Jacobs v. NATIONAL DRUG INTELLIGENCE CENTER

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

November 10, 2008

No. 07-40776 Charles R. Fulbruge III

Clerk

GARY G. JACOBS

Plaintiff-Appellee

v.

NATIONAL DRUG INTELLIGENCE CENTER

Defendant-Appellant

Appeal from the United States District Court

for the Southern District of Texas

Before JOLLY, BARKSDALE, and HAYNES, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

At issue in this appeal involving the Privacy Act of 1974, 5 U.S.C. § 552a,

is whether, as our court held in Johnson v. Department of Treasury, Internal

Revenue Service, 700 F.2d 971 (5th Cir. 1983), the Privacy Act’s “actual

damages” remedy includes emotional-distress damages. Consistent with our

binding precedent, id., the district court ruled that it does. The National Drug

Intelligence Center (NDIC) urges: the Supreme Court’s post-Johnson decisions,

“holding that a court must strictly construe an ambiguous waiver [of sovereign

immunity] in favor of the Government, have undermined Johnson” and now

compel our court to limit “actual damages” to “out-of-pocket expenses”.

AFFIRMED.

No. 07-40776

I.

Gary G. Jacobs was the president and CEO of Laredo National Bank,

which conducts business in the United States and Mexico. NDIC, a part of the

United States Department of Justice, coordinates drug intelligence information

for the Government. In the late 1990s, an NDIC “Executive Summary”,

containing references to Jacobs, was disclosed without authorization and

subsequently disseminated by the media.

As a result, in May 2001, Jacobs filed this action under the Privacy Act.

In December 2002, following a hearing, the district court granted summary

judgment for NDIC. It determined, inter alia: the Executive Summary was not

a “record” contained in a “system of records” for § 552a purposes; and, therefore,

this action is not a Privacy Act matter. Transcript of Hearing on Motion to

Dismiss at 32, Jacobs v. Nat’l Drug Intelligence Ctr., No. 5:01-CV-72 (S.D. Tex.

17 Dec. 2002).

Jacobs appealed and, in August 2005, our court reversed and remanded,

holding: “Jacobs has raised a genuine issue of material fact as to the [Privacy

Act’s] applicability”; and, therefore, “the district court erred in granting . . .

NDIC’s motion for summary judgment”. Jacobs v. Nat’l Drug Intelligence Ctr.,

423 F.3d 512, 517, 522 (5th Cir. 2005).

On remand, in a November 2006 joint pretrial order, NDIC essentially

conceded a Privacy Act violation. In that regard, the parties agreed, inter alia:

the Executive Summary was a “record” contained in a “system of records”; that

summary was disclosed without authorization; the disclosure was “intentional

or willful”; and it had an adverse effect on Jacobs. See id. at 516 (listing the four

elements for a Privacy Act disclosure violation).

Therefore, the primary issue before the district court was the extent of any

damages suffered by Jacobs as a result of the disclosure. Jacobs sought:

damages for emotional distress; costs; and attorneys’ fees.

2

No. 07-40776

During a December 2006 summary-judgment hearing, NDIC objected to

the potential inclusion of emotional-distress damages in a Privacy Act-based

award of actual damages, essentially raising the points that it now urges on

appeal. The district court responded:

[E]ven when you read the other Supreme Court cases that have

come since [Johnson], I think the Fifth Circuit indicated actual

damages are actual damages. It is what it is. Surely Congress

knew that when they passed this statute. And so, therefore, I don’t

see how we get around it. I mean, actual damages are traditionally

viewed to include [emotional-distress damages]. Under the Privacy

Act, that would probably be the main source of damage as far as any

actual damages someone might have. . . . [I] frankly don’t feel that

this is a problem based on the Fifth Circuit case law and the

subsequent Supreme Court case law. I don’t think that they are in

conflict. . . . [and] I don’t think they clearly overrule what the

Circuit has done [in Johnson].

Transcript of Hearing on Motion for Summary Judgment at 4, 8, Jacobs v. Nat’l

Drug Intelligence Ctr., No. 5:01-CV-72 (S.D. Tex. 7 Dec. 2006) (referencing

Johnson, 700 F.2d at 971). Accordingly, noting that it was bound by Johnson,

the district court denied NDIC’s motion for summary judgment. Id.

In June 2007, following a bench trial, the district court awarded Jacobs

$100,000 for emotional-distress-based actual damages.

II.

NDIC urges the award of emotional-distress damages is improper,

maintaining that actual damages awarded under the Privacy Act must be

limited to out-of-pocket expenses. In doing so, it urges: “the Supreme Court’s

post-Johnson decisions on sovereign immunity, holding that a court must strictly

construe an ambiguous waiver in favor of the Government, have undermined

Johnson and now compel [our court] to hold that ‘actual damages’ [are] limited

to out-of-pocket expenses”.

3

No. 07-40776

Interpretation of the Privacy Act is a question of law, reviewed de novo.

