Class Action Expands Against Metromail and Donnelley Over Privacy Violations; Broader focus, new plaintiffs target deceptive collection and sale of data; return of profits sought.

WASHINGTON--(BUSINESS WIRE)--April 28, 1997--Plaintiffs from three states have joined a class action against Metromail Corporation (ML.N) and R.R. Donnelley & Sons (DNY.N) over privacy violations, and the focus of the case has widened.

The original lawsuit was filed in April 1996 by Beverly Dennis, an Ohio grandmother who completed a Metromail consumer survey thinking she would receive product samples. Instead, she got a sexually graphic and threatening letter from a convicted rapist who learned intimate information about her while keypunching data from the surveys in a Texas prison.

Metromail and Donnelley claim the 12-page letter from the rapist -- who is scheduled to be released next year and who threatened to molest her in her own shower -- could not have caused her severe distress. The companies are arguing that anyone who filled out a survey promising "JUST FREE COUPONS", "NO GIMMICKS", and offers they could "only get through the mail", had "negated any reasonable expectation of privacy" in the personal data obtained by Metromail. Millions of consumers were never notified that Metromail believed they had forfeited such privacy expectations.

The unapologetic, "hardball" stance taken by Donnelley and Metromail with the Ohio grandmother may have backfired. Several days ago, individuals from California, Illinois, and New York who also filled out Metromail surveys processed by prisoners joined the class action as named plaintiffs. A new cause of action for breach of contract was added, and the focus of the fraud claim expanded.

"I'm being bombarded with calls from furious consumers from all over the country", said Mike Lenett of the Cuneo Law Group, P.C., who represents Beverly Dennis. The amended complaint also focuses on Metromail's deceptive acquisition of data by expressly promising to provide consumers with "JUST FREE COUPONS", and then selling the data to bill collectors, telemarketers and others without the consumers' knowledge or consent.

Perhaps more damaging, Metromail admits it was taking information about young children from the surveys and making it available to anyone over a 1-900 number "people-locator" service for $3 a minute. Metromail and Donnelley deny its officers knew about the prison arrangement before the Dennis incident, and blame a subcontractor, Computerized Image and Data Systems of New York. However, documents show that the surveys were shipped back and forth directly between Metromail and the prison.

The scandal has gotten the attention of legislators as well. The Beverly Dennis case has spawned "Kids Off Lists" legislation at the federal and state levels to ban the sale of children's data without parental consent, force companies like Metromail to tell parents where it obtains data on their kids, outlaw 900 number "look-up" services on children, and bar prison labor from processing children's data.

Privacy and child safety experts agree about the significance of the expanding case:

Marc Klaas, head of the Klaas Foundation for Children, stated: "The Beverly Dennis case grows out of the kind of egregious conduct that deserves to be criminalized." He added: "This case has great significance to the Kids Off Lists movement and to all parents. Beverly Dennis and the new plaintiffs are heroes for fighting back against corporate giants that have disregarded the safety and privacy of children in order to turn a profit."

"This is an important case that truly shows the dangers of the unregulated collection and sale of personal information, and goes right to the question of privacy safeguards in the marketing industry," said Marc Rotenberg, director of the Electronic Privacy Information Center (EPIC) in Washington, D.C.

Privacy Times editor Evan Hendricks noted: "This lawsuit could blow the lid off of potentially deceptive and secretive practices of one of the largest members of the list industry." Metromail refuses to identify all of the sources for its data on children.

If Beverly Dennis and the other plaintiffs are successful, Metromail will have to give back its illicit profits, notify survey respondents that the company misused their families' personal data, and remove their names from its databases. The impact of the case could go beyond the reported 1.3 million consumers whose surveys were provided to prisoners, and could ultimately affect any consumers whose personal survey information may have been improperly sold. Metromail advertises survey information on about 40 million adults and children.

Noting the fallout from this and other scandals in which Metromail has been involved, Robert Ellis Smith, an attorney and the publisher of Privacy Journal, commented: "This could be the most decisive moment in the courts for direct mail and marketing in more than two decades." He added: "Metromail's record on privacy keeps getting worse, and I'm surprised that Donnelley would put its reputation on the line as well." Donnelley will foot the bill for litigation defense costs if Metromail's insurer denies coverage, although Donnelley now owns only about 38% of Metromail after spinning off a majority stake in a public offering last year.

John Aristotle Phillips, a Metromail competitor and supporter of Kids Off Lists, agreed that Donnelley's new president and CEO, William Davis, needs to take steps to put the shameful privacy legacy of Metromail and former Donnelley CEO, John Walter, in the past: "At some point, Donnelley is going to have to apologize, settle up, and cut the cord if it ever wants to extricate itself from the seemingly unending series of Metromail scandals".

Phillips also is suggesting that Metromail president Susan Henricks apologize to parents. Henricks was the head of the Metromail division that sold childrens' names, addresses, and ages to any caller on a "900" number. The practice was abruptly halted when Phillips brought it to the attention of the Donnelley Board of Directors. In 1995 Phillips, in his capacity as a Donnelley shareholder, successfully sought the ouster of Henricks' predecessor, former Metromail President James McQuaid. During McQuaid's tenure, Metromail was caught engaging in bogus telephone surveys and misusing state voter data for unlawful purposes. -0-

Note to editors: For comment from Marc Klaas (Kids Off Lists), phone [phone]; for Privacy Times, 202/829-3660; for Privacy Journal, 401/274-7861; for EPIC, 202/544-9240; for John Phillips, 415/882-9924; for Cuneo Law Group, 202/789-3960. -0-

KEYWORDS: William Davis, Jim McQuaid, Susan Henricks, John Walter, Privacy, Prisoners, Donnelley, Metromail, Class Action Lawsuit, Marc Klaas

CONTACT: Kids Off Lists

Marc Klaas, 415/331-6867