Beneficial Consumer Discount Co. v. Poltonowicz

• Decision Date: 04 August 1994
• Docket Number: No. 94-1346,94-1346
• Citation: 47 F.3d 91
• Parties: -992, 63 USLW 2516 BENEFICIAL CONSUMER DISCOUNT COMPANY, Appellant, v. David R. POLTONOWICZ; John Poltonowicz; The Internal Revenue Service of the United States of America. . Submitted Pursuant to Third Circuit LAR 34.1(a)
• Court: U.S. Court of Appeals — Third Circuit

Page 91

47 F.3d 91

75 A.F.T.R.2d 95-992, 63 USLW 2516

BENEFICIAL CONSUMER DISCOUNT COMPANY, Appellant, v. David R. POLTONOWICZ; John Poltonowicz; The Internal Revenue Service of the United States of America.

No. 94-1346.

United States Court of Appeals Third Circuit.

Submitted Pursuant to Third

Circuit LAR 34.1(a)

Aug. 4, 1994.

Decided Feb. 9, 1995.

Shawn J. Lau, Bingaman, Hess, Coblentz & Bell, Reading, PA, for appellant.

Frank W. Hunger, Asst. Atty. Gen., Michael R. Stiles, U.S. Atty., Barbara L. Herwig, Irene M. Solet, Appellate Staff, Civ. Div., U.S. Dept. of Justice, Washington, DC, for appellee.

Before: STAPLETON and GREENBERG, Circuit Judges, and ATKINS, ^* District Judge.

OPINION OF THE COURT

STAPLETON, Circuit Judge:

Beneficial Consumer Discount Co. ("Beneficial") appeals from an order dismissing its third-party claim against the Internal Revenue Service ("IRS"), and remanding the remainder of this case to state court. The district court reasoned that the doctrine of sovereign immunity precluded Beneficial's claim against the IRS. At issue is whether the waiver of the sovereign immunity of the United States set forth either in the Right to Financial Privacy Act of 1978 ("RFPA"), 12 U.S.C. Secs. 3401-3422, or the Federal Tort Claims Act ("FTCA"), 28 U.S.C. Secs. 1346(b), 2671-2680, permits Beneficial's claim. We hold that neither of these statutes waives the federal government's sovereign immunity against Beneficial's claim. We will affirm in part and dismiss in part for lack of jurisdiction.

I.

This case arises out of a March 1991 installment loan agreement between Beneficial and defendants David Poltonowicz and John Poltonowicz ("the Poltonowiczs"). Beneficial, claiming that the Poltonowiczs defaulted on that loan, filed suit against them in the Pennsylvania Court of Common Pleas. In response, the Poltonowiczs asserted a counterclaim, alleging that Beneficial had violated the terms of the loan agreement, as well as unspecified state and federal laws, by providing certain confidential information to third parties.

Beneficial admits that it released information concerning the Poltonowiczs to a third party, the IRS. It nevertheless argues that this alleged breach of confidentiality was entirely justified. It explains that IRS officials requested the confidential information in writing and certified to Beneficial, pursuant to the requirements of 12 U.S.C. Sec. 3403(b), that the request met the requirements of the RFPA. The IRS also informed Beneficial that good-faith reliance upon the RFPA certification would relieve Beneficial of any possible liability to the Poltonowiczs for disclosing the requested account information. See 12 U.S.C. Sec. 3417(c).

This appeal arises because Beneficial did something more than assert the IRS's RFPA certification as a defense under Sec. 3417(c); it joined the IRS, alleging that, if Beneficial were held liable to the Poltonowiczs, it was entitled to judgment against the IRS for any amount they recovered. In response, the IRS removed the case to the district court and filed a motion to dismiss on the ground that Beneficial's claim was barred by the doctrine of sovereign immunity. The district court granted the IRS's motion, dismissing Beneficial's claim against the IRS with prejudice, and remanding the case to state court. Beneficial filed a timely motion for reconsideration. The district court denied that motion and this appeal followed.

II.

We are presented with threshold issues of jurisdiction. With certain exceptions not here relevant, we may review only final orders of a district court. Moreover, we are specifically barred by 28 U.S.C. Sec. 1447(d) from reviewing "[a]n order remanding a case to the State court from which it was removed," where the district court has decided to remand because it believes it "lacks subject matter jurisdiction." 28 U.S.C. Secs. 1447(c), (d), as interpreted in Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976), and Gravitt v. Southwestern Bell Telephone Co., 430 U.S. 723, 97 S.Ct. 1439, 52 L.Ed.2d 1 (1977).

The November 30, 1993, order from which Beneficial appeals dismissed with prejudice its cross-claim against the IRS on "grounds of sovereign immunity" and remanded the remaining claims in the case to the state court from which it came because it had "no independent jurisdiction" over those claims. Beneficial asks us to hold that the district court erred in dismissing its claim against the IRS. It further asks us to rule that the district court erred in remanding the other claims in the case whether or not it was justified in dismissing the IRS. ¹ We conclude that we have jurisdiction to review that portion of the November 30, 1993, order which dismissed Beneficial's claim against the IRS with prejudice, and we will affirm that part of the order. We are without jurisdiction, however, to review the district court's remand decision.