E.g., Chevron Chem. Co. v. Oil, Chem. & Atomic Workers Local Union 4-447, 47

F.3d 139, 142 (5th Cir. 1995). Additionally, as discussed in more detail infra, the

crux of NDIC’s claim is: the Privacy Act is a limited waiver of sovereign

immunity; and emotional-distress damages fall outside the scope of that waiver.

Claims of sovereign immunity are, likewise, reviewed de novo. E.g., Delta

Commercial Fisheries Ass’n v. Gulf of Mexico Fishery Mgmt. Council, 364 F.3d

269, 273-74 (5th Cir. 2004).

Our analysis begins with recognizing—as did the district court—that our

court has held the Privacy Act’s actual-damages remedy includes emotional-

distress damages. In 1983, Johnson, 700 F.2d at 972, rejected the position that

actual damages under the Privacy Act are limited to “damages for out-of-pocket

expenses”. Instead, our court held: “the term ‘actual damages’ under the

Privacy Act does indeed include damages for physical and mental injury . . . as

well as damages for out-of-pocket expenses.” Id. (emphasis added). In its

analysis, our court noted, inter alia, that seven years before the Privacy Act’s

enactment, “the Supreme Court . . . indicated that the primary damage in ‘right

to privacy’ cases is mental distress”. Id. at 977 (quoting Time, Inc. v. Hill, 385

U.S. 374, 386 n.9 (1967)). Consistent with that, our court also noted the

Supreme Court’s stating in Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974):

“Indeed, the more customary types of actual harm inflicted by defamatory

falsehood include impairment of reputation and standing in the community,

personal humiliation, and mental anguish and suffering.” Johnson, 700 F.2d at

983 (quoting Gertz, 418 U.S. at 350).

It is a well-settled Fifth Circuit rule of orderliness that one panel of our

court may not overturn another panel’s decision, absent an intervening change

in the law, such as by a statutory amendment, or the Supreme Court, or our en

banc court. E.g., United States v. Simkanin, 420 F.3d 397, 420 n.25 (5th Cir.

4

No. 07-40776

2005). Indeed, even if a panel’s interpretation of the law appears flawed, the

rule of orderliness prevents a subsequent panel from declaring it void.

Grabowski v. Jackson County Pub. Defenders Office, 47 F.3d 1386, 1400 n.4 (5th

Cir. 1995) (Smith, J., concurring in part and dissenting in part), vacated for reh’g

en banc, id. at 1403, district court judgment aff’d, 79 F.3d 478 (5th Cir. 1996) (en

banc).

Concerning our longstanding rule of orderliness, NDIC does not contend

that Johnson has been expressly overruled. In other words, in that regard, there

has been neither a controlling statutory amendment, nor a Supreme Court

decision, nor an en banc decision by our court.

Along that line, Congress is presumed to be aware of court decisions

construing statutes and may, of course, amend a statute as a result. E.g., Dole

v. Petroleum Treaters, Inc., 876 F.2d 518, 522 (5th Cir. 1989) (citing Lorillard v.

Pons, 434 U.S. 575, 580 (1978)). It has not done so for the issue at hand, even

though Johnson was decided over 25 years ago.

Moreover, a circuit split on this question has existed at least that long, but

the Supreme Court has not resolved it. The Supreme Court’s not having

rendered a decision requiring us to re-address Johnson is supported by, inter

alia, Doe v. Chao, 540 U.S. 614 (2004) (holding plaintiffs must prove some actual

damages to qualify for the Privacy Act’s minimum statutory award). In Chao,

the Court stated it was not addressing the Privacy Act’s definition of “actual

damages”. Id. at 626 n.10 (emphasis added). Then, the Court noted the circuits

“are divided on the precise definition of actual damages”; cited our Johnson

decision as an example of one definition of actual damages; and noted Johnson

allowed, as actual damages, “adequately demonstrated mental anxiety even

without any out-of-pocket loss”. Id. at 627 n.12. Given the Supreme Court’s

using Johnson in Chao as an example of one view of actual damages under the

5

No. 07-40776

Privacy Act, coupled with its expressly avoiding defining actual damages in

Chao, there has obviously been no intervening change of law by the Supreme

Court.

In the light of this, and conceding there has been no express intervening

change, NDIC essentially contends: post-Johnson, Supreme Court cases have

construed other statutory waivers of sovereign immunity narrowly; and,

therefore, were Johnson to be re-decided today, our court’s analysis of what

damages are recoverable under the Privacy Act might reach a different outcome.

See, e.g., In re Supreme Beef Processors, Inc., 468 F.3d 248, 253 (5th Cir. 2006)

(en banc) (“waivers of sovereign immunity should be narrowly construed in favor

of the United States”). We need not decide, however, whether a present-day

analysis of damages recoverable under the Privacy Act would differ from

Johnson because, again, there is no intervening change in law to permit our

doing so.

III.

For the foregoing reasons, the judgment is AFFIRMED.

6