Note: This guest post is by Karl Neudorfer of Seyfarth Shaw, LLP, who was my cocounsel representing one of the defendants in the Taylor v. Acxiom case discussed below. The outcome of the case made him precisely as happy as he appears in this photo.
Sharon Taylor et al. v. Acxiom Corporation et al., 2:07cv0001, 2:07cv0013, 2:07cv0014, 2:07cv0017, 2:07cv0018, 2:07cv0410 (E.D. Tex. 2007)
Judge: Donald E. Walter
In January 2007, approximately twenty-five plaintiffs brought five separate but nearly identical putative class actions against more than 100 different defendants, alleging violations of the Driver's Privacy Protection Act, 18 U.S.C. §§ 2721 et seq. In September 2007, the same plaintiffs filed a sixth suit, almost identical to its companions, against several more defendants. In all, the plaintiffs sought hundreds of billions of dollars in statutory damages. They did not allege actual harm. On September 9, 2008, Judge Donald E. Walter, visiting from the Western District of Louisiana in Shreveport, dismissed the plaintiffs' claims with prejudice.
Congress enacted the DPPA-the basis for plaintiffs' claims-as a result of growing concern over the availability of personal information maintained by state departments of motor vehicles. That concern was motivated in part by the murder of actress Rebecca Schaeffer (My Sister Sam), whose killer obtained her address by presenting Schaeffer's license plate number to the California DMV. To prevent similar crimes, the DPPA establishes fourteen permissible uses for personal information contained in motor vehicle records, and then prohibits the States from disclosing that information for any purpose other than those enumerated in the Act. Likewise, the DPPA prohibits private actors from knowingly obtaining, using, or disclosing personal information from a DMV record for any purpose not permitted by the Act. The DPPA contains a provision allowing for an award of "liquidated" damages of up to $2500 per violation.
Because the DPPA regulates (but does not prohibit) the disclosure of personal information, several states continue to sell DMV records to legitimate users. Texas is one of them. Texas sells its complete database of Motor Vehicle Records, containing information about every driver and motor vehicle registered with the State. By most estimates, there are twenty to twenty-five million pieces of personal information in Texas' VTR database.
Here, plaintiffs brought improper obtainment claims against each of the defendants. They alleged that each defendant had purchased Texas' complete VTR database, that each defendant lacked a permissible purpose for doing so, and that therefore each defendant had violated the DPPA by impermissibly obtaining the State's motor vehicle records. Plaintiffs sought to certify a class of everyone with a Texas driver's license. Relying on the Act's "liquidated" damages provision, the plaintiffs claimed they were entitled to an award of hundreds of billions of dollars (25 million violations x 120 defendants x $2500/violation).
The case initially was assigned to Judge T. John Ward of Marshall. It was transferred to Judge Walter of the Western District of Louisiana as a result of Plaintiffs' proposed class definition. Apparently every judge in the Eastern District holds a Texas driver's license, and thus every judge also was a member of the putative class. After Judge Ward and several other Eastern District Judges recused themselves due to this conflict, Chief Judge Heartfield assigned the case to Judge Walter, who sat in Marshall as a visiting judge.
On September 9, 2008, Judge Walter dismissed the plaintiffs' claims with prejudice in a thirteen-page opinion. He did so on two grounds: failure to state a claim for which relief can be granted, and for lack of subject matter jurisdiction due to a lack of standing. Judge Walter began the opinion with a summary of the history and purposes of the DPPA, and then confronted the 12(b)(6) prong of defendants' motions. The opinion divides the defendants into two groups, those who obtain DPPA-regulated data for their own internal use ("Nonresellers"), and those who obtain DPPA-regulated information at least in part to resell it ("Resellers"). With respect to Nonresellers, Judge Walter rejected the plaintiffs' argument that Nonresellers violated the DPPA by not putting MVR data to an immediate use, because the Act does not require any use of permissibly obtained data. Recognizing that "the DPPA does not prohibit the nonuse of data obtained for a permissible purpose, immediate or otherwise," the opinion concludes that plaintiffs' proposed interpretation of the Act would "impose . . . an illogical restriction on the use of data obtained for a permissible purpose."
Judge Walter rejected the plaintiffs' claims against the Resellers for similar reasons. Plaintiffs had alleged that the Reseller defendants violated the DPPA by obtaining the data solely for purposes of resale. But the opinion recognizes that the DPPA expressly allows for resale if an "authorized recipient" made the resale "for a use permitted under" the Act. 18 U.S.C. § 2721(c). Relying in part upon the DPPA's use of the phrase "authorized recipient" as opposed to "authorized user," Judge Walter determined the Act does not require Resellers to use permissibly obtained information, and instead expressly permits obtainment for the purpose of resale if the resale is made for a use permissible under the Act. Therefore, the plaintiffs failed to allege an impermissible obtainment by either Resellers or Nonresellers, and thus they failed to state a claim.
Judge Walter's opinion then discusses the constitutional standing issue. The opinion concludes that the plaintiffs could not establish any of the three elements of standing, particularly the injury-in-fact requirement. The only injury the plaintiffs alleged was an invasion of their statutorily protected interest in the freedom from impermissible obtainment of DPPA-regulated data. But because plaintiffs had not properly alleged a violation of that interest, they did not have an injury-in-fact. Without an injury-in-fact, the plaintiffs could not meet their burden of showing standing, and in the absence of standing, the Court lacked jurisdiction
