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ZELLER v. UNITED STATES

March 21, 1979

Sol ZELLER, Plaintiff,
v.
UNITED STATES of America, Interstate Commerce Commission, Marvin Kampel, George Stafford, and Daniel LoRusso, Defendants



The opinion of the court was delivered by: PRATT

This lawsuit, seeking damages and injunctive relief under various federal statutes and pendent state claims, presents several questions of law, the most important ones involving interpretation of the federal Freedom of Information Act and the federal Privacy Act. Defendants move for dismissal, partly for judgment on the pleadings pursuant to FRCP 12(c), and partly for summary judgment pursuant to FRCP 56(b). Papers filed with the court for consideration on the motion include statements pursuant to Eastern District Rule 9(g), affidavits of counsel and parties, Interstate Commerce Commission files and records pertaining to plaintiff, and extensive memoranda of law.

 Although the major issues involve solely questions of law, the undisputed factual and procedural context in which they arise provides a necessary perspective from which to approach them.

 I. FACTUAL AND PROCEDURAL BACKGROUND

 In 1970 and 1971, plaintiff Sol Zeller was engaged in the business of brokering charter bus tours for individuals and groups in the New York-Long Island area, usually for vacation, sight-seeing, or educational purposes. Doing business under the names "Sol Zeller Tours" and "Executive Motor Tours", plaintiff acted as a broker between clients seeking transportation and available charter bus companies. Zeller did not possess the broker's license from the Interstate Commerce Commission (ICC) that is required of individuals who, for compensation, arrange for interstate transportation of passengers or property. See Part II, § 211(a) of the Interstate Commerce Act, 49 U.S.C. § 311(a). *fn1"

 In 1970, Zeller arranged a charter bus tour for the Hillel Country Day School of Lawrence, New York. Planned as a one-day interstate excursion on July 15, 1970, from Lawrence, on Long Island, to Lancaster, Hershey and York, Pennsylvania, with a return to Lawrence, the trip ended in a tragic highway accident near Allentown, Pennsylvania, that killed seven children who were passengers on the chartered bus, and injured many others. *fn2"

 In August, 1971, the ICC commenced a civil action in the United States District Court for the Eastern District of New York, *fn3" pursuant to the Interstate Commerce Act, 49 U.S.C. § 311(a) & (c), and § 322(b)(1), seeking to restrain Zeller, doing business as Sol Zeller Tours and Executive Motor Tours, from continuing to

 
broker the transportation of passengers by motor vehicle for compensation in interstate or foreign commerce * * * without first having obtained * * * a broker's license authorizing such transactions * * * as required by * * * the Interstate Commerce Act. See Exhibit A to Defendants' Memorandum of Law in Support of Motion to Dismiss and for Summary Judgment, Civil Action No. 71 C 1037, Complaint at 3.

 An appendix to that complaint listed transactions alleged to be representative instances of plaintiff's unlawful arrangement of transportation. Among those listed was the ill-fated July 15, 1970 Hillel Country Day School trip.

 Zeller's answer to that complaint denied that any of the transactions listed in the appendix had been arranged in violation of law; in response to requests for admission, Zeller denied the receipt of compensation for the transportation listed. Nevertheless, the case was concluded on June 12, 1972, after Zeller consented to "Findings of Fact and Conclusions of Law" signed by the late Judge Judd, in which it was found that

 
on various dates and on numerous occasions between March 6, 1970, and the date of the filing of the complaint in said action, said defendant for compensation as a broker sold and offered for sale transportation subject to * * * the Interstate Commerce Act * * * and held himself out by advertisement * * * as a person who * * * arranges for such transportation * * *. Exhibit A to Defendants' Memorandum, Findings of Fact and Conclusions of Law at 2, June 12, 1972.

 The court also found that Zeller had arranged for such transportation on "some of the dates specified in (the appendix) attached and made a part of the complaint * * *." Id. at 3.

