Seventh Circuit: No Private Cause of Action Under the Video Privacy Protection Act for Failure to Purge Information–Sterk v. Redbox

[Post by Venkat Balasubramani]

Sterk v. Redbox Automated Retail, LLC, No. 12-8002 (7th Cir. March 6, 2012)

The Video Privacy Protection Act prohibits the disclosure of individuals’ videotape viewing habits. The statute also contains a provision requiring “providers” to purge any covered information within certain time periods (one year from when the information is no longer required for the purpose for which it was collected). Class action lawyers sharpened their knives and came after videotape service providers—in this case Redbox—arguing that Redbox did not purge the information as required under the VPPA. Redbox moved to dismiss on the basis that the provision of the statute requiring records to be purged did not provide for a private cause of action. The district court disagreed and denied Redbox’s motion to dismiss. (Here is my earlier blog post on the case: “Redbox Can be Liable Under the Video Privacy Protection Act for Failure to Purge Video Rental Records.”) Redbox filed an interlocutory appeal, and with lightning fast speed, the Seventh Circuit reversed the district court (the appeal was submitted on January 24, 2012 and the Seventh Circuit issued its order on March 6, 2012).

After slamming the VPPA drafters for sloppy drafting, the Seventh Circuit concludes that the overall statutory structure indicates that there is no private cause of action in this case. The court says the section which provides a civil cause of action appears immediately following the section which prohibits the disclosure of records and this indicates that the civil cause of action was intended to apply only to the section barring disclosure of records. Also, one of the subsections deals with the acceptance of videotape rental evidence; if the statute provides for a civil cause of action for a violation of all of the subsections (not just the subsection prohibiting disclosure), this would mean that a litigant would have a cause of action against a court for improperly receiving videotape rental records as evidence. (The district court focused on the statute’s use of the word “section” as opposed to “sub-section” but Judge Posner is as dismissive of the district court’s interpretation as he is of the drafters of the VPPA.)

In addition to the overall statutory structure, the court also highlights that there is no harm from wrongful retention:

Nor would it make a lot of sense to award damages for a violation of the requirement of timely destruction of personally identifiable information, in sub section (e)—the specific issue presented by this appeal. How could there be injury, unless the information, not having been destroyed, were disclosed? If, though not timely destroyed, it remained secreted in the video service provider’s files until it was destroyed, there would be no injury.

In Judge Posner’s view, this is a terrible case for statutory damages in the absence of any actual injury. While other courts have held that plaintiffs proceeding under the Driver’s Privacy Protection Act need not prove actual damages in order to be entitled to statutory damages, these decisions involve “unlawful appropriation of private personal information.” Statutory damages would make sense in the event a service provider improperly disclosed the information, but according to Judge Posner, it doesn’t make much sense for the wrongful retention of information:

The injury inflicted by such a failure is enormously attenuated, and it would be no surprise if Congress had decided—as the placement of the damages section suggests—not to provide a damages remedy, let alone a damages remedy requiring no proof of injury.

The court says that plaintiffs aggrieved by a violation of the subsection requiring records to be purged should be able to enforce their rights by requesting an injunction. The court says this is a less “obviously inappropriate” form of relief and one that does not require express Congressional authorization.

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Ouch. Another example of judicial hostility to claims made by class action privacy plaintiffs, with a focus on damages.

The court also mentions that plaintiffs added a claim for wrongful disclosure, and telegraphs the fact that in the absence of a showing of actual damages, at least this panel would view a claim for damages for violation of subsection (b)(1) (the disclosure provision) with similar skepticism.

Privacy class action plaintiffs have an uphill battle. Between Article III standing, the merits, judicial skepticism towards statutory damages, and I’m guessing a closer look at the private right of action in any newly enacted legislation, I would say that class action payouts for these types of lawsuits based on violations of federal statutes will become rarer than they already are. Were I a privacy activist, I would consider focusing my efforts on individual cases with clearly demonstrable damages, or on lobbying the companies, the public, or the FTC.

Additional coverage:

Digestible Law (Perkins Coie): “Seventh Circuit Limits Scope of Private Rights of Action under the VPPA

InsidePrivacy: “Seventh Circuit Strikes VPPA Claim for Retention Damages

THR, Esq. (Eriq Gardner): The Video Privacy Protection Act, or How Not to Write a Law