the employees involved in acting only the potential reaction of its employees on knowledge acquired via the intercepted to the policy, but also the practicality and message. difficulty of enforcing it, given its business circumstances. In the end, for an anti-frater- Crafting Anti-Fraternization Policies nization policy to survive claims brought on privacy grounds it must strike a reasonable A well-drafted, carefully implemented balance between the interests of the and widely disseminated corporate policy employer and the interests of the employ- regarding fraternization among employees ees. can provide substantial legal protection to An employer or advising attorney wish- employers.66 The employer must first deter- ing to avoid claims that a policy violates the mine the nature of the limitation desired and privacy rights of its employees should then decide how it will enforce the policy. structure the policy around the impact The policy should provide a precise defini- potential romantic relationships at work tion of the discouraged, limited or prohibit- may have on job performance. This will ed conduct. For example, an employer may increase the likelihood that a court will find define the phrase “personal relationships” a rational connection between the policy to encompass romantic relationships as well and the achievement of legitimate business as family relationships or relationships with objectives. The more specific the policy is the potential for conflicts of interest. in defining its prohibitions and the scope of The employer also must determine the their application, the more notice employ- extent to which the policy will limit such ees will be seen to have had. The more relationships. One might choose to adopt a notice employees have regarding their comprehensive policy prohibiting all rela- employer’s anti-fraternization policy, the tionships between co-workers. Another, weaker their argument that they had a rea- believing this too restrictive, might opt to sonable expectation of privacy regarding limit the prohibition to personal relation- the romantic relationship. ships between a manager and a subordinate, with or without providing various other qualifications such as whether the subordi- Conclusion nate reports directly to the supervisor. An even less restrictive option would be a lim- The privacy rights of employees typical- itation on a manager’s ability to have a ly do not prohibit employers from acting as “personal relationship” with a subordinate the dating police by implementing or within his or her chain of command. enforcing a policy against romantic rela- Finally, the employer must consider the tionships in the workplace. In many, if not types of consequences it will apply to most instances, the employer’s legitimate employees who violate the policy. These business interests in maintaining a peaceful may include transfers to another depart- and productive work environment and

66. For references to this section, see Kramer, supra note 9, at 78, 120; Dean, supra note 131 avoiding liability outweigh an employee’s right to privacy. This has proved to be especially true in the context of an employment relationship in the private sector. If an employer decides to promulgate rules and regulations regarding office romances, the policy should not intrude on employees’ private affairs unreasonably and should display respect for the personal lives of employees, while also protecting the employer’s interest in avoiding the many problems that can result from these romances. The policy should be stated clearly and tailored narrowly to protect the employer’s legitimate business interests. Consideration may be given to restricting only relationships between supervisors and subordinates since in the past these relationships have been the most likely to lead to litigation because of the imbalance of power between the two parties, as well as being the most likely to affect job performance. Most critically, whatever form of policy an employer chooses to adopt, it must enforce the policy in a uniform and non-discriminatory manner.