F I L E D United States Court of Appeals Tenth Circuit PUBLISH MAY 28 1997 UNITED STATES COURT OF APPEALS PATRICK FISHER Clerk TENTH CIRCUIT
LARRY O. ANDERSON, Lieutenant Colonel (Retired); ALBERTA ANDERSON,
Plaintiffs-Appellants, No. 96-1352
v.
LA JUNTA STATE BANK,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO (D.C. No. 95-WY-3273-CB)
Submitted on the briefs:
Alison Ruttenberg, Denver, Colorado, and Denis H. Mark and William C. Waller, Jr. of Waller and Mark, P.C., Denver, Colorado, for Plaintiffs-Appellants.
Gregory B. Kanan and Jennifer C. Robinson of Rothgerber, Appel, Powers & Johnson LLP, Denver, Colorado, for Defendant-Appellee.
Before PORFILIO and LOGAN, Circuit Judges, and BURRAGE, District Judge. *
* Honorable Michael Burrage, Chief Judge, United States District Court for the Eastern District of Oklahoma, sitting by designation. BURRAGE, District Judge.
Plaintiffs Larry O. Anderson and his wife, Alberta, appeal from an order of
the district court granting La Junta State Bank’s motion for summary judgment. 1
Plaintiffs brought this action pursuant to 12 U.S.C. §§ 3401-3422, the Right to
Financial Privacy Act (RFPA), alleging that the Bank had violated their rights
under the Act.
In 1993, the Air Force began an investigation of Mr. Anderson, then an
active duty lieutenant colonel in the Air Force, for violations of various
provisions of the Uniform Code of Military Justice, including theft of
nonappropriated funds. An investigating agent met with the Bank’s senior vice
president and asked him to produce plaintiffs’ bank records. The vice president
pulled up the information on his computer screen and, without permitting the
investigator to view the screen, informed him that plaintiffs’ records contained
nothing relevant to the investigation as only Mr. Anderson’s military pay check
was being deposited into their account. The investigators later subpoenaed
plaintiffs’ bank records.
1 After examining the briefs and appellate record, this panel has determined unanimously to grant the parties’ request for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f) and 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument.
-2- Plaintiffs thereafter commenced this action. They initially alleged the Bank
had violated the RFPA because plaintiffs were not afforded the opportunity to
challenge the subpoenas issued pursuant to the RFPA. However, in their response
to the Bank’s motion to dismiss or for summary judgment, plaintiffs asserted that
the Bank had violated the RFPA when it orally released information in response
to the investigator’s oral request. The Bank responded to this allegation and the
district court addressed the claim in its order. Therefore, plaintiffs’ appeal on this
issue is properly before the court. 2
The RFPA was enacted in response to a pattern of government abuse in the
area of individual privacy and was intended “to protect the customers of financial
institutions from unwarranted intrusion into their records while at the same time
permitting legitimate law enforcement activity by requiring federal agencies to
follow” established procedures when seeking a customer’s financial records.
Neece v. IRS, 922 F.2d 573, 575 (10th Cir. 1990) (quotation omitted). However,
“[t]he most salient feature of the [RFPA] is the narrow scope of the entitlements
it creates” by limiting the kinds of customers to whom the RFPA applies and the
types of records it protects. SEC v. Jerry T. O'Brien, Inc., 467 U.S. 735, 745
(1984). Thus, the RFPA seeks to strike a balance between the customers’ right of
2 Plaintiffs dropped their other claim before the district court and do not argue it on appeal.
-3- privacy and the need of law enforcement agencies to obtain financial records
pursuant to legitimate investigations.
Under the RFPA, the government 3 may have access to, or obtain copies of,
information contained in a customer’s financial records from a financial
institution only if the customer authorizes the disclosure, the government obtains
an administrative or judicial subpoena or summons, or the records are sought
pursuant to a search warrant or formal written request. See 12 U.S.C. § 3402.
Further, the financial institution may not release the requested financial records
until the government “certifies in writing to the financial institution that it has
complied with the applicable provisions” of the RFPA, including notice to the
customer of the existence of the subpoena, summons, search warrant, or request;
the nature of the government’s inquiry; and permitting the customer sufficient
time to respond to the notice. Id. §§ 3403(b), 3405-08.
The RFPA also restricts disclosure of customers’ financial records by
financial institutions themselves. Financial institutions may not provide “any
Government authority access to or copies of, or the information contained in, the
financial records of any customer . . . .” Id. § 3403(a). One exception has been
provided: A financial institution may notify a Government authority if it believes
3 The Air Force is not exempt from the requirements of the RFPA. See McDonough v. Widnall, 891 F. Supp. 1439, 1450 (D. Colo. 1995).
