Cross v. United States Dep't Of Justice

• Decision Date: 27 September 2010
• Docket Number: Nos. 08-5297, 08-5298, 08-5317.,s. 08-5297, 08-5298, 08-5317.
• Citation: 622 F.3d 540
• Parties: Mary Ellen BEAVEN et al., Plaintiffs-Appellees/Cross-Appellants, v. UNITED STATES DEPARTMENT OF JUSTICE et al., Defendants-Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

622 F.3d 540

Mary Ellen BEAVEN et al., Plaintiffs-Appellees/Cross-Appellants,
v.
UNITED STATES DEPARTMENT OF JUSTICE et al., Defendants-Appellants/Cross-Appellees.

Nos. 08-5297, 08-5298, 08-5317.

United States Court of Appeals,Sixth Circuit.

Argued: Dec. 3, 2009.
Decided and Filed: Sept. 27, 2010.

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622 F.3d 544

ARGUED: Steve Frank, United States Department of Justice, Washington, D.C., for Appellants. Douglas L. McSwain, Sturgill, Turner, Barker & Moloney, PLLC, Lexington, Kentucky, for Appellees. ON BRIEF: Steve Frank, United States Department of Justice, Washington, D.C., for Appellants. Douglas L. McSwain, Andrew DeSimone, Sturgill, Turner, Barker & Moloney, PLLC, Lexington, Kentucky, for Appellees.

Before: KENNEDY, MOORE, and WHITE, Circuit Judges.

MOORE, J., delivered the opinion of the court, in which WHITE, J., joined. KENNEDY, J. (pp. 560-64), delivered a separate dissenting opinion.

OPINION KAREN NELSON MOORE, Circuit Judge.

In this Privacy Act and Federal Tort Claims Act case, the Defendants-Appellants/Cross-Appellees appeal the district court's judgment, after a twenty-three-day bench trial, in favor of the Plaintiffs-Appellees/Cross-Appellants on the Privacy Act claims. The Plaintiffs cross-appeal the district court's judgment in favor of the Defendants on the Federal Tort Claims Act claim, as well as a variety of subsidiary issues. The Plaintiffs, a group of staff members at the Federal Bureau of Prisons (“BOP”) Lexington, Kentucky, Federal Medical Center (“FMC”) facility, alleged that the Defendants allowed an employee roster containing the Plaintiffs' sensitive personal information to be disclosed to improper persons, namely prison inmates and other BOP staff. The Defendants include the United States Department of Justice, the BOP, the Attorney General, the head of the BOP, various FMC officials, and the United States of America. The district court found that the responsible employee's actions resulted in a disclosure actionable under 5 U.S.C. § 552a(b) & (g)(1)(D) of the Privacy Act, and that the actions were “intentional or willful” within the meaning of 5 U.S.C. § 552a(g)(4) such that the Plaintiffs were entitled to damages, even though the employee's final act of leaving the folder unsecured was “inadvertent.” For the following reasons, we AFFIRM in part and REVERSE in part, and we REMAND for proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND ¹

During an internal investigation of unauthorized inmate computer usage at the FMC's UNICOR work facility (“UNICOR”), ² Special Investigative Agent Walter Clint Jones (“SIA Jones”) left behind a green file folder on a civilian employee's desk that included a roster of all FMC Lexington employees' names, addresses,

622 F.3d 545

Social Security numbers, home telephone numbers, pay grades, and other personal information (the “folder”). Contrary to BOP Program Statements, the folder was not marked with “LOU-Sensitive” ³ or other required markings to indicate its contents. SIA Jones left the folder on the desk in the Project Management area of UNICOR around 3:00 a.m. on Thursday, March 30, 2001. Staff began to admit inmates into this part of UNICOR beginning around 7:30 a.m., and inmate Charles Kinnard arrived sometime between 9:50 a.m. and 10:00 a.m. Susan Moore, on whose desk the folder lay, did not arrive until sometime after 9:50 a.m.; when she arrived she immediately discovered the folder and turned it over to her acting supervisor, Mark Barnes, and their acting manager, James Jones. At trial, three inmates testified that they saw inmate Charles Kinnard next to Moore's desk prior to her arrival, and two inmates, Mark Geralds and Terrell Harris, saw Kinnard looking at something on Moore's desk for at least two minutes. No civilian staff members noticed this behavior. Although inmates are never present without staff supervision, the Project Management employees do allow inmates with whom they work to approach the staff members' desks and to deposit and remove work papers.

