Parks v. U.S. I. R. S., 78-1518

• Citation: 618 F.2d 677
• Decision Date: 27 March 1980
• Docket Number: No. 78-1518,78-1518
• Parties: 80-1 USTC P 9327 Robert PARKS, Dillon Gaulding, and National Treasury Employees Union, on behalf of themselves and all others of their class similarly situated, Plaintiffs- Appellants, v. UNITED STATES INTERNAL REVENUE SERVICE, Wichita District, Maurice Johnson, Robert Edmiston, and the United States of America, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 677

618 F.2d 677

80-1 USTC P 9327

Robert PARKS, Dillon Gaulding, and National Treasury

Employees Union, on behalf of themselves and all

others of their class similarly

situated, Plaintiffs- Appellants, v. UNITED STATES INTERNAL REVENUE SERVICE, Wichita District, Maurice Johnson, Robert Edmiston, and the United

States of America, Defendants-Appellees.

No. 78-1518.

United States Court of Appeals,

Tenth Circuit.

Argued Jan. 25, 1980.

Decided March 27, 1980.

William F. White, Associate Gen. Counsel, National Treasury Employees Union, Washington, D. C. (Robert M. Tobias, Gen. Counsel, National Treasury Employees Union, Washington, D. C., and Regan & McGannon, Wichita, Kan. (of counsel), with him on brief), for plaintiffs-appellants.

Jonathan S. Cohen, Atty., Tax Div., Dept. of Justice, Washington, D. C. (M. Carr Ferguson, Asst. Atty. Gen., Gilbert E. Andrews and Thomas M. Walsh, Attys., Tax Div., Dept. of Justice, Washington, D. C., and James P. Buchele, U. S. Atty., Topeka, Kan. (of counsel), with him on brief), for defendants-appellees.

Before DOYLE, BREITENSTEIN and McKAY, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

The basic question in this case is whether the plaintiffs, who are employees of the Internal Revenue Service, can maintain a civil action growing out of the use by the Wichita office of the Internal Revenue Service of personnel files of employees who had not pledged to purchase government bonds, whereby these employees were pinpointed for a telephone campaign making use of a list of such "recalcitrants," and, if so, what the nature of the remedy is. The case is one of first impression. The trial court ruled that no remedy existed under the Privacy Act of 1974. We disagree and reverse.

This action was instituted on June 29, 1978, in the United States District Court for the District of Kansas. It was alleged that it arose under the Privacy Act of 1974 and that the court had jurisdiction pursuant to 5 U.S.C. § 552a(g)(1)(D), 28 U.S.C. §§ 1331(a) and 1361. The plaintiffs, Parks and Gaulding, are employees of the Internal Revenue Service in Wichita, Kansas. An additional plaintiff in the trial court was the National Treasury Employees' Union, the members of which are employed by the United States Department of the Treasury. The Union alleged that it had an interest in upholding the rights of Treasury Department employees in legal contract and personnel actions.

The complaint further alleged that the Privacy Act prohibits disclosure of " * * * any record which is contained in a system of records by any means of communication to any person except pursuant to a written request by, or prior written consent of, the individual to whom the record pertains," unless the officers and employees of the agency which maintains the record have need for it in the performance of their duties or if the record is disclosed for routine use. 5 U.S.C. § 552a(b)(1) and (3).

The disclosures complained of occurred when nonsupervisory personnel of the Internal Revenue Service called the plaintiffs Parks and Gaulding for the purpose of soliciting their purchase of U.S. Savings Bonds. The persons calling, upon being questioned, said that lists of IRS employees who had not participated in the purchase of U.S. Savings Bonds were supplied for the purpose of telephone calls. The senior member of management, defendant Maurice Johnson, stated that he knew of the lists and condoned their use for the purpose of encouraging participation in the bond program. It was also alleged that the use for the purpose described above was not a routine use of the files; that disclosures were made to inappropriate users for other than officially designated purposes, and that the information was not needed by agency officials and employees in the regular performance of their work.

Plaintiffs sought damages based upon alleged psychological damage or harm from the unauthorized and illegal disclosures. They prayed for the award of a minimum of $1,000 damages together with attorney's fees in accordance with 5 U.S.C. § 552a(g)(4). Also sought was injunctive relief. The defendants moved to dismiss and the district court granted this motion.