-4- it has “information which may be relevant to a possible violation of a statute or
regulation.” Id. § 3403(c). In such a case, the financial institution may provide
only the customer’s name or other identifying information and the nature of the
suspected illegal activity. See id.
The issue in this case is one we have not previously addressed. We must
determine whether an oral request by a government investigator which is orally
responded to, without permitting visual inspection of the customer’s records,
violates the RFPA, absent compliance by the Government authority with the
§§ 3402, 3403 requirements. See Neece v. IRS, 96 F.3d 460, 464 n.1 (10th Cir.
1996).
The district court held, and the bank argues, that such a disclosure does not
run afoul of the RFPA. The district court held that our decision in Bailey v.
USDA, 59 F.3d 141 (10th Cir. 1995), permitted the Bank to orally disclose the
information provided. We disagree.
In Bailey, the bank suspected two of its customers were engaging in
questionable banking practices relating to the deposit of food stamps and the
immediate withdrawal of a corresponding amount of cash. See id. at 142. The
bank notified the government. A government investigator went to the bank and
interviewed a bank employee who told the investigator the customers’ names and
the monetary value of the transactions and showed him a log of the transactions.
-5- We held this disclosure did not violate § 3403(c) as only the “essence of the
Free access — add to your briefcase to read the full text and ask questions with AI
F I L E D United States Court of Appeals Tenth Circuit PUBLISH MAY 28 1997 UNITED STATES COURT OF APPEALS PATRICK FISHER Clerk TENTH CIRCUIT
LARRY O. ANDERSON, Lieutenant Colonel (Retired); ALBERTA ANDERSON,
Plaintiffs-Appellants, No. 96-1352
v.
LA JUNTA STATE BANK,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO (D.C. No. 95-WY-3273-CB)
Submitted on the briefs:
Alison Ruttenberg, Denver, Colorado, and Denis H. Mark and William C. Waller, Jr. of Waller and Mark, P.C., Denver, Colorado, for Plaintiffs-Appellants.
Gregory B. Kanan and Jennifer C. Robinson of Rothgerber, Appel, Powers & Johnson LLP, Denver, Colorado, for Defendant-Appellee.
Before PORFILIO and LOGAN, Circuit Judges, and BURRAGE, District Judge. *
* Honorable Michael Burrage, Chief Judge, United States District Court for the Eastern District of Oklahoma, sitting by designation. BURRAGE, District Judge.
Plaintiffs Larry O. Anderson and his wife, Alberta, appeal from an order of
the district court granting La Junta State Bank’s motion for summary judgment. 1
Plaintiffs brought this action pursuant to 12 U.S.C. §§ 3401-3422, the Right to
Financial Privacy Act (RFPA), alleging that the Bank had violated their rights
under the Act.
In 1993, the Air Force began an investigation of Mr. Anderson, then an
active duty lieutenant colonel in the Air Force, for violations of various
provisions of the Uniform Code of Military Justice, including theft of
nonappropriated funds. An investigating agent met with the Bank’s senior vice
president and asked him to produce plaintiffs’ bank records. The vice president
pulled up the information on his computer screen and, without permitting the
investigator to view the screen, informed him that plaintiffs’ records contained
nothing relevant to the investigation as only Mr. Anderson’s military pay check
was being deposited into their account. The investigators later subpoenaed
plaintiffs’ bank records.
1 After examining the briefs and appellate record, this panel has determined unanimously to grant the parties’ request for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f) and 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument.
-2- Plaintiffs thereafter commenced this action. They initially alleged the Bank
had violated the RFPA because plaintiffs were not afforded the opportunity to
challenge the subpoenas issued pursuant to the RFPA. However, in their response
to the Bank’s motion to dismiss or for summary judgment, plaintiffs asserted that
the Bank had violated the RFPA when it orally released information in response
to the investigator’s oral request. The Bank responded to this allegation and the
district court addressed the claim in its order. Therefore, plaintiffs’ appeal on this
issue is properly before the court. 2
The RFPA was enacted in response to a pattern of government abuse in the
area of individual privacy and was intended “to protect the customers of financial
institutions from unwarranted intrusion into their records while at the same time
permitting legitimate law enforcement activity by requiring federal agencies to
follow” established procedures when seeking a customer’s financial records.
Neece v. IRS, 922 F.2d 573, 575 (10th Cir. 1990) (quotation omitted). However,
“[t]he most salient feature of the [RFPA] is the narrow scope of the entitlements
it creates” by limiting the kinds of customers to whom the RFPA applies and the
types of records it protects. SEC v. Jerry T. O'Brien, Inc., 467 U.S. 735, 745
(1984). Thus, the RFPA seeks to strike a balance between the customers’ right of
2 Plaintiffs dropped their other claim before the district court and do not argue it on appeal.
-3- privacy and the need of law enforcement agencies to obtain financial records
pursuant to legitimate investigations.
