Maracich v. Spears

• Decision Date: 04 April 2012
• Docket Number: No. 10–2021.,10–2021.
• Citation: 675 F.3d 281
• Parties: Edward F. MARACICH, individually and on behalf of all others similarly situated; Martha L. Weeks, individually and on behalf of all others similarly situated; John C. Tanner, individually and on behalf of all others similarly situated, Plaintiffs–Appellants, v. Michael Eugene SPEARS; Michael Spears, PA; Gedney Main Howe, III; Gedney Main Howe, III, PA; Richard A. Harpootlian; Richard A. Harpootlian, PA; A. Camden Lewis; Lewis & Babock, LLP, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

675 F.3d 281

Edward F. MARACICH, individually and on behalf of all others similarly situated; Martha L. Weeks, individually and on behalf of all others similarly situated; John C. Tanner, individually and on behalf of all others similarly situated, Plaintiffs–Appellants,

v.Michael Eugene SPEARS; Michael Spears, PA; Gedney Main Howe, III; Gedney Main Howe, III, PA; Richard A. Harpootlian; Richard A. Harpootlian, PA; A. Camden Lewis; Lewis & Babock, LLP, Defendants–Appellees.

No. 10–2021.

United States Court of Appeals, Fourth Circuit.

Argued: Dec. 8, 2011.Decided: April 4, 2012.

Philip N. Elbert, Neal & Harwell, Nashville, Tennessee, for Appellants.

Morris Dawes Cooke, Jr., Barnwell, Whaley, Patterson & Helms, LLC, Charleston, South Carolina, for Appellees.

James G. Thomas, W. David Bridgers, Elizabeth S. Tipping, Neal & Harwell, Nashville, Tennessee; Gary L. Compton, Spartanburg, South Carolina, for Appellants.E. Bart Daniel, Charleston, South Carolina, John B. White, Jr., Harrison, White, Smith & Coggins, P.C., Spartanburg, South Carolina, for Appellees.Curtis W. Dowling, Barnes, Alford, Stork & Johnson, LLP, Columbia, South Carolina, for Appellees.Michael Eugene Spears and Michael Spears, PA; Craig E. Burgess, John W. Fletcher, Barnwell, Whaley, Patterson & Helms, LLC, Charleston, South Carolina, for Appellees.Gedney Main Howe, III, and Gedney Main Howe, III, PA; Charles E. Hill, Turner Padget Graham & Laney, P.A., Columbia, South Carolina, for Appellees.Richard Harpootlian and Richard A. Harpootlian, PA.

Before DUNCAN, DAVIS, and WYNN, Circuit Judges.

Affirmed by published opinion. Judge DAVIS wrote the opinion, in which Judge DUNCAN and Judge WYNN joined.

OPINION

DAVIS, Circuit Judge:

This appeal arises from the dismissal of all claims alleged in a putative class action complaint filed pursuant to the Driver's Privacy Protection Act of 1994 (DPPA or the Act), 18 U.S.C. §§ 2721–2725, which “regulates the disclosure of personal information contained in the records of state motor vehicle departments.” See generally Reno v. Condon, 528 U.S. 141, 148, 120 S.Ct. 666, 145 L.Ed.2d 587 (2000) (holding the DPPA constitutional as a proper exercise of Congress' power under the Commerce Clause).

Appellees Michael E. Spears, Esq., Gedney M. Howe, III, Esq., Richard A. Harpootlian, Esq., and A. Camden Lewis, Esq., (“the Lawyers” or Appellees) are South Carolina attorneys who in 2006 and 2007 instituted several “group action” lawsuits in South Carolina state court against numerous car dealerships pursuant to the South Carolina Regulation of Manufacturers, Distributors, and Dealers Act (“Dealers Act”), S.C.Code Ann. § 56–15–10 et seq. They alleged that certain dealerships had collected unlawful fees from car buyers. Through requests submitted to the South Carolina Department of Motor Vehicles (DMV) under the state Freedom of Information Act, S.C.Code Ann. §§ 30–4–10 to –165 (FOIA), the Lawyers obtained “personal information” protected by the DPPA, viz., the names, addresses, telephone numbers, and car purchase information of thousands of car buyers, from which they identified potential named plaintiffs in the Dealers Act group action.

Appellants Edward F. Maracich, Martha L. Weeks, and John C. Tanner (“the Buyers” or Appellants) are car buyers who received mailings from the Lawyers regarding the Dealers Act litigation. In 2009, individually and on behalf of a putative class of all others similarly situated, the Buyers sued the Lawyers in this action in the United States District Court for the District of South Carolina alleging that the Lawyers violated the DPPA when they obtained and used the Buyers' personal information without their consent in connection with the Dealers Act litigation.

