Volume 22 Number 18, October 7, 2002

(Excerpted From Page 2)

The federal appeals panel in Richmond has ruled 2-1 that a plaintiff must prove actual damages in order to recover the Privacy Act's minimal award of $1,000. The ruling, which offers one of the most detailed discussions of Privacy Act damages, drew a sharp dissent and likely will be appealed to the entire appeals court (en banc).

The ruling, by the U.S. Court of Appeals for the Fourth Circuit reversed a district court award of $1,000 to a Virginia coal miner ("Buck Doe") whose Social Security number was wrongly disseminated in the course of a black lung benefits claim.

The Fourth Circuit majority, while not reaching the issue of whether "emotional distress" is included within the Privacy Act's definition of actual damages, indicated that it was. However, the majority went to great lengths to emphasize that Privacy Act plaintiffs must prove they actually suffered emotional distress.

"Buck Doe did not produce any evidence of tangible consequences stemming from his alleged angst over the disclosure of his SSN. He claimed no medical or psychological treatment, no purchase of medications (prescription or over-the-counter), no impact on his behavior, and no physical consequences. Further, no evidence of any kind corroborates the conclusory allegations in Buck Doe's affidavit," wrote Judge Karen Williams.

"Under these circumstances, we need not reach the issue of whether the term 'actual damages' as used in the Act encompasses damages for non-pecuniary emotional distress because, regardless of the disposition of that issue, Buck Doe's claims fail for lack of evidentiary support. In turn, because we have concluded that 'actual damages' are a prerequisite to the recovery of statutory minimum damages, and because Buck Doe utterly failed to produce evidence sufficient to permit a rational trier of fact to conclude that he suffered any "actual damages," the district court's entry of summary judgment in Buck Doe's favor as to his entitlement to a statutory 'actual damages' award must be reversed," she wrote.

In dissent, M. Blane Michael wrote, "Congress creates statutory damages remedies because it wants to encourage civil enforcement suits in situations where actual damages are difficult to prove. . . (T)he danger that plaintiffs with meritorious cases will 'walk away from the courthouse empty handed' is especially great when the wrong to be remedied is the invasion of privacy because damages arising from that wrong can be hard to quantify. This is because the typical injury caused by invasions of privacy is mental distress."

The case stems from the handling of over one million claims for black lung benefits by the Labor Dept.'s Office of Workers' Compensation Programs (OWCP) and its Division of Coal Mine Workers' Compensation. OWCP assigned an "OWCP number" to identify each claim, but when a coal miner applied for benefits, he was asked to provide his SSN voluntarily and was informed that the number may be used to facilitate determination of benefits eligibility. OWCP then substituted the SSN as the "OWCP number."

Hearing forms sent out by some administrative law judges (ALJs) included the SSNs, meaning that they were (1) disclosed to other applicants, their employers, and counsel, and (2) frequently included in publicly released ALJ and Benefits Review Board decisions that, in turn, were published in benefits decision reporters and made available in computerized legal research databases. Buck Doe and six other unnamed plaintiffs filed suit under the Privacy Act.

The district court, citing Buck Doe's testimony that dissemination of his SSN caused stress, ruled that he established actual damages and awarded him $1,000, the Privacy Act's minimum. The 5^th, 9^th, 11^th and D.C. Circuits have all ruled that to recover the Privacy Act's minimal damage of $1,000, plaintiffs do not have to prove actual damages, only an adverse effect caused by a willful or intentional violation. On appeal, the government urged the Fourth Circuit to follow the Sixth's Circuit's holding that the Privacy Act only allows for recovery of out-of-pocket losses.

Judge Karen Williams declined to go that far, but said that her finding that plaintiff must prove actual damages was consistent with the 6^th Circuit's view that waivers of sovereign immunity (i.e., the government agreeing by statute that it can be sued) must be narrowly construed in favor of the government.

Judge Williams' standards for the need to prove emotional distress were based largely on the 4^th Circuit's 1996 opinion in Price v. City of Charlotte (93 F.3d 1241), from which she quoted extensively, even though it was not a Privacy Act case.