 On the same day, Judge Judd granted judgment enjoining Zeller from independently brokering motor transportation for compensation in interstate or foreign commerce, and from holding himself out to broker such transportation, without first obtaining a broker's license from the ICC. The judgment was consented to by Zeller personally and by his counsel. See Exhibit A to Defendants' Memorandum.

 On the following day, June 13, 1972, the ICC regional office in Boston, Massachusetts, disseminated to various newspapers and trade publications as well as to other ICC regional offices, a press release describing the consent judgment and the fact that Zeller had been enjoined from independently brokering motor transportation for compensation in interstate commerce without first obtaining a broker's license from the ICC. The press release read as follows:

 TABLE

 
In the United States District Court for the Eastern District of New York Honorable Orrin G. Judd, Judge.
 
On June 12, 1972 at Brooklyn, New York, judgment was entered permanently enjoining the defendant Sol Zeller, doing business as Sol Zeller Tours and Executive Motor Tours, Brooklyn, New York, from brokering motor transportation for compensation in interstate or foreign commerce, or holding himself out to broker such transportation, without first obtaining a broker's license from the Interstate Commerce Commission.
 
The complaint filed in this case alleged that the defendant, a passenger broker who held and holds no broker's license from the Interstate Commerce Commission, had in violation of the Interstate Commerce Act for compensation arranged for and sold the interstate transportation by motor bus of various groups, including the transportation of children from the Hillel Country Day School, Lawrence, Long Island, New York to Lancaster, Hershey and York, Pennsylvania which prematurely ended in a fatal accident on July 15, 1970 near Allentown, Pennsylvania in which seven of the children were killed. The charter bus operator involved in that charter trip, Tedesco Bus Co., Inc., had previously on October 1, 1971 been fined $ 3,000 for violations of the Interstate Commerce Act in the United States District Court for the District of New Jersey as a result of a criminal action instituted at the instance of the Interstate Commerce Commission.
 
The instant case was instituted and presented to the court by the Commission's Bureau of Enforcement upon information furnished by the Bureau of Operations. (Refer E 2-71-19).

 Over a year later, in late 1973, defendant Marvin Kampel, who was employed by the ICC as a district supervisor in the New York area, was instructed by his superiors to investigate whether Zeller was violating the Interstate Commerce Act or was operating in violation of the 1972 injunction. *fn4" His investigation was conducted during 1974 and 1975, and included field interviews with known or possible customers of Zeller. On at least one occasion, Kampel gave a copy of the June 13, 1972 press release to the person being interviewed. Kampel Aff., P 6.

 In addition to the investigation, Kampel also at times assisted prospective applicants for brokers' licenses who visited the ICC offices in New York. On at least six occasions he distributed copies of the press release to such individuals in order to demonstrate the consequences of operating without a broker's license. Kampel Aff. P 7. Kampel had no part, however, in the preparation and initial distribution of the press release.

 By letter dated April 13, 1975, addressed to the Secretary of the ICC, Zeller contested the wording of the 1972 press release on the ground that it contained statements and implications that were inaccurate, misleading, and prejudicial. He asserted that much of the language in the press release had been taken out of context; that the press release incorrectly raised implications connecting Zeller's violation of the Interstate Commerce Act with the bus accident near Allentown; that the press release prejudiced him by associating him with the carrier on the bus trip and by stating that the carrier had been fined in a previous criminal proceeding; and finally, that the press release failed to indicate that the consent judgment did not prevent him from acting as an agent for a broker or being otherwise employed by a broker. Zeller requested that appropriate corrections be made, and demanded access to the complete ICC file and all ICC records and documents pertaining to him. See Rec. at 51-53. *fn5"

 The ICC responded that it considered the press release to be factually correct. It construed plaintiff's April 13, 1975 request as having been made pursuant to the Freedom of Information Act, 5 U.S.C. § 552 (FOIA), and advised him that he was entitled to examine approximately 108 pages of material; he was denied access to other ICC records relating to him on the ground that they fell into several exemptions contained in that statute. Letter dated May 12, 1975, addressed to plaintiff from Acting Secretary of ICC, Rec. at 47-48. Certain records were withheld on the ground that they were wholly or partially exempt as intra-agency memoranda, FOIA(b)(5); *fn6" other documents were considered investigatory records exempt on the ground that their production would "constitute an unwarranted invasion of personal privacy", FOIA(b)(7)(C); still other investigatory records were withheld on the ground that they were compiled for law enforcement purposes, and their production would "interfere with enforcement proceedings", FOIA(b)(7)(A).

