Moskiewicz v. U.S. Dept. of Agriculture, 85-1892

• Decision Date: 23 May 1986
• Docket Number: No. 85-1892,85-1892
• Citation: 791 F.2d 561
• Parties: Peter F. MOSKIEWICZ and Jo Ann Moskiewicz, Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE and Farmers Home Administration, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 561

791 F.2d 561

Peter F. MOSKIEWICZ and Jo Ann Moskiewicz, Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE and Farmers Home

Administration, Defendants-Appellees.

No. 85-1892.

United States Court of Appeals, Seventh Circuit.

Submitted Oct. 30, 1985.

Decided May 23, 1986.

Leslie F. Kramer, Antoniewicz, Gregg & Rona, Madison, Wis., Charles S. Senn, Thorp, Wis., for plaintiffs-appellants.

John R. Byrnes, U.S. Atty., Madison, Wis., for defendants-appellees.

Before COFFEY, Circuit Judge, RIPPLE, Circuit Judge, and CAMPBELL, Senior District Judge. ^*

William J. CAMPBELL, Senior District Judge.

Plaintiffs Peter and Jo Ann Moskiewicz appeal a ruling of the U.S. District Court for the Western District of Wisconsin which granted in part a motion for summary judgment in favor of defendants U.S. Department of Agriculture and the Farmers Home Administration (FmHA). The district court concluded the plaintiffs had brought two causes of action under the Privacy Act (the Act), 5 U.S.C. Sec. 552a, et seq. In essence, defendants filed motions for summary judgment attacking both causes. The district court granted defendants' motion as to the first cause yet ruled for plaintiffs on the second.

This litigation arose because plaintiffs' application for an emergency economic loan under the Emergency Agriculture Credit Adjustment Act of 1978 ¹ was rejected by the FmHA. In plaintiffs' first cause of action plaintiffs alleged the FmHA, an agency for purposes of the Privacy Act, violated 5 U.S.C. Sec. 552a(g)(1)(C) because it failed, as the relevant part of that statute reads:

... to maintain any record concerning any individual with such accuracy, ... as is necessary to assure fairness in any determination relating to the qualifications, character, rights, or opportunities of, or benefits to the individual that may be made on the basis of such record, and consequently a determination is made which is adverse to the individual;

Further, plaintiffs asked for damages under 5 U.S.C. Sec. 552a(g)(4) of the Privacy Act, by properly asserting FmHA officials "willfully and intentionally" maintained the allegedly inaccurate information. 5 U.S.C. Sec. 552a(g)(4) states:

(4) In any suit brought under the provisions of subsection (g)(1)(C) of (D) of this section in which the court determines that the agency acted in a manner which was intentional or willful, the United States shall be liable to the individual in an amount equal to the sum of--

(A) actual damages sustained by the individual as a result of the refusal or failure, but in no case shall a person entitled to recovery receive less than the sum of $1,000; and

(B) the costs of the action together with reasonable attorney fees as determined by the court.

In plaintiffs' second cause of action, as delineated by the district court, plaintiffs sought to have the allegedly inaccurate records amended according to the provisions set forth in 5 U.S.C. Sec. 552a(g)(1)(A) and (g)(2). The district court decided to rule on plaintiffs' second cause of action first, reasoning that if there was no genuine issue of material fact which would lead one to conclude plaintiffs' records deserved to be judicially amended, then there could be no genuine issue as to whether FmHA officials willfully and intentionally maintained inaccurate records for the purposes of damages. ² The district court concluded that plaintiffs' proposed amendments to their application, while based on dubious assumptions, would indeed produce figures on their application which would generate the positive cash flow necessary to secure the emergency loan. The district court stated while it doubted plaintiffs' figures, they were figures which were computed in a manner open to debate, and therefore the question of their accuracy created issues of fact sufficient to preclude summary judgment. If plaintiffs' figures were ultimately deemed more accurate, it would be the FmHA's inaccurate figures which caused plaintiffs' loan application to be rejected. Hence, plaintiffs' second cause of action, which asked for FmHA's allegedly inaccurate records to be amended, survived this summary judgment stage.

