Argument preview: The Privacy Act and damages for distress

 Alexander Wohl is an Adjunct Professor and a consultant to the Law and Government Program at the Washington College of Law. He was selected as a United States Supreme Court Fellow and served as a law clerk to Judge Ralph B. Guy on the United States Court of Appeals for the Sixth Circuit.  His writing background also includes positions as the Supreme Court correspondent for the San Francisco Chronicle, Supreme Court columnist for the ABA Journal, and Senior Editor for Biography magazine. He currently is completing a dual biography of Justice Tom Clark and his son, Attorney General Ramsey Clark, and their impact on the balance between government power and individual rights.

Take a small but illegal misrepresentation on a government form, throw in a massive law enforcement investigation involving the cooperation of three government agencies, add the broad protections of the Privacy Act of 1974, and you have the makings of a Supreme Court case – Federal Aviation Administration v. Cooper – that addresses a precise but important question:  Does the Federal Privacy Act, which was passed to prevent the unauthorized sharing or release of information about individuals and allows for civil remedies from the government for violation of the law, include damages for mental and emotional distress?

The facts:

Respondent Stanmore Cawthon Cooper has been a private airplane pilot since 1964, when he first received his flying certificate.  To legally operate an aircraft under Federal Aviation Administration (FAA) rules, a pilot must also have a valid “airman medical certificate,” which requires an applicant to disclose any illnesses, disabilities, or surgeries the applicant has had, as well as medications he is taking. Cooper was diagnosed with HIV in 1985. Knowing he would not be granted certification to fly, Cooper decided to let his medical certificate lapse and simply stop flying.  In 1994 he again submitted the medical certificate application, but did not disclose that he had HIV or was taking antiretroviral medication. He received his certificate that year and for the next ten years renewed it as required, each time intentionally not disclosing his disease or treatment. His rationale was that public knowledge of his disease and his being gay would have a negative impact on his employment, as well as other aspects of his life.

Cooper’s illegal act caught up with him as the result of two unconnected occurrences, one personal and one government-related.  The first arose in 1995, when his health began to deteriorate and he applied to the Social Security Administration (SSA) for long-term disability benefits. In the application he disclosed his HIV status to the agency, with the understanding that all information included in his application would be confidential and used only for determination of his eligibility. Over the next year he received benefits, after which time his health improved and he discontinued them.

In 2002 the Inspectors General of the Department of Transportation (DOT) and the Social Security Administration launched “Operation Safe Pilot,” a joint criminal investigation to uncover illicit efforts of medically unfit individuals to obtain FAA flight certifications. At the core of that investigation was the sharing of various lists held by the individual agencies: the FAA provided the Inspector General of the DOT, its parent agency, with names and other identifying information for active certified pilots, which, in turn, sent a list of the pilots to the Social Security Administration, which then cross-checked the list against its own list of individuals collecting disability. In the course of the investigation, the agency discovered Cooper’s failure to disclose his HIV status.

Upon being confronted with his complete Social Security disability file and medical records, Cooper admitted his crime.  He was indicted in 2005 on three counts of making a false statement to a government agency and subsequently pleaded guilty to one count of making and delivering a false official writing, a misdemeanor.  He also had his pilot’s certificate revoked. In 2007, Cooper sued the federal government, alleging that the three agencies involved in Operation Safe Pilot “willfully or intentionally” violated the Privacy Act when it violated his confidentiality by sending his records to other agencies, which caused him “to suffer humiliation embarrassment, mental anguish, fear of social ostracism, and other severe emotional distress.”

The law in question

The Privacy Act was enacted in 1974 “to protect the privacy of individuals indentified in information systems maintained by Federal agencies,” by regulating “the collection, maintenance, use, and dissemination of information by such agencies.”  The law was passed in light of growing concerns about information in computer databases, a prescient response to the intersection of issues of technology and privacy, questions that are today even more daunting. The law provides detailed instructions for agency record management and limits how an agency can share that data with other agencies or individuals. Most importantly for this case, the law provides a private right of action and civil damages, and waives government immunity for proven misconduct. Specifically, the law states that an individual who can demonstrate that an agency acted “in a manner that was intentional or willful,” can receive “actual damages” sustained by the individual resulting from the violation.

There is little question that the government shared and disclosed to other agencies without notice or consent the personal records of thousands of pilots in the course of its criminal investigation ; for example, Cooper’s records included his Social Security number, the Social Security diagnosis code that indicated he was HIV positive, and his complete Social Security disability file, which included hundreds of pages of his medical records.

The Northern District Court of California, which heard Cooper’s case, found as much. Even though the court agreed that the government violated the Privacy Act, it nonetheless granted summary judgment to the government on the grounds that Cooper had failed to demonstrate “actual damages” under the Act. Thus, the question on appeal was limited to the meaning of the term “actual damages,” which is not defined in the law.

