The Fourth Circuit in Van Alstyne v. Electronic Scriptorium, Limited, 2009 WL 692512 (4th Cir. March 18, 2009), recently broke new ground in determining that the Stored Communications Act (SCA), 18 U.S.C. §§ 2701, et seq., requires proof of actual damages as a prerequisite to recovering the $1,000 per violation statutory damages under § 2707(c) of the SCA. In so doing, the Fourth Circuit departed from several other courts that had previously decided the issue.
Section 2707(c) provides that a court may assess “actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation, but in no case shall a person entitled to recover receive less than the sum of $1,000.”
Plaintiff Van Alstyne sued her supervisor and her former employer under the SCA for allegedly accessing her AOL e-mail account without her authority. Van Alstyne claimed no actual damages as a result of accessing her e-mail account and, instead, limited her request for relief to punitive damages and “statutory minimum damage[s].” A jury awarded Van Alstyne $175,000 in statutory damages and $100,000 in punitive damages as well as her attorneys’ fees and costs.
On appeal, the defendant appellants argued that the trial court erred in permitting the jury to award statutory damages without first finding that Van Alstyne suffered actual damages. In particular, the defendants argued that under a plain reading of § 2707(c) a “person entitled to recover” statutory damages must be one who “suffered” actual damages.
The Fourth Circuit agreed, relying primarily on Doe v. Chao, 540 U.S. 614 (2004), in which the Supreme Court held that statutory damages under the Privacy Act are available only to plaintiffs who first prove they suffered actual damages. The Fourth Circuit noted that the Privacy Act’s damage provision is substantively indistinguishable from the SCA’s damage provision and thus, “just as the Privacy Act required proof of ‘actual damages’ as a prerequisite to recovering statutory damages, so does the SCA.” The Fourth Circuit stated that the “simplest reading” of the SCA damage provision was that the “entitled to recover” language must refer back to the immediately preceding provision, i.e., one who “suffered” actual damages. The Fourth Circuit rejected several arguments advanced by Van Alstyne that previously had been accepted by district courts that had considered the issue. For example, Van Alstyne argued that the structure of the SCA dictates a different result than the Privacy Act because, unlike the Privacy Act, § 2707(a) of the SCA provides that a “person aggrieved” may recover from a violator, which, according to Van Alstyne, means that under the SCA a person only needs to be “aggrieved” to recover statutory damages.
The Fourth Circuit rejected this argument noting that § 2707(a) provides that an aggrieved person may “recover . . . such relief as may be appropriate” and that “appropriate” relief is defined in § 2707(b) to include statutory damages under subsection (c). Thus, the Fourth Circuit concluded, an “aggrieved” person under § 2707(a) could only recover under subsection (c) as defined and limited by subsection (c), i.e., a person who “suffered” actual damages.
The Fourth Circuit also rejected Van Alstyne’s argument that because the SCA involves the illegal “accessing” of “facilities” where electronic communications are stored, the SCA should be interpreted in accordance with the common law of trespass, which allows an action against a trespasser even if no damage results from the trespass. The Fourth Circuit found that Van Alstyne’s argument conflated trespass to land and trespass to chattel, and that trespass to chattel more closely mirrored the SCA. At common law, trespass to chattel required proof of some harm from which damages could be assessed. Consequently, the Fourth Circuit concluded that nothing in the common law of trespass to chattel altered its analysis.
Finally, the Fourth Circuit rejected Van Alstyne’s argument that the Doe Court implicitly concluded that the SCA permits an award of statutory damages without proof of actual damage because the Doe majority did not refute the Doe dissent’s contention that the SCA “ha[s] been understood to permit recovery of the $1,000 statutory minimum despite the absence of proven actual damages.” The Fourth Circuit stated that the “Doe [majority’s] refusal to interpret a statute not before it does not carry the authoritative weight Van Alstyne would prescribe it.”
The Fourth Circuit did agree with Van Alstyne that proof of actual damages is not required before an award of either punitive damages or attorneys’ fees can be made under the SCA. The Fourth Circuit’s primary rationale was that the SCA provisions permitting the award of punitive damages and attorneys’ fees did not contain the same “entitled to recover” limiting language as in the SCA’s statutory damage provision.
For a Sixth Circuit decision regarding the SCA, see Privacy Briefing (Issue 5)