Pub. 1 2013 Issue 3
38 San Diego Dealer T he United States Supreme Court recently heard arguments in, Maracich v. Spears, a case that has the potential to affect car dealers across the country. The case involves the conflict between customer privacy rights and plaintiffs’lawyers’aggressive attempts to solicit clients, something that has become increasingly of concern to California dealers. For example, at the end of last year some local dealers received subpoenas demanding thousands of customer retail installment sale contracts, despite the fact that those dealers were not even defendants in the lawsuit. This troubled the dealer community because the subpoenas were an improper attempt to get protected consumer information and appeared to be designed to locate plaintiffs for new lawsuits against the nonparty dealer recipients. The origin of Maracich is a 2006 class action lawsuit that was filed by eight consumers against 324newcar dealerships inSouthCarolina.That lawsuit alleged that the dealerships violated South Carolina’s Manufacturers, Distributors, and Dealers Act by collecting undisclosed dealer documentation fees. The plaintiffs’ lawyers, however, had a problem. The eight plaintiffs had only purchased eight cars from eight different dealerships. Those individuals did not have standing to sue the remaining 316 stores. And the lawyers did not have any information about those other stores or their customers. So they submitted requests to the DMV under the South Carolina Freedom of Information Act seeking the name and contact information of people who recently purchased automobiles. Themotor vehicle departments in all 50 states are restricted fromdisclosing personal information about drivers, including name and contact informa- tion, by the federal Driver’s Privacy Protection Act (“DPPA”). The DPPA was enacted to protect the privacy of individuals and also to prevent the harm that can be caused by the unauthorized disclosure of personal information. Senator Barbara Boxer sponsored the DPPA after actress Rebecca Schaeffer was murdered by a man who obtained her home address from the California DMV. After its passage, Congress reacted to growing concern about consumer privacy violations caused by aggressive marketing by amending the DPPA to require a consumer’s express consent to solicitation. Since the plaintiffs’ lawyers in South Carolina did not have the consent of any consumers (besides their eight plaintiffs) to acquire name and contact information, they told the DMV that they were seeking the information under an exception. The DPPA has 15 exceptions. One allows the disclosure of personal information if it is related to pending litigation. The plaintiffs’ lawyers claimed they were seeking the information for use as “evidence” or to identify “witnesses” in their case. In reality they were fishing for clients to sue the other car dealerships. The South Carolina DMV eventually provided the lawyers with the personal information of thousands of people. Over approximately five months, the lawyers sent form letters to those people. Each letter contained the initial disclosure “Advertising Material” and stated that the lawyers represented consumers in lawsuits against car dealerships. The recipients were invited to contact the lawyers to discuss their “rights and options… in a free consultation.” Some of the people who received these letters were angry that their personal information had been disclosed without their consent. They hired their own attorneys and filed a class action lawsuit against the plaintiffs’ lawyers for $200 million for violation of the DPPA (each violation is $2,500). The plaintiffs’ lawyers (now the defendants) attempted to get the lawsuit dismissed by the trial court, arguing that the letters were not “solicitations” or “advertisements” and also that they were protected by the litigation exception. This is the lawsuit that the Supreme Court will decide, Maracich v. Spears. At the Supreme Court, the DPPA privacy consumers argued that the litigation exception does not apply because the purpose of the lawyers’letters was not to find witnesses (how likely is it that one of the thousands of recipients actually witnessed one of the eight original plaintiffs buy their car without a doc fee disclosure?) or to obtain evidence, it was to solicit clients. If other businesses have to obtain explicit consumer consent under the DPPA before obtaining personal contact information for advertising, lawyers should too. While it is always hard to predict how the Justices will decide from their ques- tions during arguments, there is a decent chance that they will decide in favor of protecting consumer privacy. The question is, how narrowly will the Court interpret the DPPA’s protections and the litigation exception? At the hearing, Justice Steven Breyer (who tends to vote with the court’s liberal bloc) expressed concern about lawyers using the litigation exception to fish for clients, stating, “you can’t just go and troll for clients, simply because you think a defendant has done something wrong, and you have no client.” Justice Alito (considered a conservativemember) noted that the DMV database contains some very sensitive information such as Social Security numbers and whether a person has a disability. It is unlikely that the Court will decide completely in favor of one side or the other. Regardless, this case will affect how plaintiffs’lawyers try to find clients to sue dealerships. And in any litigation, it is important to keep in mind the fact that a myriad of state and federal laws protect your customers’personal information. So, if you happen to be served with a subpoena seeking confidential customer information (including name and contact information), be sure to consult with qualified legal counsel well before the time to respond approaches. As the Maracich case shows, privacy laws can be used as both a sword and a shield. For additional information, please contact Callahan Thompson Sherman and Caudill LLP attorney Rick Ritchie at 619-232-5700 or by email at rritchie@ ctsclaw.com . Plaintiffs’ Lawyers Trolling For Cl ients By Shane McCallan, Associate Attorney Callahan Thompson Sherman & Caudill LLP
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