16 Nov $139.95? The Damages you are Entitled to against a Creditor that Published your Social Security Number to the World.
The Southern District has recently changed course, lowering the amount of sanction damages against creditors that divulge social security numbers to the world to capture and use for identity theft. While social security numbers must be redacted in all proof of claims submitted in Bankruptcy Courts, frequently they are not. As a result, creditors break numerous State and Federal Laws, Local Court Orders, and National Bankruptcy Rules, when they disclose such confidential information.
These disclosures result in a plethora of damages to debtors, due to identity theft. Criminals capture these social security numbers to obtain credit, sell to immigrants who use these for illegal employment purposes, market them for sale across the world, etc. Indeed, in September, 2003, the Federal Trade Commission stated “More than 27 million people have been victims of identity theft in the last five years, costing them $5 billion and businesses and financial institutions almost $48 billion.”
Hmmm, Do the Math: $53 Billion in damages to 27 million people, thats $1887.00 in damages per victim. Nevertheless, the consequences for such disclosures now appear to be limited to $139.95. On November, 3, 2008, Judge Taylor issued a non-published opinion, in the case of In re Carole Sue Williams. In that case, Union Bank of California disclosed the debtor’s social security number in a proof of claim. Doan Law Firm objected and sucessfully got it redacted. Union Bank then did it again. Again, Doan Law objected and got it redacted again. Doan Law then discovered that this was not the first instance, and that in the past 5 years alone, there were hundreds, if not thousands of other proof of claims, solely in the Southern District Bankruptcy Court, where social security numbers were broadcast to the world to see. Multiply this by the number of Bankruptcy Courts across the United States and……well, the numbers are staggering!
Doan Law then brought an Order to Show Cause against Union Bank for damages to the Debtor. Ultimately, the Bankruptcy Judge did not address any of the other victims of the Southern District and solely concentrated on the Williams matter before her. She then entered an award of damages in the amount of $139.95 against Union Bank, payable to the debtor. She also reduced the attorney fee request of over $3000 (consisting of over 5 months work) to $550.00. Judge Taylor thought that the disclosure of social security numbers and the motions to redact the same are so routine these days in Bankruptcy Court that attorney fees should be limited to $450.00. But since this case had 2 motions, she awarded $450 for the first motion and $100 for the second.
It is also interesting to note that the concerns the Court brought up over attorney fees were not brought up by opposing counsel. Accordingly, while this author strongly believes that the Judge had no authority to make such a reductionto attorney fees in light of the recent 9th Circuit Case on this very issue (Moreno v. City of Sacramento, 2008 U.S. App. LEXIS 15951, 9th Cir. Cal. 7/28/08), the time and costs of appeal rendered the same economically unfeasible to pursue. Hence, such reductions will continue in most cases despite 9th circuit authority, until the fee awards in question are high enough to pursue…….which are virtually none in Chapter 13 cases.
In sum, Judge Taylor felt the identity theft risks in the two separate violations by Union Bank have a maximum damage award of $139.95 with $450.00 in presumed attorney fees. Compare this award with the previous award Judge Taylor issued in the Jacobson case earlier this year where $2,389.95 was awarded.
So what’s the bottom line? You have a very strong chance of having your social security number broadcast across the world with risks of identity theft in Chapter 13 cases. But you also have recourse. Whether the disclosure of the social security number is worth $139.95 is a different matter, and probably not a reasonable figure in most people’s opinion.
Regardless, always check any proof of claims in your case for social security numbers, as the sooner you catch the same and file a motion to redact, the better off you are in preventing identity theft. While no disclosure could ever possibly be worth $139.95, its not a matter of damages, but more a matter of damage control.
While Bankruptcy Court may be a wonderful medium to resolve debtor and creditor rights, its not perfect, and no doubt identity theft issues will continue. And while you may not be able to depend upon the Bankruptcy Court for an equitable remedy to fully compensate you for all your damages in all cases, depending upon your jurisdiction, you may also have other state and federal remedies outside of the bankruptcy court to fill the void.
Written by Michael G. Doan
Bankruptcy Law Network (BLN)
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