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Broad phrases like "in such manner” and “in such detail" presumably authorize the Secretary to force disclosure of all those records which are required under Sections 101(c) and 101(d) of the Act, including: (a) the identity of any person having an account with an insured bank, or authorized to act with respect to any such account; (b) a microfilm of each check, draft or similar instrument received by it for deposit or collection, together with an identification of the party for whose account it is to be deposited or collected.
Although Regulation 103.22 uses the statutory authority to require information only for transactions involving more than $10,000, the existence of Regulation 103.45 allows the Secretary to expand the requirement to the full extent of the statutory power “in his sole discretion.” B. Information made available to the Secretary and to all other federal agencies
Many controversial and unpopular groups, including political parties, private associations and organizations such as Plaintiff ACLU, conduct the vast bulk of their financial business in the form of checks. They receive membership dues, donations, and proceeds from the sale of literature in that form. The requirements of the Act concerning disclosure of certain information means, in effect, that every person joining one of these organizations, subscribing to its literature or contributing to its financial support can be required simultaneously (and involuntarily) to serve notice on the Secretary of the Treasury of his or her association with that group or organization. Furthermore, by reason of $ 212 of the Act and Regulation 103.43, the Secretary may make any such information available to any other department or agency of the United States upon the written request of the department or agency. C. Supreme Court decisions protecting a refusal to disclose such information
Given the bitter historical struggle to shield controversial associations from compulsory disclosure to the State, it comes as no surprise that the Supreme Court has consistently afforded a "preferred” position to the protection of associational privacy in the context of controversial political organizations.
The right of privacy in the sphere of controversial associations, first expounded by Mr. Justice Douglas in his concurrence in United States v. Rumley, 345 U.S. 41 (1953), was recognized five years later by a unanimous Supreme Court in NAACP v. Alabama, 357 U.S. 449 (1958). In connection with an attempt to enjoin the NAACP from operating in Alabama, the Attorney General sought disclosure of its local membership list. When the NAACP refused to comply with a court order compelling the disclosures, it was fined for contempt of court. Mr. Justice Harlan, writing for a unanimous Court, ruled that Alabama could not constitutionally compel disclosure of the NAACP membership list. He stated :
“It is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as the forms of governmental action in the cases above. ... This Court has recognized the vital relationship between freedom to associate and privacy of one's associations. . . . Inviolability of privacy in group association may in many circumstances be indispensable to preservation of freedom of association, particularly where a group espouses dissident beliefs.” 357 U.S. at 462.
In Bates v. Little Rock, 361 U.S. 516 (1960), Mr. Justice Stewart, writing for a unanimous Court, rebuffed an attempt by the City of Little Rock to compel disclosure of the local membership list of the NAACP and the identities of its linancial contributors. After quoting extensively from NAACP v. Alabama, supra, Mr. Justice Stewart concluded :
“We conclude that the municipalities have failed to demonstrate a controlling justification for the deterrence of free association which compulsory disclosure of the membership lists would cause. The petitioners cannot be punished for refusing to produce information which the municipalities could not require.” 361 at 527.
In Louisiana ew rel, Gremillion v. NAACP, 336 U.S. 293 (1961) the Supreme Court unanimously declared unconstitutional a Louisiana statute compelling disclosure of membership lists in certain non-profit organizations. Mr. Justice Douglas, writing for the Court, reaffirmed the Court's adherence to Bates and NAACP v. Alabama, in ruling that:
“... where .. disclosure of membership lists results in reprisals against and hostility to the members, disclosure is not required.” 366 U.S. at 296.
Two years later, in Gibson v. Florida Legislative Investigations Committee, 372 U.S. 539 (1963), the Supreme Court once again afforded plenary constitutional protection to associational anonymity. In Gibson, a Committee of the Florida Legislature, in connection with an investigation into potential communist inflltration of the NAACP, attempted to compel the disclosure of a segment of the membership lists of the Miami NAACP. Mr. Justice Goldberg, writing for a majority of the Court, observed that:
“... it is an essential prerequisite to the validity of an investigation which intrudes into the area of constitutionally protected rights of speech, press, association and petition that the State convincingly show a substantial relation between the information sought and a subject of overriding and compelling state interest." 372 U.S. at 546.
Since no such showing could be made in Gibson, the disclosure demand was declared unconstitutional.
