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COVERT v. HERRINGTON

August 6, 1987

Willard A. Covert and Barbara Covert, husband and wife; Ramona Abbott, a single person; Ted Nichol and Yvonne Nichol, husband and wife; Jerome Lee and Jrannine Lee, husband and wife; Thomas G. Humphrey and Patty Humphrey, husband and wife; William P. Espinoza, Jr. and Janet Espinosa, husband and wife; Aldo Pineda and Bertha Pineda, husband and wife; Eldon Schlabach and Marlene Schlabach, husband and wife; Steven L. Bohan, a single person; Mark Studd, a single person; Larry Spurgin, a single person; Lawrence Bills and Iva Bills, husband and wife; and Earl Penor and Berneice Penor, husband and wife, Plaintiffs,
v.
John Herrington, Secretary, Department of Energy, United States of America, Defendants



The opinion of the court was delivered by: QUACKENBUSH

 JUSTIN L. QUACKENBUSH, United States District Judge.

 This is an action brought under the Privacy Act, 5 U.S.C. § 552a, by 13 contract employees or "job shoppers" at the Hanford Nuclear Reservation. Plaintiffs claimed that unlawful disclosures of their personnel security files by the Department of Energy (DOE) to the DOE Inspector General (IG) and subsequently to the United States Department of Justice led to criminal prosecutions against them. None of those prosecutions resulted in convictions, but plaintiffs claim damages including costs and attorney fees incurred in defense of the criminal prosecutions.

 A bench trial was held June 23, 1987, in Richland, Washington. Appearing for plaintiffs were Daryl D. Jonson and James E. Egan; appearing for the government were Assistant United States Attorney Robert S. Linnell, as well as DOE Attorneys Carolyn Reeplog and Clyde Fitz. At this trial, the case was submitted to the court upon stipulated facts. Two exhibits were admitted: the Stipulation of Fact, including a transcript of testimony from Grand Jury proceedings in the related criminal case (Ex. 1) and the IG's Prosecutive Reports which had been provided to the Department of Justice (Ex. 2). The parties were permitted to submit additional memoranda on several issues, which has been done (Ct. Rec. 27-30).

 Having considered the record, including the exhibits and Stipulation of Fact and the argument of counsel, and being fully advised in the premises, the court hereby makes its Findings of Fact and Conclusions of Law.

 The target of the investigation were employees of HEPCO, Inc., and STACO, Inc., subcontractors for the DOE's prime Hanford contractors, Westinghouse Hanford Co. and Rockwell Hanford Operations. Under agreements between the contractors and subcontractors (effective October 1, 1979 for Rockwell and February 3, 1980 for Westinghouse), the subcontractors' employees were required to execute Certificates of Permanent Residence to be eligible for per diem subsistence payments.

 Each Certificate of Permanent Residence acknowledged that the signing party understood he was eligible for a subsistence allowance only during such periods as he maintained two residences -- a permanent residence more than 50 miles from the worksite, and a temporary one within 50 miles of the worksite. Plaintiffs herein, employees of the above-described subcontractors at various times after June 1, 1980, all signed such Certificates of Permanent Residence.

 As a condition of their employment, plaintiffs were required to complete and execute forms DOE-1, "Personnel Security Questionnaire," and Supplement to Form DOE-1, which stated that "personal information on the form(s) will be used to determine an individual's eligibility for a DOE personnel security clearance or access authorization." It also provided, in pertinent part, that

 
access to or use of the information provided is permitted only to the authorized Federal Government investigative agencies conducting the investigations and to DOE personnel directly involved in the processing of the determination of the eligibility of the individual for security clearance or access authorization.

 (Emphasis added.) Plaintiffs all completed and executed these forms at various dates between June 1, 1980, and January 1, 1986.

 In May 1985, an auditor in the DOE's IG Office, James Steven Abernethy, began an audit to determine whether about 130 job shoppers may have inappropriately received per diem payments. He examined the contract files maintained by Westinghouse and Rockwell, including the Certificates of Permanent Residence. In an attempt to verify the accuracy of information provided by the job shoppers, he also used telephone directories, Polk City Directories, the Cole Publication Cross Reference Directory, and property records from the Benton and Franklin County Assessors' offices.

 A significant number of the job shoppers whose records were checked were determined to have met the requirements of Certificates of Permanent Residence, and were maintaining both permanent and temporary residences. About 30 to 35 were questionable. The audit information gathered by Mr. Abernethy was provided to IG Special Agents Donald Farmer and Richard Young, who, between June 1985 and January 1986, examined personnel security clearance files of the individuals identified in the audit. Those files were maintained pursuant to the Privacy Act, 5 U.S.C. § 552a, by the DOE's Safeguards and Security Division.

