Just one decision out of the Court of Appeal yesterday, but it’s a doozy. In Foothill Federal Credit Union v. Superior Court, case no. B198664 (2d Dist. Sept. 24, 2007), the court holds that consumers’ claims against a credit union for disclosing consumer records in response to a subpoena are barred by the litigation privilege of Civil Code section 47. At least, that’s the way the court describes its holding, but there is more at work in the decision.
The impact of this decision is hard to understate in light of Code of Civil Procedure section 1985.3, which requires a party seeking certain forms of consumer records in discovery to notify the consumers so they have an opportunity to object to the disclosure. The court’s finding that the credit union in this case was shielded from any liability by Civil Code section 47 renders Code of Civil Procedure section 1985.3 pretty much toothless.
Interestingly, the real parties did not contend that section 47 was inapplicable. Instead, they claimed that the policies underlying expanding the privilege beyond defamation were not served by applying it to a custodian of records who provides records in violation of section 1985.3, that applying the privilege in such circumstances would virtually abrogate section 1985.3 because it would remove any incentive for a records custodian to comply with it, and that applying the privilege in this case leads to an absurd result because the very litigation that gives rise to the discovery would also confer immunity for providing discovery in violation of the statute.
The actual reasoning of the court strays from application of the privilege to whether any remedy exists for violation of section 1983.5. The court holds that the only purpose of section 1985.3 is to provide a process for consumers to object to disclosure. It provides them no right of action against a noncomplying records custodian.
Given this determination, the discussion of whether the section 47 litigation privilege applies seems academic to me. If no right of action exists, then there’s no liability, privilege or no privilege.
Regardless of the court’s actual reasoning, there is no denying that its decision leaves consumers at the mercy of records custodians and leaves them with no recourse for violations of section 1985.3. The tone of California Appellate Report‘s post on the case does not appear to be overstated.
Even the majority opinion appears to acknowledge this (though certainly in less dire terms than California Appellate Report), and the concurring opinion makes an explicit appeal to the legislature to step in.