Holloway v. Community Bank
Filing
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MEMORANDUM AND OPINION - Signed by District Judge Thomas W Phillips on 9/27/2011. (KMK)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
IN RE BRUCE GERALD HOLLOWAY,
Debtor-Appellant,
v.
COMMUNITY BANK,
Bank-Appellee.
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No. 3:10-CV-75
(Phillips)
MEMORANDUM OPINION
I.
Introduction
Debtor-Appellant Bruce Gerald Holloway appeals the Bankruptcy Court’s dismissal
of the first, second, third, fifth, and sixth courts of his complaint. The United States Bankruptcy
Court for the Eastern District of Tennessee found that all of Debtor’s claims, with the exception of
the fourth count, failed to state a claim upon which relief could be granted. The Bankruptcy Court
therefore granted the Bank-Appellee’s motion to dismiss courts one, two, three, five, and six of the
Debtor’s complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), as incorporated by Federal
Rule of Bankruptcy Procedure 7012(b). This court affirms the Bankruptcy Court’s Order for the
reasons contained herein.
II.
Issues Presented
Whether the Bankruptcy Court’s decision to grant the Bank’s motion to dismiss
courts one, two, three, five, and six of the Debtor’s complaint should be affirmed. Specifically,
whether the Bankruptcy Court erred in holding:
1.
11 U.S.C. § 107(c) does not allow for a private right of action for relief enabling a
plaintiff to pursue a claim of contempt in court; and
2.
Disclosure of unredacted sensitive information in a proof of claim filed with the
United States Bankruptcy Court Clerk’s Office does not satisfy the publicity element
necessary to state a claim for invasion of privacy.
III.
Background
On September 8, 2008, Debtor filed a voluntary petition commencing under Chapter
13 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern
District of Tennessee. Bank, which held a lien secured by a 2002 Chevrolet Truck, was included in
Mr. Holloway’s bankruptcy statements and schedules. Bank filed its original proof of claim with the
Bankruptcy Court’s Clerk’s Office on October 2, 2008, which revealed Debtor’s full Social Security
Number and financial account number without redaction. On February 12, 2009, Debtor filed an ex
parte emergency motion to restrict public access to the proof of claim, and on March 10, 2009, Bank
filed an amended proof of claim with Debtor’s private and personal information redacted.
Contemporaneously with his ex parte motion, Debtor filed a complaint against Bank
in the United States Bankruptcy Court for the Eastern District of Tennessee. The complaint was
premised on Bank’s failure to redact Debtor’s social security number and full account number from
the loan documents attached to Debtor’s proof of claim. The complaint alleged six causes of action:
(1) Objection to Claim; (2) Violation of Gramm-Leach Bliley Act; (3) Contempt of Court and
Violation of Federal District Court and Violation of Federal District Court and Bankruptcy Court
Orders and Policies Against Disclosure of Personal Identifiers and Sensitive Data; (4) Contempt of
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Court and Violation of Federal Rule of Bankruptcy Procedure 9037 - Failure to Redact Nonpublic
Information; (5) Contempt of Court and Violation of 11 U.S.C. § 107(c) - Failure to Redact
Nonpublic Information; and (6) Invasion of Privacy and Intentional or Negligent Infliction of
Emotional Distress. It sought compensatory and punitive damages, injunctive relief, disallowance
of claim, a discharge of indebtedness, and sanctions against Bank.
Bank filed a motion to dismiss Debtor’s claims on March 12, 2009, citing French v.
American General Financial Services (In re French), 401 B.R. 295 (Bankr. E.D. Tenn. 2009), which
was factually similar to the instant case and recently entered in the same venue. Plaintiff filed a
response brief on April 1, 2009. Citing French, the United States Bankruptcy Court partially granted
Bank’s motion, dismissing counts one, two, three, five, and six as failing to state a claim upon which
relief could be granted. Fed. R. Civ. P. 12(b)(6); Fed. R. Bankr. P. 7012(b).
IV.
Jurisdiction and Standard of Review
On June 1, 2009, Debtor filed a Notice of Appeal and Motion for Leave to Appeal,
pursuant to 28 U.S.C. § 158(a). On June 18, 2009, the Bankruptcy Court entered an order staying
the adversary proceedings pending this appeal. This court has appellate jurisdiction in this matter
pursuant to 28 U.S.C. § 158(a) and Bankruptcy Rule 8001 et seq.
