Ferm v. U.S. Trustee

Decision Date08 February 1999
Docket NumberN,No. 97-16646,97-16646
Citation194 F.3d 954
Parties(9th Cir. 1999) In re: LAORPHUS CRAWFORD, Debtor. JACK FERM, Appellant, v. UNITED STATES TRUSTEE, Appellee. In re: IBOLYA RAUSCH, Debtor. JACK FERM, Appellant, v. UNITED STATES TRUSTEE, Appellee. o. 97-16653
CourtU.S. Court of Appeals — Ninth Circuit

William Bue, Erik Bakken, James Eustace, Allison E. Lee, Willie M. Jordan-Curtis, University of Arizona College of Law Legal Clinic, Tucson, Arizona, for the appellant.

Anne M. Lobell, United States Department of Justice, Washington, D.C., for the appellee.

Appeals from the United States District Court for the District of Nevada; Philip M. Pro, District Judge, Presiding. D.C. No. CV-96-00647-PMP(LRL), D.C. No.CV-96-00646-PMP(RLH)

Before: Betty B. Fletcher, and A. Wallace Tashima, Circuit Judges, and James R. Singleton,* District Judge.

B. FLETCHER, Circuit Judge:

Appellant Jack Ferm ("Ferm") is a nonattorney bankruptcy petition preparer ("BPP"). In the course of preparing bankruptcy petitions for two debtors, Ferm did not include his own Social Security Number ("SSN") on several documents submitted to the bankruptcy court, as required by 11 U.S.C. S 110(c). The bankruptcy court subsequently imposed fines against him totaling $800 for his failure to disclose his SSN, fines that were upheld on appeal to the district court. In these appeals, Ferm contends that S 110(c) violates his constitutional rights to privacy and equal protection, as well as certain rights secured to him by S 7 of the Privacy Act. In the alternative, he argues that he has satisfied the requirements of the "reasonable cause" exception to S 110(c).

BACKGROUND

The facts are undisputed. Ferm, who characterizes himself as an "independent paralegal," assists individuals in preparing bankruptcy petitions. In mid-1995, he filed a motion with the Bankruptcy Court for the District of Nevada seeking leave to substitute an identification number other than his SSN on the bankruptcy petitions he prepares. The motion was motivated by Ferm's fear of credit card fraud. The bankruptcy court denied the motion in an order filed on August 21, 1995.

On September 5, 1995, Ibolya Rausch and Laorphus Crawford each filed pro se Chapter 7 petitions with the bankruptcy court. Each petition disclosed that Ferm had assisted in its preparation. Although Ferm completed the required disclosure forms in connection with the petitions, he omitted his SSN. In response, Appellee United States Trustee ("government") asked the bankruptcy court to fine Ferm $24,000, require him to disgorge the fees he earned from Rausch and Crawford, and hold him in contempt of the court's August 21, 1995 order. In a published opinion, the bankruptcy court fined Ferm a total of $800 for his failure to include his SSN on the documents relating to the Crawford and Rausch petitions.1 See Ferm v. U.S. Trustee (in re Rausch), 197 B.R. 109 (Bankr. D. Nev. 1996). The district court in a published opinion affirmed the bankruptcy court. See Ferm v. U.S. Trustee (in re Rausch), 213 B.R. 364 (D. Nev. 1997). These appeals followed.

DISCUSSION

We have jurisdiction over these appeals pursuant to 28 U.S.C. 158(d). We independently review the bankruptcy court's determinations and do not give deference to the district court. See Levin v. Maya Const. (In re Maya Const.), 78 F.3d 1395, 1398 (9th Cir. 1996). Because the relevant facts here are undisputed, our review focuses on the bankruptcy court's legal conclusions, which are subject to de novo review. See Worthington v. General Motors Corp. (In re Claremont Acquisition Corp.), 113 F.3d 1029, 1031 (9th Cir. 1997).

I. The statutory framework: Section 110(c) and Section 107.

Section 110(c)2 requires that BPPs include their SSNs on all documents filed with the bankruptcy court and authorizes the imposition of a fine in the event of noncompliance. See 11 U.S.C. S 110(c). Congress enacted this provision in 1994 as part of a larger effort to regulate nonattorney bankruptcy petition preparers:

[Section 110] adds a new section to chapter 1 of title 11 United States Code to create standards and penal ties pertaining to bankruptcy petition preparers. Bankruptcy petition preparers not employed or supervised by any attorney have proliferated across the country. While it is permissible for a petition pre parer to provide services solely limited to typing, far too many of them also attempt to provide legal advice and legal services to debtors. These preparers often lack the necessary legal training and ethics reg ulation to provide such services in an adequate and appropriate manner. These services may take unfair advantage of persons who are ignorant of their rights both inside and outside the bankruptcy system.

