AMERIQUEST MORTGAGE Co. v. Wash. State OFFICE of The ATTORNEY Gen.

• Decision Date: 04 November 2010
• Docket Number: No. 82690-1.,82690-1.
• Citation: 241 P.3d 1245
• Parties: AMERIQUEST MORTGAGE COMPANY, a Delaware corporation, Respondent, v. WASHINGTON STATE OFFICE OF the ATTORNEY GENERAL, Petitioner.
• Court: Washington Supreme Court

241 P.3d 1245

AMERIQUEST MORTGAGE COMPANY, a Delaware corporation, Respondent,

v.WASHINGTON STATE OFFICE OF the ATTORNEY GENERAL, Petitioner.

No. 82690-1.

Supreme Court of Washington,En Banc.

Argued May 11, 2010.

Decided Nov. 4, 2010.

COPYRIGHT MATERIAL OMITTED.

David W. Huey, Office of the Attorney General, Tacoma, WA, Shannon E. Smith, Office of the Attorney General, Seattle, WA, Alan D. Copsey, Office of the Attorney General, Olympia, WA, for Petitioner.

Erik Dupen Price, Lane Powell PC, Olympia, WA, Michael Alan Nesteroff, Laura Therese Morse, Lane Powell PC, Seattle, WA, Joanne N. Davies, Buchalter Nemer Fields & Younger, Irvine, CA, for Respondent.

Melissa Ann Huelsman, Law Offices of Melissa A. Huelsman, Seattle, WA, for RespondentIntervenor.

William John Crittenden, Patrick Denis Brown, Seattle, WA, amicus counsel for Washington Coalition for Open Government.

Douglas B. Klunder, Margaret Ji Yong Pak, Seattle, WA, amicus counsel of American Civil Liberties Union.

FAIRHURST, J.

¶ 1This case concerns the application of certain federal privacy laws to a request for information brought under the State's Public Records Act (PRA), chapter 42.56 RCW.The Washington State Office of the Attorney General(AGO) obtained loan files, e-mails, and other papers from Ameriquest Mortgage Company during its investigation of Ameriquest's lending practices.The AGO also generated its own documents and received other information directly from consumers who filed complaints about Ameriquest.A member of the public, Melissa A. Huelsman, invoking the PRA, asked for records from the investigation, and the AGO wants to disclose certain information, including names, addresses, phone numbers, and interest rates.Ameriquest does not object to the AGO disclosing information it received from individual consumers.Ameriquest does object to the AGO disclosing information it received from Ameriquest.The disputed issue is whether, and to what extent, the federal Gramm-Leach-Bliley Act (GLBA), 15 U.S.C. §§ 6801-6809, and the relevant Federal Trade Commission(FTC) rule, preempt the PRA or otherwise bar the AGO from disclosing information it received from Ameriquest.

I.STATEMENT OF THE CASE

A.Overview of the GLBA and the FTC rule

¶ 2 In the GLBA, Congress enacted the federal policy requiring financial institutions to “respect the privacy of its customers” and “protect the security and confidentiality of those customers' nonpublic personal information.”15 U.S.C. § 6801(a).Pursuant to the rule-making authority granted in the GLBA, § 6804, the FTC adopted Privacy of Consumer Financial Information, 16 C.F.R. § 313.¹Under these federal privacy protections, a financial institution is not allowed to disclose a consumer's nonpublic personal information to a nonaffiliated third party, ² unless the consumer receives a prior notice and an opportunity to opt out.15 U.S.C. § 6802(a)(b);16 C.F.R. § 313.10(a)(1).³The notice must describe the financial institution's privacy policies and practices, including the kinds of protected information that the financial institution discloses to nonaffiliated third parties.15 U.S.C. § 6803;16 C.F.R. § 313.6.A separate opt out notice must “clearly and conspicuously” describe the consumer's right to opt out of the financial institution's disclosures of protected information and must give the consumer a “reasonable means” to exercise that right.15 U.S.C. § 6802(b)(1);16 C.F.R. § 313.7(a)(1).If after giving proper notice and a reasonable opportunity to opt out, the consumer does not opt out, then the financial institution may disclose nonpublic personal information to nonaffiliated third parties.15 U.S.C. § 6802(a)- (b);16 C.F.R. § 313.10(a)(1).The disclosure must be consistent with the policies described in the notice.See15 U.S.C. § 6802(a)- (b);16 C.F.R. § 313.10(a)(1).

¶ 3 Several exceptions to the financial institution's notice and opt out obligation are set forth in § 6802(e) and 16 C.F.R. § 313.14-.15.Some of the exceptions are relevant here.The financial institution does not have to give notice if the disclosure is done “with the consent or at the direction of the consumer,”§ 6802(e)(2);16 C.F.R. § 313.15(a)(1); or is necessary to, among other things, “comply with Federal, State, or local laws, rules, and other applicable legal requirements,”§ 6802(e)(8);16 C.F.R. § 313.15(a)(7)(i); or “comply with a properly authorized civil, criminal, or regulatory investigation,”§ 6802(e)(8);16 C.F.R. § 313.15(a)(7)(ii).