The district court then ruled on plaintiffs' other action which sought damages by alleging defendants willfully and intentionally maintained the allegedly inaccurate records. The district court concluded that assuming arguendo the FmHA records were inaccurate and in need of amendment there was no evidence which could lead a reasonable factfinder to infer defendants willfully and intentionally maintained the inaccurate records within the meaning of the Privacy Act. The district court believed that because the figures used in the application were genuinely debatable (precluding summary judgment on the issue of amending them discussed above) there was no evidence defendants recklessly disregarded the provisions of the Privacy Act by intentionally maintaining inaccurate records. Under a worse case scenario, the district court could conceivably foresee the FmHA as being found negligent in maintaining the figures/records it did. However, negligent behavior was simply not sufficient to recover damages under the Privacy Act's "willful and intentional" violation provision. In sum, the district court granted defendant FmHA's motion for summary judgment on the damages issue, yet let the issue as to whether plaintiffs' records merited amending survive the summary judgment stage. We note subsequent to these events both parties stipulated to voluntary dismissal with prejudice to plaintiffs' second cause of action which sought that the records be amended. With the dismissal of plaintiffs' second cause of action, the district court's granting of defendants' summary judgment on the first cause became a final appealable order and we now have jurisdiction under 28 U.S.C. Sec. 1291.

The issue on appeal is whether the district court erred in ruling there was no evidence defendants intentionally or willfully violated the Privacy Act. What type of behavior constitutes an intentional and willful violation has been the subject of significant debate among the courts in recent years. The most popular explanation, used as a starting point by the majority of courts, comes from the legislative history entitled "Analysis of House and Senate Compromise Amendments to the Federal Privacy Act," to be found at 120 Cong.Rec. 40405, 40406 (1974):

In a suit for damages, the [compromise] amendment reflects a belief that a finding of willful, arbitrary or capricious action is too harsh a standard of proof for an individual to exercise the rights granted by this legislation. Thus the standard for recovery of damages was reduced to "willful or intentional" action by an agency. On a continuum between negligence and the very high standard of willful, arbitrary, or capricious conduct, this standard is viewed as only somewhat greater than gross negligence.

Having initially identified the standard for recovery of damages as conduct constituting something "greater than gross negligence" courts have struggled to determine what specific actions on the part of government officials could meet the standard. A seminal case which discussed the application of the greater than gross negligence standard to specific conduct was Parks v. United States Internal Revenue Service, 618 F.2d 677 (10th Cir.1980). In Parks plaintiffs, employees of the Internal Revenue Service, claimed their employer wrongfully surveyed their personnel files to ascertain whether they had purchased U.S. Savings Bonds (in violation of 5 U.S.C. Sec. 552a(b)(1) and (3)). Having decifered plaintiffs had not purchased bonds, the IRS included their names in a telephone campaign conducted by non-supervisory employees to solicit bond purchases. Plaintiff sought damages based on psychological harm from the unauthorized disclosure of their records. The government claimed defendants had failed to allege a willful and intentional violation of the Act. The Parks court ruled while it did not appear proof of premeditated malice was required to meet the "willful and intentional" conduct standard under the Privacy Act, defendants' publishing of the information to IRS employees in this instance for the use of soliciting bond sales fell short of conduct worthy of damages (greater than gross negligence) under the "willful and intentional" provision of the Privacy Act. While the denunciation of a requisite finding of premeditated malice helped further define "willful and intentional" conduct under the Act, other courts still grappled to fit the language/standard into their circumstances.

In South v. Federal Bureau of Investigation, 508 F.Supp. 1104 (N.D.Ill.1981) Judge James Moran conducted a general survey of definitions and standards concerning "intentional and willful" conduct. He quoted Black's Law Dictionary as defining these terms by referring to "conscious," "knowing" and "designed" acts of behavior. However, Judge Moran noted that the emphasis could shift, depending on the area of the law. For example, in securities law, a "recklessness" standard was considered desirable to employ, and "violations were found where the defendant proceeded in apparent disregard of or with reckless indifference to a known obligation or set of facts." (citing Wasson v. SEC, 558 F.2d 879, 882 (8th Cir.1977)) (emphasis added). Judge Moran cited the Ninth Circuit in Sorenson v. United States, 521 F.2d 325 (9th Cir.1975) as defining willful conduct in terms of recklessness--a "reckless disregard for obvious risks." The Seventh Circuit has similarly endorsed a "recklessness" test on past occasions (see Sundstrand v. Sun Chemical Corp., 553 F.2d 1033 (7th Cir.1977)). Hence, elements of recklessness often have been a key characteristic incorporated into a definition of willful and intentional conduct.

Judge Moran was forced to conclude that, "Judicial interpretations of the intentional and willful standard under the Privacy Act are...