Aviation Serv. LLC v. SBA, No. 23-3507, 2025 WL 963127 (N.D. Ill. Mar. 31, 2025) (Pallmeyer, J.)

Aviation Serv. LLC v. SBA, No. 23-3507, 2025 WL 963127 (N.D. Ill. Mar. 31, 2025) (Pallmeyer, J.)

Re:  Requests for records concerning processing of plaintiffs’ loan applications, as well as broad range of “‘internal policy’” and “‘statistic[al]’” documentation

Disposition:  Granting in part and denying in part defendant’s motion for summary judgment; granting in part and denying in part plaintiffs’ motion for summary judgment
 

• Procedural Requirements, Time Limits; Litigation Considerations, Relief:  The court relates that “[i]n this case, SBA responded to all but one of Plaintiffs’ requests within days, informing them of the bases for withholding certain documents and advising of their right to appeal.”  “For the last request . . . , SBA did not acknowledge receipt or provide any determination until litigation commenced nearly a year after it was submitted.”  “Similarly, despite evidence that Plaintiffs’ appeals to SBA’s productions were delivered to SBA on September 26, 2022, SBA did not process those appeals until August 2023.”  “Thus, it appears from the record that SBA failed to abide by the deadlines set by § 552(6)(A)(i) and § 552(6)(A)(ii).”  “But these failures are not a legal basis for the relief sought by Plaintiff.”  The court explains that “‘[i]f the agency does not adhere to FOIA’s explicit timelines, the “penalty” is that the agency cannot rely on the administrative exhaustion requirement to keep cases from getting into court.’”  “In this case, as Plaintiffs are already in court and SBA is not raising an exhaustion argument, the remedy is irrelevant.”  “Instead, Plaintiffs construe the FOIA’s statutory deadlines as an independent basis for obtaining declaratory and injunctive relief.” “Plaintiffs in this case have not alleged that SBA has a pattern or practice of violating FOIA’s statutory deadlines.”  “To the contrary, the record shows that SBA responded promptly to every request that it processed.”  “For those submissions it did not have a record of receiving . . . , SBA again promptly responded upon becoming aware of them.”  “Significantly, the relief Plaintiffs request here is unrelated to delays in SBA’s responses.”  “As noted, . . . Plaintiffs do not seek a declaration that SBA has a policy or routine practice of delaying FOIA responses.”  “Instead, they seek a judgment from this court declaring SBA’s searches inadequate and ordering SBA to release withheld documents and conduct further searches for records.”  “But the fact that a FOIA production is late does not translate to a finding of inadequacy.”
   
• Litigation Considerations, Evidentiary Showing, Adequacy of Search:  The court reviews each request separately, first finding that “Request No. 6795 requested information in four general categories:  records pertaining to specific [Economic Injury Disaster Loan (“EIDL”)] applications submitted by [plaintiffs], internal policy documents regarding loan payments and ‘claw back’ procedures, statistical data of returned funds and records explaining such returns, and records pertaining to [one plaintiff].”  “[Defendant’s] initial search in response to this request was limited to the first category of requested information.”  “[Defendant’s] initial search was not the extent of SBA’s response to this request.”  “After processing Plaintiffs’ appeals, [the Office of Hearings and Appeals (“OHA”)] directed the Office of the Chief Financial Officer to conduct additional searches for the data regarding returned [Economic Injury Disaster Loan (“EIDL”)] loan funds and make additional productions within 20 days.” “[The Office of the Chief Financial Officer (“OCFO”)] ‘ran a query of the RAPID database using search terms from request number SBA-2022-006795 and produced a spreadsheet with responsive EIDL loans.’”  “From this description alone, however, the court cannot determine whether OCFO’s search of the RAPID database was reasonable under the circumstances.” “While RAPID appears to be the right database to have searched, [defendant’s] description of the search does not identify the specific search terms used, nor does [defendant] explain whether OCFO searched for records that would reveal the reason for the returned funds, as requested by [plaintiffs].”  “The court reaches a similar conclusion regarding OHA’s provision of links to SBA’s reading room in response to [plaintiffs’] requests for internal policy documents.”  “Though [Processing and Disbursement Center (“PDC”)’s] initial search for documents did not include an attempt to respond to [plaintiffs’] request for internal policy records, OHA recognized this deficiency and provided specific links to publicly-available policy documents it deemed responsive to Plaintiffs’ requests.” “Additionally, on August 30, 2023, SBA instructed PDC to run an additional search of ‘internal policy and procedural documents.’”  “But neither OHA’s decision nor [defendant’s] declaration explains how these additional productions are responsive.”  “OHA’s decision does not explain what methods it used to determine that the policies sought by Plaintiffs were ‘publicly available,’ or that the specific links provided would be responsive to [plaintiff’s] request for internal policy documents; [defendant] does not identify the search terms PDC used to find responsive internal policy documents.”  “SBA’s submissions are thus not ‘reasonably detailed’ to inform the court that its responses to [plaintiffs’] request for policy documents were adequate.”
  
