Balancing the Government's Investigative Powers and the Citizen's Privacy Rights
| Publication year | 1985 |
| Pages | 947 |
1985, June, Pg. 947. Balancing the Government's Investigative Powers and the Citizen's Privacy Rights
Franklin A. Nachman, Denver, is a partner in the firm of Semple & Jackson.
The advent of the year 1984 brought renewed interest in the right of citizens to privacy. While the omnipresent state that Orwell envisioned in 1984 has not materialized, technological advances have increased the opportunity for governmental agencies to intrude in the private affairs of citizens. In Colorado, litigation concerning the right of privacy has arisen in various areas. The Colorado courts have held on some issues that the Colorado Constitution affords greater privacy rights to its citizens than the United States Constitution. Therefore, practitioners should be aware of state as well as federal decisions on privacy matters.
This article reviews significant Colorado cases on the question of the right to privacy. It also analyzes the issue of whether grand juries have the right to subpoena consumer reports prepared by credit reporting bureaus. This issue has not been resolved in Colorado and has been the subject of divided opinions in many federal courts. The conflict is the result of imprecise legislative drafting and manifests the problems that can beset the public when federal agencies disagree on the implementation of a federal statute.
The historical development of the right of privacy began with an extensive discussion in the famous law review article written nearly 100 years ago by Samuel D. Warren and Louis D. Brandeis, entitled "The Right to Privacy."(fn1) With respect to the tort of invasion of the right of privacy, Professor Prosser has commented: "Although there was at first some hesitation, a host of other legal writers have taken up the theme, and no other tort has received such an outpouring of comment in advocacy of its bare existence."(fn2) Thirty-five jurisdictions had already recognized the tort of invasion of the right of privacy before the Colorado Supreme Court recognized the doctrine in 1970 in Rugg v. McCarty.(fn3)
Rugg was a case whose facts irresistibly led the Colorado court to recognize the tort of invasion of privacy. Plaintiff owed a health studio $44.50. She alleged that a collection agency which purchased the obligation repeatedly harassed her with numerous phone calls and letters demanding payment. It also sent letters to her employer stating she was not living up to her obligations and inquiring about how many garnishments would be tolerated. Plaintiff alleged that these actions were done willfully and wantonly in disregard of her rights.
Noting that there were previous cases which declined to recognize the doctrine, the court announced that in this case it would do so. The court noted the General Assembly's legislative recognition of the right to privacy in connection with a wiretapping and eavesdropping statute, which provided: "There exists in the State of Colorado a right of privacy, an invasion of which may be compensated by damages."(fn4)
The court did not attempt to define the right of privacy comprehensively, nor did it attempt to characterize the nature of all invasions which could constitute violations of such a right. Deciding only the case before it, it held: ... when unreasonable action in pursuing a debtor is taken, which forseeably will probably result in extreme mental anguish, embarassment, humiliation or mental suffering and injury to a person possessed of ordinary sensibilities, under the same or similar circumstances, then such conduct falls within the forbidden area and a claim for invasion of privacy may be asserted.(fn5)
Since 1970, the issue of the right of privacy has arisen in Colorado with respect to bank records, employment records, arrest and indictment records and law office searches.
The Colorado Supreme Court has held that individuals have an expectation of privacy with respect to their bank records. In Charnes v. DiGiacomo,(fn6) the court refused to follow an opinion of the U.S. Supreme Court four years earlier (United States v. Miller), which held that a bank customer's expectations of privacy in his records was forfeited when he disclosed the information to the bank in the course of his bank transactions.(fn7) In Charnes, the court recognized that a taxpayer had a reasonable expectation of privacy in the bank records of his financial transactions. However, in this case it also found that the subpoena for the records was properly issued, and refused to grant the taxpayer's motion to quash.
The Attorney General, on behalf of the Director of the Department of Revenue, filed a motion for a subpoena duces tecum to the bank. It believed the bank had custody and control of records necessary for the Department to
investigate the liability of the taxpayer for Colorado income, sales and withholding taxes. The Director filed exhibits showing that the taxpayer, who had been served with an administrative subpoena, refused to produce the requested documents.
The Department sought the subpoena pursuant to CRS § 39-21-112(3), which provided for issuance of a subpoena when the Department is unable to obtain information directly from the taxpayer. The taxpayer intervened and moved to quash the subpoena. The district court denied the taxpayer's motion and transferred the case to the supreme court because the taxpayer challenged the constitutionality of the subpoena statute. The supreme court affirmed.
The court noted that the Colorado and U.S. Constitutions protect an individual's reasonable expectation of privacy from unreasonable government intrusion, citing the Fourth Amendment of the U.S. Constitution and Article II, § 7 of the Colorado Constitution. The court observed that while the U.S. Supreme Court's decision in Miller(fn8) limited its application of the Fourth Amendment to the facts before it, it did not determine the scope of protection provided citizens in Colorado by the Colorado Constitution.
The issue in Charnes was whether the interest asserted by the taxpayer represented a reasonable expectation of privacy, considering, not the location of the act or the property, but the individual's expectation of privacy. The court concluded that the taxpayer's expectation was sufficient to afford him the right under the Colorado Constitution to challenge a subpoena to the bank for his records.
Following the observation of the U.S. Supreme Court in Katz v. United States that the Fourth Amendment provides protection for "people, not places,"(fn9) the Colorado court held that a bank customer has an expectation of privacy in the bank's records of his financial transactions even though he has surrendered possession of the records to the bank. The court noted that bank transactions are not completely voluntary because bank accounts are necessary to modern commercial life and, contrary to the holding in Miller, the customer did not intend to disclose the substance of his financial transactions to third parties.
Charnes and cases in other states that have refused to follow Miller have taken an enlightened view toward technological processes that facilitate intrusion into citizens' personal affairs. Historically, individuals had no right to refuse governmental access to records absent a possessory interest in the records sought. In Katz, the court acknowledged the existence of new technology facilitating access to private records not in custody of the citizen, and concluded that it was no longer desirable to resolve these issues by making property interests paramount. It should be emphasized, however, that even though Colorado recognizes a reasonable expectation of privacy in bank records and has taken the more enlightened view of the Katz court, Colorado is in the minority of states deciding this issue.(fn10)
Although recognizing the right of taxpayers to oppose unreasonable government intrusion, the Colorado Supreme Court placed a high burden on taxpayers seeking to quash administrative subpoenas. The Charnes court held that probable cause was not required to support an administrative subpoena. To pass constitutional muster, the statute allowing the judicial subpoena would be upheld if: (1) the investigation was for a lawfully authorized purpose; (2) the information sought was relevant to the inquiry; and (3) the subpoena was sufficiently specific to obtain documents which are adequate but not excessive for the inquiry.(fn11) The court concluded that the Colorado statute met these standards.(fn12)
A subpoena seeking information to enforce the tax laws is a lawfully authorized purpose and information relating the correctness of the taxpayer's return or the amount of the taxpayer's income is relevant to the enforcement of the tax laws. Therefore, the court upheld the constitutionality of the statute and denied the motion to quash. It rejected the taxpayer's arguments that the civil subpoena was in valid because it could be used in a future criminal prosecution, and that the subpoena process violated his Fifth Amendment rights. The court left open the question of whether the lack of a notice provision in the statute invalidated the statute because the taxpayer had actual notice of the proceeding in this case. However, the court held that the taxpayer should have notice of a judicial subpoena proceeding.(fn13)
One year after the decision in Charnes, Colorado banks and their lawyers found themselves in a dilemma arising from the conflict between the decisions of the U.S. and Colorado Supreme Courts. The U.S. Attorney served grand jury subpoenas for customer records on two...
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