Keeping Your Records Clean -Segregating 2257 Records under Federal Law
By: Lawrence G. Walters, Esq.
Walters Law Group
Performer ID’s? Check. 2257 form? Check. Model release? Check. Throw them all into a file or load them into a database and your legal tail is covered, right? Unfortunately, XXX law is never that simple, particularly when discussing compliance with federal regulations as applied to a highly regulated industry like adult entertainment.
One of the most common mistakes our firm has seen over the years with section 2257 compliance is the inclusion of extraneous records in the 2257 file or database. The biggest offender always seems to be the model release, which is often kept alongside the 2257 form related to an individual performer. Logic would dictate that this is the proper procedure, and that all legal documentation associated with a performer should be maintained in the same place, at the risk of getting lost if separated. But alas, logic does not always inform obligations imposed by a federal statute. The applicable statutory provision appears in 28 C.F.R. § 75.2(e) which states:
Records required to be maintained under this part shall be segregated from all other records, shall not contain other records, and shall not be contained within any other records.
Seems pretty clear, right? But even well-known adult entertainment lawyers have become confused on occasion, and recommend including information or other evidence in a performer’s 2257 file beyond the specific categories of material required by the statute (e.g. “dress size, phone number,” handwriting sample, etc.). The specific items that should be contained in any producer’s 2257 files and/or database, is beyond the scope of this article, and more importantly, the subject of retained legal advice. However, given the clear dictates of federal law, commonly obtained documents such as model releases, payment/compensation information, or evidence of sobriety have no place in a 2257 file. Such information could certainly be kept separately to help defend against later claims by models seeking to remove their content, but never included in a 2257 record. But any recommendation regarding keeping such information in a 2257 file is simply dangerous.
Why would the Department of Justice require this segregation of 2257 records from other performer records? Was that provision included just to make compliance more difficult and catch producers in technical violations? Although, one’s inner conspiracy theorist cannot immediately dismiss such questions – particularly when a controversial issue such as adult entertainment is the subject of the regulation- the real answer is probably less incendiary and much more practical. The fact of the matter is that FBI inspectors simply do not want to sift through mounds of irrelevant business documentation to find the federally mandated information that is pertinent to their investigation. The 2257 inspections that have occurred thus far, typically involved the use of a device to copy the relevant files and/or database in order to facilitate the inspection process and avoid unnecessary governmental review of proprietary business information. Segregating the records into a single physical or electronic file allows for easy copying and examination by authorized federal agents, without permitting review of extraneous and possibly confidential business information
Section 2257 is not the only federal statute that requires some form of records segregation. For example, federal drug regulations mandate that medical professionals and researchers authorized to handle controlled substances, must keep separate records pertaining to such substances. Various portions of HIPAA, specifically those pertaining to the privacy regulations of the Americans with Disabilities Act and the Family & Medical Leave Act, require that employers maintain employee medical records in separate files as well. Similarly, even psychotherapy notes and such related information must be segregated from other records under HIPAA privacy rules.
Some of the separation requirements are based on privacy concerns, such as those applicable to medical records, while others are focused on easing the burdens on inspectors (i.e., § 2257 and the controlled substances regulations). Whatever the justification, it is clear that section 2257 requires that only the specific items required by the statute be included in the 2257 file/database. Unfortunately, before the adoption of this particular regulation in 2008 (effective in 2009), many 2257 forms circulated by XXX lawyers were included in, or comprised the first page of, the performer’s model release. Often, only one signature was obtained for both the model release and 2257 form. While this practice was certainly easier on the content producers and helped prevent inadvertent loss or misplacement of portions of a model’s legal documentation, this procedure is no longer permissible.
Unlike certain “grandfathering” provisions found in section 2257, such as those exempting content (created prior to March 18, 2009) depicting the “lascivious exhibition of the genitals or pubic area” of a person, the record segregation provision was effective immediately upon adoption. As a practical matter, that means content producers who were accustomed to maintaining extraneous documents (such as model releases) in their 2257 files were immediately obligated to clean out those files and separate any 2257 material from all other business records pertaining to the performer. Often this meant manually creating a new 2257 form or database from the data in the combined forms circulating prior to the adoption of 28 C.F.R. § 75.2(e). While this may sound unnecessary, particularly in an era when section 2257 is not being actively enforced, violations of this regulation still carry a potential five year federal prison sentence. Certainly this would be harsh punishment for content producers who happen to mix some extraneous performer information in their 2257 file. Notably, physicians have been carried away in handcuffs for failing to properly maintain controlled substances records in the proper format; this stands to reason that practically speaking, there is no difference between the two.
The good news is that segregating your business records from your 2257 records actually benefits the producer. A federal agent has no authority – and frankly no business – poring over documents containing proprietary business information, such as compensation details, exclusivity obligations, non-compete provisions, STD test results, or any other category of information not specifically authorized for review without a warrant under section 2257. Remember, FBI agents can enter a producer’s place of business without notice and demand to inspect 2257 records under penalty of federal prosecution. Producers of erotic content need not expose their entire business files to review by federal agents without a warrant, when such is not required by section 2257. Attempting to segregate 2257 records from other documents while the federal agents are waiting to conduct an inspection is not practical, and could arouse suspicion in the minds of the investigators.
An argument can also be made that producers have an affirmative obligation to protect the performer’s privacy rights, thus triggering the need to weed out sensitive performer documents from such files. In an age where privacy rights are dwindling at a rapid pace, every effort should be undertaken by producers of erotic content to demonstrate what is known in the law as a “reasonable expectation of privacy.” Failing to keep 2257 files clean and separate from all other business documentation could result in a waiver of important constitutional rights to privacy if produced to federal agents during a 2257 inspection. Without a warrant, the government’s prying eyes must be limited to only those minimal categories of information that producers are obligated to make available under federal law.
Lawrence Walters heads up Walters Law Group, and has represented the adult industry for 25 years. Nothing in this article is intended as legal advice. Mr. Walters can be reached at email@example.com, or 800.530.8137.