 Plaintiff subsequently requested, on July 21, 1975 and on August 11, 1975, that his April 13, 1975 letter be considered as an initial request under the Privacy Act of 1974, 5 U.S.C. § 552a (PA). Rec. at 39, 41. The ICC questioned this in view of the fact that the PA would not become effective until September 27, 1975, and requested clarification from Zeller as to which statute, PA or FOIA, his request was based upon. Rec. at 38.

 Zeller thereupon retained counsel who wrote to the ICC on October 16, 1975, specifying that plaintiff sought relief under both the FOIA and the PA, and asking that the letter be considered an initial request under the PA. Rec. at 30-37. Counsel also restated plaintiff's earlier objections to the press release regarding alleged inaccuracies and implications, and demanded revision of the press release or amendment of the ICC records. The letter made other miscellaneous requests under various provisions of the PA: an accounting of each ICC disclosure of the press release, a copy of the ICC procedures concerning access to and review and amendment of records, and notice by the ICC to all individuals to whom the press release had been distributed advising them of any corrections or disputed sections.

 The secretary of the ICC responded by letter dated December 24, 1975, advising Zeller's counsel that the ICC records contained no personal information concerning Zeller, but rather, information regarding Zeller's entrepreneurial activities, and that in accordance with Office of Management and Budget (OMB) Guidelines the secretary, therefore, considered such information not subject to the PA. See 40 Fed.Reg. 28948 (1975).

 Zeller's counsel appealed the secretary's denial to the chairman of the ICC, who subsequently affirmed the secretary's decision by letter dated January 30, 1976, stating that "the information sought is entrepreneurial in nature and that therefore, (plaintiff's) request does not fall within the ambit of the Privacy Act." Rec. at 14. In addition, the chairman advised that dissemination of the press release would cease, and along with the letter, enclosed 107 pages of information pursuant to plaintiff's FOIA request.

 II. NATURE OF THE PRESENT ACTION

 Plaintiff filed the complaint in this action on March 15, 1976, seeking damages and injunctive relief against the government, the ICC, Kampel, Kampel's superior, Daniel LoRusso, and ICC Chairman, George Stafford. Originally there were seven causes of action; two more were added by amendment on April 30, 1976.

 Plaintiff's complaint presents claims under the PA, the FOIA, and the Federal Tort Claims Act, as well as pendent state law claims of libel, slander and Prima facie tort. Under the PA plaintiff seeks in Count I injunctive relief pursuant to PA(e)(5) & PA(e)(6) *fn7" to restrain further dissemination of the press release and to compel the ICC to amend it so as to render it "accurate, complete, timely and relevant within the meaning of the Privacy Act * * * ", as well as damages, pursuant to PA(g)(1), PA(g)(2)(A) & PA(g)(4), for defendants' alleged wrongful dissemination of the press release and for failure to maintain records as mandated by PA(e)(5). In seeking this relief, plaintiff invokes PA(g)(2)(A), which authorizes De novo review of the challenged agency determination.

 In Count II plaintiff seeks equitable relief under the FOIA and the PA to obtain disclosure of all files and records in possession of the ICC that are pertinent to him.

 Miscellaneous injunctive relief under the PA is sought in Count III. Under the Federal Tort Claims Act, 28 U.S.C. §§ 1346, 2671 Et seq., (FTCA) *fn8" plaintiff seeks damages against the United States for the disclosures by its employee Kampel, and for the ICC's negligent failure to supervise Kampel and prevent his disclosures of the press release, allegedly in violation of PA(b). *fn9" Amendment to Complaint, Counts VIII & IX.