H.R. REP. NO. 103-835, at 56 (1994), reprinted in 1994 U.S.C.C.A.N. 3340, 3365; see also Fessenden v. Ireland (In re Hobbs), 213 B.R. 207, 210-11 (Bankr. D. Me. 1997) (discussing legislative history of S 110); 2 LAWRENCE P. KING, COLLIER ON BANKRUPTCYS 110.LH (15th ed. revised 1999) (same).

Ferm does not object to the bankruptcy court's collection of his SSN pursuant to S 110(c). He does, however, object to the subsequent disclosure of his SSN to the general public, an outcome that results from the fact that, by separate statutory provision, papers filed with the bankruptcy court become part of the public record. See 11 U.S.C. S 1073. Accordingly, we limit our inquiry today to the question of whether the disclosure of Ferm's SSN violates his constitutional or statutory rights; we express no opinion regarding whether the mere collection of SSNs pursuant to S 110(c) invades any legallyprotected interest of BPPs.

II. Informational privacy.

While the Supreme Court has expressed uncertainty regarding the precise bounds of the constitutional "zone of privacy," its existence is firmly established. See, e.g., Whalen v. Roe, 429 U.S. 589, 599-600 (1977); Griswold v. Connecticut, 381 U.S. 479, 483 (1965). We have observed that the relevant Supreme Court precedents delineate at least two distinct kinds of constitutionally-protected privacy interests: "One is the individual interest in avoiding disclosure of personal matters, and another is the interest in independence in making certain kinds of important decisions." Doe v. Attorney General, 941 F.2d 780, 795 (9th Cir. 1991) (quoting Whalen, 429 U.S. at 599-600). Ferm argues that the disclosure of his SSN implicates the first of the two threads, sometimes referred to as the right of "informational privacy." See generally Francis S. Chlapowski, Note, The Constitutional Protection of Informational Privacy, 71 B.U. L. REV. 133 (1991); see also Doe v. City of New York, 15 F.3d 264, 267 (2d Cir. 1994) (collecting cases and concluding that "[t]here is . . . a recognized constitutional right to privacy in personal information.").4

We agree with Ferm that the indiscriminate public disclosure of SSNs, especially when accompanied by names and addresses,5 may implicate the constitutional right to informational privacy. As the Fourth Circuit recognized in Greidinger v. Davis, "the harm that can be inflicted from the disclosure of a SSN to an unscrupulous individual is alarming and potentially financially ruinous." Greidinger v. Davis, 988 F.2d 1344, 1354 (4th Cir. 1993).6 In an era of rampant identity theft, concern regarding the dissemination of SSNs is no longer reserved for libertarians inveighing against the specter of national identity cards. See id. at 1353 ("[A]rmed with one's SSN, an unscrupulous individual could obtain a person's welfare benefits or Social Security benefits, order new checks at a new address on that person's checking account, obtain credit cards, or even obtain a person's paycheck."). Unlike a telephone number or even a name, an individual's SSN serves as a unique identifier that cannot be changed and is not generally disclosed by individuals to the public.

Judicial and legislative actions in other contexts also support the conclusion that the disclosure of SSNs can raise serious privacy concerns. See generally Flavio L. Komuves, We've Got Your Number: An Overview of Legislation and Decisions to Control the Use of Social Security Numbers as Personal Identifiers, 16 J. MARSHALL J. COMPUTER & INFO. L. 529, 549-68 (1998). For example, courts have interpreted Exemption 6 of the Freedom of Information Act ("FOIA"), 5 U.S.C. S 552(b)(6), to forbid the disclosure of SSNs. See I.B.E.W. Local Union No. 5 v. HUD, 852 F.2d 87, 89 (3d Cir. 1988). Congress for its part, has enacted measures to control the collection and dissemination of SSNs by government agencies, including the Privacy Act, discussed in more detail below, and the Driver Privacy Protection Act, 18 U.S.C. SS 2721-23 (barring states from disclosing "personal information," including SSNs, contained in motor vehicle licensing records).

The right to informational privacy, however, "is not absolute; rather, it is a conditional right which may be infringed upon a showing of proper governmental interest." Doe v. Attorney General, 941 F.2d at 796. Our precedents demand that we "engage in the delicate task of weighing competing interests" to determine whether the government may properly disclose private information. Doe v. Attorney General, 941 F.2d at 796; see also Roe v. Sherry, 91 F.3d at 1274; Barry v. City of New York, 712 F.2d 1554, 1559 (2d Cir. 1983); Westinghouse, 638 F.2d at 578. Relevant factors to be considered include:

. . . the type of record requested, the information it does or might contain, the potential for harm in any subsequent nonconsensual disclosure, the injury from disclosure to the relationship in which the record was generated, the adequacy of safeguards to prevent unauthorized disclosure, the degree of need for access, and whether there is an express statutory mandate, articulated public policy, or other...

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