A bankruptcy court’s findings of fact are reviewed for clear error, and its conclusions
of law are reviewed de novo. In re Behlke, 358 F.3d 429, 433 (6th Cir. 2004). A finding of fact is
clearly erroneous “when although there is evidence to support it, the reviewing court on the entire
evidence is left with the definite and firm conviction that a mistake has been committed.” Anderson
v. City of Bessemer City, 470 U.S. 564, 573 (1985). De novo means deciding the issue as if it had
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not been heard before, In re Downs, 103 F.3d 472 (6th Cir. 1996), and no deference is given to the
Bankruptcy Court’s conclusions of law, Razavi v. Commissioner, 74 F.3d 125, 127 (6th Cir. 1996).
V.
Analysis
Plaintiff avers that the Bankruptcy Court erred by holding (1) 11 U.S.C. § 107(c)
(West 2011) does not allow for a private right of action for relief enabling a plaintiff to pursue a
claim of contempt of court (Doc. 3, at 10-13), and (2) disclosure of unredacted sensitive information
in a proof of claim does not satisfy the publicity element necessary to state a claim for invasion of
privacy (Doc. 3, at 14-17). In granting the Bank’s Motion to Dismiss, the Bankruptcy Court relied
exclusively upon French v. American General Financial Services (In re French), 401 B.R. 295
(Bankr. E.D. Tenn. 2009). (Doc. 1, Attach. 2, Ex. 2.) The Plaintiff asserts that French was wrongly
decided. (Doc. 3, at 12, 15-16.) This court agrees with the Bankruptcy Court that French is good law
and instructs the dismissal of counts one, two, three, five, and six of Debtor’s claims.
1.
The Bankruptcy Court properly dismissed Debtor’s claims under 11 U.S.C. §
107(c)(1) because § 107(c) does not create a private right of action.
11 U.S.C. § 107(a) “establishes a broad right of public access, subject only to limited
exceptions set forth in the statute, to all papers filed in a bankruptcy case.” In re Neal, 461 F.3d
1048, 1053 (8th Cir. 2006). Subsection (c) of § 107 contains the exceptions to the public access rule:
The bankruptcy court, for cause, may protect an individual, with respect to the
following types of information to the extent the court finds that disclosure of such
information would create undue risk of identity theft or other unlawful injury to the
individual or the individual’s property:
(A) Any means of identification (as defined in section 1028(d) of title 18)
contained in paper filed, or to be filed, in a case under this title.
(B) Other information contained in a paper described in subparagraph (A).
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11 U.S.C. § 107(c)(1). Because § 107(c) does not expressly create a private remedy, the United
States Bankruptcy Court for the Eastern District of Tennessee in French exhaustively inquired
whether there is an implied cause of action in § 107(c). 401 B.R. at 304-07. Applying the Sixth
Circuit’s four-factor test for implied private rights of action1, the court found that the permissive
language of § 107(c) requires a court to find cause for restricting public access, and that the statute
thus addresses the operation of the court, not the parties who appear before it. Id. at 306 (citations
omitted). The court also found that legislative history confirms Congress did not intend § 107(c) to
create a private right of action or to be a remedial statute, but rather to establish the duty of the court
to restrict public access if disclosure creates an undue risk. Id. at 306. The court concluded that
107(c) is a remedy for the court, and does not afford individuals a private right of action. Id.
The facts in French were substantially similar to the facts of the instant case, whereby
a party failed to redact Debtor’s private information from documents attached to Debtor’s proof of
claim. Id. at 301-02. Additionally, this court in French dismissed the exact same five causes of
action as are at issue in this appeal. Id. at 303. Debtor fails to set forth any facts or law to support
a finding that French was incorrectly decided and that § 107(c) grants individuals an implied private
cause of action. Additionally, Debtor’s contention that § 107(c)’s inclusion in the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005 indicates that Congress intended 107(c) to afford
a private remedy is unpersuasive, as a statute imposing on courts a duty to protect individuals from
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First, the court considers whether the plaintiff is one of the class for whose special
benefit the statute was enacted. Second, the court examines legislative history to see if it can
discern any intent to create or to deny a right of action under the statute. Third, the court weighs
whether implying a right of action would be consistent with the purposes of the legislative
scheme. And fourth, the court determines whether the cause of action is one traditionally
relegated to state law, so that it would be inappropriate to infer a cause of action based solely on
federal law. Thomas M. Cooley Law Sch. v. ABA, 459 F.3d 705, 711 (6th Cir. 2006).
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certain public disclosures is also consistent with BAPCPA. Pub. L. 109-8, H. Rep. 109-31 (2005).
The remedy the court accorded Debtor in this case, namely the refiling of a redacted
document with the Clerk’s Office, was consistent with the goal of § 107(c) to protect individuals
from public disclosure of private information. The lack of any private right of action results in there
being no jurisdiction for any such private right of action and, as such, the Bankruptcy Court
appropriately dismissed five of the six causes of action in Debtor’s Complaint.