It should be noted that the disclosure demand in Gibson was far less sweeping than the demands at issue herein. The Committee in Gibson merely sought confirmation as to whether specific named individuals, suspected of membership in the Communist Party, had infiltrated the NAACP. No attempt was made in Gibson, as it has been herein, to compel the reporting of information which results in the blanket disclosure of membership or subscription lists. Indeed, an earlier attempt by the Florida Committee to compel such broad disclosure had been rebuffed as unconstitutional by the Florida Supreme Court. 108 So. 2d 729, cert. den. 360 U.S. 919.
Thus, although the Gibson court was divided concerning the constitutionality of the narrow questions actually at issue therein, the Court was unanimous in condemning blanket membership disclosure as unconstitutional. Mr. Justice Goldberg, writing for the majority, stated :
"Obviously, if the respondent were still seeking discovery of the entire membership list, we could readily dispose of this case on the authority of [Bates and NAACP v. Alabama, supra); a like result would follow if it were merely attempting to do piecemeal what could not be done in a single step.” 372 U.S. at 550–551.
The Supreme Court's protection of the right of anonymity in controversial political associations continued in Lamon v. Postmaster General, 381 U.S. 301 (1965). In Lamont, petitioner challenged a post office regulation which compelled the addressee of "communist political propaganda” to specifically request its delivery, thus publicly identifying himself as a person desiring to receive such material.15
In declaring the regulation unconstitutional, Mr. Justice Douglas stated :
"... the addressee in order to receive his mail must request in writing that it be delivered ... This requirement is almost certain to have a deterrent effect, especially as respects those who have sensitive positions. Their livelihood may be dependent on a security clearance. Public officials, like schoolteachers who have no tenure, might think they would invite disaster if they read what the Federal Government says contains the seeds of treason. Apart from them, any addressee is likely to feel some inhibition in sending for literature which Federal officials have condemned as 'communist political propaganda'.” 381 U.S. at 307.
The Supreme Court's protection of associational privacy culminated in its per curiam affirmance in Pollard v. Roberts, 283 F. Supp. 248 (E.D. Ark. 1968), aff'd per curiam 393 U.S. 14 (1968), a case remarkable for its relevance here, since it involved an attempt to penetrate anonymity by examining an organization's bank account.
In Pollard, a District Attorney, acting as a one-man Grand Jury pursuant to Arkansas law, sought to subpoena the records of a checking account maintained by the Arkansas Republican Party at the First National Bank of Little Rock. The subpoena was issued in connection with an investigation of alleged election law violations during the 1966 elections. The three judge District Court (consisting of then Circuit Judge Blackmun, Judge Henley and Judge Harris) noted:
“These records, if produced, would reveal information not only as to sums of money contributed to the party during the 1966 campaign ... but also would identify individual contributors from all over the State whose contributions were deposited in the account in question and would reveal the amounts of individual contributions.” 283 F. Supp. at 251–252.
Judge Henley, writing for a unanimous panel, reviewed the growth of the doctrine of associational privacy in the Supreme Court and concluded that controversial political association could be disclosed, if at all, only upon a showing of a “cogent” and “compelling” state interest. Judge Henly continued :
“Moreover, even if a State can legitimately compel a limited disclosure of individuals affiliated with a group, it does not follow that the State can compel a
15 Until the commencement of the Lamont litigation, the Post Office maintained a central list of the identities of persons requesting the delivery of “communist political propaganda.” The lists were terminated during the pendency of the Lamont case.
sweeping and indiscriminate identification of all of the members of the group in excess of the State's legitimate need for information.” 283 F. Supp. at 257.
The Pollard court concluded:
"The Alabama, Arkansas, Florida, and Louisiana First Amendment cases which have been cited make it clear that the First Amendment protects freedom of association and privacy of association. It also protects freedom to participate in political life without unjustified governmental interference.
"While there is no evidence of record in this case that any individulals have as yet been subjected to reprisals on account of the contributions in question, it would be naive not to recognize that the disclosure of the identities of contributors to campaign funds would subject at least some of them to potential economic or political reprisals of greater or lesser severity.
"Apart from fear of actual reprisal, many people doubtless would prefer not to have their political party affiliations and their campaign contributions disclosed publicly or subjected to the possibility of disclosure merely because an officer or agency clothed with investigatory powers may suspect that some members of their party may have violated the law. Disclosure or threat of disclosure well may tend to discourage both membership and contributions thus producing financial and political injury to the party affected.” 283 F. Supp. at 258. Accordingly, the Court enjoined the law enforcement of the subpoenas in question.
