In re Rausch

Decision Date20 May 1996
Docket NumberBankruptcy No. BK-S-95-23707-LBR.
Citation197 BR 109
PartiesIn re Ibolya RAUSCH, Debtor.
CourtU.S. Bankruptcy Court — District of Nevada

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Jack Ferm, Las Vegas, NV.

Tom Grimmett, Trustee, Las Vegas, NV.

Ibolya Rausch, pro se.

MEMORANDUM DECISION RE: ORDER TO SHOW CAUSE

LINDA B. RIEGLE, Chief Judge.

On September 5, 1995, Ibolya Rausch filed a Chapter 71 petition pro se. On her "Statement of Assistance by Non-Attorney", she disclosed that she had paid $150 to "Jack Ferm" for assistance in filing the petition. A "Statement of Assistance by Non-Attorney Re: Filing The Bankruptcy Petition" was signed by Ferm. It failed to state his Social Security Number ("SSN"). Instead, Ferm provided his SSN to the bankruptcy court's intake supervisor, and in the place provided for disclosure of the SSN, stated: "See Gail Intake Supervisor." Ferm did not place his SSN on the petition, the schedules, the statement of financial affairs, or the "Chapter 7 Individual Debtor's Statement of Intention." Ferm also failed to provide his name, address and signature on the schedules, the statement of financial affairs, and the "Chapter 7 Individual Debtor's Statement of Intention."2 Earlier, on August 30, 1995, this Court had entered an order denying Ferm's motion to use an identifying number other than his SSN on petitions prepared by him.

Upon a motion by the United States Trustee ("UST") this Court ordered Ferm to show cause why he (1) should not disgorge the fee paid to him by the Debtor; and (2) should not be fined for violation of 11 U.S.C. § 110(c); and (3) should not be held in contempt of the Court's August 30, 1995 order denying Ferm's motion to use an identifying number other than his SSN.

The UST argued in its show cause motion that Ferm failed to provide his SSN on 17 "documents",3 that he failed to state his name and address on 15 "documents", and that failed to sign 16 "documents." The UST argues that each failure by Ferm to provide his name, address, signature and SSN constitutes a separate violation of 11 U.S.C. §§ 110(b)(1) and (c)(1). The UST asks that Ferm be fined $24,000 ($500 for each of the 48 "documents" filed), that he be required to disgorge his fee, and that he be found in contempt of the Court's order of August 30, 1995 denying Ferm's motion to use an identifying number other than his SSN.

Ferm argues that he has "reasonable cause" for not placing his SSN on the documents for filing, in that public disclosure of his SSN would leave him vulnerable to SSN-related fraud and "credit theft." He contends that disclosure of his SSN to the bankruptcy court's intake supervisor satisfies 11 U.S.C. § 110(c), and that Congress cannot require him to make his SSN "known to the general public." Ferm challenges § 110(c)(2) on a number of constitutional grounds, arguing that it violates his fundamental rights "to choose a calling or profession", "to personal security" and his "right to privacy", the Fourth, Fifth and Ninth Amendments and the "penumbral guarantees." He contends that a heightened standard of review applies, in that public disclosure of his SSN isn't "necessary for a compelling governmental interest." Ferm also challenges § 110(c)(2) on equal protection grounds, arguing that it establishes a "class within a class" because attorneys and their employees are also "document preparers" but aren't required to supply their SSNs. Finally, Ferm argues that § 110(c)(2) violates the Privacy Act.

Legal Discussion
A. The Right To Privacy.

There is no "right of privacy" expressly guaranteed by the U.S. Constitution. Grummett v. Rushen, 779 F.2d 491 (9th Cir. 1985). The United States Supreme Court has recognized that "zones of privacy" may be created by specific constitutional guarantees which impose limits upon governmental power. Grummett, 779 F.2d at 491; Paul v. Davis, 424 U.S. 693, 712-13, 96 S.Ct. 1155, 1165-66, 47 L.Ed.2d 405 (1976).

Rights found in the "zones of privacy" are limited to those which are "fundamental" or "implicit in the concept of ordered liberty." Roe v. Wade, 410 U.S. 113, 152, 93 S.Ct. 705, 726, 35 L.Ed.2d 147 (1973) (citations omitted). The activities related to these "zones" pertain to the intimate facets of an individual's life in the areas of marriage, procreation, contraception, family relationships, child rearing and education. Paul v. Davis, 424 U.S. 693, 713, 96 S.Ct. 1155, 1166, 47 L.Ed.2d 405 (1976). "The Supreme Court has limited the constitutional right to privacy to interferences with a `person's most basic decisions about family and parenthood . . . as well as bodily integrity.'" People of State of Calif. v. F.C.C., 75 F.3d 1350, 1361 (9th Cir. 1996), citing, Planned Parenthood v. Casey, 505 U.S. 833, 849, 112 S.Ct. 2791, 2806, 120 L.Ed.2d 674 (1992) (telephone number is not among the select privacy interests protected by a federal right to privacy).