James Jones, after meeting with Moore and Barnes, reported the incident to Associate Warden Ann Mary Carter. Carter then met with Moore and Barnes, told them the folder had been properly secured, asked them to submit memoranda explaining the incident, and instructed them not to discuss the incident with anyone. Because the folder was found on a civilian staff member's desk, Carter believed that no disclosure had occurred, and neither she nor anyone else ordered an investigation, lockdown, or shakedown. The inmates were subjected to the normal pat-down searches prior to their leaving Project Management at the lunch break and at the end of the workday. Warden Maryellen Thoms later decided to treat SIA Jones's act as a performance violation, and, thus, the incident was not reported to the BOP Office of Internal Affairs (“OIA”). ⁴

Soon after March 30, Moore contacted the Union Steward, but Thoms declined to discuss the incident with anyone other than the Union President, with whom she met in mid-April. On April 19, 2001, the Union filed an official grievance alleging that FMC management violated the Freedom of Information Act and the Privacy Act, and requesting that staff be advised of the incident and potential personal-security implications. Scott Murchie, FMC Lexington Human Resources Manager, responded and suggested that no action should be taken before evidence of disclosure was available. The BOP Regional Director denied the grievance on May 4, 2001, citing the absence of “specific proof that staff had their privacy compromised” as the reason not to notify staff. Beaven, 2007 WL 1032301, at *6. Thoms later denied two staff members' requests for information under the Privacy Act related to any disclosure of their personal information based on lack of proof of disclosure under the Privacy Act. The Union referred the incident to the OIA on May 9, 2001, and then invoked arbitration on May 29, 2001. The Union requested an accounting of disclosures, but Thoms denied the request for lack of evidence that a disclosure occurred.

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On September 17, 2001, Thoms issued the first memorandum to staff related to the incident, but the memorandum included several factual inaccuracies-including assertions that the folder was properly marked “LOU-Sensitive” and that it was discovered at 9:00 a.m. after being left unattended since only 7:30 a.m.-and the memorandum failed to state the incident date, the information in the folder, and whom it affected. The memorandum closed by assuring staff of Thoms's “commitment to investigate [disclosure] allegations.” Id. at *8. The memorandum also offered assistance from BOP attorneys in filing administrative tort claims if any allegations “prove founded” because “we have yet to receive any documentation that inmates accessed the file in question.” Id. After arbitration on October 30, 2001, Thoms issued a second staff memorandum on December 17, 2001, but failed to correct inaccuracies or omissions other than the incident date and information included in the folder. The December 17 memorandum again stressed Thoms's “commitment to investigate allegations” of disclosure and provide assistance if “such allegations prove founded.” R. on Appeal (“ROA”) Vol. 1 (J.A.) at 707 (Pls.' Exhibit 56). Sometime after the arbitration, but before the second memorandum, Thoms instructed Murchie to destroy the folder when he was moving to D.C. (Murchie had received the folder from SIA Jones in case it was necessary for arbitration).

On March 1, 2002, the Plaintiffs' counsel filed administrative tort claims for seventy-eight staff members, but the BOP denied the claims on August 26, 2002, based on the claimants' failure to produce evidence of actual disclosure to inmates. On February 19, 2003, the Plaintiffs filed the instant suit asserting nine separate counts on behalf of 106 staff members (adding six more staff and four additional counts in the January 8, 2004, amended complaint). Counts One through Eight alleged violations of the Privacy Act, Count Nine alleged a violation of the Social Security Act, and Counts Ten through Thirteen alleged claims under the Federal Tort Claims Act. On cross-motions for summary judgment, the district court on February 9, 2005, denied the Plaintiffs' motion and granted the Defendants' motion on all counts except the outrageous-conduct claim in Count Eleven, but on September 29, 2005, the district court reinstated the claims of Privacy Act disclosure and common law invasion of privacy, Counts One and Ten. The district court also granted the Plaintiffs' motion to sanction the Defendants for destroying the folder, and the court excluded testimony about the Defendants' inspection of the folder. A twenty-three day bench trial started on February 27, 2006. On March 30, 2007, the district court imposed the Plaintiffs' requested adverse evidentiary inference for spoliation, found that the Defendants had violated the Privacy Act, and denied all other claims. On December 19, 2007, the district court denied the Plaintiffs' motion for discovery sanctions related to misstatements about the folder's labeling and destruction and entered judgment against the Defendants, awarding damages of $1,000 each to all of the plaintiffs except two who had proved greater actual damages.

II. ANALYSIS

The Defendants raise three issues on appeal: (1) Whether the district court erred as a matter of law in holding that the alleged disclosure of the folder was “intentional and willful” while also finding that the responsible employee's act of leaving it in an unsecured location was “inadvertent”; (2) Whether the district court abused its discretion in adopting, as an evidentiary sanction for spoliation, a non-rebuttable inference that “disclosure” occurred; and (3) Whether the district court abused its discretion in its alternative ruling that the...