The fear that government will seek, and some individuals and groups in and out of government will use, information concerning the organizational alliances of members of groups such as the plaintiff ACLU is no fantasy. In fact, in Shelton v. Tucker, 364 U.S. 479 (1960), one of the leading cases guaranteeing anonymity of membership, the United States Supreme Court specifically noted that one of the proved purposes of those seeking membership information was to purge from the ranks of Arkansas teachers all who belonged to the American Civil Liberties Union. See 364 U.S. at 486 n.7.
Nor is that fear outdated. The ACLU alone is currently involved in litigation concerning the power of the House Committee on Internal Security to subpoena the bank accounts of three organizations: the Progressive Labor Party, the National Peace Action Coalition, and the People's Coalition for Peace and Justice. Preliminary injunctions were successfully obtained from the District Courts of the District of Columbia and the government's appeals are consolidated and pending before the District of Columbia Circuit (respectively, cases numbered 71–1609, 71–1693, and 71-1717).
The organizational accounts of the Plaintiff ACLU, and the personal accounts of plaintiffs Stark and Marson, will on July 1 be one written order away from governmental scrutiny unless this Court intervenes, by reason of Regulation 103.45, which permits the Secretary to designate individual accounts and transactions for reporting, and to enforce his demand immediately by application of the massive sanctions available to him under $$ 124–26, 207–209, and 233, and Regulations 103.46-49. That such surveillance is possible is clear. That it is tempting to government is documented by the cases cited above. That combination of power and temptation must be restrained.
A TEMPORARY RESTRAINING ORDER IS NECESSARY IN THE CIRCUMSTANCES OF THIS
28 U.S.C. $ 2284 provides in relevant part:
In any action or proceeding required by Act of Congress to be heard and determined by a district court of three judges the composition and procedure of the court . . . shall be as follows: (3) In any such case in which an application for an interlocutory injunction is made, the district judge to whom the application is made may, at any time, grant a temporary restraining order to prevent irreparable damage. The order, unless previously revoked by the district judge, shall remain in force only until the hearing and determination by the full court.
Irreparable damage will unquestionably result to Plaintiffs if the Act and Regulations are not restrained. Plaintiff Security National Bank will to the knowledge of its customers be forced under threat of civil and criminal sanctions to become the unwilling agent of the government's surveillance, thus violating good banking practice, breaching the confidentiality of its relations with its customers, and losing significant numbers of its customers and substantial deposits.
Plaintiffs Stark and Marson, depositors in banks affected by the Act and Regulations, will suffer their contributions and dues to organizations and associations to become available to governmental scrutiny, will suffer the loss of the traditional privacy of their financial affairs, will have their accounts subject to additional reporting requirements under 31 CFR 103.45 without notice or an opportunity to contest, and will be stripped of the protection of the Fourth Amendment in their financial affairs.
Plaintiff American Civil Liberties Union of Northern California, Inc., and its members, will suffer exposure of their accounts, subscriptions, donations and membership checks to governmental scrutiny. Plaintiff ACLU will lose members and contributors because it will no longer be able to insure their anonymity; its members will lose their constitutionally protected anonymity.
Both substantial financial loss and encroachment into fundamental constitutional rights have been held sufficient injury to support the issuance of a temporary restraining order. In Cincinnati, New Orleans & Texas Pacific R.R. Co. v. United States, 220 F. Sup 46 (W.D. Ohio, 1963) and G. B. C. Inc. v. United States, 302 F. Supp. 1283 (E. D. Tenn., 1969), district courts issued restraining orders against enforcement of ICC orders because of the danger of imminent and substantial financial loss. See also Canrel v. Wyman, 321 F. Supp. 258 (S.D.N.Y. 1970).