The Ninth Circuit has held that the Constitution protects two types of 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 Gen. of the United States, 941 F.2d 780, 795 (9th Cir.1991), citing, Whalen v. Roe, 429 U.S. 589, 599, 97 S.Ct. 869, 876, 51 L.Ed.2d 64 (1977).

Privacy interests which relate to disclosure of personal matters ("informational privacy") encompasses two areas. The first is the government's collection and storing of information about citizens. See Whalen v. Roe, 429 U.S. 589, 605, 97 S.Ct. 869, 879, 51 L.Ed.2d 64 (1977) (State recordation in a centralized computer file of the names and addresses of persons who have obtained certain drugs). The second area is the release of information to the public or another government agency (the "public dissemination of information"). Nixon v. Adm'r of Gen. Serv., 433 U.S. 425, 97 S.Ct. 2777, 53 L.Ed.2d 867 (1977) (disclosure of private papers concerning private communications between Nixon and his family and physician); Doe v. Attorney Gen. of United States, 941 F.2d 780 (9th Cir.1991) (disclosure of medical information); United States v. Westinghouse Elec. Corp., 638 F.2d 570 (3rd Cir.1980) (disclosure of medical records). Ferm complains about the public disclosure of his SSN, and thus his arguments relate to the second area.

A SSN is not within one of the "zones of privacy" recognized as "fundamental" or "implicit in the concept of ordered liberty." In re Turner, 193 B.R. 548 (Bankr.N.D.Calif.1996) (disclosure of SSN by document preparer does not violate preparer's constitutional right to privacy). A SSN has nothing to do with a person's most basic decisions about family, parenthood, or bodily integrity. Mandatory disclosure of "one's social security number does not so threaten the sanctity of individual privacy as to require constitutional protection."4 Doyle v. Wilson, 529 F.Supp. 1343, 1348 (D.Del.1982). See also McElrath v. Califano, 615 F.2d 434, 441 (7th Cir.1980). Not every government disclosure of personal information invokes constitutional protection.5 See, e.g., See People of State of Calif. v. F.C.C., 75 F.3d 1350, 1361 (9th Cir.1996) (disclosure of telephone number is not protected by the federal constitution; it is "not among the select privacy interests protected by a federal constitutional right to privacy"), citing, Planned Parenthood v. Casey, 505 U.S. 833, 849, 112 S.Ct. 2791, 2805-06, 120 L.Ed.2d 674 (1992); St. Michael's Convalescent v. State of Calif., 643 F.2d 1369 (9th Cir.1981) (health care provider's disclosure of cost information to public did not implicate a constitutional right of privacy).

Even where information involving a fundamental right is disclosed, however, privacy protection is not absolute. The right of privacy is "a conditional right which may be infringed upon a showing of proper governmental interest." Doe v. Attorney General of U.S., 941 F.2d 780, 796 (9th Cir.1991). In determining whether the government may seek or use private information, courts balance the government's interest in having or using the information against the individual's interest in denying access. Id. The factors which must be considered in reaching a fair balance of the competing interests include (1) the type of information requested; (2) the potential for harm in any subsequent nonconsensual disclosure; (3) the adequacy of safeguards to prevent unauthorized disclosure; (4) the degree of need for access; and (5) whether there is an express statutory mandate, articulated public policy, or other recognizable public interest militating toward access. Id.

Applying these factors, overall, the balance weighs on the side of permitting the public disclosure of a document preparer's SSN under § 110. While there may be a risk that a SSN will be used fraudulently, the government's interest in policing widespread fraud and abuse by petition preparers outweighs the preparer's interest in denying public access to his SSN, and implicates no "fundamental" right.6

The need for public access to a document preparer's SSN is compelling, given the serious nature of the conduct to be prevented and the widespread corruption associated with document preparers. See In re Turner, 193 B.R. 548, 556 (Bankr.N.D.Calif.1996) (government has compelling interest in disclosure of petition preparer's SSN in order to police fraud and abuse by preparers); Bowen v. Roy, 476 U.S. 693, 709, 106 S.Ct. 2147, 2157, 90 L.Ed.2d 735 (1986) (prevention of fraud is compelling interest). Requiring public disclosure of SSNs furthers the public interest by identifying unscrupulous preparers and by detecting and tracking their activities in the bankruptcy system. Alternatives to public disclosure are inadequate in that § 110(c) is not amenable to the kind of "private disclosure" sought by Ferm. Use of an alternative number such as a local driver's license number, or...

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