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October 26, 2010
North Carolina Tax Request to Amazon Shot Down by District Court
North Carolina lost a summary judgment motion to Amazon today over requests for customer data on purchases made by North Carolina residents. The case involves successive data requests from the North Carolina Department of Revenue. Amazon first turned over details of around 50 million records of sales to North Carolina residents between 2003 and 2009. None of these had customer information associated with them. the NC DOR made successive requests for information which would reveal customer names and purchases. Amazon filed suit on privacy grounds. These requests were ostensibly over Amazon's tax liability, but the same information would allow NC to bill use and sales tax to its residents.
The basis of Amazon's suit was that disclosing its customer's names, addresses, and otehr personal information violates the First Amendment, parts of the Washington State Constitution, and the Video Privacy Protection Act, 18 U.S.C. § 2710. The ACLU intervened on the side of Amazon and presented similar arguments. The NC DOL opposed summary judgment on the grounds that Amazon's claim is not ripe because no tax summons was issued. The Court disagreed, stating that Amazon did not have to wait for an injury to proceed. The NC DOR also argued that the Tax Injunction Act precluded jurisdiction. That argument failed with a large part of the opinion explaining that result.
The most important part of the opinion covers the First Amendment issue:
Amazon and the Intervenors have established that the First Amendment protects the disclosure of individual’s reading, listening, and viewing habits. For example, the Intervenors make uncontroverted statements that they fear the disclosure of their identities and purchases from Amazon to the DOR and that they will not continue to make such purchases if Amazon reveals the contents of the purchases and their identities. (Dkt. Nos. 25-29.) The DOR concedes that the First Amendment protects them from such disclosures. In fact, the DOR has repeatedly stated it does not want detailed information about purchases for fear of implicating the First Amendment. (See Dkt. No. 43 at 8.) However, DOR has consistently requested this very information by reaffirming its broad requests. At the same time, the DOR has also refused to give up the detailed product information about Amazon’s customers’ purchases. (Woodard Decl. ¶ 16.) The pending request for “all information as to all sales” by Amazon implicates the First Amendment rights of Amazon’s customers and the Intervenors. While the DOR states that it could not possibly match the names to the purchases, its promise of forbearance is insufficient to moot the First Amendment issue. See United States v. Stevens, 130 S.Ct. 1566, 1591 (2010) (stating that the Court “would not uphold an unconstitutional statute merely because the Government promised to use it responsibly”). The Court finds the disclosure of the identities and detailed information as to the expressive content of Amazons’ customers’ purchases will have a chilling effect that implicates the First Amendment.
The Court still allows North Carolina to ask for a new information set of names, addresses, and general product information provided that the NC DOR destroys the detailed information it currently has.
October 26, 2010 | Permalink