 On September 9, 1985, and on various dates thereafter, Special Agents Farmer and Young examined the entire personnel security files of plaintiffs herein without a written request by, or the prior written consent of, the individuals to whom the records pertained. Disclosure of these files to the agents was not pursuant to a court order under 5 U.S.C. § 552a(b)(11), nor pursuant to a written request by an agency for law enforcement purposes under § 552a(b)(7). This court previously has determined that the IG was entitled to examine the personnel security files under the "need to know" exception of § 552a(b)(1) and 42 U.S.C. § 7138(b)(1), which vests the IG with the duty of detecting fraud or abuse in DOE programs and operations. See Order Denying Plaintiffs' and Defendant's Motions for Summary Judgment (Ct. Rec. 24). The remaining issue in this case is whether the Special Agents violated the Privacy Act in turning over the Personnel Security Questionnaires (Part 1) to the Assistant United States Attorney and furnishing information therefrom to the Grand Jury without a court order or a written request from the Department of Justice pursuant to 5 U.S.C. § 552a(b)(11) and (7).

 The Special Agents allegedly acted in accordance with a February 23, 1983 Memorandum from the director of the DOE's Security Division, Office of Safeguards and Security, which stated that DOE personnel security files would be made available for review by IG special investigators "in connection with official investigative matters based upon an investigator's verbal request. The IG Investigator will present appropriate credentials and, prior to conducting the file review, complete an appropriate Privacy Act form for inclusion in the personnel security file." For each file reviewed, a "File Review Log" was completed stating the purpose of the review as "law enforcement" or "background data." Parts of the personnel security files were copied and filed in the IG's Richland office.

 Following their investigation, Special Agents Young and Farmer presented a Prosecutive Report for each named plaintiff herein (and certain others who were not subsequently indicted) to an Assistant United States Attorney for the Eastern District of Washington. Each Report contained details of the investigations, copies of the Certificates of Permanent Residence and copies of Part I of the Personnel Security Questionnaires (PSQ). *fn1" The latter included extensive details regarding present and past residences of the job shoppers under investigation, past employment and identification of relatives and their addresses. Also contained in each Report were any statements or affidavits provided by the job shoppers under investigation and a "Warning and Waiver of Rights" pursuant to which the statements were taken. Finally, each Report contained the statutes and/or regulations allegedly violated; a summary of "personal and criminal history"; a list of witnesses and expected testimony against each job shopper; and copies of the contractual provisions between the contractors and subcontractors regarding per diem eligibility. Some of the information given to the Department of Justice was public information, while other information (i.e., Part I of the Personnel Security Questionnaires) was protected by the Privacy Act.

 The IG's disclosure to the Department of Justice was without a written request by, or the prior written consent of, the individuals to whom the records pertained. Disclosure of these files was not pursuant to a court order under 5 U.S.C. § 552a(b)(11), nor a written request by the Department of Justice under § 552a(b)(7). The government, however, argues that disclosure to the Department of Justice and the Grand Jury fell within the "routine use" exception of § 552a(b)(3).

 Moreover, defendant acknowledged in its Answer (Ct. Rec. 4) that information derived from copies of documents from the personnel security files was presented to the Grand Jury and that plaintiffs were "indicted as a result of live testimony based in part on information in the individual Plaintiffs' personnel security files."In fact, Special Agents Young and Farmer testified before the Grand Jury May 5, 1986, regarding the results of their investigations, stating generally that the "permanent addresses" given on the Certificates were, in fact, the addresses of relatives. No personnel security files were actually provided to the Grand Jury.

 The Grand Jury returned an Indictment against the plaintiffs named herein, which was filed May 5, 1986. The indictment charged each plaintiff with submitting a false claim to an agency of the United States (18 U.S.C. § 287), theft of government property (18 U.S.C. § 641) and making a false statement in a matter within the jurisdiction of an agency of the United States (18 U.S.C. § 1001). Only one defendant -- Willard A. Covert -- was brought to trial, resulting in a judgment of acquittal. Trial of this matter revealed that plaintiffs were not government employees, but employees of companies providing workers for Hanford contractors. The remaining cases were dismissed or had been subject to pretrial diversion.

 In their Stipulation, the parties have agreed that each plaintiff sustained $3,000 damages, the sum each incurred in attorney fees for defense of the criminal actions. "The only issue as to these damages will be whether such damages were proximately caused by a violation of the Privacy Act." The parties have further stipulated that "at a minimum, the $1,000 statutory damage provided in the Privacy Act shall be the agreed-upon damages for each Plaintiff (5 USC § 552a)." Plaintiffs agreed to submit no testimony in support of their claims for mental anguish and humiliation.

 This court has jurisdiction over the parties to this action. Subject matter jurisdiction exists under 5 U.S.C. § 552a(g) and 28 U.S.C. § 1331.

 The Privacy Act of 1974, 5 U.S.C. § 552a(b), provides, in pertinent part:

 
No agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to a written request by, or with the prior written consent of the individual to whom the record pertains, unless disclosure of the record would be --
 
(1) to those officers and employees of the agency which maintains the record who have a need for the record in the performance of their duties;
 
. . . .
 
(3) for a routine use as defined in subsection (a)(7) of this section and described under subsection ...

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