Amazon.com LLC v. Lay

Filing 46

DECLARATION of Zapolsky filed by Plaintiff Amazon.com LLC re 44 MOTION for Summary Judgment (Caplow, Steven)

Amazon.com LLC v. Lay

Doc. 46

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THE HONORABLE MARSHA J. PECHMAN

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE AMAZON.COM, LLC ) ) Plaintiff, ) ) v. ) ) KENNETH R. LAY, in his official capacity as ) Secretary of the North Carolina Department of ) Revenue, ) ) ) Defendant. ) ) No. 10-CV-00664 DECLARATION OF DAVID A. ZAPOLSKY IN SUPPORT OF PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT PURSUANT TO FED. R. CIV. P. 56(a) NOTE ON MOTION CALENDAR: August 6, 2010

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I, David A. Zapolsky, declare under the penalty of perjury as follows: 1. I am Vice President and Associate General Counsel for Amazon.com, Inc.,

parent company of Amazon.com LLC ("Amazon"). In this position, I am familiar with Amazon's business model and with customers' feedback regarding Amazon's business model and practices. I have personal knowledge of the matters referred to in this declaration, either directly or based on due diligence and reasonable inquiry, including my review of Amazon's business records. If called as a witness, I am competent to testify to those matters.

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DECLARATION OF DAVID A. ZAPOLSKY -- 1
Davis Wright Tremaine LLP
LAW OFFICES Suite 2200 1201 Third Avenue [phone]
Seattle, Washington 98101- 30 45 Fax: [phone]

2.

I submit this declaration in support of Amazon's Motion for Summary

Judgment and points and authorities in support thereof.

Dockets.Justia.com

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Amazon's Business and Customers' Privacy Concerns

3.

Amazon is one of the world's leading online retailers of books, music, movies,

and other types of products, offering over 25 million book titles alone. Millions of individuals all over the world purchase books, DVDs, CDs and other items from Amazon's websites by browsing the World Wide Web using personal computers or other computing devices. Purchases are made online primarily through credit card transactions, which in turn generate

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electronic records of all purchases, including purchases of books and other expressive material. 4. Amazon assigns each product that it sells a specific product code, known as the

Amazon Standard Identification Number, or ASIN. If an ASIN is typed into the search bar on Amazon's website, the website will display detailed information about the product associated with that ASIN. 5. One of the issues that Amazon has always faced is addressing its customers'

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DECLARATION OF DAVID A. ZAPOLSKY -- 2
Davis Wright Tremaine LLP
LAW OFFICES Suite 2200 1201 Third Avenue [phone]
Seattle, Washington 98101- 30 45 Fax: [phone]

concerns about online privacy. At a brick-and-mortar store for books, music, and videos, a customer has the option of paying with cash, and there is no record that a specific customer purchased a specific book, CD, or DVD. In contrast, when a customer purchases an expressive work from Amazon, he or she generally uses a credit or debit card, and the transaction information, which necessarily includes the title of the item, is electronically stored. Many of Amazon's customers know that an electronic record of their expressive choices is created. 6. Amazon has taken exceptional care to assure that any data it obtains regarding

its customers and their transactions remains protected and private. The company has

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consistently improved and updated its privacy practices over the years to remain at the forefront of online privacy protection for our customers and others who visit our websites. 7. Amazon has received countless customer inquiries about online privacy over

the years. Among other concerns, customers inquire whether the government has access to a customer's purchase information and whether this information is truly private. To help address such concerns and to assure customers that Amazon does not voluntarily share their product choices, we post our Privacy Notice at the bottom of practically every web page on

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Amazon's various websites. The current version of our policy is located at http://www.amazon.com/gp/help/customer/display.html?nodeId=468496. The DOR's Information Document Requests

8.

