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Dealership Did Not Violate Law When It Provided Customer’s Personal Information to Law Enforcement
By Michael A. Goodman

There’s been a lot of talk in the last several years about privacy of consumer information, and a boatload of state and federal laws are in effect that tell holders of such information what they can and can’t do with that information. A recent case shows, however, that personal information is not always protected from dissemination.

James Bradley bought a truck from Raceway Ford, Inc. and financed the purchase. Bradley provided personal information to Raceway in connection with the transaction. After the purchase, two state law enforcement officers requested information about Bradley from Raceway, which it provided. In response, Bradley sued Raceway, alleging negligence, invasion of privacy, identity theft, and intentional and negligent infliction of emotional distress. Raceway filed a special motion to dismiss, known as a SLAPP motion (“strategic lawsuit against public participation”). SLAPP motions are intended to curtail lawsuits brought primarily to chill the valid exercise of freedom of speech. The trial court denied Raceway’s SLAPP motion. On appeal, the California Court of Appeal reversed.

The appellate court’s SLAPP analysis considered the required elements of Raceway’s motion. First, the appellate court concluded that Bradley’s cause of action “arose from” conduct by Raceway in furtherance of the right of petition or free speech. Raceway volunteered Bradley’s information to law enforcement in connection with an investigation of possible wrongdoing by Bradley. The appellate court reasoned that this action was therefore a protected activity. The disclosure qualified for protection under the litigation privilege and was absolutely privileged under the SLAPP analysis.

Second, the appellate court found that Raceway’s disclosure did not violate any legal duty that Raceway may have owed to Bradley. The appellate court rejected Bradley’s argument that Raceway was subject to the Gramm-Leach-Bliley Act, finding, without analysis, that Raceway was not a “financial institution” subject to that Act. Similarly, the appellate court rejected Bradley’s argument that Raceway was subject to the California Financial Information Privacy Act because that Act excludes dealers that enter into contracts for the sale or lease of motor vehicles.

Third, the appellate court found that Raceway did not owe a contractual obligation to Bradley that would have prohibited the disclosure to law enforcement. Raceway’s privacy policy allowed for disclosure to law enforcement in some circumstances and also stated that the policy was not a contract, contract amendment, or complete list of legal obligations on the subject of privacy. As a result, the appellate court concluded that Raceway’s disclosure of Bradley’s information did not violate any contractual obligation.

Fourth, the appellate court considered Bradley’s reasonable probability of success on his claims at trial, as required by the SLAPP standard. The appellate court found that all of Bradley’s claims against Raceway hinged on a showing that Raceway owed some legal or contractual duty to Bradley that would have prohibited the disclosure to law enforcement. As noted above, the appellate court found no such duty. Therefore, Bradley had no reasonable likelihood of success. Without that likelihood, the appellate court found that Raceway was entitled to dismissal of Bradley’s complaint in response to its SLAPP motion.

The dealership may have avoided liability in this case, but don’t assume that you can just hand over a customer’s personal information, even to law enforcement, without first checking with your lawyer to make sure that you are not running afoul of federal or state laws or any contract you have with your customer.

Bradley v. Raceway Ford, Inc., 2011 Cal. App. Unpub. LEXIS 2900 (Cal. App. April 19, 2011).

Michael A. Goodman is a partner in the Washington, D.C., office of Hudson Cook, LLP. Mike can be reached at 202-327-9704 or by email at mgoodman@hudco.com.

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