 Based upon still other statutory provisions, plaintiff seeks in Count VII mandamus relief under 28 U.S.C. § 1361 compelling the individually named defendants to perform their statutory duties under the PA by preventing unauthorized issuance or disclosure of the press release, and in Count V, actual damages for wrongful disclosure of information by an ICC agent in violation of 49 U.S.C. § 322(d); plaintiff has indicated his intent to abandon the latter claim. See n. 9, Supra.

 Finally, as to the pendent state law claims, plaintiff seeks damages from Kampel for libel and slander, based upon Kampel's distribution of the press release and defamatory oral statements which he allegedly made, Count IV, and for Prima facie tort, claiming that Kampel's actions amounted to an intentional effort to destroy plaintiff's name and business reputation. Count VI.

 III. PRIVACY ACT: DEFENDANTS' THRESHOLD ARGUMENTS

 Before addressing plaintiff's claims on the merits, defendants raise three preliminary arguments as to the scope of the PA itself and the permissible extent of the court's review of the particular decision made by the ICC here. Defendants argue that the only determination they have made thus far under the PA was that the information Zeller requested was "entrepreneurial" and, therefore, did not fall within the scope of the PA. Review of that initial decision, defendants urge, should be made under the Administrative Procedure Act, 5 U.S.C. § 701 Et seq. (APA), and, if found to be erroneous, should result only in a remand to the ICC so that Zeller's requests can be decided by defendants on their merits. Three threshold questions are thus presented: whether review in this action is under the APA or the PA, whether "entrepreneurial" information falls within the PA, and whether remand is appropriate.

 A. Review here is under the PA, not the APA.

 Defendants assert that the court is limited in this action to a review of the ICC chairman's determination that the Privacy Act does not apply to the information sought by this plaintiff; they argue that such review must be pursuant to the APA, which, if applicable would require the court to determine only whether the ICC chairman's determination was arbitrary, capricious, an abuse of discretion, or not otherwise in accordance with law. 5 U.S.C. § 706. Defendants' position would limit the court at this stage merely to review of the determination that the PA is inapplicable in its entirety, and would exclude from such review any possible substantive violations or misapplications of the Act.

 From the terms of the PA and its somewhat sparse legislative history, the court concludes that Congress intended that the PA provide a more extensive judicial review over agency actions than that permitted under the APA. PA procedures are set forth in PA(g), which states in relevant part:

 
(g)(1) Civil remedies. Whenever any agency
 
(A) Makes a determination under subsection (d)(3) of this section not to amend an individual's record in accordance with his request, or fails to make such review in conformity with that subsection;
 
(B) Refuses to comply with an individual request under subsection (d)(1) of this section;
 
(C) Fails to maintain any record concerning any individual with such accuracy, relevance, timeliness, and completeness as is necessary to assure fairness in any determination relating to the qualifications, character, rights, or opportunities of, or benefits to the individual that may be made on the basis of such record, and consequently a determination is made which is adverse to the individual; Or
 
(D) Fails to comply with any other provision of this section, or any rule promulgated thereunder, in such a way as to have an adverse effect on an individual,
 
The individual may bring a civil action against the agency, and the district courts of the United States shall have jurisdiction in the matters under the provisions of this subsection. (emphasis supplied).

 The Senate bill, S. 3418, modified as the compromise bill, was enacted into law as the Privacy Act. After stating the purposes of its bill, the Senate Report pointed out several ways in which the Act accomplishes those purposes, *fn10" one such method being that

 
Judicial remedies allow the enforcement of the Act through the courts by individuals and organizations in civil actions challenging denial of access to personal information or through suits by * * * any aggrieved person to enjoin violations or threatened violations of the Act. Sen.Rep.No.93-1183, 93rd ...

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