The district court also ruled that it lacked subject matter jurisdiction over the Union because the Privacy Act precludes suits by anyone other than "individuals" as that term is defined in 5 U.S.C. § 552a(a)(2), and, second, because the Union had failed to allege actual harm to itself and therefore lacked standing to sue under Warth v. Seldin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975), and Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972).

The judge ruled, in addition, that there was a lack of subject matter jurisdiction over the individual defendants Johnson and Edmiston, because the Privacy Act only authorized suits against agencies as defined in 5 U.S.C. §§ 552a(a)(1) and 552(e). The judge's final point was that the amended complaint failed to state a claim under the Privacy Act, because the IRS' use of the information from the personnel files was an intra-agency "routine use" within the definition of 5 U.S.C. § 552a(a)(7). Accordingly, the judge ruled that the defendants had not violated the Act. In addition, the judge ruled that the plaintiffs had failed to allege sufficiently that they had suffered an adverse effect or injury-in-fact from disclosures. The district court did not address itself specifically to the plaintiffs' claim for damages as distinguished from the plaintiffs' claim for injunctive relief. Nor did the judge consider the alternative grounds advanced by plaintiffs in support of the claim for injunctive relief, 28 U.S.C. §§ 1331(a) and 1361.

The plaintiffs seek reversal on a number of grounds, which we summarize as follows:

The plaintiffs contend that they have stated a claim for relief under the Privacy Act under two substantive provisions of the Act, first, under 5 U.S.C. § 552a(b)(1), and second, 5 U.S.C. § 552a(b)(3). They also say that the invasion which caused psychological harm was adequate to constitute an adverse effect or an injury-in-fact. The plaintiffs argue further that injunctive relief should be available to them under 28 U.S.C. §§ 1331(a) or 1361. Finally, the plaintiffs contend that the Union and the individual defendants Johnson and Edmiston were proper parties to the lawsuit.

The defendants argue that the complaint is insufficient because the injunctive relief sought is unavailable under the Privacy Act. They say, in addition, that the plaintiffs' allegations are inadequate for failure to allege the element of willfulness or intent necessary for monetary relief.

The plaintiffs take issue with all of the defendant's contentions in their reply brief.

Does the complaint state a claim under the Privacy Act? Our conclusion is that the allegations are sufficient to demonstrate a violation of that part of the Act which defines a remedy against the offending agency for money damages.

The applicable provisions are subsections (1) and (3) of 5 U.S.C. § 552a(b). Subsection (1) sets up the prohibition against disclosure in unmistakable terms:

(b) Conditions of disclosure. No agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to written request by, or with the prior written consent of, the individual to whom the record pertains, unless disclosure of the record would be

(1) to those officers and employees of the agency which maintains the record who have a need for the record in the performance of their duties; . . .

There is a specific allegation in the amended complaint that 21. Disclosure of savings bond information was not needed by agency officials and employees in the regular performance of their work.

The trial court did not consider this particular remedy averred by the plaintiffs in their complaint, that is, the prohibition against disclosure together with the exceptions, one of which is that the agency employees had need of the record in the regular performance of their duties. While the district court failed to address this element of the plaintiffs' claim, it did give a general rejection. If the plaintiffs have stated a claim pursuant to § 552a(b)(1), ¹ they are entitled to have their case tried.

It cannot be gainsaid that Congress expressly held out nonparticipation in savings bond programs as an example of information not needed in the performance of federal employees' regular duties. We do not say that this does not prevent the defendants from arguing to the contrary that disclosure of savings bond information was necessary to the performance of their duties. The defendants rely on Executive Order No. 11532, 35 Fed.Reg. 8629 (June 4, 1970). This Executive Order was signed by President Richard Nixon on June 2, 1970. It established an Interdepartmental Committee for the Voluntary Payroll Savings Plan for the Purchase of United States Savings Bonds. This consisted of the heads of all federal executive-branch agencies. The order charged the committee to formulate a plan of organization and sales promotion of the savings bond program. Even though this may have been a worthy effort, it does not justify the use of information derived from the personnel files of employees, particularly in view of the subsequent passage of the Privacy Act. In short, the order, which was at odds with the stated legislative purpose of the Privacy Act, does not license the defendants to violate the Privacy Act, and it would not be a ground for justifying the dismissal of plaintiffs' complaint.

The defendants also maintain that the use here was a routine one within the meaning of 5 U.S.C. § 552a(b)(3), which prohibits an agency from disclosing a record which is contained in a system of records except pursuant to written request by, or with the written consent of, the individual to whom the record pertains unless the disclosure of the...