On cross-motions for summary judgment in the district court, the Buyers argued that the liability of the Lawyers was established as a matter of law because the Lawyers had obtained their personal information for use in a mass solicitation which, without the Buyers' consent, is prohibited by the DPPA. The Lawyers argued, to the contrary, that they obtained and used the Buyers' personal information for purposes that are permitted notwithstanding the absence of consent, most particularly, under the “litigation exception” to the DPPA's general prohibitions on the use of personal information. In a thorough opinion, the district court granted summary judgment in favor of the Lawyers, concluding that the Lawyers did not engage in prohibited solicitation but that, even if they did, their actions nonetheless satisfied the so-called “litigation” and “state action” exceptions to the statutory prohibitions under the DPPA, and therefore their actions comported with the requirements of the Act. The Buyers have timely appealed from the adverse judgment.

Having carefully considered the record and the parties' contentions, in light of the plain language, purpose, and overall structure of the DPPA, we affirm the judgment, albeit on reasoning differing somewhat from that of the district court. Specifically, we hold that the district court erred in ruling that the Lawyers did not engage in solicitation. Yet, the Lawyers indisputably made permissible use of the Buyers' personal information protected by the DPPA, here, for use “in connection with [litigation],” including “investigation in anticipation of litigation.” 18 U.S.C. § 2721(b)(4). Ultimately, the Buyers' damages claims asserted under the DPPA fail as a matter of law, notwithstanding the fact that the Buyers can identify a distinct prohibited use (mass solicitation without consent) that might be supported by evidence in the record. In short, where, as a matter of settled state law and practice, as here, solicitation is an accepted and expected element of, and is inextricably intertwined with, conduct satisfying the litigation exception under the DPPA, such solicitation is not actionable by persons to whom the personal information pertains.

I.

The issues presented arise out of the process and circumstances surrounding the Lawyers' efforts to investigate, and in due course to institute, claims cognizable in the Dealers Act litigation they filed in state court. Accordingly, we first set forth in some detail the facts and procedural history relevant to the state court litigation. We then proceed to describe the facts and procedural history of this action filed in federal district court. As the parties indicated in their cross-motions for summary judgment filed in the district court, the essential cardinal facts are undisputed.

A.

In early June 2006 the Lawyers were contacted by several persons who complained that local car dealerships were engaged in unfair practices. The pursuit of these potential claims led the Lawyers to make the first of a series of FOIA requests to the South Carolina DMV. The requests indicated to the DMV that information was being sought “in anticipation of litigation,” under the DPPA provision commonly referred to as the “litigation exception,” which authorizes a state DMV to disclose drivers' and/or car owners' “personal information”: ¹

for use in connection with any civil, criminal, administrative, or arbitral proceeding in any Federal, State, or local court or agency or before any self-regulatory body, 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.18 U.S.C. § 2721(b)(4).

In the original FOIA request, Appellee Harpootlian explained to the DMV: “I have plaintiffs who have complained of certain conduct as a result of their transactions with car dealers, conduct which I believe to be a potential violation [of] state law. I am attempting to determine if this is a common practice, and am accordingly submitting this FOIA request.” J.A. 206. The request was for information on “private purchases of new or used automobiles in Spartanburg County during the week of May 1–7, 2006, including the name, address, and telephone number of the buyer, dealership where purchased, type of vehicle purchased, and date of purchase.” J.A. 206. Apparently satisfied that the litigation exception applied, the DMV provided the requested information.

About one month later, Harpootlian made a second FOIA request to the DMV. This request likewise invoked the litigation exception of the DPPA and extended the inquiry to purchases of new or used cars in Charleston, Richland, York, Lexington, and Greenville counties for the week of May 1–7, 2006. Again, the DMV provided the requested information.

It is undisputed that at the time of these first two FOIA requests (despite Harpootlian's reference to “plaintiffs who have complained of certain conduct”) the Lawyers had not yet filed an action under the Dealers Act or otherwise. Just days after the second FOIA request, however (and presumably before it was answered), the Lawyers filed in state court a Dealers Act case referred to by the parties and the district court as the Herron litigation, alleging violations by 51 car dealerships.² The suit was filed on behalf of four named plaintiffs and “for the benefit of all others,” J.A. 220; see S.C.Code Ann. § 56–15–110 (providing that “when such action is one of common or general interest to many persons or when the parties are numerous and it is impracticable to bring them all before the court, one or more may sue for the benefit of the whole, including actions for injunctive relief.”).

Immediately following the filing of the complaint in Herron, various defendant dealerships filed motions to dismiss on the ground that they had not sold cars to any of the four named plaintiffs, who therefore lacked standing. With these motions pending, Harpootlian submitted a third FOIA request to the DMV in October 2006, again citing the litigation exception, in which he requested the personal information and types of vehicles purchased for people who bought cars from...