Ex parte National Western Life Ins. Co.

• Citation: 899 So.2d 218
• Parties: Ex parte NATIONAL WESTERN LIFE INSURANCE COMPANY. Ex parte United American Insurance Company. (In re Terrill W. Sanders, as administrator of the estate of John W. Guthrie, deceased v. Wade Odice Farmer et al.)
• Decision Date: 08 October 2004
• Court: Supreme Court of Alabama

899 So.2d 218

Ex parte NATIONAL WESTERN LIFE INSURANCE COMPANY.

Ex parte United American Insurance Company.

(In re Terrill W. Sanders, as administrator of the estate of John W. Guthrie, deceased v. Wade Odice Farmer et al.)

1068.

Supreme Court of Alabama.

October 8, 2004.

Charles D. Stewart and Jarrod B. Bazemore of Spain & Gillon, LLC, Birmingham, for petitioner National Western Life Insurance Company.

Clarence M. Small, Sharon D. Stuart, and H. Spence Morano of Christian & Small, LLC, Birmingham, for petitioner United American Insurance Company.

Terrell Wynn and Bruce J. McKee of Hare, Wynn, Newell & Newton, Birmingham, for respondents. Robert A. Huffaker of Rushton, Stakely, Johnston & Garrett, Montgomery, for amici curiae Alfa Mutual Insurance Company and Alfa Life Insurance Corporation, in support of the petitioners.

Michael R. Pennington of Bradley Arant Rose & White, L.L.P., Birmingham, for amici curiae Business Council of Alabama and Association of Alabama Life Insurance Companies, in support of the petitioners.

Samuel H. Franklin of Lightfoot, Franklin & White, Birmingham; and Joana S. Ellis of Hill, Hill, Carter, Franco, Cole & Black, P.C., Montgomery, for amicus curiae Alabama Defense Lawyers Association, in support of the petitioners.

HOUSTON, Justice.

National Western Life Insurance Company and United American Insurance Company ("the petitioners"), defendants in an action pending in the Jefferson Circuit Court, petition for a writ of mandamus directing the Jefferson Circuit Court to vacate its order compelling the petitioners to disclose to the plaintiff in the action certain personal information regarding their customers and to enter a protective order regarding that information. The petitioners contend that the disclosure of the information is barred by 15 U.S.C. § 6802, a part of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq. ("the GLBA"). We disagree, and we deny the petitions.

I. Facts

These mandamus petitions involve a pure question of statutory construction, and the facts relevant to that question are not disputed.

Terrill W. Sanders, as administrator of the estate of John W. Guthrie, deceased ("the respondent"), filed an action based upon an alleged negligent issuance of a life-insurance policy,¹ naming as defendants the petitioners, among others. In pursuing this claim, the respondent sought discovery from the petitioners of insurance policies and any other insurance documents of several individuals who are not parties to, and who have no interest in, this action. The petitioners objected to the respondent's request, asserting that the documents, which contain medical histories, Social Security numbers, marital status, occupation, height, weight, date and location of birth, address, day and evening telephone numbers, and insurance choices, premiums, and benefits, are confidential and private.

The respondent then filed a motion to compel, seeking the production, without limitation, of all the requested documents. The petitioners filed motions for protective orders and motions in opposition to the respondent's motion to compel. The trial court granted the petitioners' motions for protective orders. However, upon the respondent's motion to reconsider, the court ordered the petitioners to produce the documents.

The petitioners filed motions to reconsider, restating all of their previous arguments and adding a new one: that the privacy provision of the GLBA, 15 U.S.C. § 6802, barred the petitioners from disclosing the requested information. The trial court denied the petitioners' motions to reconsider, and these now-consolidated petitions for the writ of mandamus followed.

II. Standard of Review

Normally, in reviewing a petition for a writ of mandamus directed to a trial court's ruling on a discovery matter, this Court must decide whether the trial court exceeded its discretion. Ex parte Clarke, 582 So.2d 1064, 1067 (Ala.1991). However, when the trial court's discovery order is predicated upon a pure question of statutory construction, as it is in this case, we review this, as we review all questions of statutory construction, de novo, giving no deference to the trial court's conclusions. Pitts v. Gangi, 896 So.2d 433 (Ala.2004); Greene v. Thompson, 554 So.2d 376 (Ala.1989).