¶ 4 These federal restrictions also prohibit a nonaffiliated third party from reusing or redisclosing any protected information received from a financial institution.The receiving nonaffiliated third party may disclose nonpublic personal information to its affiliates and those of the financial institution.15 U.S.C. § 6802(c);16 C.F.R. § 313.11(c)(1)-(2), .11(d)(1)-(2).However, the receiving nonaffiliated third party may not reuse or redisclose the nonpublic personal information to another nonaffiliated third party unless an exception applies or the reuse or redisclosure would be lawful if done by the financial institution.15 U.S.C. § 6802(c);16 C.F.R. § 313.11(c)-(d).

B.Factual and procedural history

¶ 5 The AGO accumulated thousands of pages of documents when it investigated Ameriquest's lending practices for violations of the Consumer Protection Act, chapter 19.86 RCW.Ameriquest delivered loan files, e-mails, internal customer complaint files, and other documents to the AGO.Individual customers of Ameriquest gave information to the AGO through its consumer complaint process.The AGO also developed its own documents as the investigation unfolded.None of these documents are included in the appellate record, but an Ameriquest employee, in a sworn declaration, summarized the contents of the loan files that Ameriquest gave to the AGO:

[T]he loan files produced by Ameriquest to the AGO would, at minimum, include a customer's full legal name, social security number (possibly an actual copy of the social security card as well), driver's license number (possibly a copy of the actual license as well), date of birth, credit (FICO) score, credit report (which would identify mortgages and consumer credit information such as name of credit card company, amount charged, amount paid, outstanding balance, timeliness of payments), monthly income, sources of monthly income (which could include a copy of the borrower's paystub, W2, personal and business tax returns, business profit and loss statement), employer's name, employer's address, length of employment, nature of employment, name and age of any children, checking and savings account information (bank statements, deposit verification), identification of other assets (stocks, bonds, life insurance net cash value, retirement fund holdings, net worth of business), residential address, residential telephone number, personal wireless telephone number, as well as all terms and conditions of the customer's transaction (e.g., loan amount, interest rate etc.).

Clerk's Papers(CP)at 118.The employee also stated that the Ameriquest e-mails given to the AGO “contain confidential customer information.”CPat 119.On March 21, 2006, a consent decree terminating the AGO's investigation was entered in King County Superior Court.The decree included a provision relating to the PRA: “If the State receives a request for documents provided by an Ameriquest Party ..., the State shall comply with applicable public disclosure laws and promptly provide notice to the Ameriquest Parties of the request that will afford the Ameriquest Parties the reasonable opportunity to assert that the documents subject to the request are exempt from disclosure.”CPat 168.

¶ 6 Huelsman is an attorney whose practice specializes in predatory lending cases, and she has represented former customers of Ameriquest.On February 5, 2007, she gave the AGO a request for “[a]ll records relating to [the] investigation of Ameriquest.”CPat 132.⁴In follow-up discussions with the AGO, Huelsman clarified that she wanted the borrowers' names, addresses, and loan terms and costs, but not the borrowers' Social Security numbers, account numbers, and the like.The AGO notified Ameriquest that it intended to comply with Huelsman's request.

¶ 7 Ameriquest sought an injunction against the AGO.The trial court entered a temporary restraining order prohibiting the AGO's intended disclosures to Huelsman.In a motion for a preliminary injunction, Ameriquest asked the court to enjoin the AGO's disclosure of five types of documents: (1) Ameriquest's customer loan files, (2) Ameriquest's internal customer complaint files, (3) Ameriquest's employee e-mails, (4) Ameriquest's trade secrets and proprietary information, and (5) the AGO's internally produced documents.Ameriquest did not object to disclosure of the AGO's consumer complaint files, as long the disclosed documents did not include information given by Ameriquest.The trial court denied Ameriquest's motion, concluding that, among other things, the GLBA“does not preempt the State's law on public disclosure of documents.”CPat 322.However, the court left the temporary restraining order “in effect until the AGO completes a thorough redaction of exempt personal and confidential information from the records.”CPat 323.⁵¶ 8The Court of Appeals reversed, holding that “[i]f compliance with the PRA is inconsistent with the GLBA, then the GLBA preempts the PRA on this point and prohibits disclosure.”Ameriquest Mortgage Co. v. Att'y Gen. of Wash.,148 Wash.App. 145, 159, 199 P.3d 468(2009).Because the AGO is a nonaffiliated third party under the GLBA and Huelsman is not an affiliate of the AGO, the Court of Appeals concluded that the GLBA applied to the AGO's proposed disclosure to Huelsman.Id. at 162, 199 P.3d 468.The Court of Appeals remanded to the trial court, concluding that “[w]hat information in...