2.
The Bankruptcy Court properly dismissed Debtor’s claims related to invasion
of privacy because the act of filing a bankruptcy proof of claim is not sufficient
to establish that the information was disseminated to the public at large, as
required to state a claim of invasion of privacy under Tennessee law.
Tennessee adopts the Restatement (Second) of Torts as the applicable law in invasion
of privacy claims. West v. Media Gen. Convergence, Inc., 53 S.W.3d 640, 648 (Tenn. 2001). The
tort of public disclosure of private facts provides: “One who gives publicity to a matter concerning
the private life of another is subject to liability . . . for invasion of his privacy, if the matter
publicized is of a kind that (a) would be highly offensive to a reasonable person; and (b) is not of
legitimate concern to the public.” Rest. (Second) of Torts § 652(d) (West 2011). The “publicity”
element of this tort “differs from “publication” . . . . [Publicity] means that the matter is made public,
by communicating it to the public at large, or to so many persons that the matter must be regarded
as substantially certain to become one of public knowledge.” Id. cmt. a (emphasis added). Therefore,
“essential to recovery is a showing of a public disclosure of private facts. Communication to a single
individual or to a small group of people . . . will not give rise to liability.” Beard v. Akzona, 517 F.
Supp. 128, 132 (E.D. Tenn. 1981).
The United States Bankruptcy Court for the Eastern District of Tennessee held in
French that the “publicity” element necessary to establish a claim for invasion of privacy in
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Tennessee is not met by the act of filing a bankruptcy proof of claim. 401 B.R. at 316-19. The court
inquired into whether (1) plaintiff was damaged by the disclosure of private information; (2) anyone
actually saw the private information; (3) any person took affirmative action to view the private
information; and (4) the individual viewing the information poses a risk to the plaintiff. Id. at 318
(citing Southhall v. Check Depot, Inc. (In re Southhall), 2008 WL 5330001, *3 (Bankr. N.D. Ala.
Dec. 19, 2008))2. The court found that the debtor did not allege that the protected information ever
was viewed by the clerk’s office or that the information was, in fact, ever seen by any member of
the public at large. Id. Nor was there any allegation that any user of the court’s ECF or PACER
systems improperly accessed the information. Id. The court found that the debtor had failed to allege
any facts sufficient to establish that the information at issue was disseminated to the public at large.
Id. at 319. The debtor’s sixth cause of action for invasion of privacy was dismissed.3 Id.
In the instant case, Debtor makes exactly the same privacy allegation as the debtor
in French. Id. at 303. And, like in French, Debtor cannot point to any fact that would arguably satisfy
the “publicity” element of his privacy claims. The court finds unpersuasive Debtor’s assertion that
the numerous subscription systems that electronically disseminate PACER information make it
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The court declines to rule on the appropriateness of the French court’s reliance on the
Southhall factors, because Debtor in the instant case failed to meet the “publicity” element of an
invasion of privacy claim, as defined in comment a of the Restatement (Second) of Torts §
652(d), without regard to the Southhall factors.
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Though Debtor does not raise on appeal the issue of his intentional and negligent
infliction of emotional distress claims, the Court notes that, under exactly the same facts, the
court in French also found that the debtor had not pled any facts to support a claim for
intentional infliction of emotional distress under Miller v. Willbanks, 8 S.W.3d 607, 612 (Tenn.
1999), or that the conduct of the bank was so outrageous as to be outside the bounds of decency,
or that the situation implicated the general negligence principles of duty, breach, injury, and
causation. 401 B.R. at 319-20. The claims for infliction of emotional distress were dismissed. Id.
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“undisputable” that his information was publicly disseminated. (Doc. 3, at 16.) Though Debtor
asserts that information on ECF and PACER can become available on those secondary subscription
systems, Debtor did not claim that such widespread dissemination occurred in his case. As such,
Debtor failed to state a claim upon which relief could be granted, and the Bankruptcy Court properly
dismissed his claims related to invasion of privacy.
VI.
Conclusion
The Bankruptcy Court did not err in finding that 11 U.S.C. § 107(c) does not accord
individuals a private right of action, and that disclosure of unredacted sensitive information in a
proof of claim filed with the Bankruptcy Court Clerk’s Office does not satisfy the publicity element
necessary to state a claim for invasion of privacy under Tennessee law. This court affirms the
Bankruptcy Court’s decision to grant the Bank’s motion to dismiss courts one, two, three, five, and
six of the Debtor’s complaint.
IT IS SO ORDERED.
ENTER:
s/ Thomas W. Phillips
United States District Judge
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