A federal judge said "If Congress had wanted the Gramm-Leach-Bliley Act’s privacy provisions to cover lawyers, it would have said so." The Court denied the Federal Trade Commission’s motion to dismiss a case asking that lawyers be exempt from the statute’s provisions. The Court held, in essence, that lawyers do not fall under the traditional definitions of financial institutions, to which the Act applies, and the Congress didn’t define the term so as to include lawyers as a class.
The article continues to say "... The ABA and the New York bar group argue that state ethics rules are far more stringent than the law’s privacy provisions, which require financial institutions to send clients annual privacy-protection statements and notify them if they intend to share their personal information..."
The following is the Court order:
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
AMERICAN BAR ASSOCIATION,
Plaintiff
v. Civil Action No. 02-1883 (RBW)
FEDERAL TRADE COMMISSION,
Defendant
____________________________________
MEMORANDUM OPINION
Conclusion
For the aforementioned reasons, the Court will deny the defendant's motions to dismiss the complaints pursuant to Rule 12(b)(6). This is because it does not appear that Congress intended for the GLBA's privacy provisions to apply to attorneys. In addition, it also appears on the record now before the Court, that the FTC's failure to provide sufficient reasoning to support its interpretation that attorneys are subject to the GLBA, raises concerns regarding whether the decision amounted to arbitrary and capricious agency action. Finally, even if the GLBA is applicable to attorneys engaged in the practice of law, it appears that the FTC failed to consider whether attorneys are entitled to a de minimis exemption under the GLBA, which if proven to be the case, would also amount to arbitrary and capricious agency action.
SO ORDERED this 11th day of August, 2003.
REGGIE B. WALTON
United States District Judge
SPECIAL NOTE TO CALIFORNIA ATTORNEYS:
California practitioners who must deal with G-L-B should be aware of CA SB 1, which passed the Senate, after passing the assembly. Expected to be signed by the Governor.
DECEMBER 2, 2002 An act to add Division 1.2 (commencing with Section 4050) to the Financial Code, relating to financial privacy.
Section 4052 ©) provides: The term "financial institution" does not include any provider of professional services, or any wholly owned affiliate thereof, that is prohibited by rules of professional ethics and applicable law from voluntarily disclosing confidential client information without the consent of the client.
