Walker v. White
| Decision Date | 20 June 2002 |
| Docket Number | M2001-02438-COA-R9-CV |
| Parties | JERRY WALKER, ET AL. v. RICKY E. WHITE, ET AL. IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE |
| Court | Tennessee Court of Appeals |
This is an interlocutory appeal by permission which raises issues of first impression concerning the federal Right to Financial Privacy Act and the Tennessee Financial Records Privacy Act. We first must determine whether state courts retain concurrent jurisdiction to resolve claims brought against a bank by its customer arising under the federal Act. We hold that federal court jurisdiction under the Act is permissive. State courts therefore retain concurrent jurisdiction over such claims. We further hold that the Tennessee Financial Records Privacy Act is not applicable to federal agencies which issue subpoenas for bank records. The furnishing of information pursuant to a subpoena issued by a federal agency is governed in Tennessee by the federal Right to Financial Privacy Act. Accordingly, we affirm the trial court's order denying summary judgment on these issues to the Defendant.
Philip C. Kelly and Gwynn K. Smith, Gallatin, Tennessee, for the appellant, Citizens Bank of Lafayette.
Alan Mark Turk, Brentwood, Tennessee, for the appellees, Jerry Walker, Opal Walker, and Walker & Assoc. Realty, Inc. f/k/a Century 21 Walker & Assoc., Inc.
Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Circuit Court Affirmed; and Remanded
DAVID R. FARMER, J., delivered the opinion of the court, in which W. FRANK CRAWFORD, P.J., W.S., and ALAN E. HIGHERS, J., joined.
The litigation underlying this interlocutory appeal arises from allegations made by defendant Ricky White1 (White) that the plaintiffs Jerry Walker and wife, Opal Walker (the Walkers) had filed for bankruptcy, hidden assets and perpetuated a fraud on the Farmers Home Administration (FmHA), an agency of the United States Department of Agriculture (USDA), in connection with a debt settlement agreement. During the course of the USDA investigation of these allegations, the Inspector General of the USDA issued subpoenas duces tecum to the defendant Citizens Bank of Lafayette (Bank) in December of 1993, requesting the financial records of the Walkers and their real estate corporation. The Walkers filed a motion to quash the subpoena of their personal records in the U.S. District Court for the Middle District of Tennessee.2 The court ordered the USDA to disclose the nature of the law enforcement investigation of the Walkers, and the Walkers withdrew the motion.312 U.S.C.S. 3405 (1) (2) (2002).
The Walkers subsequently were indicted and arrested on charges that they knowingly and willfully ma[d]e or caused to be made false, fictitious and fraudulent statements and representation in an Application for Settlement of Indebtedness, submitted to the Farmers Home Administration, in that [they] concealed and did not disclose on the Application various business and real estate assets which they owned or maintained constructive title, ownership and possession thereof. In violation of Title 18, United States Code, Sections 1001 and 2.
A criminal trial of the Walkers was held in January of 1998. According to the Walkers' amended complaint, they had not in fact filed for bankruptcy and the action against them was dismissed on January 27, 1998.4
In January of 1999, the Walkers and Walker & Assoc. brought suit against the Bank, alleging, inter alia, violations of the RFPA and the Tennessee Financial Records Privacy Act (the Tennessee Act).5 On June 22, 2001, the Bank filed a motion for summary judgment which the court denied as to all issues but one.6 In October of 2001, the trial court granted the Bank's motion for permission to seek an interlocutory appeal of its ruling denying the Bank's motion for summary judgment and entered a stay pursuant to Tenn. R. App. P. 9. The Bank's application for permission for interlocutory appeal was granted by this Court on October 26, 2001.
Issues Presented for Interlocutory Appeal
This Court granted permission for interlocutory appeal of the following issues:
(1) Do state courts have subject matter jurisdiction to entertain the Plaintiff's claims asserted under the Federal Right to Privacy Act of 1978?
(2) Does the Tennessee Financial Records Privacy Act, Tenn. Code Ann. 45-10-101 et seq., apply to federal agencies, such as the U.S. Department of Agriculture, which issue subpoenas for bank records?
(3) Does the Tennessee Financial Records Privacy Act permit the Defendant Bank to disclose records of the Plaintiff Corporation to a federal agency such as the Department of Agriculture, since the Defendant Bank is not prohibited under the Federal Right to Financial Privacy Act from making such disclosure?