Because the district court's decision to dismiss Beneficial's claim against the IRS affected the substantive rights of the parties and was separable from the district court's decision to remand, that portion of the order appealed from is a final one over which we have appellate jurisdiction despite the bar of 28 U.S.C. Sec. 1447(d). This is the teaching of the Supreme Court's decision in City of Waco v. United States Fidelity & Guaranty Co., 293 U.S. 140, 143-44, 55 S.Ct. 6, 7-8, 79 L.Ed. 244 (1934) (review permitted of an order dismissing one party to a case where that order was accompanied by a motion to remand because "in logic and fact the decree of dismissal preceded that of remand and was made by the District Court while it had control of the case."), and our decision in Carr v. American Red Cross, 17 F.3d 671, 674-78 (3d Cir.1994) (same).

On the other hand, Sec. 1447(d) bars our review of that portion of the district court's order remanding this case to state court. City of Waco v. United States Fidelity & Guarantee Co., 293 U.S. 140, 143, 55 S.Ct. 6, 7, 79 L.Ed. 244 (1934) (stating that "no appeal lies from the order of remand"); see generally 15A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure Sec. 3914.11, at 712-15 (1992 & Supp.1994). Cases permitting appellate consideration of remand orders, such as Carr or Thermtron Products, are inapposite. We permitted review of the remand order in Carr because without that review, our decision overturning the district court's order which triggered the remand would have been meaningless. 17 F.3d at 683. Our decision here, in contrast, affirms the order preceding remand. Thermtron Products is likewise inapplicable; the Supreme Court there permitted mandamus review of a remand order which was based "on grounds that [the district court] had no authority to consider." 423 U.S. at 351, 96 S.Ct. at 593. Here the district court's remand was based on its conclusion that it had no subject matter jurisdiction over the remaining claims and, as Thermtron Products expressly recognized, this is the kind of order which comes within the scope of Sec. 1447(d) and may not be reviewed.

III.

It is well settled that the United States enjoys sovereign immunity from suits and, accordingly, may be sued only if it has waived that immunity. United States v. Idaho ex rel. Dep't of Water Resources, --- U.S. ----, ----, 113 S.Ct. 1893, 1896, 123 L.Ed.2d 563 (1993); United States v. Nordic Village, Inc., 503 U.S. 30, ----, 112 S.Ct. 1011, 1014, 117 L.Ed.2d 181 (1992); FMC Corp. v. Department of Commerce, 29 F.3d 833, 838-39 (3d Cir.1994); In re University Med. Ctr. (University Med. Ctr. v. Sullivan), 973 F.2d 1065, 1085 (3d Cir.1992). The IRS, as an agency of the United States, is thus shielded from private actions unless sovereign immunity has been waived. United States v. Mitchell, 463 U.S. 206, 212, 103 S.Ct. 2961, 2965, 77 L.Ed.2d 580 (1983).

"[W]aivers of federal sovereign immunity must be 'unequivocally expressed' " in the statutory text and " '[a]ny such waiver must be strictly construed in favor of the United States.' " Idaho, --- U.S. at ----, 113 S.Ct. at 1896 (citations omitted); Department of Energy v. Ohio, 503 U.S. 607, 112 S.Ct. 1627, 1633, 118 L.Ed.2d 255 (1992); Nordic Village, 503 U.S. at ---- - ----, 112 S.Ct. at 1014-15; Ardestani v. INS, 502 U.S. 129, 112 S.Ct. 515, 520, 116 L.Ed.2d 496 (1991); University Med. Ctr., 973 F.2d at 1085.

Beneficial asserts that two federal statutes permit it to bring its third-party claim against the IRS: the Federal Right to Privacy Act ("the FRPA") and the Federal Tort Claims Act ("the FTCA"). We consider the applicability of these two statutes in turn.

IV.

The Right to Financial Privacy Act of 1978, 12 U.S.C. Secs. 3401-3422, is designed "to protect the customers of financial institutions from unwarranted intrusion into their records while at the same time permitting legitimate law enforcement activity." H.R.Rep. No. 1383, 95th Cong., 2d Sess. 33 (1978), reprinted in 1978 U.S.C.C.A.N. 9273, 9305. The RFPA's civil enforcement mechanism, Sec. 3417(a), reflects this goal of protecting the privacy interests of customers of financial institutions. It states in pertinent part:

(a) Liability of agencies or departments of United States or financial institutions.

Any agency or department of the United States or financial institution obtaining or disclosing financial records or information contained therein in violation of this chapter is liable to the customer to whom such records relate in an amount equal to the sum of--

(1) $100 without regard to the volume of records involved;

(2) any actual damages sustained by the customer as a result of the disclosure;

(3) such punitive damages as the court may allow, where the violation is found to have been willful or intentional; and

(4) in the case of any successful action to enforce liability under this section, the costs of the action together with reasonable attorney's fees as determined by the...