Technology: Corporate Legal Fiction Not to Be Taken Personally When It Comes to Privacy

Alan WernickThe news media, Internet commentators and others have, for some time now, been examining the evolving issues of personal privacy rights, and will continue to do so for some time into the future. Indeed, personal privacy issues must be proactively confronted with critical analysis to better enable a more frictionless environment for the World Wide Web to continue evolving and growing. Whether activity occurs at the local shopping mall or on the Internet, issues concerning personal privacy rights impact that activity in one way or another.

But, what if the activity is done by a corporation - a legal fiction? Do corporations have an expectation of "personal privacy?" Consider the language of the Freedom of Information Act exemption ?7(C). This exemption covers law enforcement records, where the disclosure "could reasonably be expected to constitute an unwarranted invasion of personal privacy." In a recent United States Supreme Court case, FCC vs. AT&T Inc., the Supreme Court held in a unanimous decision that corporations do not have "personal privacy" rights for the purposes of the FOIA exemption ?7(C).

The facts of FCC vs. AT&T revolve around an investigation by the Federal Communications Commission (FCC) that was initiated when AT&T voluntarily reported in August 2004 to the FCC that it might have overcharged the government for services it provided as part of the FCC administered Education Rate program which was created to enhance access for schools and libraries to advanced telecommunications and information services. As part of that investigation, AT&T provided to the FCC's Enforcement Bureau (the Bureau) various documents, including responses to interrogatories, invoices, emails with pricing and billing information, names and job descriptions of employees involved and AT&T's assessment of whether those employees had violated the company's code of conduct. The investigation was resolved in December 2004 through a consent decree in which AT&T, without conceding liability, agreed to pay the government $500,000 and to create a plan to ensure compliance with the program.

Subsequent to the consent decree, CompTel--"a trade association representing some of AT&T's competitors"--submitted a Freedom of Information Act (FOIA) "request seeking '[a]ll pleadings and correspondence' in the Bureau's file on the AT&T investigation." AT&T opposed CompTel's request, and the Bureau issued a letter-ruling in response, in which it concluded that "individuals identified in [AT&T's] submissions" have "privacy rights" that warrant protection under FOIA Exemption 7(C). However, the Bureau reasoned that "businesses do not possess 'personal privacy' interests as required" by the exemption, and refused to apply the exemption to the corporation itself. However, the Bureau did find that some of the information AT&T had provided (e.g., cost and pricing data, billing-related information and identifying information about staff, contractors, and customer representatives) was protected from disclosure under FOIA Exemption 4 which relates to "trade secrets and commercial or financial information obtained from a person and privileged or confidential." (Emphasis added)

AT&T successfully appealed to the United States Court of Appeals for the 3rd Circuit. In reversing, the FCC Bureau's decision, the 3rd Circuit held "...that Exemption 7(C) extends to the 'personal privacy' of corporations, since 'the root from which the statutory word [personal] . . . is derived' is the defined term 'person'" and explained that "'[i]t would be very odd indeed for an adjectival form of a defined term not to refer back to that defined term.' ... The court accordingly ruled 'that FOIA's text unambiguously indicates that a corporation may have a 'personal privacy' interest within the meaning of Exemption 7(C).'" The FCC appealed and the U.S. Supreme Court granted certiorari and reversed the 3rd Circuit.

The Supreme Court, in analyzing the FOIA statute, states: "'Person' is a defined term in the statute; 'personal' is not. When a statute does not define a term, we typically 'give the phrase its ordinary meaning.' ... 'Personal' ordinarily refers to individuals. We do not usually speak of personal characteristics, personal effects, personal correspondence, personal influence, or personal tragedy as referring to corporations or other artificial entities. This is not to say that corporations do not have correspondence, influence, or tragedies of their own, only that we do not use the word 'personal' to describe them." ... "In fact, we often use the word 'personal' to mean precisely the opposite of business-related: We speak of personal expenses and business expenses, personal life and work life, personal opinion and a company's view."

The analysis of statutory language frequently turns on the context in which words are used or defined in the statute. The text of Exemption 7(C) uses the words "personal privacy" and not just the word "personal." The Court found unpersuasive AT&T's argument to treat the term "personal privacy" as simply the sum of the two words (i.e., "personal privacy" equals "the privacy of a person"). The Supreme Court went on to note that the specific question in this case is whether Congress used the term "personal privacy" to refer to the privacy of artificial persons (e.g., corporations) in FOIA Exemption 7(C).

The Supreme Court also looked to a memorandum to federal executive departments and agencies prepared by the United States Attorney General, which explained that "personal privacy" in Exemption 7(C) "pertains to the privacy interests of individuals" and went on to note that the exemption "does not seem applicable to corporations or other entities." In reversing the Court of Appeals, the Supreme Court states: "We reject the argument that because 'person' is defined for purposes of FOIA to include a corporation, the phrase 'personal privacy' in Exemption 7(C) reaches corporations as well. The protection in FOIA against disclosure of law enforcement information on the ground that it would constitute an unwarranted invasion of personal privacy does not extend to corporations. We trust that AT&T will not take it personally."

About the author: Alan S. Wernick is a partner at FSB FisherBroyles LLP (WWW.FSBLEGAL.COM), and is a member of the bars of IL, NY, OH, & DC. Since 1982 Alan's business law practice has focused in computer law / cyberspace law / information technology law, and intellectual property law, and data privacy/security law. More information about Alan's practice, lectures, and publications is available at WWW.WERNICK.COM.

(C) 2011 Alan S. Wernick. WWW.WERNICK.COM

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