Standard of Review
All issues presented in this appeal are issues of law. The standard of review for this Court on issues of law is de novo, with no presumption of correctness afforded to the conclusions of the court below. Bowden v. Ward, 275 S.W.3d 913, 916 (Tenn. 2000); Tenn. R. App. P. 13(d).
State Court Jurisdiction
Congress enacted the federal Right to Financial Privacy Act, codified at 12 U.S.C.S. 3401 et seq., in 1978 in response to the holding by the United States Supreme Court in United States v. Miller, 425 U.S. 435, 436 (1976), that bank customers do not have a constitutionally protected privacy interest in bank records. Neece v. Internal Revenue Service, 922 F.2d 573, 574 (10th Cir. 1990); see Miller, 425 U.S. at 436. The Act seeks to balance the protection of bank records from unnecessary intrusion while permitting law enforcement agencies access to those records for use in lawful, legitimate investigations. Neece, 922 F.2d at 557 (quoting H.R. Rep. No. 1383, 95th Cong., 2d Sess. 33 reprinted in 1978 U.S. Code Cong. & Admin. News 9273, 9305, 9278). The RFPA permits causes of action to be brought in federal court without regard to the amount in controversy.
The Bank asserts that the federal courts have exclusive jurisdiction over causes of action arising under the Act. The Bank calls our attention to section 3416 of the RFPA, which provides:
An action to enforce any provision of this title may be brought in any appropriate United States district court without regard to the amount in controversy within three years from the date on which the violation occurs or the date of discovery of such violation, whichever is later.
12 U.S.C.S. 3416 (2002). The Bank argues that this jurisdictional statement, in combination with 3410 of the federal Act, which mandates that a motion to quash a subpoena issued by a federal agency must be brought in an appropriate United States District Court, evidences exclusive federal court jurisdiction. As further evidence, the Bank points to statements of U.S. District Courts that jurisdiction over the federal Act is "vested exclusively in Article III courts." See, e.g., McDonough v. Widnall, 891 F.Supp. 1439, 1448 (D. Colo. 1995). The Bank further submits that since the federal Act operates as a limited waiver of the federal government's sovereign immunity, all actions brought to enforce any of its provisions accordingly must be brought in federal court. We disagree.
We note at the outset that this cause of action does not include a claim against the USDA or any federal officer or agency. The Walkers' complaint names as defendants only Ricky White and Citizens Bank of Lafayette, both of which undisputably are subject to general jurisdiction in the State of Tennessee. Thus issues of the sovereign immunity of the United States, or the waiver thereof, are not elements of this lawsuit.
As both parties acknowledge, there is a strong presumption that state courts retain jurisdiction concurrent with federal courts over claims brought pursuant to federal law. Taflin v. Levitt, 493 U.S. 455, 458 (1990). Such state court jurisdiction is limited only by restrictions imposed by the Supremacy Clause of the United States Constitution. Id. State court jurisdiction over federal causes of action does not arise because it is specifically conferred by Congress. Taflin, 493 U.S. at 469 (Scalia, J., concurring). Rather, such jurisdiction is presumed in the absence of "an affirmative act of power under the Supremacy Clause to oust the States of jurisdiction" Id. at 470. State courts retain concurrent jurisdiction over federal claims unless Congress deliberately uses its authority to affirmatively "withdraw" that jurisdiction. Id.
At oral argument, counsel for the Bank directed our attention to the three considerations enunciated by the U.S. Supreme Court in Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 477 (1981), to determine whether Congress intended exclusive federal court jurisdiction over a federal cause of action. In Gulf Offshore, the Court opined, "the presumption of concurrent jurisdiction can be rebutted by an explicit statutory directive, by unmistakable implication from the legislative history, or by a clear incompatibility between state-court jurisdiction and federal interests." Gulf Offshore, 453 U.S. at 477 (). The Bank contends that since the RFPA acts as a limited waiver of U.S. sovereignty, state court jurisdiction over causes of action arising under the Act is incompatible with federal interests.
We disagree with the Bank that state court jurisdiction is either explicitly or implicitly withdrawn for causes of action arising under the federal Act for three reasons. First, the proposition that state court jurisdiction can by withdrawn by anything less than an explicit statutory directive has been tempered, if not neutralized, by the U.S. Supreme Court in Taflin and Yellow Freight. Taflin, 493 U.S. at 469-473; Yellow Freight Sys., Inc. v. Donnelly, 494...
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