"An award of compensatory emotional distress damages requires evidence 'establish[ing] that the plaintiff suffered demonstrable emotional distress, which must be sufficiently articulated; neither conclusory statements that the plaintiff suffered emotional distress nor the mere fact that a . . . violation occurred supports an award of compensatory damages.' A plaintiff's own conclusory allegations that he felt 'embarrassed,' 'degraded,' or 'devastated,' and suffered a loss of self-esteem, will not suffice to create a disputed issue of material fact for the jury regarding the presence of compensable emotional distress, "she wrote. She cited the 5^th Circuit's 1998 opinion in Brady v. Fort Bend County (145 F.3d 691) a Section 1983 case, in which the court held that "vague and conclusory" testimony that a claimant was "highly upset," could not "accept it mentally," "didn't feel like the same person," or "spent more time on the couch" did not satisfy the specificity standard for compensable emotional distress.

"Where, on the other hand, a plaintiff can produce evidence that emotional distress caused chest pains and heart palpitations, leading to medical and psychological treatment which included a formal diagnosis of 'major depressive disorder,' as well as necessitated prescription medication, it is clear that some amount of compensatory damages for emotional distress is warranted," she wrote, citing the 4^th Circuit 2001 case, Knussman v. Maryland (272 F.3d 625).

"In determining whether sufficient evidence exists to support an award of more than nominal damages for emotional distress, we examine factors such as the need for medical, psychological, or psychiatric treatment, the presence of physical symptoms, loss of income, and impact on the plaintiff's conduct and lifestyle," Judge Williams wrote.

"Buck Doe's evidence of emotional distress in this case falls far below the level which our precedent demands before the issue of compensatory damages for emotional distress may be submitted to the finder of fact. He testified that he was 'greatly concerned and worried' about the disclosure of his SSN; that he felt his privacy had been violated in 'words he cannot describe'; that he felt the consequences of the disclosure of his SSN could be 'devastating' for himself and his wife, and that the disclosure of his SSN had 'torn [him] all to pieces,' in a manner that 'no amount of money' could ever compensate." She was joined by Judge J. Michael Luttig

In dissent, Judge M. Blane Michael said the problem with the majority's approach is that, "even on the most restrictive reading, the statute plainly awards $1,000 in statutory damages to a plaintiff who can prove $1, or even one penny, of actual damages."

"The Price framework was simply not designed to help courts decide whether a plaintiff's testimony adequately supports damages awards for such small sums. Consider the various factors that Price regards as adequate corroboration of emotional distress: 'medical, psychological, or psychiatric treatment, the presence of physical symptoms, loss of income, and impact on the plaintiff's conduct and lifestyle.' I think it highly unlikely that any plaintiff would seek medical, psychological, or psychiatric treatment, lose income, or undergo a change of lifestyle because of one dollar's worth of emotional distress. Physical symptoms (sleeplessness, for example) might be present even in very minor cases of emotional distress, but then again they might not. All these factors are of course relevant to deciding whether a plaintiff experienced significant emotional distress -- the kind that could support a substantial compensatory damages award. But they have little to say about whether claims of very minor emotional distress are genuine, and the majority agrees that if emotional distress counts as 'actual damages' at all, proof of very minor emotional distress entitles the plaintiff to statutory damages under the Privacy Act," he wrote.

"The Price framework is unhelpful in evaluating claims of very minor emotional distress for a simple reason: no plaintiff in a lawsuit under § 1983 (or any other cause of action without a statutory damages provision) ever sets out to prove that he suffered one dollar's worth, let alone one penny's worth, of emotional distress. When a plaintiff winds up with nominal damages, this means either that he conceded the absence of actual injury and sought to vindicate an abstract right or that he sought substantial damages and lost. A nominal damages award surely does not mean that the plaintiff has tried, but failed, to prove that he suffered one dollar's worth of emotional distress," he continued.

"First, Congress created the statutory damages remedy as an incentive to suit because it recognized that damages from government invasions of privacy are hard to prove. Second, Congress recognized that the typical injury caused by the invasion of privacy is emotional distress. Third, Congress intended for the statutory damages remedy to be available to plaintiffs who suffered even very minor harms as a result of the government's intentional or willful invasion of their privacy," he continued.

In a footnote, he said, "If the Secretary is correct in her contention that 'actual damages' includes only out-of-pocket losses, proof of actual damages cannot be a prerequisite to the recovery of statutory damages. Conversely, I believe that the majority's holding commits this

circuit to the position that the term 'actual damages' includes at least emotional distress that would qualify as 'demonstrable' under Price." (Buck Doe, Virginia Privacy Litigation, et al. v. Elaine L. Chao, Sec. of Labor, et al.: CA-4 -- No. 00-2247 & --2292; Sept. 20.)