Under the RFPA, the government 3 may have access to, or obtain copies of,
information contained in a customer’s financial records from a financial
institution only if the customer authorizes the disclosure, the government obtains
an administrative or judicial subpoena or summons, or the records are sought
pursuant to a search warrant or formal written request. See 12 U.S.C. § 3402.
Further, the financial institution may not release the requested financial records
until the government “certifies in writing to the financial institution that it has
complied with the applicable provisions” of the RFPA, including notice to the
customer of the existence of the subpoena, summons, search warrant, or request;
the nature of the government’s inquiry; and permitting the customer sufficient
time to respond to the notice. Id. §§ 3403(b), 3405-08.
The RFPA also restricts disclosure of customers’ financial records by
financial institutions themselves. Financial institutions may not provide “any
Government authority access to or copies of, or the information contained in, the
financial records of any customer . . . .” Id. § 3403(a). One exception has been
provided: A financial institution may notify a Government authority if it believes
3 The Air Force is not exempt from the requirements of the RFPA. See McDonough v. Widnall, 891 F. Supp. 1439, 1450 (D. Colo. 1995).
-4- it has “information which may be relevant to a possible violation of a statute or
regulation.” Id. § 3403(c). In such a case, the financial institution may provide
only the customer’s name or other identifying information and the nature of the
suspected illegal activity. See id.
The issue in this case is one we have not previously addressed. We must
determine whether an oral request by a government investigator which is orally
responded to, without permitting visual inspection of the customer’s records,
violates the RFPA, absent compliance by the Government authority with the
§§ 3402, 3403 requirements. See Neece v. IRS, 96 F.3d 460, 464 n.1 (10th Cir.
1996).
The district court held, and the bank argues, that such a disclosure does not
run afoul of the RFPA. The district court held that our decision in Bailey v.
USDA, 59 F.3d 141 (10th Cir. 1995), permitted the Bank to orally disclose the
information provided. We disagree.
In Bailey, the bank suspected two of its customers were engaging in
questionable banking practices relating to the deposit of food stamps and the
immediate withdrawal of a corresponding amount of cash. See id. at 142. The
bank notified the government. A government investigator went to the bank and
interviewed a bank employee who told the investigator the customers’ names and
the monetary value of the transactions and showed him a log of the transactions.
-5- We held this disclosure did not violate § 3403(c) as only the “essence of the
suspected illegal activity” was revealed by the disclosure. Id. at 143.
The district court held that the disclosure in this case was also valid as the
bank revealed even less information than had been revealed in Bailey. However,
the issue here is not how much information was provided, but who initiated the
contact. The Bank did not suspect plaintiffs of any wrongdoing. Rather, the
government initiated the contact based on suspicions arising from information
obtained from sources outside of plaintiffs’ bank records. We agree with the
district court that had the Bank suspected plaintiffs of wrongdoing and initiated
contact with the government investigators, the information disclosed would not
have violated the RFPA. However, the Bank could not respond to the
government’s inquiry and release information to the government investigator
unless the government had properly complied with the procedures set forth in the
RFPA. Cf. Duncan v. Belcher, 813 F.2d 1335, 1339 (4th Cir. 1987) (RFPA does
not insulate private accounts from government investigation, but “merely
establishes summary procedures for government investigators to follow”). Thus,
the Bank violated the RFPA.
The Bank also argues that the RFPA permits oral disclosure of information
absent compliance with RFPA procedures. The RFPA prohibits the release of
“financial records” unless set procedures are followed. “Financial records” are
-6- defined as “an original of, a copy of, or information known to have been derived
from” a customer’s bank records. 12 U.S.C. § 3401(2). In Hunt v. SEC, 520
F. Supp. 580 (N. D. Tex. 1981), the court held that the plain meaning of the
language of § 3401(2) “clearly includes oral testimony relating to a customer’s
relationship with a bank or financial institution.” Id. at 605. We agree. The oral
disclosure here by the Bank related information derived from plaintiffs’ bank
records and was protected by the RFPA. The RFPA does not require that such
information be conveyed in writing before its disclosure can violate a bank
customer’s right to privacy in his records.
We need not consider whether plaintiffs suffered any damages as a result of
the disclosure. If the government or a financial institution violates the RFPA, the
customer whose financial records were disclosed is entitled to $100, regardless of
the volume of records involved. Id. § 3417(a). Damages may also be awarded in
the form of any actual damages sustained as a result of the disclosure and punitive
damages if the violation is determined to have been willful or intentional. Id.
Further, if the action is successful, costs and reasonable attorney’s fees may also
be awarded. Id. We leave it for the district court in the first instance to
determine whether damages are appropriate here.
-7- The judgment of the United States District Court for the District of
Colorado is REVERSED, and the case is REMANDED for further proceedings in
accordance with this opinion.
-8-