Prot. the Pub.’s Trust v. IRS, No. 23-340, 2024 WL 663427 (D.D.C. Feb. 16, 2024) (Lamberth, J.)

Prot. the Pub.’s Trust v. IRS, No. 23-340, 2024 WL 663427 (D.D.C. Feb. 16, 2024) (Lamberth, J.)

Re:  Request for records concerning meetings between IRS Commissioner and high-level executives at now-bankrupt cryptocurrency exchange FTX

Disposition:  Granting plaintiff’s motion for attorney fees and costs; awarding plaintiff $17,884.42 in attorney’s fees and costs

• Attorney Fees, Eligibility:  The court explains that “[t]he outcome of [plaintiff’s] motion principally turns on whether FOIA plaintiffs can substantially prevail without obtaining responsive records.”  “This [situation] presents a question unaddressed by the Circuit – whether ‘relief’ necessarily requires FOIA plaintiffs to obtain responsive records – that only a handful of Courts in this District have addressed.”  “After careful consideration, the Court concludes that ‘relief’ is capacious enough to encompass a search not resulting in responsive records and rejects the categorical bar propounded by IRS.”  “‘FOIA defines “relief” broadly as, among other things, the “taking of . . . action on the application [ ] or petition of, and beneficial to, a person[,]” . . . and in this regard, the statute appears merely to have imported the ordinary meaning of “relief” into the agency context.’”  “[I]n a FOIA case ‘action on the application or petition of . . . a person’ and ‘redress or benefit’ sought from a court can encompass more than just an agency turning over records.”  “Indeed, § 552(a)(4)(E) does not mention ‘records’ at all.”  “IRS effectively asks this Court to rewrite the statute to make ‘relief’ incorporate a requirement pertaining to ‘records.’”  “But if Congress wanted to cabin § 552(a)(4)(E) to cases where the plaintiff obtained responsive records, it could have easily done so.”  “Finally, legislative history, coupled with fulsome analysis of prospective incentives to prosecute FOIA claims, further confirms this Court's reading of the text.”  “This legislative history is significant because it confirms the Court’s reading of the text.”  “All of the textual features that the Court identified . . . § 552(a)(4)(E)’s incorporating § 551(11)’s definition of ‘relief,’ using ‘relief’ instead of ‘records,’ and introducing both pathways to fee eligibility via the same introductory clause – are a direct consequence of the Act.”  “Text and legislative history alike make clear that Congress’s purpose in enacting this provision was to prevent obstinate agencies from avoiding FOIA’s fee-shifting strictures by changing their position during litigation and improperly pushing costs onto plaintiffs.”  “To hold otherwise would do violence to the scheme of incentives embodied in the statute’s text.”  “Categorically refusing to award fees in a case where a plaintiff caused an agency to conduct a search that it had refused to perform but did not ultimately result in responsive records would deter legitimate FOIA plaintiffs from bringing suit.”  “That is because there is always ex ante uncertainty that a search will result in responsive documents.”  “Moreover, plaintiffs and agencies do not share this uncertainty equally:  agencies enjoy an information advantage and know much better than requesters whether a particular search request will produce responsive records.”
  
  “The Court will now determine whether [plaintiff] has substantially prevailed.”  “IRS does not dispute that [plaintiff] made a detailed, reasonable request for records.”  “IRS was obdurate and thrice refused to undertake the requested search.”  “IRS does not now defend its earlier refusal to process [plaintiff’s] request.”  “On these facts, the Court finds that [plaintiff] has substantially prevailed within the meaning of FOIA.”  “The Court is satisfied that [plaintiff] obtained ‘relief’ because the sequence of events that precipitated this suit – IRS’s refusal to search – mirrored the result that [plaintiff] obtained as a result of IRS’s voluntary change in position – IRS searched for responsive records pursuant to [plaintiff’s] FOIA request.”  “Additionally, [plaintiff] obtained everything they could have obtained at the time they filed suit.”  “[Plaintiff] did not know whether responsive records existed; only IRS’s search revealed that they did not.”  “So, [plaintiff] received the maximum extent of relief in fact available to it through suit – a satisfactory search revealing no records.”  “This constitutes ‘relief’ under § 552(a)(4)(E).”  Additionally, the court finds that “[plaintiff] has obtained substantial relief here, namely, a satisfactory search for responsive records after repeated refusals to comply by IRS.”  “Because the search was satisfactory and no such records in fact existed, there is nothing more that [plaintiff] could have obtained from IRS.”
   
