Trans Union LLC v. F.T.C.

• Decision Date: 16 July 2002
• Docket Number: No. 01-5202.,01-5202.
• Citation: 295 F.3d 42
• Parties: TRANS UNION LLC, Appellant v. FEDERAL TRADE COMMISSION, et al., Appellees,
• Court: U.S. Court of Appeals — District of Columbia Circuit

295 F.3d 42

TRANS UNION LLC, Appellant v. FEDERAL TRADE COMMISSION, et al., Appellees,

No. 01-5202.

United States Court of Appeals, District of Columbia Circuit.

Argued May 3, 2002.

Decided July 16, 2002.

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Appeal from the United States District Court for the District of Columbia (No. 00cv02087).

Ernest Gellhorn argued the cause for the appellant. Roger L. Longtin and Stephen L. Agin were on brief. Mary E. Gately entered an appearance.

John F. Daly, Counsel, Federal Trade Commission, argued the cause for the appellees. Lawrence DeMille-Wagman and Michael D. Bergman, Attorneys, Federal Trade Commission; Jeanette Roach, Counsel, Federal Deposit Insurance Corporation; Alisa B. Klein and Mark B. Stern, Attorneys, United States Department of Justice; Rosa M. Koppel, Attorney, United States Department of Treasury; Thomas J. Segal, Deputy Chief Counsel, and Elizabeth R. Moore, Counsel, Office of Thrift Supervision; and Katherine H. Wheatley, Assistant General Counsel, Board of Governors of Federal Reserve System, were on brief. Richard M. Ashton, Associate General Counsel, Board of Governors of Federal Reserve System; Gregory F. Taylor, Counsel, Federal Deposit Insurance Corporation; and Larry J. Stein, Attorney, United States Department of Treasury, entered appearances.

Bill Lockyer, Attorney General, State of California, and Susan E. Henrichsen, Deputy Attorney General, State of California were on brief for the amici curiae in support of the appellees.

Before: EDWARDS, HENDERSON, and GARLAND, Circuit Judges.

Opinion for the court filed by Circuit Judge KAREN LeCRAFT HENDERSON.

KAREN LeCRAFT HENDERSON, Circuit Judge:

Trans Union, LLC, a "credit reporting agency" (CRA) under the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq.,¹ challenges regulations promulgated by the Federal Trade Commission (FTC) and other federal agencies² to implement the privacy provisions of the Gramm-Leach-Bliley Act (GLBA), Pub.L. No. 106-102, 113 Stat. 1338 (1999) (codified at 15 U.S.C. §§ 6801 et seq.). Trans Union contends the regulations unlawfully restrict a CRA's ability to disclose and reuse certain consumer information because (1) a CRA is not a "financial institution" subject to the FTC's rulemaking authority under the GLBA; (2) the regulations' definition of the statutory term "personally identifiable financial information" (PIFI) is overbroad; (3) the regulations' restrictions on reuse of information are inconsistent with the GLBA; and (4) the challenged regulations infringe Trans Union's right of free speech under the First Amendment to the United States Constitution. The district court rejected these challenges and upheld the regulations. For the reasons set out below, we affirm the district court's decision.

I.

The Congress enacted the GLBA in order "[t]o enhance competition in the financial services industry," Pub.L. No. 106-102, 113 Stat. at 1338, by "eliminat[ing] many Federal and State law barriers to affiliations among banks and securities firms, insurance companies, and other financial service providers," H.R. Conf. Rep. No. 106-434 at 1, 151 (1999), U.S. Code Cong. & Admin. News at 245, 246. Title V of the GLBA contains a number of provisions designed to protect the privacy of "nonpublic personal information" (NPI) that consumers provide to financial institutions, see 15 U.S.C. §§ 6801-6809, reflecting "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," 15 U.S.C. § 6801(a). The GLBA restricts the ability of a "financial institution" to disclose NPI to a nonaffiliated third party by requiring (subject to certain exceptions not pertinent here) that the financial institution provide the consumer with notice of the institution's disclosure policies and the opportunity for the consumer to "opt out" of disclosure. Id. § 6802(a)-(b), (e). The GLBA further mandates that an unaffiliated third party recipient of NPI "shall not directly or through an affiliate of such receiving third party, disclose such information to any other person that is a nonaffiliated third party of both the financial institution and such receiving third party, unless such disclosure would be lawful if made directly to such other person by the financial institution." Id. § 6802(c).

