Severance Payments To Which an Employee Becomes Entitled Within 180 Days of Bankruptcy Filing Receive Priority Treatment

In Matson v. Alarcon, No. 10-2352, 2011U.S. App. LEXIS 13729 (4th Cir. July 6, 2011), the Fourth Circuit addressed the treatment of an employer’s liability under a severance benefits plan in bankruptcy.  The employer had established a severance benefits plan which entitled employees who were terminated without cause to compensation calculated based on the terminated employee’s length of service.  Simply stated, employees became “participants” in the plan, and thus entitled to compensation under it, upon being terminated without cause, and signing a severance agreement and release. Id. at *2-*3.  The size of the benefit to which a participant was entitled depended on the duration of his service to the employer.  Id.

The employer terminated approximately 125 employees within 180 days of filing its bankruptcy petition.  Id. at *4.  In the subsequent bankruptcy proceedings, the terminated employees asserted that their claims for severance were entitled to priority treatment up to the maximum amount provided under 11 U.S.C. § 507(a)(4).  Id. at *5.  The trustee argued that the former employees “earned” an entitlement to severance pay throughout the course of their employment, and were therefore only entitled to priority treatment for that portion of the severance that was “earned” within the 180 day pre-petition time period.  Id.  The Bankruptcy Court overruled the trustee’s objections to priority treatment, and the trustee’s appeal was certified to the Court of Appeals.  Id. at *6.

            The Fourth Circuit affirmed the Bankruptcy Court, holding that the former employees “earned” the full amount of their severance within the meaning of § 507(a)(4)(A) on the date they became entitled to receive such compensation.  Id. at *13-*14.  Although the amounts of compensation were based on length of service, the Court found that the employees did not “earn” severance compensation over the entire course of their employment.  Id. at *11-*12.  Rather, the Court, examining the “plain and ordinary meaning” of the terms in § 507(a)(4), found that employees do not “earn” severance pay as compensation for services rendered, but instead “earn” severance pay when they become entitled to receive it.  Id. at *9-*10.  Since the employees became entitled to receive severance pay only upon their termination, which was within the 180 day statutory window, priority treatment of the claims up to the statutory maximum was appropriate.  Id. at *10.

In so holding, the Fourth Circuit recognized the existence of potentially inconsistent decisions in the Third, First, and Ninth Circuits.  Id. at *12-*13, (citing In re Roth Am., Inc., 975 F.2d 949 (3d Cir. 1992); In re Mammoth Mart, Inc., 536 F.2d 950 (1st Cir. 1976); In re Health Main. Found., 680 F.2d 619 (9th Cir. 1982)).  Those Courts had held that severance compensation calculated based on length of employment has priority as an administrative expense of the bankruptcy estate “only to the extent that the compensation is based on services provided to the bankruptcy estate after the debtor files for bankruptcy.”  Matson, 2011 U.S. App. LEXIS 13729 at *12-*13.  The Fourth Circuit distinguished the decisions of the First, Third, and Ninth Circuits, explaining that those decisions interpreted 11 U.S.C. § 503(b)(1)(A), which was materially different from 11 U.S.C. § 507(a)(4).  Id. at *13.  Specifically, § 503(b)(1)(A) does not use the word “earned”, does not specifically include “severance pay” as a form of wages, and requires a calculation of the value of the “services rendered” during the relevant time period.  Id.

State Courts Split Over Adoption of Twombly/Iqbal Pleading Standards

On July 21, 2011, the Tennessee Supreme Court, sitting en banc in Webb v. Nashville Area Habitat for Humanity, 2011 Tenn. LEXIS 623 (Tenn. July 21, 2011), unanimously declined to embrace the Supreme Court’s new Rule 8 pleading standards articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). Judge Sharon Lee, writing for the court, stated:

“In summary, it must be remembered that we are addressing the standard in assessing the sufficiency of a single document filed at the very beginning of a case – the complaint. Our motion-to-dismiss jurisprudence reflects the principle that this stage of the proceeding is particularly ill-suited for an evaluation of the likelihood of success on the merits or of the weight of the facts pleaded, or as a docket-clearing mechanism… We decline to reinterpret Rule 8 to require a pleader demonstrate ‘plausibility’ and continue to adhere to the well established standards [set forth in Tennessee jurisprudence which follows a liberal notice pleading standard].”

