Personal Privacy in an Information Society. Elements of an Expectation of Confidentiality. Prohibiting Voluntary Disclosure

07/12/1997

In several areas of its inquiry, the Commission attempted to identify records about an individual kept by third parties in which it believes the individual should have a legitimate expectation of confidentiality-a right to expect that such records or the information in them would not ordinarily be disclosed without his consent. The Commission found that certain financial, insurance, and medical records fall in this category.32 The Commission also believes that other areas of private activity, which could not be studied as carefully, create records outside the possession of the individual which deserve protection, one example being telephone toll records.

While toll records are not analogous, as checking account records are, to "private papers" within the meaning of the Fourth Amendment, they provide independent documentation of communications which, before the telephone, were considered uniquely private in character.33 Indeed, our present legal system severely restricts access to the contents of such communications.34Since the mere fact of communication is often as revealing as the content, the Commission believes that toll records should be protected as well. The American Telephone and Telegraph Company has, in fact, already taken a step in that direction by refusing to disclose toll records in all but a few instances unless a subpoena commands it.35 Moreover, telephone toll records are but one example of areas of record keeping that may be deserving of protection but into which the Commission did not have time to delve.

Whatever the record about an individual, however, if it is determined to be one in which a legitimate expectation of confidentiality should exist, then to secure that expectation the record keeper must be put under a duty not to disclose the information in the record without the consent of the individual unless required to do so by legal process or government reporting requirements. Simply saying that a record keeper may not disclose voluntarily, however, is not enough. Real protection demands that the individual have the means to prevent improper disclosures by a record keeper and secure redress against a record keeper who violates the basic expectation of confidentiality. To an extent, the mode for obtaining suchredress is set out in the Commission's recommendations regarding particularareas of record keeping. A critical further step is clear definition of theindividual's legal interest in the record, of his expectation of confidentialityas it applies to the question of voluntary disclosure by the record keeper.Under existing law, when documentary information is voluntarilysupplied to law enforcement personnel in the course of investigation, such aswage records provided by an employer, the subject of such documentaryevidence is presumed not to have a legal interest in the records. As theSupreme Court has noted, personnel files and the like are "records in whichthe . . . [individual] has no proprietary interest of any kind, which areowned by the third person, which are in his [third person's] hands, andwhich relate to the third person's transaction" with the individual.36Forthese reasons, the record keeper's right to volunteer the information in itsrecords to the government is currently unrestricted.37 Even documentsobtained illegally by private parties, if acquired without governmentknowledge or complicity, may be turned over to and used by the government.38

As explored earlier in this chapter, and in several other sections of this report, not only is the record keeper free to disclose as a matter of theory, record keepers in sectors such as banking and credit make a practice of disclosing account information voluntarily to government agents. The Commission's survey of credit-card issuers and their disclosure practices confirmed testimony to this effect received during the Commission's hearings.39Representatives of Federal investigative agencies themselves corroborated the Commission findings that, with the exception of requests for telephone toll records and the records maintained by a limited number of banks, most of the requests they make for records are complied with informally. Frequently, government agencies maintain informal liaison with credit companies and banks to facilitate the flow of account information.40

These findings reinforce the conclusion that only when an individual can claim a legal interest equal to the California standard of a legitimate expectation of privacy is voluntary disclosure of his records by third-party record keepers securely limited. Recognition of such a legal interest places clear responsibility on the record keeper to assure against improper disclosure, to government or anyone else. If information is improperly disclosed, in other words, the record keeper is liable for damages or susceptible to injunctive relief. The fact that the record keeper is liable for improper disclosures of information held confidentially, however, does not mean that the government may use informal coercion to force "voluntary" disclosure, thus escaping liability. Indeed, if government were to coerce disclosure, there would be little equity in holding the record keeper responsible. The Commission believes that as a corollary to prohibitions on voluntary disclosure by record keepers, stringent penalties should be established for inducing a record keeper or its employees to disclose information in which an individual has an expectation of confidentiality. Such an enforcement scheme should include the right to initiate an individual civil damage action against anyone who induces the breach of an expectation of confidentiality in records. The scheme should extend sanctions to all persons, not simply government agents.

A record keeper's duty not to disclose recorded information in which an individual has a legitimate expectation of confidentiality should not prohibit every disclosure. Obviously, there are circumstances in which the record keeper should have the discretion, or even the duty, to disclose. If the record subject injures the record keeper, for example, information may be disclosed by the record keeper to establish the fact of injury or to assist those investigating the injury. Protecting privacy does not mean completely insulating an individual; if he violates the terms of his relationship with . credit-card issuer, for example, he must be prepared to accept the costs if injury to that financial agent. In such circumstances, the record keeper should be free to disclose information about the individual necessary to assure full compensation for the injury and proper application of the law.

In addition, if a record keeper becomes aware from information generated in its relationship with an individual that he is engaged in illegal activity, then the record keeper should be under some obligation to disclose that information to proper authorities, as would any other citizen. For example, if a bank holds confidential documentary information which indicates that an individual is engaged in illegal transfers of funds to a foreign nation, the bank might be implicated as an accessory if one of its officers were aware of the transfer and the bank did not report it.41 It is not the intent of the Commission to create a new testimonial privilege for bankers, insurers, or anyone else. Rather, the Commission seeks to fashion protection for documentary information about individuals which, were it not for Twentieth Century changes in social and economic organization, would have remained the private and protectible records of the individual. The observations of the record keeper and his employees concerning the actions of the individual which appear to be illegal are not, in the Commission's opinion, protectible information.

Finally, as outlined in the credit, depository, insurance, and medical records recommendations of the Commission, certain disclosures by the record keeper are necessary to maintain properly the relationship between record keeper and individual. Within the context of the prior notice provisions and redisclosure safeguards recommended in the chapters dealing with those types of records, the Commission recognizes the legitimacy of such disclosures.42

A prohibition on voluntary disclosure provides the first element in the design o` the expectation of confidentiality which the Commission recommends for certain records. To secure this first portion of the legal barrier that will protect records about an individual from improper incursion by government and others, the Commission recommends that as a general rule a private-sector record keeper maintaining records in which an individual has a legitimate expectation of confidentiality should not disclose information from such records without the consent of the individual, except under the specific circumstances discussed in the last few pages and articulated in the separate recommendations relating to each area of private-sector record keeping.

Concurrent with this limitation, the Commission, of course, recommends restrictions on how government may go about obtaining information about individuals from third-party record keepers. Those limitations on government access will be discussed below.