The U.S. District Court for the Western District of Washington granted Amazon.com's request for  declaratory judgment that the North Carolina Department of Revenue’s (the Department) information requests for the production of customer purchase records violated the First Amendment and the Video Privacy Protection Act (VPPA), 18 U.S.C. § 2710.  Amazon.com LLC v. Lay, No. C10-664-MJP, 2010 WL 4262266 (W.D. Wash. Oct. 25, 2010).  The Department sought from Amazon.com “all information for all sales to customers with a North Carolina shipping address by month in an electronic format for all dates between August 1, 2003, and February 28, 2010” as part of an audit of the company to determine whether it had any tax liability to the State of North Carolina.  Amazon.com filed suit claiming that the production of its customers’ personally identifiable information in conjunction with the detailed business records previously provided to the Department would enable the Department to learn of the “title and description of every book, DVD, music selection, or other item purchased by the customer.”  The Department filed a motion to dismiss Amazon.com’s suit raising various jurisdictional arguments, and Amazon.com moved for summary judgment on its claims for declaratory judgment.

The district court made quick work of the Department’s jurisdictional arguments finding that Amazon.com’s claims were ripe and that the suit did not implicate the Tax Injunction Act, 28 U.S.C. § 1341, because the Department’s lack of personally identifiable information about Amazon.com’s customers would not interfere with the Department’s ability to assess any taxes owed by Amazon.com and that Amazon.com lacked an adequate state remedy in North Carolina to challenge a tax summons, should one issue.  The district court also rejected a comity argument asserted by the Department, as well as an argument that Amazon.com had failed to state a claim under the VPPA with respect to its customers’ video purchasing records.  In rejecting the latter argument, the district court disagreed with the U.S. Court of Appeals for the Sixth Circuit’s decision in Daniel v. Cantrell, 375 F.3d 377, 381-82 (6th Cir. 2004), and held that the VPPA not only allows suits against a video service provider, but also against anyone that seeks to obtain personally identifiable information from a video service provider.

The district court next turned to the merits of Amazon.com’s First Amendment claim.  The district court highlighted the importance of individuals having the ability to access information anonymously and found that the disclosure of personally identifiable information that would allow the Department to determine the books, films and other expressive materials purchased by Amazon.com’s customers would chill the exercise of their First Amendment rights.  The district court then examined whether the Department had a compelling government interest to request the personally identifiable information and found one lacking.  The district court determined that the Department “has no legitimate need or use for having details as to North Carolina Amazon customers’ literary, music, and film purchases.”

The district court also considered the merits of Amazon.com’s VPPA claim.  The district court found that the Department’s information requests also violated the Act because the Department sought detailed information about Amazon customers’ video and audiovisual purchases.  The Department attempted to argue that a VPPA claim was unripe in light of the fact it had not asked for the specific titles of any videos.  The district court rejected this argument because the Department in fact possessed such information from earlier information requests and, in conjunction with its requests for customers’ personally identifiable information, could determine the titles of any videos purchased by North Carolina customers.

In the end, the district court granted Amazon.com declaratory relief from the Department’s information requests for personally identifiable information under the First Amendment and the VPPA.  The Department cannot seek to force Amazon.com to disclose its customers’ names, addresses or any other personal information as long as the Department has access to or possession of detailed purchase records that would allow it to determine the content of online customer purchases.

© 2010 Perkins Coie LLP