2011 Tenn. LEXIS 623 at *40-41. In rejecting the Supreme Court’s new pleading standards, the Tennessee Supreme Court relied upon a similar decision from the Washington State Supreme Court in McCurry v. Chevy Chase Bank, FSB, 169 Wn.2d 96, 233 P.3d 861 (Wash. 2010) (en banc) where that court also rejected the Supreme Court’s plausibility standard. In McCurry, the court stated as follows:

“The Supreme Court's plausibility standard is predicated on policy determinations specific to the federal trial courts. The Twombly Court concluded: federal trial courts are incapable of adequately preventing discovery abuses, weak claims cannot be effectively weeded out early in the discovery process, and this makes discovery expensive and encourages defendants to settle ‘largely groundless’ claims. See 550 U.S. at 557-58, 559, 127 S. Ct. 1955. Neither party has shown these policy determinations hold sufficiently true in the Washington trial courts to warrant such a drastic change in court procedure.

Nor has either party here addressed countervailing policy considerations. For example, do current discovery expenses justify plaintiffs' loss of access to that discovery and general access to the courts, particularly in cases where evidence is almost exclusively in the possession of defendants? Could runaway discovery expenses be addressed by better means — perhaps involving more court oversight of the discovery process or a change in the discovery rules?”

Id. at 102-103. The Supreme Court of Delaware in Cent. Mrtg. Co. v. Morgan Stanley Mortgage Capital Holdings LLC, 2011 Del. LEXIS 439 (Del. Sup. Ct. August 18, 2011) (en banc), “decline[d] to use this case as the vehicle to address whether the Twombly-Iqbal holdings affect our governing standard… Instead, we emphasize that, until this Court decides otherwise or a change is duly effected through the Civil Rules process, the governing pleading standard in Delaware to survive a motion to dismiss is reasonable ‘conceivability.’” The Delaware “conceivability” standard is “more akin to ‘possibility,’ while the federal ‘plausibility’ standard falls somewhere between mere ‘possibility’ but short of ‘probability.’” Id. at *14-15, n.13.

In contrast to the outright rejections of Twombly/Iqbal pleading standards by the Tennessee and Washington Supreme Courts, several state supreme courts have embraced the new standards. See, e.g. Doe v. Bd. Of Regents of Univ. of Neb., 280 Neb. 492, 788 N.W.2d 264, 274-78 (Neb. 2010) (adopting the Twombly/Iqbal standard); Iannacchino v. Ford Motor Co., 451 Mass. 623, 888 N.E.2d 879, 890 (Mass. 2008) (adopting the Twombly standard in a pre-Iqbal decision); Sisney v. Best Inc., 2008 SD 70, 754 N.W.2d 804, 807-09 (S.D. 2008) (adopting the Twombly standard in a pre-Iqbal decision).

Most recently, on September 15, 2011, the District of Columbia Court of Appeals in Potomac Development Corp. v. District of Columbia, No. 10-CV-632, 2011 D.C. App. LEXIS 552 (D.C. September 15, 2011), reinstated the court’s earlier adoption of the plausibility standard. In Mazza v. House Craft, LLC, 18 A.3d 786 (D.C. 2011), vacated as moot, 22 A.3d 820 (D.C. 2011) (per curiam), the court, Judge Blackburne-Rigsby writing for the panel, adopted the standard, but that opinion was subsequently vacated as moot and thus not of precedential value. See also Grayson v. AT&T Corp., 15 A.3d 219, 229 n.16 (D.C. 2011) (en banc); Oh v. National Capital Revitalization Corp., 7 A.3d 997, 1005 n.10 (D.C. 2010); Solers, Inc. v. Doe, 977 A.2d 941, 948 n.5 (D.C. 2009).

