Commentary Addressing Risks and Opportunities Through the Lifecycle of Data, Technology, Advertising and Innovation

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In privacy litigation, the majority of the federal courts have required demonstration of a certain tangible, provable harm before granting damage awards to plaintiffs claiming a violation of their privacy.&nbsp; The Supreme Court&rsquo;s recent decision in <a href="http://dataprivacymonitor.bakerhostetlerblogs.com/wp-content/uploads/sites/5/2012/04/FAA-v.-Cooper-032812.pdf">Federal Aviation Administration et al. v. Stanmore Cawthon Cooper</a>,&nbsp;case number 10-1024, is no different.&nbsp; In the Court&rsquo;s March 28, 2012 5-3 decision, the Court held that mental and emotional distress are not actual damages under the Privacy Act of 1974, 5 U.S.C. &sect;552, limiting the recovery plaintiffs can obtain under the statute to &ldquo;actual damages&rdquo; of pecuniary harm.&nbsp; The Court focused on the sovereign immunity doctrine and statutory interpretation in determining that the civil remedies provision of the Privacy Act allows for &ldquo;actual damages&rdquo; consisting only of pecuniary harm.&nbsp; The Court also acknowledged that because the term &ldquo;actual damages&rdquo; has a &ldquo;chameleon-like quality,&rdquo; an all-purpose definition cannot be relied upon, and that the term must be considered in the particular context in which it appears.&nbsp;&nbsp;&nbsp; Under the Privacy Act, federal agencies are prohibited from sharing information about individuals without express consent.&nbsp; The civil remedies provision of the Privacy Act provides that for any act of an agency that is intentional or willful, the United States shall be liable for &ldquo;actual damages sustained by the individual as a result of the refusal or failure, but in no case shall a person entitled to recover receive less than the sum of $1,000.&rdquo;&nbsp; 5 U.S.C. &sect;552a(g)(4)(A). The remedial provision of the Privacy Act was previously addressed by the Supreme Court in Doe v. Chao, 540 U.S. 614 (2004), where the Court held that the remedial provision of the Privacy Act authorized a plaintiff to recover a guaranteed minimum award of $1,000 for violation of the Act, but only if an &ldquo;actual damage&rdquo; was proven.&nbsp; Id. at 620, 627.&nbsp; While not addressing the meaning of &ldquo;actual damages,&rdquo; the Court in Doe observed that the Privacy Act&rsquo;s remedial provision was similar to the remedial scheme for common law torts of libel and slander &ndash; under which a plaintiff can recover &ldquo;general damages&rdquo; only if he/she is able to prove &ldquo;special harm&rdquo; (also known as &ldquo;special damages&rdquo;), which is limited to actual pecuniary loss which must be expressly plead and proven.&nbsp; Id. at 622, n. 5, 625, 627, n. 12.&nbsp; The Court in Doe, noting that a circuit split existed at the time, left open the definition of what qualified as &ldquo;actual damages.&rdquo;&nbsp; Id. at 627, n. 12.&nbsp; In the 2007 case plaintiff filed against the Federal Aviation Administration, the Social Security Administration and the U.S. Department of Transportation, Cooper, a pilot, claimed that the agencies, in violation of the Privacy Act of 1974, during a joint investigation into potential medical fraud by pilots, had improperly shared information about his HIV-positive status.&nbsp; Cooper had kept his HIV status undisclosed for years, and his pilot license was revoked when the information was disclosed during the joint agency investigation in 2005.&nbsp; Cooper eventually was recertified as a pilot upon his application for recertification.&nbsp;&nbsp; Cooper sought recovery under the Privacy Act for &ldquo;humiliation, embarrassment, mental anguish, fear of ostracism, and other severe emotional distress.&rdquo;&nbsp; Cooper failed to allege any pecuniary or economic loss.&nbsp; The Supreme Court&rsquo;s holding in FAA v. Cooper reverses the Ninth Circuit&rsquo;s February 2010 ruling that &ldquo;actual damages&rdquo; under the Privacy Act, unambiguously defined, allows for recovery of both pecuniary injuries and emotional damages.&nbsp; The Ninth Circuit&rsquo;s decision reversed the California district court&rsquo;s 2008 decision, grounded in the principles of sovereign immunity, that the Privacy Act does not authorize the recovery of damages from the government for nonpecuniary mental or emotional harm.&nbsp; While the decision in FAA v. Cooper specifically addresses actual damages under the Privacy Act,&nbsp;the Court&rsquo;s analysis of the definition of &ldquo;actual damages&rdquo; is notable in the context of privacy litigation generally. &nbsp;&nbsp;An upholding of the Ninth Circuit&rsquo;s decision would have allowed plaintiffs to pursue monetary damages for emotional distress in privacy litigation where plaintiffs claim a loss of privacy, including data breach cases, where pecuniary loss as a result of data breach is difficult to prove.&nbsp;

US Supreme Court Finds that Mental and Emotional Distress are not “Actual Damages” under the Privacy Act