III. Analysis

Enacted in 1999, the GLBA prohibits a financial institution from "disclos[ing] to a nonaffiliated third party any nonpublic personal information" received by the institution from a consumer, unless the consumer has notice of the disclosure and has been given an opportunity to "opt out" of the disclosure, that is, "to direct that such information not be disclosed to such third party." 15 U.S.C. § 6802(b)(1)(B). Congress expressly stated its purpose behind this prohibition as follows:

"(a) Privacy obligation policy. It is the policy of the Congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers' nonpublic personal information.

"(b) Financial institutions safeguards. In furtherance of the policy in subsection (a) of this section, each agency or authority described in section 6805(a) of this title shall establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguards —

"(1) to insure the security and confidentiality of customer records and information;

"(2) to protect against any anticipated threats or hazards to the security or integrity of such records; and

"(3) to protect against unauthorized access to or use of such records or information which could result in substantial harm or inconvenience to any customer."

15 U.S.C. § 6801. The GLBA expressly states that it supersedes any "statute, regulation, order, or interpretation in effect in any State" to the extent that any "such statute, regulation, order, or interpretation is inconsistent with the provisions of this subchapter." 15 U.S.C. § 6807(a).

The general prohibition in the GLBA on disclosure of nonpublic personal information is subject to certain exceptions, which, in light of the express purposes behind the GLBA, have been properly held to be "limited in scope and purpose." Individual Reference Servs. Group, Inc. v. FTC, 145 F.Supp.2d 6, 36 (D.D.C.2001) (stating that the "legislative history and structure [of the GLBA] indicate that Congress intended the exceptions [in the GLBA] to be limited in scope and purpose"). One of those exceptions is § 6802(e)(8), which provides:

"(e) General exceptions. Subsections (a) and (b) of this section shall not prohibit the disclosure of nonpublic personal information —

". . . .

"(8) to comply with Federal, State, or local laws, rules, and other applicable legal requirements; to comply with a properly authorized civil, criminal, or regulatory investigation or subpoena or summons by Federal, State, or local authorities; or to respond to judicial process or government regulatory authorities having jurisdiction over the financial institution for examination, compliance, or other purposes as authorized by law."

In this case, there is no dispute that the petitioners are bound by the GLBA, that the information sought by the respondent is "nonpublic personal information," and that the respondent is a "nonaffiliated third party." The sole issue, therefore, is whether 15 U.S.C. § 6802(e)(8) allows the petitioners to disclose the requested information to the respondent.

No Alabama appellate court has interpreted § 6802(e)(8). The handful of courts in other jurisdictions that have interpreted the provision have arrived at conflicting opinions as to whether 15 U.S.C. § 6802(e)(8) allows disclosure of nonpublic personal information by a financial institution to a private plaintiff in a civil action, and, if it does, under which part of the provision disclosure is allowed. In Marks v. Global Mortgage Group Inc., 218 F.R.D. 492 (S.D.W.Va.2003), the United States District Court for the Southern District of West Virginia reviewed a federal magistrate judge's ruling that § 6802(e)(8) allowed the disclosure by a financial institution of "nonpublic personal information" to a plaintiff in a civil action who was undisputedly a "nonaffiliated third party." The federal magistrate judge did not rule that the disclosure was allowed under the "judicial process" language of § 6802(e)(8), but rather that it was allowed under the language permitting disclosure "to comply with Federal, State, or local laws, rules, and other applicable legal requirements." Marks, 218 F.R.D. at 495. The federal district court disagreed with this interpretation, but affirmed the magistrate's ruling by holding that the disclosure was allowed under the "judicial process" language:

"The court agrees that § 6802(e)(8) of the GLBA permits the defendant to disclose the information sought by the plaintiffs, but for reasons different from those of the Magistrate Judge. The language in § 6802(e)(8) permitting disclosure `to comply with Federal, State, or local laws, rules, and other applicable legal requirements' refers to the numerous federal and state statutes, rules, and legal requirements that regulate the financial industry. The purpose of this exception is to allow financial institutions to comply with these various laws and requirements without fear of violating the GLBA. The language does not create an exception for the disclosure of information in the course of civil discovery.

"However, section 6802(e)(8) also allows disclosures made `to respond to judicial process or government regulatory authorities having jurisdiction over the financial institution for examination, compliance, or other purposes as authorized by law.' 15 U.S.C. § 6802(e)(8) (emphasis added). The plaintiffs contend that this language creates an independent `judicial process' exception to the opt-out provision that applies to civil discovery.

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