As mentioned in a recent note by a law student at UC Berkley, the rejections of the new federal plausibility pleading standards raise some interesting Erie issues. For example, if a state claim under the state law of Tennessee or Washington were litigated in federal district court under that court’s diversity jurisdiction, the federal court would not be required to adopt state pleading standards. See Hanna v. Plumer, 380 U.S. 460 (1965). Under reverse-Erie analysis, the state courts hearing federal subject-matter claims normally use state procedures unless federal procedural rights are a “basic and fundamental” part of the federal right at issue. Felder v. Casey, 487 U.S. 131, 151 (1988) (“[f]ederal law takes state courts as it finds them only insofar as those courts employ rules that do not impose unnecessary burdens upon rights of recovery authorized by federal laws”). In Brown v. W. Ry. of Ala., 338 U.S. 294 (1949), the Court held that pleading standards can be integral to the enforcement of federal rights, holding that states may not apply more stringent pleading standards than would be applied to the case had it been brought in federal court. Id. at 296. The Supreme Court has never addressed whether states may apply less stringent pleading standards to federal claims. The author of the note suggests that Western Railway was predicated on the protection of federal rights in state courts, and argues that less stringent pleading standards do not threaten the enforcement of federal rights and thus may pass muster under currently existing reverse-Erie jurisprudence. See Roger M. Michalski, Tremors of Things to Come: The Great Split Between Federal and State Pleading Standards, 120 Yale L. J. 109 (2010).

So, the practice tips would seem to be the following:

1. Counsel should be aware of the latest articulation of pleading standards from the applicable state supreme court or the intermediate courts if the issue has not yet filtered up to the supreme court.
2. Where a pleading standard less stringent than Twombly/Iqbal has been adopted like in Tennessee, Washington and Delaware, counsel for plaintiff should consider whether the case is more appropriately filed in state court.
3. If the pleading standard remains uncertain in the applicable state, counsel might consider filing in state court and arguing for a rejection of the new federal standard.
4. Where plaintiff has filed in state court, the defense should consider the argument that under Western Railway, the new federal standard should be applied to any federal claim asserted in state court.
5. The defense, where state claims are brought in federal court, should emphasize to the district judge that whatever the state standard might be, the new federal plausibility standard must be applied.

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Section 1981 Retaliation Claims Governed By Federal Catch-All 4-Year Statute of Limitations

Three Circuits, most recently the Ninth in Johnson v. Lucent Techs., Inc., No. 09-55203, 2011 U.S. App. LEXIS 16100 (9th Cir. Aug. 4, 2011), have held that retaliation claims under 42 U.S.C. § 1981 are subject to the 4-year statute of limitations set forth in 28 U.S.C. § 1658.  In Johnson, the Ninth Circuit recognized that retaliation claims were no longer viable under § 1981 after the Supreme Court’s 1989 decision in Patterson v. McLean Credit  Union, 491 U.S. 164 (1989) until they were resuscitated by the enactment of the Civil Rights Act of 1991. The Ninth Circuit held: “Because they arise under a post-December 1, 1990 act of Congress, section 1981 retaliation claims are governed” by section 1658.  Previously, the Eleventh and Seventh Circuits had so held.  See Baker v. Birmingham Bd. of Educ., 531 F.3d 1336 (11th Cir. 2008); Dandy v. United Parcel Serv., Inc., 388 F.3d 263 (7th Cir. 2004).  

To understand this issue, one needs to be familiar with some employment law history. Prior to the Supreme Court’s 1989 decision in Patterson, some courts had held that § 1981 encompassed retaliation claims. See, e.g. Sherpell v. Humnoke Sch. Dist. No. 5, 874 F.2d 530, 536 (8th Cir. 1989); Goff v. Continental Oil Co., 678 F.2d 593, 597-98 (5th Cir. 1982). Then, with Justice Kennedy writing for a five Justice majority, the Supreme Court issued its decision in Patterson  which held that § 1981 only covered claims regarding the “formation” of a contract.[1] In the wake of Patterson, most courts held that § 1981 did not cover retaliation claims. Williams v. First Union Nat’l Bank, 920 F.2d 232, 234 (4th Cir. 1990) (collecting cases); McCarthy v. Kemper Life Ins. Co., 924 F.2d 683, 688 (7th Cir. 1991); but see McKnight v. Gen. Motors Corp., 908 F.2d 104-112 (7th Cir. 1990) (Judge Posner, with Senior Circuit Judge Fairchild dissenting, suggests that maybe retaliation remained actionable under § 1981, provided that the retaliation had a racial motivation. In Dandy v. United Parcel Svcs., supra, the panel seemingly put this issue to rest, without any reference to Judge Posner’s opinion in McKnight). Indeed, the courts held that so called “post-formation” claims were no longer encompassed by § 1981. However, those “formation” claims that  Patterson recognized as cognizable under § 1981 continued to be filed, and the courts continued to be asked to determine the statute of limitations applicable to such claims. As the courts had done before Patterson, the post-Patterson courts held that, as § 1981 contains no statute of limitations, the federal district courts must determine the most appropriate state statute of limitations and apply that to a “formation” claim. See e.g. McKnight v. Gen. Motors Corp., 908 F.2d 104-112 (7th Cir. 1990). As a result, the statute of limitations on a “formation” claim varied from jurisdiction to jurisdiction. 

