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Perry v. Federal Bureau of Investigation

*fn*: April 11, 1985.

RIXON MERLE PERRY, PLAINTIFF-APPELLANT
v.
FEDERAL BUREAU OF INVESTIGATION, ET AL., DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 77 C 2466 - Abraham L. Marovitz, Judge.

Cummings, Chief Judge, Wood and Cudahy, Circuit Judges.

Author: Cummings

CUMMINGS, Chief Judge.

This case - involving an unsuccessful applicant for a series of jobs with the federal government -raises issues concerning the Fifth Amendment's Due Process Clause and the Privacy Act, codified in part at 5 U.S.C. § 552a. The district court ruled that dissemination of an allegedly false FBI report about plaintiff to his prospective federal agency employers did not violate plaintiff's legal rights and granted summary judgment to defendants in a series of opinions. We affirm in part and reverse in part.

I

In 1976 Rixson Perry applied for a job as enforcement agent with the Bureau of Alcohol, Tobacco and Firearms ("BATF"). The BATF informed Perry that he was being considered for an appointment, and Perry signed a form authorizing the agency to obtain background information on him; the only part of the release pertinent to this appeal is that Perry authorized the release of information contained in "police and criminal records." In May 1976, the FBI sent the BATF, at the latter's request, a five-page report on plaintiff which contained allegations of third parties that Perry had impersonated state and federal law enforcement officers on numerous occasions.*fn1 The report contained allegations that Perry (1) had posed on various occasions as an FBI agent, a United States Marshal, and an Illinois State Trooper; (2) had illegally stopped cars, using a red emergency light and a siren; (3) carried numerous weapons in the trunk of his car; and (4) possessed various badges and other forms of police identification.*fn2 A cover letter that accompanied the report stated that the report "clearly reflects Perry's unstable nature." The record does not disclose whether this cover letter was sent to the BATF along with the report.

In June the BATF withdrew the tentative offer of employment it made Perry in April. Plaintiff alleges that in 1976, 1977 and 1978 he also did not receive law enforcement jobs with three other federal agencies - the U.S. Marshals Service, the Department of Agriculture, and the Internal Revenue Service (all defendants) because of the FBI report. In particular, the complaint alleges that Perry was denied a position with the Marshals Service solely on the basis of information received orally from the FBI, the same information that was later compiled in the FBI report. (The district court's opinion of January 15, 1981, fixes the date of the decision not to hire Perry as April 22, 1976, three weeks before the date of the FBI report.) Moreover, Perry alleged that after being told by an official with the Department of Agriculture that he was an excellent candidate for a position with that agency, he was not hired because of the FBI report (allegedly transmitted to the Agriculture Department by the BATF). Finally, the record contains a copy of a 1977 letter from the IRS appointing plaintiff as a criminal investigator, subject to an investigation of Perry. Three weeks later, plaintiff alleges, the job offer was withdrawn, based in part on the FBI report, which the IRS had received from the BATF.

Plaintiff contends that the FBI report is false and that its dissemination and use by the defendant agencies violated rights guaranteed him by the Constitution and the Privacy Act. For purposes of reviewing the grant of summary judgment to defendants, we must assume that the report is indeed false. Munson v. Friske, 724 F.2d 683, slip op. at 7 (7th Cir. 1985). Some of the claims presented below have dropped out. Three issues remain on appeal: (1) whether the FBI violated section (3)(5) of the Privacy Act, 5 U.S.C. § 552a(e)(5), in compiling and distributing the report; (2) whether the FBI's disclosure of the report to the BATF violated 5 U.S.C. § 552a(b); and (3) whether the dissemination of the report implicated a liberty interest protected by the Due Process Clause. The district court ruled against Perry on all three issues. We agree with the district court's decision on the Privacy Act questions, but reverse with respect to plaintiff's due process claim.

II

Section (e)(5) of the Privacy Act requires each federal agency that maintains a system of records to "maintain all records which are used by the agency in making any determination about any individual with such accuracy, relevance, timeliness, and completeness as is reasonably necessary to assure fairness to the individual in the determination." 5 U.S.C. § 552a(e)(5) (emphasis supplied). Perry argues that this section requires the FBI to ensure that its records are accurate before sending them to other agencies. We disagree. Although we have found two cases in which section (e)(5) has been applied to an agency whose records were used by another agency in making a determination about an individual,*fn3 these decisions are inconsistent with the statute's language and the legislative history.

To begin with, section (e)(5) applies only to records used by an agency in "making any determination" about an individual. The legislative history indicates that the word "determination" in section (e)(5) "means any decision affecting the individual which is in whole or in part based on information contained in the record and which is made by any person or any agency." H.R. Rep. No. 1416, 93d Cong., 2d Sess. 15 (1974) (emphasis supplied).*fn4 The FBI made no decision or determination about Perry. It merely sent a report, summarizing information provided by third parties, to the BATF, which would then decide whether to hire plaintiff. Cf. Zeller v. United States, 467 F. Supp. 487, 502 (E.D.N.Y. 1979) (press release issued by agency was not used by agency in making decisions adversely affecting plaintiff).

In addition, the statute requires agencies disseminating its records to anyone other than an agency to make reasonable efforts to ensure the records' accuracy and completeness. 5 U.S.C. § 552a(e)(6) (emphasis supplied).*fn5 The specific exclusion of agencies from section (e)(6) and the lack of provisions elsewhere in the Privacy Act on agency-to-agency transfers of records indicate that Congress did not intend the obligations of section (e)(6) to apply to the sending agency when records are sent from one agency to another.

