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Class action lawyers suffered a setback at the hands of U.S. District Judge Daniel T.K. Hurley in their quest to win huge damages for alleged misuse of state-gathered personal information about drivers. A year ago, South Florida attorneys filed a lawsuit in U.S. District Court in West Palm Beach on behalf of about 565,000 licensed Florida drivers against Fidelity Federal Bank and Trust. It alleged that the West Palm Beach-based bank violated the federal Drivers Privacy Protection Act when it obtained their “personal information” from the Florida Department of Highway Safety and Motor Vehicles from 2000 to 2003 without their “express consent.” Last week, Judge Hurley dismissed the case, which had been set for trial this summer. He ruled that the motorists had suffered no actual damages and weren’t entitled to sue. Hurley also denied as moot a motion to certify the class. The federal law — enacted in 1994 in response to crimes that were committed using information obtained from state motor vehicle departments and amended in 2000 — allows plaintiffs to recover $2,500 per violation. The law says courts “may award actual damages, but not less than liquidated damages in the amount of $2,500.” The plaintiffs had argued that Hurley should award either $2,500 or actual damages, whichever amount is greater, but not make actual damages a precondition for an award. They also claimed that requiring actual damages would send a message that there are no consequences for violating the law. But Hurley, citing a U.S. Supreme Court decision earlier this year in a lawsuit filed under a similar federal privacy statute, held that proof of actual damages was required to state a claim. “These statutory minimum amounts are designed to encourage people with minor actual damages to file complaints against offending parties,” Hurley wrote. “They are not designed to allow those suffering no actual damages to file claims. The court cannot read a remedy into the DPPA that does not exist.” “We’re very pleased,” said the bank’s co-counsel, L. Louis Mrachek of Page Mracheck Fitzgerald & Rose in West Palm Beach. “The judge simply followed the method of analysis laid out recently by the U.S. Supreme Court. If the law is simple and clear and unambiguous, apply the statute as Congress wrote the statute.” Mracheck worked on the case with his law partner, Roy E. Fitzgerald III. Lawyers for the Florida motorists immediately vowed to appeal. “With all due respect, we think [Judge Hurley] was wrong,” said Paul J. Geller of Geller Rudman in Boca Raton. Geller represents the plaintiff class along with Roger Slade and Marc C. Pugliese, partners at Miami’s Pathman Lewis and Mark A. Goldstein of Wolf & Goldstein in Miami. The decision could affect other class actions in the Southern District of Florida that seek large damages under the 1993 privacy law. One is a multibillion-dollar blockbuster that recently coalesced out of a half-dozen cases, including two cases filed a year ago. One case was filed against ChoicePoint Inc., which has data mining operations headquartered in Boca Raton, and one was filed against Reed Elsevier, the parent of Dayton, Ohio-based Lexis-Nexis. U.S. District Judge Jose E. Martinez in Miami has that case. Another big privacy lawsuit was filed this month by four South Floridians who sued state Department of Highway Safety and Motor Vehicles executive director Fred Dickinson and seven of his employees personally for alleged violations of the federal law. “It’s obviously something we’re going to be concerned with and have to deal with,” said Joel S. Perwin, a partner in Miami’s Podhurst Orseck who is part of the plaintiff team in the consolidated ChoicePoint case. “But we think there’s some room for discussion of Judge Hurley’s reasoning about the extent to which the federal statute should be interpreted to require some pecuniary loss as a condition of taking advantage.” West Palm Beach defense attorney Sidney A. Stubbs Jr., of Jones Foster Johnston & Stubbs, who represents Reed Elsevier in the same case, declined to discuss Hurley’s ruling in detail, but said, “It is certainly consistent with our view of the law.” OUT OF COMPLIANCE At the heart of the dispute was a June 2000 amendment to the federal Drivers Privacy Protection Act. The act originally was passed by Congress in response to several notorious crimes — including the 1989 slaying of actress Rebecca Schaeffer — in which killers used information contained in publicly available motor vehicle records to identify, locate and stalk their victims. The amendment required states to obtain the express consent of individuals before releasing personal information. But Florida did not immediately conform its law to the federal requirements, instead allowing the disclosure of such data for bulk solicitations unless drivers formally opt out of such disclosure. A new law passed by the Legislature will end that practice and bring Florida into compliance on Oct. 1. Damages in lawsuits under the statute are potentially huge because attorneys seek to recover a seemingly modest amount set in the act — $2,500 per violation — for every motorist involved. There are more than 13 million licensed drivers in Florida and 15 million registered vehicles. The West Palm Beach class action case began last July when Wellington resident James Kehoe filed suit. He alleged that every month between June 2000 and June 2003, the defendant bank paid the state of Florida a penny apiece for the names and addresses of drivers who had registered motor vehicles in Broward, Palm Beach and Martin counties. The Department of Highway Safety and Motor Vehicles forwarded the information electronically to a mass mailing service provider hired by Fidelity to send out solicitations to refinance auto loans. Fidelity paid a total of about $5,600 for the 560,000 names. Kehoe did not allege he ever received any of Fidelity’s solicitations, but did allege that Fidelity bought his personal information without his consent. His complaint asked for liquidated damages of $2,500 each for the 565,000 motorists whose privacy rights were allegedly violated by the thrift when it purchased their personal information from the state. Buying and selling personal information is big business in Florida. During fiscal year 2001-2002, the state collected about $27 million from the sale of driver’s license and motor vehicle registration records stored in its massive data banks, state officials have said. Fees are set by statute. Two of the state’s biggest customers are ChoicePoint, based in Alpharetta, Ga., and Reed Elsevier, the U.S. holding company for Great Britain’s Reed Elsevier PLC and the Dutch Reed Elsevier N.V. Florida’s failure to follow the federal law’s provisions created both confusion and opportunity. The federal law does not allow individuals to sue states for violations. Enforcement is statutorily limited to action by the U.S. attorney general, who may impose a $5,000 per day penalty against states that fail to comply. But no such fine was ever imposed on Florida. In pleadings, Fidelity said it was not aware that Florida hadn’t complied with the federal law until the lawsuit was filed. NEVER REACHED ISSUE But Judge Hurley never reached the issue of whether Fidelity was liable for violating the federal law when it didn’t know that Florida had failed to obtain the actual consent of motorists before releasing their personal information. He said in his order there was no need to decide that question because he had found that the motorists’ claim “fails for lack of actual damages.” Hurley based his decision on the structure of a single sentence in the act: “The court may award actual damages, but not less than liquidated damages in the amount of $2,500.” Fidelity had argued that language meant the courts have the discretion to award the $2,500 statutory minimum only after plaintiffs show they have sustained actual damages. Kehoe had countered that courts should award either $2,500 or actual damages, whichever amount is greater, but not make actual damages a precondition for an award. To support his ruling for the defense, Hurley cited the U.S. Supreme Court’s decision earlier this year in Doe v. Chao. In that case, the justices affirmed a 4th U.S. Circuit Court of Appeals opinion and held that proof of actual damages was required to state a claim under the Privacy Act, another law that contains a similar damages provision. Judge Hurley also cited Doe to explain why he found “unconvincing” the plaintiff argument that requiring actual damages would send a message that there are no consequences for violating the federal law.

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