When Congress enacted the 1991 Civil Rights Act, it “overruled” the Supreme Court’s holding in Patterson, and rewrote § 1981 by adding § 1981a which defines the term “make and enforce contracts” to include the “making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.” Thereafter, the courts again began to hold that retaliation claims, in light of this amendment, were encompassed by the revised § 1981. The statute of limitations problem remained, however, and federal district courts continued to apply the most analogous state statue of limitations.  

On December 1, 1990, the Congress had enacted 28 U.S.C. § 1658, a catchall 4-year statute of limitations for actions “arising under an Act of Congress enacted after the date of the enactment of this section” where Congress had not included a statute of limitations. 28 U.S.C. § 1658(a). In 2004, the Supreme Court in Jones v. R.R. Donnelley’ & Sons Co., 541 U.S. 369 (2004), rev’g 305 F.3d 717 (7th Cir. 2002) was presented with the question of whether § 1981 hostile work environment, wrongful termination, and failure-to-transfer claims were governed by Congress’ 4-year catchall statute of limitations (28 U.S.C. § 1658), or by the most analogous state statute of limitations. The Court, in an opinion authored by Justice Stevens, held that § 1658 applies to any claim “arising under” an act of Congress which was enacted after December 1, 1990, and that “a cause of action ‘aris[es] under an Act of Congress enacted’ after December 1, 1990 – and therefore is governed by § 1658’s 4-year statute of limitations – if the plaintiff’s claim against the defendant was made possible by a post-1999 enactment.” Id. at 382. 

In light of this history, the Ninth Circuit, with Judge Betty Fletcher writing for the panel in Johnson v. Lucent Technologies held that § 1658’s 4-year statute of limitations now applies to a § 1981 retaliation claim. 

In 2008, Judge Dubina writing for a panel of the Eleventh Circuit in Baker v. Birmingham Bd. of Educ., supra, held that plaintiff’s claims were made possible by the 1991 amendments to § 1981 and that, accordingly, those claims arise under a post-1991 enactment, bringing the 4-year catchall statute of limitations into play. Interestingly, in Baker, the court was confronted with a § 1983 claim (a 2-year Alabama limitations period would apply to a § 1983 claim) against a state actor, and one question before the court was whether the state statute applicable to § 1983 claims applied (Wilson v. Garcia 471 U.S. 261, 275-76 (1985) (Court held that the statute of limitations for a § 1983 claim is generally the applicable state-law statute of limitations for personal-injury torts)) or whether it should be the § 1981 statute of limitations. Section 1983 does not provide a cause of action against state actors, and claims against state actors of § 1981 violations must be brought pursuant to § 1983 (Jett v. Dallas Indep. Sch. Dist. 491 U.S. 701, 735 (1989) (holding that § 1983 “provides the exclusive federal damages remedy for the violation of the rights guaranteed by § 1981 when the claim is pressed against a state actor.”)), hence, the question as to whether the § 1983 or § 1981 statute of limitations applied. In light of the holding in Jones, the Eleventh Circuit concluded that plaintiff’s claim was made possible by the 1991 Civil Rights Act, a post-1990 enactment, and that, therefore, the four-year catchall statute of limitations applied. See also City of Rancho Palos Verdes, Cal. v. Abrams, 544 U.S. 113, 123 n.5 (2005) (Justice Scalia writing for the Court in a case brought under the Federal Telecommunications Act, states that while the statute of limitations for a § 1983 claim is generally the applicable state-law period for personal injury torts, here, since the claim rests upon violation of a post-1990 congressional enactment, § 1658 would seem to apply). Other courts have decided this issue differently, and held that the plaintiff’s cause of action arises under § 1983, not § 1981, since § 1983 is the exclusive remedy against state actors for violations of § 1981, and thus have applied the most analogous state personal injury statute of limitations. See AUI, LLC v. DeKalb Cnty., 2006 U.S. Dist. LEXIS 89828 (N.D. Ga. August 28, 2006); Marshall v. Daleville City Bd. Of Educ., 2006 U.S. Dist. LEXIS 50543 (M.D. Al. July 24, 2006). 

