|
Gramm-Leach-Bliley Act , 15 U.S.C.A. § 6802(e) (8) allows an adverse party open access to another party's nonpublic financial information held by a financial institution by "judicial process". Frequently, this is attempted by a "documents only subpoena" which does not require appearance before a court, but frequently appearance before the adverse party's attorney. Banks are genuinely concerned for their own liability to their customers, because the statute does not tell us if such a subpoena is "judicial process".
The issue is simple but the law is not. Without a court order or the consent of the customer, the Bank may be prohibited from disclosing non-public information as a financial institution to a private plaintiff in a civil case without further "judicial process" under the Gramm-Leach-Bliley Act, 15 USC § 6802(e)(8). The relevant text of the statute is as follows:
Sec. 6802. Obligations with respect to disclosures of personal information
(a) Notice requirements
Except as otherwise provided in this subchapter, a financial institution may not, directly or through any affiliate, disclose to a nonaffiliated third party any nonpublic personal information, unless such financial institution provides or has provided to the consumer a notice that complies with section 6803 of this title.
......
(e) General exceptions
Subsections (a) and (b) of this section shall not prohibit the disclosure of nonpublic personal information -
..........
(8) to comply with Federal, State, or local laws, rules, and other applicable legal requirements; to comply with a properly authorized civil, criminal, or regulatory investigation or subpoena or summons by Federal, State, or local authorities; or to respond to judicial process or government regulatory authorities having jurisdiction over the financial institution for examination, compliance, or other purposes as authorized by law. [emphasis added].
The language of the exception is in the disjunctive: the exception applies to (1) properly authorized ... subpoena ... by Federal, State or local authorities or (2) to respond to judicial process or (3) [to] government regulatory authorities having jurisdiction over the institution.
The first and the third exceptions do not apply. Is a civil subpoena signed by an attorney alone without the customer's consent or an accompanying court order "judicial process." But it may be inferred as such. There is no authoritative precedent in Michigan that a documents only subpoena is "judicial process" under 15 USC § 6802 (e)(8).
Parties to a divorce or other contentious litigation frequently spare over a subpoena of records and place a bank between them. One party demands production, the other refuses, the bank requests a consent from its customer and that is refused. Then neither party seeks the intervention of the court and dig in their heels.
Like almost all other such disputes, the parties usually settle, because either one could go to court and obtain an order. Parties could simply use other discovery means to obtain the bank records, such as a request to produce records, but they like the emotional effect of a "subpoena for your bank account." However, where one party insists on a documents only subpoena and the other refuses consent, the Bank is damned if it does and damned if it doesn't. Moreover, there are the financial, public relations, and management impacts of having to deal with these questions.
The prohibitions mandated by the GLBA are quite simple. The Act unequivocally states that a financial institution simply cannot disclose nonpublic personal information of its consumers to a non-affiliated third party UNLESS:(1) the financial institution clearly and conspicuously discloses to the consumer that such information may be disclosed; (2) the consumer is given the opportunity before the time of disclosure to direct that such information not be disclosed; and (3) the consumer is given an explanation of how he/she can exercise that non-disclosure option. See 15 U.S.C. §6802 (b). When the bank give its customer notice of the subpoena, the customer can decided to exercise the non-disclosure option.
The Michigan Bankers Association has advised its members that a documents only subpoena is really a request for production, and that there is a duty of confidentiality which requires notice by the Bank and a right objection by the customer to protect the customers' accounts. However, the courts in Michigan have not fleshed out the process or rights after notice of such rights is given.
Counsel in other States suggest that while there is a duty of comply with civil subpoena, banks run the risk of sanctions from their customers Gramm-Leach-Bliley Act.
The Courts in the few States to pass on these disputes, never reach the issue, since by the time the matter is on appeal, the trial court has already issued the needed order for production, nullifying the issue of the initial response of the financial institution
Banks are threatened repeatedly by parties in litigation with claims for sanctions and damages. When necessary a bank should seek a protective order from the court to quash or enforce the subpoena, but protect the Bank from further liability and costs.
|