As described in the accompanying Declaration of Jennifer Galbreath

("Galbreath Decl."), the North Carolina Department of Revenue ("DOR") has issued three Information Document Requests to Amazon (collectively "Requests," defined individually as the "December Information Request," "March Information Request," and "June Information Request" in the Galbreath Decl. and attached thereto as Ex. A, B and F), purportedly as part of an audit of Amazon for compliance with North Carolina state sales and use tax laws. 9. The December Information Request asked, in part, that Amazon provide "all

information for all sales to customers with a North Carolina shipping address by month in an electronic format" for all dates between August 1, 2003, and February 28, 2010 (emphasis

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DECLARATION OF DAVID A. ZAPOLSKY -- 3
Davis Wright Tremaine LLP
LAW OFFICES Suite 2200 1201 Third Avenue [phone]
Seattle, Washington 98101- 30 45 Fax: [phone]

added). 10. In response to the DOR's December Information Request, Amazon provided

the DOR with responses to all of the data fields specified by the DOR that were reasonably obtainable from Amazon's records, including: order ID number, ASIN, seller, ship-to city,

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county, postal code, the non-taxable amount of the purchase, and tax audit record identification (the "Initial Data"). 11. The subsequent March Information Request stated that the Initial Data omitted

the "Bill to Name; Bill to Address (Street, City, State, and Zip); Ship to Name; Ship to Address (Street); Product/item code or description" (the "Customer Data"). The March Information Request demanded that Amazon provide the Customer Data "for examination" on or before April 19, 2010, or face an administrative summons pursuant to N.C. Gen. Stat. §

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105-258. 12. When combined with the Initial Data, the Customer Data would allow the

DOR to identify which customer purchased which specific product(s), including expressive works like books, CDs and DVDs. To protect the privacy of customers' expressive choices, Amazon declined to provide the Customer Data in a letter to the DOR dated April 19, 2010 (attached to the Galbreath Decl. as Ex. C) and filed its Complaint in the instant action. Potential Harm To Amazon And Its Customers

13.

Amazon is concerned that compliance with the DOR's Requests, in the

absence of a showing of a compelling need by the DOR for the information, will chill the First Amendment and privacy rights of its customers. 14. Amazon fears that its customers' online privacy concerns will be heightened

such that some of them may be reluctant to purchase expressive materials online ­ particularly
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DECLARATION OF DAVID A. ZAPOLSKY -- 4
Davis Wright Tremaine LLP
LAW OFFICES Suite 2200 1201 Third Avenue [phone]
Seattle, Washington 98101- 30 45 Fax: [phone]

items that are sensitive, controversial, or that might somehow portray them in a negative light. 15. Because the Initial Data contains ASIN numbers, the DOR can identify that

anonymous Amazon customers in North Carolina have purchased or received potentially sensitive or personal books such as:

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·

"Bipolar Disorder: A Guide for Patients and Families," by Francis Mark Mondimore (ASIN 0801883148); "He Had It Coming: How to Outsmart Your Husband and Win Your Divorce," by Stacy Schneider (ASIN 1416949356); "Living With Alcoholism: Your Guide To Dealing With Alcohol Abuse And Addiction While Getting The Alcoholism Treatment You Need," by K M S Publishing.com (ASIN 1450501354); "What to Do When You Can't Get Pregnant: The Complete Guide to All the Technologies for Couples Facing Fertility Problems," by Daniel A. Potter and Jennifer S. Hanin (ASIN 1569243719); and "Outing Yourself: How to Come Out as Lesbian or Gay to Your Family, Friends, and Coworkers," by Michelangelo Signorile (ASIN 0684826178). 16. Some of the movies that Amazon's North Carolina customers have purchased

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DECLARATION OF DAVID A. ZAPOLSKY -- 5
Davis Wright Tremaine LLP
LAW OFFICES Suite 2200 1201 Third Avenue [phone]
Seattle, Washington 98101- 30 45 Fax: [phone]

include: "Lolita" (1962) (DVD) (ASIN B000UJ48VI); "Brokeback Mountain" (2005) (DVD) (ASIN B00005JOFQ); and "Fahrenheit 9/11" (2004) (DVD) (ASIN B000SINT52), to name just a few sensitive or controversial titles. Other Amazon customers have purchased potentially controversial music, including recordings by Eminem such as "The Marshall Mathers LP" (ASIN B00004T9UF) and "The Slim Shady LP" (ASIN B00000I5JQ). 17. To the extent that the DOR intends to use the information the DOR has

demanded in its Requests to contact Amazon's customers about their reading, viewing, listening and other choices, or to the extent that customers otherwise become aware that their purchasing habits may be disclosed to the government, the DOR's Requests have the distinct potential to upset customers or cause them embarrassment or distress as they contemplate that their purchases of personal, sensitive or unpopular expressive material from Amazon may be scrutinized by government officials.

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The DOR's Post-Litigation Communications With Amazon

18.