In 2004, in Dandy v. United Parcel Service, supra, the Seventh Circuit, Judge Williams writing for the panel, held that plaintiff’s claims, including (1) hostile work environment; (2) failure to promote; (3) disparate treatment in terms of compensation; and (4) retaliation were subject to § 1658’s catchall statute of limitations because they were made possible by the 1991 Civil Rights Act. Judge Williams wrote for the panel in that case. See also White v. BFI Waste Servs., 375 F.3d 288, 291-92 (4th Cir. 2004) (finding disparate treatment in compensation claims stated under §1981 are covered by § 1658).

To summarize the practice pointers: 

1.      A failure to hire claim under § 1981 is governed by the most analogous state statute of limitations.

2.      In a failure to promote claim where the promotion would create a new and distinct employment relationship, the most analogous state statute of limitations applies. Otherwise, the 4-year § 1658 statute of limitations applies.

3.      In § 1983 claims for violations of § 1981, there is a significant debate as to whether the most analogous state personal injury statute of limitations applies or the 4-year catchall.

4.      All circuits that have addressed the issue have held that retaliation claims under § 1981 are governed by the § 1658 4-year catchall.

5.      Compensation claims under § 1981 would appear to be governed by the 4-year catchall. In perusing such claims, take into account the Lilly Ledbetter Fair Pay Act provisions.

6.      Racial harassment and hostile work environment claims under § 1981 appear to be governed by the 4-year catchall statute of limitations.

---

[1] Subsequent to Patterson, some courts found, after a fact specific inquiry, that a promotion claim constituted a “formation” claim where the promotion would create “a qualitatively different relation between the employer and the employee, for example, a move from factory worker to foreman, foreman to foreman supervisor, or manager to officer, likely would create a new and distinct relation giving rise to a § 1981 action under Patterson.” Butts v. City of NY Dept. of Housing, 990 F.2d 1397, 1412 (2d Cir. 1993). However, some cases held that the denied promotion would not have satisfied the Patterson “new and distinct relationship” test. See e.g. Revis v. Slocomb Indus., Inc., 814 F. Supp. 1209 (D. Del. 1993); Johnson v. Indopco, Inc., 834 F. Supp. 1039 (N.D. Ill. 1993)

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A Canadian Perspective on Social Media and Concerted Activity

The British Columbia Labour Relations Board recently issued a decision permitting the termination of two employees for Facebook comments during and immediately following a unionization drive, though the comments were substantially more inflammatory and threatening than those described above.  On October 22, 2010, in Lougheed Imports, Ltd. d/b/a West Coast Mazda v. United Food and Comm’l Workers Int’l Union, 2010 CanLII 62482 (B.C. L.R.B. 2010), the British Columbia Labour Relations Board upheld the termination of two employees for comments that they posted on Facebook about their employer.  During and immediately after the drive to establish a union, the two employees involved in the unionization effort posted offensive, and potentially threatening, comments on their Facebook pages.  In one post, one of the terminated employees wrote “If somebody mentally attacks you, and you stab him in the face 14 or 16 times… that constitutes self defence [sic], doesn’t it????” Lougheed Imports, 2010 CanLII 62482 at par. 17 (ellipses in original).  The employer began building a file on one of these employees, the most active union supporter in the shop, on the same day that the union applied for certification, and, despite the provocative nature of his posts, kept its concern secret from the employee until the date of his termination on October 7.  Despite largely agreeing with the union that the employer’s behavior was “puzzling” and “suspicious,” the Board sided with the employer, relying primarily on the egregious nature of the postings and the employer’s alleged uncertainty as to how to address misconduct on Facebook.