• Attorney Fees, Entitlement:  The court finds that “[t]he public benefit, commercial benefit, personal interest, and reasonableness factors all weigh in favor of [plaintiff].”  “Accordingly, the Court finds that [plaintiff] is entitled to an award of attorney’s fees in this case.”  First, “[t]he Court finds that [the public benefit] factor favors [plaintiff].”  “FTX’s ‘sudden and unprecedented collapse . . . sent shockwaves through the cryptocurrency industry’ and was a matter of great public concern.”  “These momentous developments, coupled with near-contemporaneous revelations that top figures at FTX had met with officials at the Securities and Exchange Commission, meant that there was ‘at least a modest probability’ that [plaintiff’s] December 2022 request for information concerning meetings between the IRS Commissioner and top figures at FTX would generate information relevant to FTX’s collapse or dealings with regulators.”  “Accordingly, it was ‘plausible ex ante that [plaintiff’s] request ha[d] a decent chance of yielding a public benefit[]’ . . . .”  Second, regarding “[t]he ‘commercial benefit’ and ‘plaintiff’s interest’ factors,” “[t]he Court finds that the second and third factors favor [plaintiff].”  “IRS ‘does not dispute that Plaintiff’s request was not made to obtain a commercial benefit or that it is a nonprofit public interest organization.’”  “[Plaintiff] sought records so that it could ‘publish information . . . on its website [and] distribute the records and expert analysis to its followers through social media channels including Twitter, Facebook, and other similar platforms.’”  “Additionally, [plaintiff] ‘has a robust network of reporters, bloggers, and media publications interested in its content and that have durable relationships with the organization.’”  “[Plaintiff] ‘intend[ed] to use any or all of these far-reaching media outlets to share with the public information obtained as a result of [its] request.’”  “This sort of ‘journalistic or public-interest oriented’ activity generally entitles FOIA plaintiffs to fees.” 
  
  Regarding the fourth factor, “‘whether the agency’s opposition to disclosure “had a reasonable basis in law,” and whether the agency “had not been recalcitrant in its opposition to a valid claim or otherwise engaged in obdurate behavior[,]”’” the court relates that “IRS does not attempt to justify, let alone explain, its prior recalcitrance.”  “Instead, IRS argues that the Court cannot even ‘reach the reasonableness of withholding measure’ because this factor presupposes the existence of responsive records.”  “IRS believes that because no such records existed, it did not ‘withhold’ anything and there is nothing left for the Court to analyze.”  The court finds that “IRS is incorrect that this factor ‘explicitly presupposes a “withholding”’ of responsive records.”  “This factor requires courts to evaluate whether the agency’s position ‘had a reasonable basis in law’ and whether the agency ‘had not been recalcitrant in its opposition to a valid claim or otherwise engaged in obdurate behavior.’”  “That broad inquiry focuses on the reasonableness of IRS’s conduct in responding to [plaintiff’s] claims and does not strictly require the withholding of responsive records.”  “[Plaintiff’s] request was stated with specificity, [was] reasonable in scope, and contained helpful information to guide the agency.”  “IRS refused to process [plaintiff’s] request because it alleged it was ‘overly broad.’”  “Despite requests from IRS, [plaintiff] never narrowed, modified, or clarified its request.”  “Yet IRS was able to process it without issue after [plaintiff] filed suit.”  “The Court sees no reason to give IRS the benefit of the doubt when it has already disclaimed any need to explain these events.”  “Nor does the Court believe it would be proper to import the responsive records requirement that it rejected under the fee eligibility prong into the fee entitlement prong.”  “Again, the focus of this inquiry is the reasonableness of IRS’s conduct in refusing to comply with [plaintiff’s] request (i.e., withholding a search), not whether [plaintiff’s] request resulted in responsive documents.”  “IRS has not explained or justified its conduct, so this factor favors [plaintiff].”
  
  Attorney Fees, Calculations:  The court relates that “[plaintiff] requests $5,281.02 in fees and $12,603.40 in ‘[f]ees-on-fees.’”  “IRS does not challenge [plaintiff’s] lodestar rate, billing entries, time spent, or arithmetic.”  “Instead, IRS argues that [plaintiff’s] fee request is unreasonable because [plaintiff] ‘did not obtain any relief’ and [plaintiff’s] ‘fees-on-fees’ request constitutes an unreasonable windfall.”  “IRS argues that [plaintiff’s] request for $5,281.02 in fees is unreasonable because ‘there were zero documents discovered as a result of this litigation’ and [plaintiff] ‘did not obtain any relief.’”  “Here IRS rehashes its argument that [plaintiff] has not substantially prevailed.”  “But the Court has already rejected that argument and found that [plaintiff] obtained relief within the meaning of § 552.”  “True, [plaintiff] sued because it hoped to obtain responsive records, but [plaintiff] could not have known before litigating IRS’s obdurate refusal to search that no such records existed.”  “Accordingly, the Court finds that a reasonable fee award is the full amount requested by [plaintiff], or $5,281.02.”  Additionally, the court relates that “IRS argues that [plaintiff’s] request for $12,603.40 in ‘fees-on-fees’ is unreasonable because it represents ‘70% of the total litigation costs’ and is therefore ‘a windfall for the attorneys.’”  The court finds that “IRS again has not challenged the hours performed or rate charged by [plaintiff’s] counsel, which [plaintiff] contends reflects the ‘minimum’ necessary to effectively litigate a contested motion for attorney’s fees.”  “[T]he Court finds that the amount requested by [plaintiff] ‘represents a reasonable, highly efficient effort to litigate novel questions of law surrounding the award of attorney’s fees in this case.’”  “Having surveyed case law in this District, the Court does not believe that it should reduce [plaintiff’s] ‘fees-on-fees’ award merely because its percentage share of the total litigation costs is high.”  “[Plaintiff’s] counsel effectively and diligently pursued this motion while simultaneously disclaiming certain fees and costs in the interest of fairness.”  “[Plaintiff] was completely successful in prosecuting its motion for fees.”  “Accordingly, the Court finds that a reasonable ‘fees-on-fees’ award is the full amount requested by [plaintiff], or $12,603.40.”