Following the commencement of this litigation, the DOR stated that it does not

need the ASIN information for its audit of Amazon's compliance with state tax laws and has offered to return the Initial Data to Amazon, as described in the Galbreath Decl., para. 16. 19. Amazon has repeatedly asked the DOR for assurances that the DOR will

refrain from seeking information about customers' choices of expressive material in the future
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and for an explanation of why the DOR needs any personally identifiable information in order to audit Amazon's compliance with state tax laws. By letter dated May 14, 2010, through counsel, Amazon asked the DOR to clarify its position with respect to the protection of Amazon's customer privacy ("May 14 Letter"). A true and correct copy of the May 14 Letter is attached hereto as Exhibit 1. In the May 14 Letter, Amazon asked the DOR: (a) if the DOR were to return a disk containing the ASIN information, what assurances could be provided that the DOR had not made any back-ups of the data Amazon has provided containing

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DECLARATION OF DAVID A. ZAPOLSKY -- 6
Davis Wright Tremaine LLP
LAW OFFICES Suite 2200 1201 Third Avenue [phone]
Seattle, Washington 98101- 30 45 Fax: [phone]

detailed ASIN information that reveals the titles of books, movies and CDs; (b) whether the DOR would enter into a consent order prohibiting the DOR from seeking the titles of expressive material from Amazon in the future; and (c) whether the DOR maintains that it needs the names and addresses of Amazon customers, or any other personally identifiable information, in order to audit Amazon's compliance with state tax laws, and if so, why such customer information is necessary to audit Amazon. Amazon also requested that the DOR issue a revised request for information specifically stating that Amazon need not provide the names and titles of books, movies, CDs and other expressive materials.

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20.

The DOR responded to Amazon's May 14 Letter with a letter to counsel dated

May 19, 2010 ("May 19 Letter") indicating that it would be seeking additional information. A true and correct copy of the May 19 Letter is attached hereto as Exhibit 2. While continuing its offer to provide a disk with the ASIN information previously provided, the DOR's May 19 letter did not respond to the substance of Amazon's May 14 Letter. 21. In a letter dated June 7, 2010, the DOR, by its counsel, explained that it had

issued a new information request that "is not focused on customer names," but further
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explained that the "DOR is, at least for the time being, deferring action on customer names" while it pursues other information from Amazon. A true and correct copy of the DOR's June 7, 2010 letter is attached hereto as Exhibit 3. The DOR has offered to return the Initial Data (which includes the ASIN numbers) in exchange for more general product code information but has not yet been able to confirm that any and all copies of the previously-provided product information will be deleted. 22. In the DOR's June 4, 2010 cover letter to Jennifer Galbreath attached to the

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DECLARATION OF DAVID A. ZAPOLSKY -- 7
Davis Wright Tremaine LLP
LAW OFFICES Suite 2200 1201 Third Avenue [phone]
Seattle, Washington 98101- 30 45 Fax: [phone]

June Information Request, the DOR "reserve[d] the right to request additional information, including, but not limited to, information not provided in response to earlier IDR requests." Galbreath Decl. Ex. F. 23. Thus far, the DOR has refused to agree to refrain from seeking information

about customers' choices of expressive material in the future. In response to Amazon's repeated inquires seeking further clarification of DOR's position, the DOR has advised, in conversation among counsel on June 15, 2010, and confirmed by letter from Amazon's counsel on June 16, 2010, that the DOR will not agree to a consent order or other binding commitment that it will not require Amazon to provide the DOR with information about

customers' choices of expressive material or personally identifying information about
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customers. A true and correct copy of the letter of June 16, 2010 is attached hereto as Exhibit
4.

24.

As a result, Amazon continues to have serious concerns that the DOR, now or

in the future, whether under the current Secretary of the DOR or a future Secretary, will seek information about customers identities or their choices of expressive material. Amazon's North Carolina customers have no assurance that their privacy will be protected from

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DECLARATION OF DAVID A. ZAPOLSKY - 8
Davis Wright Tremaine LLP
LAW OFFICES

government scrutiny and, absent such assurances, may be reluctant to purchase expressive material online 25. Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury under the laws

of the United States of America that the foregoing is true and correct to the best of my knowledge and belief

David A. Zapolsky VP, Legal Amazon.com, Inc. Dated: Seattle, Washington July CZ , 2010

Suite 2200 · 1201 Third Avenue Seattle, Washington 98101-3045 [phone] · Fax: [phone]

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