665 F.2d 327 (11th Cir. 1982), 80-9070, Fitzpatrick v. I.R.S.

Docket Nº:80-9070.
Citation:665 F.2d 327
Party Name:Donald M. FITZPATRICK, Plaintiff-Appellant, v. The INTERNAL REVENUE SERVICE, Defendant-Appellee.
Case Date:January 07, 1982
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 327

665 F.2d 327 (11th Cir. 1982)

Donald M. FITZPATRICK, Plaintiff-Appellant,

v.

The INTERNAL REVENUE SERVICE, Defendant-Appellee.

No. 80-9070.

United States Court of Appeals, Eleventh Circuit

January 7, 1982

Page 328

William L. Harper, U. S. Atty., Atlanta, Ga., Michael J. Salem, Trial Atty., Tax Div., U. S. Dept. of Justice, Washington, D. C., Joyce F. Glucksman, Steven P. Flig, Lawrence K. G. Poole, William W. Harness, Atlanta, Ga., for plaintiff-appellant.

M. Carr Ferguson, Asst. Atty. Gen., John F. Murray, Acting Asst. Atty. Gen., Tax Div., Dept. of Justice, Washington, D. C., Michael L. Paup, Chief Appellate Section, Richard W. Perkins, Helen M. Marinak, Attys., Tax Div., Dept. of Justice, Washington, D. C., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before MORGAN, HILL and KRAVITCH, Circuit Judges.

KRAVITCH, Circuit Judge:

Appellant Donald M. Fitzpatrick appeals from a district court judgment granting him the statutory minimum $1,000 damages for injuries from violations of the Privacy Act, 5 U.S.C. § 552a, and awarding $3,000 of a requested $19,700 in attorneys' fees. Appellant contends that the district court erred in not granting him damages for proven mental injuries resulting from illegal disclosures of personal information, and abused its discretion in reducing his requested attorneys' fees without adequate explanation. Because we hold that damages under the Privacy Act are recoverable only for proven out-of-pocket losses, we affirm that part of the judgment granting appellant the statutory minimum $1,000 in damages. We agree with appellant, however, that the trial court failed to adequately explain the reduction of the requested attorneys' fees and therefore we remand the case to the district court for a more thorough explanation.

I. Background

Appellant Fitzpatrick brought suit under the Privacy Act for unlawful disclosures concerning his disability discharge from the Internal Revenue Service. As part of his application for disability benefits, appellant completed an IRS form indicating he had been suffering from mental distress. The trial court found that appellant's supervisor was guilty of four acts of willfully disclosing appellant's mental condition in violation of the Act, 1 rendering the IRS liable for damages. These findings are uncontested.

To prove damages, appellant introduced the uncontradicted testimony of a psychiatrist that the disclosures had caused appellant to become paranoid about acquaintances knowing that he had retired because of a mental disability. The psychiatrist further testified that the disclosures had

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resulted in appellant becoming deeply depressed and withdrawing from social activities. Appellant also introduced evidence that he had intended to open a tax consulting service after retiring from the IRS, but the disclosures had ruined his ability to attract and deal with clients. The trial court found that the evidence of damages was too speculative to warrant recovery, 2 and awarded appellant the statutory minimum $1,000 damages, plus costs and reasonable attorneys' fees as provided for in the Act. Subsequently, appellant's attorneys submitted detailed affidavits requesting $1,295.46 in litigation expenses and $19,700 in attorneys' fees (394 hours at $50 per hour). Finding the requested fees excessive, the court reduced the award to $3,000, and also disallowed several expense items. This appeal followed.

II. Damages Under the Privacy Act

The Privacy Act, 5 U.S.C. § 552a(g)(4) states:

In any suit brought under the provisions of subsection (g)(1)(C) or (D) of this section in which the court determines that the agency acted in a manner which was intentional or willful, the United States shall be liable to the individual in an amount equal to the sum of-

(A) actual damages sustained by the individual as a result of the refusal or failure, but in no case shall a person entitled to recovery receive less than the sum of $1,000; and

(B) the costs of the action together with reasonable attorney fees as determined by the court.

Appellant does not contest the trial court's finding that the evidence as to his future tax consulting service was too speculative to sustain a damage award. Rather, appellant vigorously argues that his evidence of mental injuries was uncontested and that he therefore suffered damages compensable under the Act. 3 The key issue, therefore, is the meaning of "actual damages" in subsection (g)(4)(A) of the Act. Appellant asserts that "actual damages" is synonymous with general or compensatory damages at common law and that he is entitled to recover for his proven mental injuries. The government, on the other hand, contends that "actual damages" refers to out-of-pocket or pecuniary loss, and because appellant proved no pecuniary losses he is entitled only to the $1,000 statutory minimum damages.

This issue is one of first impression. Ordinarily, our first step in construing a statute is to interpret the statutory language in accordance with its "plain meaning." E. g., United States v. Yeatts, 639 F.2d 1186, 1189 (5th Cir. 1981). 4 Both parties argue that the court decisions interpreting "actual damages" in other contexts support their interpretation in the context of the Privacy Act. Unlike general, special, and compensatory...

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