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Canadian Perspective on Defamation on Anonymous Internet Message Board

In Warman v. Wilkins-Fournier, 2010 ONSC 2126 (CanLII May 30, 2011), the Plaintiff-Respondent commenced an action against the operators of an internet message board, and eight anonymous posters, for defamation in connection with comments made by those posters.  The Divisional court had heard an earlier appeal in this matter on May 3, 2010, when it held that the motions judge erred by not considering the anonymous posters’ right of freedom of expression, noting that the commenters’ decision to remain anonymous gave rise to a reasonable expectation of privacy.  The court also expressed concern with the potential “chilling effect on freedom of expression” resulting from disclosure.  The court remitted the case to a different motion judge for reconsideration.

Upon remittance, the new motions judge applied a four-part test developed by the Divisional court: 

1) whether the unknown alleged wrongdoer could have a reasonable expectation of anonymity in the particular circumstances; 2) whether the respondent has established a prima facie case against the unknown alleged wrongdoer and is acting in good faith; 3) whether the Respondent has taken reasonable steps to identify the anonymous party and has been unable to do so; and 4) whether the public interests favouring disclosure outweigh the legitimate interests of freedom and right to privacy of the persons sought to be identified if the disclosure is ordered. Warman v. Wilkins-Fournier, 2010 O.J. No. 1846 (CanLII May 3, 2010).

Relying on the terms of membership to the website to which the anonymous posters posted allegedly defamatory material, the motions judge on remittance found that the mere use of pseudonyms did not create a reasonable expectation of privacy.  The terms of membership stated, in pertinent part, that “[i]f you post libelous or defamatory material, you are on your own” and that “[y]our FC alias is no protection.”  The motions judge went on to find that a prima facie case of defamation had been established and that any remaining privacy interests were outweighed by the need to address potential defamatory postings, noting that the privacy intrusion in providing e-mail addresses, registration information, and IP addresses was for the “limited purpose” of effecting service.

The Warman court’s decision to require a prima facie showing of the underlying claim before allowing a plaintiff to discover the identity of an anonymous online speaker comports with the tact taken by several courts in the United States, including the 9th Circuit.  In In re Anonymous Online Speakers, 2011 U.S. App. LEXIS 487 (9th Cir. Jan. 7, 2011), the 9th Circuit opined that “[a] number of courts have required plaintiffs to make at least a prima facie showing of the claim for which the plaintiff seeks the disclosure off the anonymous speaker’s identity.” The Court also noted that, in each case it reviewed, the initial burden rested on the party seeking discovery.  While U.S. courts have applied varying levels of showing, the lowest being “good faith,” the bar that must be cleared is tied to the nature of the speech at issue, and is unaffected by the fact that it occurs online. Id. at *15 - *18.  The dispute before the 9th Circuit, much like the dispute in Warman was over the propriety of using a particular standard on the facts presented.  In Warman, the original motions judge used a “good faith” standard, which is the lowest possible, and was reversed by the Divisional court.  Examining the unsettled nature of the law, 9th Circuit declined to find “clear error” in the District Court’s use of the highest standard, which requires plaintiff to survive a hypothetical motion for summary judgment before becoming entitled to information revealing the speaker’s identity, though the 9th Circuit did note that such a standard was not appropriate in the instant case.

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A Canadian Perspective on Social Media Discovery

In Sparks v. Dube, 2011 NBQB 40 (CanLII Feb. 4, 2011), a personal injury lawsuit tried to the Court of Queen’s Bench of New Brunswick, the defendant retained an investigator to find and review plaintiff’s personal websites.  The investigator discovered photographs on the public portions of plaintiff’s Facebook website that were potentially inconsistent with plaintiff’s claimed injuries.  Defendant requested an ex-parte order to compel plaintiff to download and preserve the contents of all social network sites.  The defendant further requested that the downloading be accomplished without prior notice to the plaintiff.  The court granted defendant’s request, and ordered plaintiff’s lawyer to set a meeting with plaintiff to accomplish the downloading, without informing plaintiff of the purpose of the meeting until plaintiff arrived.  The downloading was to be performed under the supervision of a second lawyer to certify that the order was strictly complied with.  The contents of the download were then sealed pending defendant’s motion for production of information with a “semblance of relevance.”