The Ninth Circuit reversed, finding that the Act’s legislative history was unreliable but citing the provision of the law which indicates that the government will “be subject to civil suit for any damages which occur as a result.” In its ruling, the court focused on the “right of privacy,” citing defamation cases such as Time, Inc. v. Hill and Gertz v. Robert Welch, Inc. Concluding that the primary source of damage in these cases is often “mental distress from having been exposed to public view,” the court stated, “[o]ne can readily envision circumstances in which these types of injuries might flow from the disclosure of one’s confidential medical records…. Given the nature of the injuries that most frequently flow from privacy violations, it is difficult to see how Congress’s stated goal …could be fully realized unless the Act encompasses …non-pecuniary injuries.”

The government filed a petition for certiorari, which the Court (with Justice Kagan recused) granted on June 20, 2011.

Legal arguments

The disagreement on the law’s interpretation centers on several related questions of statutory construction.  Cooper argues that Congress intended “actual damages” to include mental and emotional harm, a conclusion he suggests is clear from the “plain meaning” of the Privacy Act’s language; from the “cardinal rule” of statutory construction; and also from the law’s statement of purpose, which includes language including the prevention of “embarrassment” among the Act’s goals.  He asserts that this interpretation of the statutory language is consistent with, and borrows from the common law torts of defamation and invasion of privacy as well as case law that for years prior to the passage of the Privacy Act consistently interpreted statutes in a variety of other areas of law to find that “actual damages” includes compensation for real or appreciable emotional distress. Finally, he points out that if Congress had intended to limit the “actual damages” language to cover only pecuniary loss, it could and would have done so explicitly.

The government counters that Cooper and the Ninth Circuit offer an “untenable” conclusion that is both unreasonable and ambiguous. In its view, precedent clearly holds that in such ambiguous cases involving a waiver of sovereign immunity must be narrowly construed in favor of the sovereign, and that the law should be interpreted to cover only pecuniary loss. It also suggests that reliance on the general language of the Act’s preamble is improper because that language is simply “generic” and does not supersede the “operative text” of the Act. The government further argues that the legislative history also mandates a limited conclusion because of Congress’s “acute concern” with restricting the federal government’s financial exposure under the Act. The government repeatedly cites a report of the Privacy Protection Study Commission, which Congress assigned to review the issue, but whose conclusions and authority Cooper disputes.  Finally the government acknowledges the connection to privacy law and the law of defamation, but it suggests the focus should be on the category of defamation torts known as defamation “per quod,” to distinguish them from defamation “per se” in which damages are automatically presumed, and suggests that this common law understanding limits recovery to pecuniary loss.

Analysis

The Ninth Circuit’s ruling compounded a circuit split on the interpretation of “actual damages,” with the Eleventh Circuit and the Sixth Circuit holding that only pecuniary losses are recoverable, and the Fifth Circuit agreeing with the Ninth. The Ninth Circuit’s ruling was notable (and no doubt of special interest to the Supreme Court) because it includes a vigorous dissent from a denial of en banc review by Judge O’Scannlain, joined by Chief Judge Kozinski and Judges Gouls, Tallman, Bybee, Callahan, Bea, and N.R. Smith. In language echoed in the government’s brief, the dissenters suggest that because the term in question is ambiguous, “a chameleon,” no waiver of sovereign immunity should be allowed for non-pecuniary damages.  The dissenters also take the opposite tack from the majority on the privacy issue, suggesting that “[t]he proliferation of electronic records raises the stakes of a broader waiver of sovereign immunity,” and that Congress did not intend “to increase the fiscal exposure of the United States.”

The Court will have to weigh the view that the Privacy Act was intended to broadly protect privacy rights against the government’s more limited understanding of the law limiting the statute’s coverage only to pecuniary loss. Not only would such an interpretation limit monetary recovery for damages but – as an amicus curiae brief filed by the National Whistleblower Center suggests – it could frustrate the intent of the law by increasing the disincentives for whistleblowers to expose misconduct or violations of the law.

One case certainly to figure significantly in the Supreme Court’s decision is its 2004 holding in Doe v. Chao, which interpreted the same provision but on the broader question of whether a plaintiff whose rights were violated automatically was entitled to the statutory minimum damages award or whether those plaintiffs had to prove that they had suffered at least some “actual damage.”  A six-to-three majority adopted the more limited approach and concluded that a plaintiff must both prove the violation and demonstrate damages. Not surprisingly, in the present case the government cites Chao repeatedly, suggesting that the Court in that case intended a limited interpretation of “actual damages.” Cooper distinguishes Chao, and – like the Ninth Circuit –  cites Justice Ginsburg’s dissent in the case. Though the Court today has a vastly different make-up than it did just seven years ago, its ideological balance has changed little. Two of the three dissenters, Justices Ginsburg and Breyer are still on the Court, as are Justices Scalia, Kennedy, and Thomas, who were in the majority. The opinion in that case, somewhat surprisingly, was written by Justice David Souter.

It may be suggested that both Cooper and the FAA learned a lesson from the case. Following his guilty plea, Cooper applied to the FAA for recertification as a private pilot and, after the agency conducted a review of his entire medical history, including the information about his HIV diagnosis and treatment, it reissued his private pilot certificate and medical certificate. The likelihood, however, is that the Supreme Court will not be quite as agreeable in its consideration of this issue.