In light of the statute's language, structure and legislative history, we interpret section (e)(5) to mean that when one federal agency sends records to another agency to be used by the latter in making a decision about someone, the responsibility for ensuring that the information is accurate, relevant, timely and complete lies with the receiving agency - the agency making the "determination" about the person in question - not the sending agency.*fn6 Guildeliens drafted by the Office of Management and Budget ("OMB") shortly after the Privacy Act be came law - guidelines still in effect today - are in accord with this interpretation. 40 Fed. Reg. 28,948, 28,964 - 28,965 (July 9, 1975) (Privacy Act Implementation: Guidelines and Responsibilities).*fn7 See also Clarkson v. Internal Revenue Service, 678 F.2d 1368, 1377 (11th Cir. 1982); Note, The Privacy Act of 1974: An Overview, 1976 Duke L.J. 301, 315.

We recognize that our construction of section (e)(5) - compelled, we think, by the statutory language and its history - creates some practical problems for litigations. For example, after the FBI was granted summary judgment on Perry's section (e)(5) claim, Perry voluntarily dismissed his section (e)(5) claims against the remaining defendants because he felt they would provide little in the way of meaningful relief; the FBI would retain its report and the right to circulate it regardless of the outcome of the section (e)(5) claims against the other defendants. Appellant's Brief at 3. Besides the limited utility of a pyrrhic victory against the other agencies, it might be difficult for a plaintiff to win a section (e)(5) suit against a receiving agency. Section (e)(5), after all, requires only that an agency act reasonably in ensuring that the information it relies on in making employment decisions is accurate. It might be hard to argue, for example, that it is unreasonable for an agency to rely on a report from the nation's leading crime-fighting agency, especially when the FBI itself is in the best position to validate the information. But Congress was entitled to draft the Privacy Act this way, and any resolution of these problems must come from Capitol Hill, not the courts.

III

The Privacy Act prohibits the release of information about a person, with exceptions not relevant to this case, unless the individual consents to the disclosure in writing. 5 U.S.C. § 552a(b). Perry's second statutory claim is that he did not consent to the release of the FBI report. He contends that the reference to "police and criminal records" in the release he signed is limited to records of arrests and convictions. The phrase "police and criminal records," however, is broader in scope than arrest and conviction records. Information retrieved, as here, from the FBI's criminal investigative files fits comfortably within the category of criminal records. Although not as detailed as the waiver signed by the plaintiff in Thomas v. Veterans Administration, 467 F. Supp. 458, 460 n. 4 (D. Conn. 1979), the release Perry signed is not so vague or general that it is questionable whether he knew what he was authorizing or whether the FBI knew what documents it could lawfully release to the BATF. Cf., e.g., the boilerplate release in Doe v. General Services Administration, 544 F. Supp. 530, 531-532 (D. Md. 1982). The release in this case is sufficient to comply with § 552a(b); Perry consented to the release of the information found in the FBI report.

IV.

The most troublesome issue in this case is plaintiff's claim that the disclosure of the FBI report implicated a liberty interest protected by the Fifth Amendment. No constitutional claim would be stated if Perry alleged only that the FBI report defamed him, Paul v. Davis, 424 U.S. 693, 47 L. Ed. 2d 405, 96 S. Ct. 1155, or if he claimed only that as a result of the report he did not receive a particular government job, Cafeteria & Restaurant Workers, Local 473 v. McElroy, 367 U.S. 886, 6 L. Ed. 2d 1230, 81 S. Ct. 1743. But Perry has alleged that the FBI is deliberately attempting to deny him employment within the federal government in a law enforcement position; the FBI, he claims, has willfully and intentionally made it impossible for him to get a federal law enforcement position and virtually impossible to obtain similar work with state or local government agencies. Plaintiff also claims that the allegations in the report are false, an essential element of his liberty interest claim. Codd v. Velger, 429 U.S. 624, 627-628, 51 L. Ed. 2d 92, 97 S. Ct. 882 (per curiam).

While most of the liberty interest cases involve individuals who have been dismissed, e.g., Codd v. Velger; Board of Regents v. Roth, 408 U.S. 564, 33 L. Ed. 2d 548, 92 S. Ct. 2701; Munson v. Friske, 754 F.2d 683 (7th Cir. 1985), the plaintiff here was never hired. In Larry v. Lawler, 605 F.2d 954 (7th Cir. 1978), this Court held that a liberty interest could be implicated by the manner in which a job applicant is turned down.*fn8 Larry applied to the Civil Service Commission to be put on a list of eligible applications for federal jobs. The Commission rated him ineligible (because of his employment record and habitual use of alcohol); the effect of this finding was to bar Larry from federal employment for a period of up to three years. 605 F.2d at 956. We applied the two-part analysis developed in Board of Regents v. Roth to determine if Larry had a protectable liberty interest: a liberty interest in implicated when (1) charges are made against an individual which might seriously damage his standing and associations in the community; or (2) the state imposes on an individual a stigma or other disability foreclosing his freedom to take advantage of other employment opportunities.*fn9 Id. at 957 (quoting Roth, 408 U.S. at 573-574). See also Munson, slip op. at 13-14. We decided that the second situation existed in Larry's case, even though the Commission's findings were not made public:

[T]he federal government is composed of many different

agencies and departments, all of which ...


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