Can Lawyers Use Drivers' DMV Information To Recruit Potential Class Representatives?

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As I’ve noted in earlier posts (see here and here), this is shaping up as an important term for the class action defense bar at the United States Supreme Court. Late last month, the Court added another important question to its docket, granting certiorari in Maracich v. Spears. In Maracich, the Court will decide whether plaintiffs’ counsel may obtain drivers’ personal identifying information from state Departments of Motor Vehicles in order to send those drivers letters attempting to recruit them as class representatives.

The Drivers’ Privacy Protection Act of 1994 provides that drivers’ “personal information” held by state Departments of Motor Vehicles must be held confidential, and may be disclosed only pursuant to one of several enumerated exceptions. Two are at issue in Maracich. First, the “litigation exception” permits use “in connection with any civil, criminal, administrative, or arbitral proceeding in any Federal, State, or local court or agency . . . including the service of process, investigation in anticipation of litigation, and the execution or enforcement of judgments and orders, or pursuant to an order of a Federal, State or local court.” Second, the “solicitation exception” permits use: “for bulk distribution for surveys, marketing or solicitations if the State has obtained the express consent of the person to whom such personal information pertains.” 18 USC 2721(b). The DPAA includes a private right of action, 18 USC 2724(a), provides for statutory liquidated damages, 18 USC 2724(b), and states that intention or knowing violations may be a criminal offense. 18 USC 2722, 2723.

The defendants in Maracich – several South Carolina plaintiffs’ lawyers and their law firms – were contacted in mid-2006 by several people who complained of unfair practices by car dealerships. The defendants sent their initial FOIA request to the South Carolina DMV, explaining that they were “attempting to determine if this is a common practice,” and invoking the litigation exception to the DPPA. About a month later, they sent a second request, seeking drivers’ information for additional counties and invoking the litigation exception again. A few days after the second request, they filed their first class complaint pursuant to the South Carolina Regulation of Manufacturers, Distributors, and Dealers Act, naming 51 dealerships as defendants and listing four class representatives.

Most of the dealerships moved to dismiss, noting that they had sold nothing to any of the class representatives. So the lawyers sent a third FOIA request, asking for drivers’ personal information and types of vehicles bought for 328 enumerated dealerships, including all those with pending motions to dismiss. Not long after, the defendant lawyers amended their class complaint, naming four more class representatives and 273 additional defendants. Again, the dealerships who had not sold a vehicle to any named class representative moved to dismiss – 183 in all.

In January 2007, the lawyers sent the first of their letters to drivers whose contact information had been received in the FOIA requests. Headed “advertising material,” the letter stated that “we would like the opportunity [to] discuss your rights and options with you in a free consultation.” As required by the South Carolina Rules of Professional Conduct, a copy of the letter and the names and addresses of recipients was filed with the state Office of Disciplinary Counsel, effectively making the information obtained from the DMV a matter of public record. Over the following weeks, the lawyers sent three additional FOIA requests, each time invoking the litigation exception. Following the last FOIA request, they sent two additional waves of letters to drivers, more than 21,000 in all. In June 2007, the lawyers moved for leave to amend their complaint to add 250 additional named plaintiffs.

Two years later, three drivers who had received the letters filed a class action complaint against the lawyers, alleging that their conduct violated the DPPA. The plaintiffs sought $2,500 for each unlawful use of personal information, as well as punitive damages, attorneys’ fees and costs. The lawyers moved to dismiss, citing the litigation exception. After initially denying the motion, the district court reversed itself. The court held that the lawyers’ conduct was not “solicitation” because, having filed a putative class action, the attorneys had a fiduciary duty to unnamed possible class members. In the alternative, the court held that the lawyers’ conduct satisfied the litigation exception, and therefore did not have to satisfy the solicitation exception as well.

The Fourth Circuit affirmed on somewhat different grounds. The Court found that although the lawyers’ conduct was solicitation under an objective standard, solicitation of potential class representatives was “an accepted and expected element of, and . . . inextricably intertwined with” the lawyers’ “investigation in anticipation of litigation” – a permitted use under the litigation exception.

As the plaintiffs’ cert petition points out, the Fourth Circuit’s decision essentially creates a new, free-standing exception to the DPPA: “for use by lawyers.” If a lawyer may send out mass mailings using drivers’ confidential contact information whenever he or she receives a few complaints about a vehicle or other product, it is difficult to imagine when the strict limits on solicitation could ever apply. The plaintiffs note that the Third Circuit flatly rejected the notion that the DPPA allows the use of DMV data in hunting for potential litigants in Pichler v. UNITE. The District of Columbia Circuit reached the same result in Wemhoff v. District of Columbia, as did the Eleventh Circuit in Thomas v. George, Hartz, Lundeen, Fulmer, Johnstone, King & Stevens, P.A.

The Fourth Circuit considerably worsened a Circuit split regarding the relationship between the DPPA exceptions as well, the plaintiffs argue. The Fourth Circuit’s view that unlawful solicitation is permitted because it is “inextricably intertwined” with permissible litigation use squarely conflicts with the Third Circuit’s view that nothing in the Act excuses an impermissible use just because it is executed in conjunction with a permissible one. Although the Fourth Circuit insisted that its position matched the Eleventh Circuit’s view in Rine v. Imagitas, Inc., the plaintiffs argued that this was not so. The Eleventh Circuit held that any lawful purpose for a single use of personal information was enough to bar liability, not that lawful uses justified separate, unlawful uses.

Given that there seems to have been no serious Circuit split in DPPA law worth the Court’s time until Maracich, the Court’s immediate grant of certiorari here seems to indicate a better-than-even chance that the Court will reverse the Fourth Circuit. The Fourth Circuit’s extraordinarily broad construction of the litigation exception – previously thought to be limited to locating witnesses and facilitating service of process – writes the clear limits to the solicitation exception out of the statute, in violation of long-settled rules of construction. Reversal in Maracich will restore the balance Congress intended when the statute was enacted, vindicating important privacy rights. We expect a decision in the first quarter of 2013.