Other courts have also indicated that, when it appears sufficiently clear that the constitutional rights of a plaintiff have been violated, the violation of those rights alone will support a finding of irreparable injury. In Lafferty v. Carter, 310 F. Supp. 465 (W. D. Wisc. 1970), the district judge issued a restraining order on his finding that a teacher had probably been suspended without his constitutional right of due process. Likewise, in the recent case of Palmigiano v. Travisona, 317 F. Supp. 776 (D. R.I., 1970), the court issued a temporary restraining order after finding that the First Amendment rights of prisoners had been violated. The Court said:
“28 U.S.C. $ 2284 (3) specifically directs inquiry into the probability of irreparable harm if such an order is not granted. On this point, plaintiffs have argued that defendants' action impedes the right to meaningful assistance of counsel, violates the constitutional protections against unreasonable searches and seizures, violates plaintiffs' privilege against self-incrimination, makes a shambles of the attorney-client privilege between plaintiffs and their respective counsel, effectively denies the right of free and confidential access to the courts, and destroys the right of marital privacy. This alone is an impressive array of substantial contentions, some of which have recently been the basis for relief in Sostre v. Rockefeller, 312 F. Supp. 863 (S. D. N.Y. 1970). However, this action today rests entirely on my belief that plaintiff's fundamental right of free speech suffers under defendants' restrictions—so in compliance with 28 U.S.C. & 2284 (3), I find irreparable damage to exist under present prison conditions.
“Though it is not apparent from the fact of 28 U.S.C. $ 2284 (3), some courts have emphasized that a temporary restraining order will issue only when the party seeking it is likely to succeed on the merits. See, e.g., Greyhound Lines, Inc. v. United States, 301 F. Supp. 356 (N. D. Ill. 1960). This court thinks that the better-reasoned view, however, is that the likelihood of success on the merits should be a minor factor, especially where the potential injury is great. As the court held in G. B. C., Inc. v. United States, 302 F. Supp. 1283 at 1284 (E. D. Tenn. 1969) : '*** if the balance of hardships tips decidedly toward the plaintiff, it is ordinarily sufficient that the plaintiff has raised questions going to the merits which are so serious, substantial, difficult and doubtful, as to make them fair ground for litigation and thus, for more deliberate investigation'."
There should be no doubt here that the arguments of the Plaintiffs are serious, substantial, and difficult : fair ground for litigation and investigation. On any balancing of hardships, plaintiffs are bound to prevail. The Act is almost two years old, and the Secretary has not promulgated regulations in any hurry. A slight extension of the almost two years delay for which the Secretary is responsible will not unduly burden the defendants. On the other hand, if the Act and Regulations go into effect on July 1st, the government can be seeking protected information by July 2d and threatening civil and criminal sanctions by July 3d. Losses of customer confidence, associational anonymity, privacy and the protection of the Fourth Amendment are losses that, by their nature, cannot be repaired after the fact. There is no reason why defendants cannot undergo the delay caused by a restraining order; there is every reason why Plaintiffs need immediate relief.
Dated : June 29, 1972.
HENRY RAMSEY, JR.,
Attorneys for Plaintiffs.
Senator PROXMIRE. Our next witness is Mr. Rex Morthland on behalf of the American Bankers Association.
STATEMENT OF REX J. MORTHLAND, AMERICAN BANKERS
Senator PROXMIRE. As you know, Mr. Morthland, better than we do, the hour is very late, and anything you can do to abbreviate your remarks, we will appreciate.
Mr. MORTHLAND. My remarks will probably be the shortest ones you have heard this morning.
Mr. Chairman and members of the subcommittee, I am Rex J. Morthland, chairman of the board, the Peoples Bank & Trust Co., of Selma, Ala. I am appearing here this morning on behalf of the more than 13,000 banks that belong to the American Bankers Association. We appreciate this opportunity to express our views on S. 3814 and S. 3828.
We concur with the aims of the Congress—written into Public Law 91-508—to assist law enforcement agencies by requiring banks and other financial institutions to maintain records of bank transactions where such records have a high degree of usefulness in criminal, tax, and regulatory investigations.
We are equally anxious to preserve the individual's right of privacy and the confidential relationship between an individual and his bankas S. 3814 and S. 3828 seek to do. We held this position throughout the legislative history of Public Law 91-508. During both House and Senate hearings, we pointed out the need to protect an individual's right of privacy in his confidential relationship with his bank. Excerpts from our previous testimony are attached as an appendix to this stateinent, and we request that they be inserted in the record.
Senator ProxMIRE. Without objection, that appendix will be printed in full in the record (see p. 235).
Mr. MORTHLAND. I would like to call to your attention particularly the statement of our witness before your subcommittee which appears on page 227 of your hearings as follows:
Information made available to law enforcement agencies from bank records should be confined to the records of those persons who are subject to active investigations and only in response to subpoena or comparable legal process. This would protect the rights of the individual and the responsibility of the financial institutions and would be consistent with long recognized principles of law.
The right to privacy in connection with one's financial transactions is an essential part of our American system of values and is protected