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The European Union: The Right to be Forgotten

The European Union is considering adding a “right to be forgotten” as part of a planned update to bring the 1995 Data Protection Directive in line with new technologies.  The controversial right would give individuals the right to withdraw their consent to data processing.  This means that, for example, an individual could withdraw their consent to Facebook retaining or sharing a photograph of themselves.  According to a spokesman for Viviane Reding, the EU Justice Commissioner, “after you have withdrawn your consent, there shouldn’t even be a ghost of your data left in some server somewhere.  It’s your data and it should be gone for good.”  Leigh Phillips, “EU to Force Social Network Sites to Enhance Privacy”, The Guardian (March 16, 2011).

The precise shape of this right remains unclear.  It seems likely that it will contain a requirement that individuals “opt-in” to allow data processing, as opposed to the current “opt-out” regime.  Matt Warman, “EU Proposes Online Right “To Be Forgotten”, The Telegraph (Nov. 5, 2010). It is also probable that data processors will face additional restrictions on the type of data which they can process and the length of time for which they can maintain it.  While it may be that the right will do little more than heighten already-extant consent requirements in the 1995 Data Protection Directive, a recent request by the Spanish government to Google illustrates that such a right could have wide-reaching implications.  John Hendel, “In Europe, a Right to Be Forgotten Trumps the Memory of the Internet”, New York Times (Feb. 3, 2011).  On January 19, 2011, Google refused a request from Spain to remove 90 links.  Id.  Most of the links were to newspaper articles and other public information which portrayed individual Spanish citizen plaintiffs in an unfavorable manner.  Id.  For example, one request came from a domestic violence victim whose address can be found on the search engine.  Another is from a woman, reports about whose criminal activity as a teenager are available online.  Ravi Mandalia, “Google Receives Data Deletion Request from Spanish Government” ITProPortal, (August 12, 2011).  Google argued that Spain’s request could do serious harm to freedom of speech and that responsibility for removing content rested with the publishers linked to, not Google.    Google is currently fighting several lawsuits related to the removal of these links under the “right to be forgotten” in Spain’s National Court.  The publications which maintain the data, primarily newspapers and other media sources, were not asked by Spain to remove the information Google linked to from their websites – presumably due to concerns about censorship or freedom of the press. 

The outcome of the battle over this case has potentially wide-reaching implications for the shape of social media websites throughout the world.  Ms. Reding has explicitly stated that “[p]rivacy standards for European citizens should apply independently of the area of the world in which their data is being processed,” and that “[t]o enforce the EU law, national privacy watchdogs shall be endowed with powers to investigate and engage in legal proceedings against non-EU data controllers whose services target EU consumers.”  Ben Rooney, “Non-EU Websites Must Operate Under EU Privacy Laws”, The Wall Street Journal TechEurope Blog (March 16, 2011).  If investigations into the procedures used by social media websites in handling personal data become common, providers could be faced with the choice of conforming their entire operation to comply with EU privacy regulations or somehow segregating accounts used by European citizens for different treatment – potentially a daunting task.

Civil rights organizations have taken a mixed view of any potential right to be forgotten.  The American Civil Liberties Union (“ACLU”) has, in the past, advocated a potentially more limited “right to delete” which would “generally encompass the deletion only of any association with a given record, not necessarily the entire record itself,” except when such disassociation is impossible as for example, when a person’s face is captured by a security camera.  Chris Conley, “The Right to Delete” AAAI Spring Symposium Series (March 23, 2010). This is a more limited right than that which appears to be under consideration in Europe.  The ACLU also proposes safeguards to balance this right against rights of free speech and press by providing various exceptions, including exceptions for “newsworthy” content, but the ACLU acknowledges that the “right to delete” presents difficult issues in this regard.  In the United Kingdom – already facing criticism for not complying fully with the 1995 Data Protection Directive – Mr. Kenneth Clarke, Secretary of State for Justice, has criticized the notion of a broad “right to be forgotten.”  “Kenneth Clarke Warns on EU Data Protection Rules”, May 26, 2011.

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