To implement its disclosure restrictions, the GLBA gives the FTC and other agencies broad rulemaking authority:

(a) Regulatory authority

(1) Rulemaking

The Federal banking agencies, the National Credit Union Administration, the Secretary of the Treasury, the Securities and Exchange Commission, and the Federal Trade Commission shall each prescribe, after consultation as appropriate with representatives of State insurance authorities designated by the National Association of Insurance Commissioners, such regulations as may be necessary to carry out the purposes of this subchapter with respect to the financial institutions subject to their jurisdiction under section 6805 of this title.

15 U.S.C. § 6804(a)(1). Section 6805(a) further provides for enforcement of both the GLBA and the regulations promulgated pursuant thereto "by the Federal functional regulators, the State insurance authorities, and the Federal Trade Commission with respect to financial institutions and other persons subject to their jurisdiction under applicable law," as described in section 6805(a). Id. § 6805(a). The first six paragraphs of section 6805(a) specify under what authority and by which agencies the GLBA and the regulations are to be enforced against banks, savings associations, commercial lending companies, credit unions, securities brokers and dealers, investment companies, investment advisers and insurance providers. See id. U.S.C. § 6805(a)(1)-(6). The final, catchall paragraph of section 6805(a) mandates enforcement "[u]nder the Federal Trade Commission Act by the Federal Trade Commission for any other financial institution or other person that is not subject to the jurisdiction of any agency or authority under paragraphs (1) through (6)." Id. § 6805(a)(7). CRAs are not among the entities identified in the first six paragraphs.

On May 24, 2000 the FTC published its Final Rule on "Privacy of Consumer Financial Information," 65 Fed.Reg. 33,646, setting forth regulations comparable to and consistent with those promulgated by other federal agencies. See 65 Fed.Reg. at 33,646 n. 3.³ On August 30, 2000 Trans Union filed an action in the district court challenging the FTC's regulations on the grounds, inter alia, that (1) a CRA is not a "financial institution" subject to the FTC's rulemaking authority under 15 U.S.C. § 6804(a)(1); (2) the FTC overbroadly defined PIFI; (3) the regulations' restrictions on reuse of consumer information are inconsistent with the GLBA; and (4) the regulations violate Trans Union's First Amendment free speech right. In a memorandum opinion and order filed April 30, 2001, the district court rejected all of Trans Union's objections and granted summary judgment in the agencies' favor. See Individual Reference Serv. Group, Inc. v. FTC, 145 F.Supp.2d 6 (D.D.C.2001). Trans Union filed a notice of appeal on June 20, 2001 challenging the regulations on the four grounds enumerated above.

II.

The court reviews the district court's summary judgment decision de novo and "we may affirm only if `there is no genuine issue as to any material fact [and] the moving party is entitled to judgment as a matter of law.'" Gilvin v. Fire, 259 F.3d 749, 756 (D.C.Cir.2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (quoting Fed.R.Civ.P. 56(c))). We conclude the FTC is entitled to summary judgment under this standard and therefore affirm the district court. We address each of Trans Union's arguments seriatim.

A. Authority to Regulate CRAs

First, Trans Union asserts the FTC lacks authority to promulgate regulations governing CRAs because a CRA is not a "financial institution" subject to the FTC's regulatory authority under 15 U.S.C. § 6804(a)(1). In reviewing the FTC's interpretation of the GLBA, we use the familiar Chevron analysis:

If ... "`Congress has directly spoken to the precise question at issue,'" we "must give effect to Congress's `unambiguously expressed intent.'" Secretary of Labor v. [Fed. Mine Safety & Health Review Comm'n], 111 F.3d 913, 917 (D.C.Cir.1997) (quoting Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984)). "If `the statute is silent or ambiguous with respect to the specific issue,' we ask whether the agency's position rests on a `permissible construction of the statute.'" Id. (quoting Chevron, 467 U.S. at 843, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694).

National Multi Housing Council v. EPA, 292 F.3d 232, 234 (D.C.Cir.2002) (quoting Cyprus Emerald Resources Corp. v. Fed. Mine Safety & Health Review Comm'n, 195 F.3d 42, 45 (D.C.Cir.1999)). To the extent that the statutory term "financial institution" may be ambiguous, we believe the FTC reasonably construed the term to apply to a CRA.

Section 6809 of title 15 defines "financial institution" as "any institution the business of which is engaging in financial activities as described in section 1843(k) of Title 12." Section 1843(k)(4) of title 12 in turn defines "activities that are financial in nature" to include "[e]ngaging in any activity that the [Federal Reserve] Board has determined, by order or regulation that is in effect on November 12, 1999, to be so closely related to banking or managing or controlling banks as to be a proper incident thereto (subject to the same terms and conditions contained in such order or regulation, unless modified by the Board)." On February 28, 1997, the Federal Reserve Board...