  Regarding another request which “sought all records referring to [one plaintiff],” the court finds that “PDC’s search of the RAPID database at SBA’s request was a reasonable and good faith response to [this request].”  “In clarifying the nature of [plaintiffs’] request, [defendant’s] letter itself specified that searches were to be based on ‘record keeping protocol for Emergency EIDL loans.’”  “[Defendant] has established that RAPID was the database most likely to contain information regarding EIDL loan processing, and PDC used both [the one plaintiff’s] name (as requested) and many loan application numbers associated with him to produce responsive documents.”  “PDC chose not to run searches using the four application numbers provided by [plaintiffs], but that choice was reasonable:  For two of the provided numbers, SBA was already producing documents in response to [two other requests].”  “For another application number, individuals beside [the one plaintiff] were listed as owners and had not given consent to [the other plaintiff] receiving documents.”  “The fourth loan application number provided by [one plaintiff] for which PDC did not run a search was not an EIDL application.”  “As [one plaintiff] specifically advised SBA of [the other plaintiff’s] concern for loans that were part of a ‘COVID-19 related program’ and requested records regarding EIDL loans, . . . it was reasonable for PDC to assume that a loan unrelated to EIDL was not relevant to [one plaintiff’s] request.” “Further, though [the one plaintiff’s] request sought records relating to his name, PDC went beyond those terms and used nine EIDL numbers not identified by [the other plaintiff], further demonstrating good faith in response to this request.”
  
  “The court’s appraisal of SBA’s search in response to Request No. 6797 is similar to its analysis of Request No. 6795.”  “This request, submitted on behalf of [one plaintiff], sought records relating to specific loan application numbers . . . , internal policies regarding SBA’s disbursement of approved funds, and data concerning circumstances in which SBA had approved an increase in loan funding.” “PDC then ran searches of the RAPID system using one of the application numbers provided.”  “As discussed above, PDC’s use of the application number provided by Plaintiff as a search term was reasonably calculated to produce responsive documents.”  “But SBA’s response to this request differs in [one] respect[] from its response to Request No. 6795.”  “First, SBA provides no explanation for PDC’s failure to use the other loan application number provided . . . as a search term.”  “Though it appears that the number relates to a non-EIDL loan application, the . . . request was not limited to EIDL-related records.”  “Given this record, the court directs SBA to run a search of the appropriate database for records regarding [this loan].”
  
  Regarding another request which “sought records regarding two specific loan applications . . . , internal policies regarding SBA’s approval process, and all records containing [one specific name],” the court finds that “[a]s for the specific loan information, PDC used [one loan number] and produced all responsive documents, but did not use [another loan number] in any search.”  “Absent an explanation from SBA for why this term was ignored, the court directs SBA to run a search using that loan application number.”  “Finally, in response to the . . . request for all documents relating to [one named individual], it does not appear that SBA conducted any search beyond PDC’s search using the one loan application number.” “Nor does [defendant’s] declaration explain why a search for documents involving [the at issue] name was not conducted.”  “At the very least, SBA must respond to this request in the same manner it responded to Request No. 6796’s request for all records referring to [one plaintiff].” “To do so, it may seek clarification from [one plaintiff] about the scope of the search, and/or identify all loan application numbers associated with her for use as search terms.”
  
  “SBA produced no response to Request No. 6800, which sought internal policies regarding the funding of approved EIDL applications as well as detailed statistics and records of loan applications that were approved, funded, or modified after April 1, 2022.”  “In reviewing this request, PDC determined that the information sought was either produced already in response to Request No. 6799 or exempt from FOIA production.”  “As the court reads Request No. 6800, however, it is not fully congruent with Request No. 6799; it seeks different kinds of policy documents from SBA (policies regarding funding approved loans versus policies regarding the approval process) and seeks records about other loans approved by SBA rather than records pertaining to [one plaintiff’s] own application.”  “[One plaintiff’s] final request sought records concerning contracts between SBA and [an outside company], various internal policies regarding the funding, approval, and denial of EIDL applications, and various forms of ‘statistical data.’”  “The court finds that ‘[w]ith respect to documents relating to SBA’s contracts with [the company], SBA’s search within its procurement database used the procurement identification number [one plaintiff] provided and was thus reasonably calculated to produce the requested records.”  “As for the request for internal policy documents, the [defendants] declaration identified the search terms used, and, as [one plaintiff’s] request was focused on COVID-era EIDL policy, those terms were reasonably used to locate policy documents sought by this request.”  “Moreover, Plaintiffs have provided no countervailing evidence that SBA’s production of these policy documents were deficient, much less identified a specific type of policy information not contained in SBA’s production.”
   
• Exemption 5, Deliberative Process Privilege:  The court holds that “SBA has met its burden to invoke Exemption 5.”  “Here, SBA’s Vaughn indices demonstrate that the redacted case note files contained information that was both pre-decisional and deliberative.” “First, SBA has explained that the redacted information concerned ‘the agency’s consideration of the loan application[s] in question.’”  “As such, the documents were clearly produced prior to SBA’s final determination on the applications.”  “Second, the indices describe the information redacted as ‘discussions regarding certain sensitive details and concerns that were raised during the application process based on the information provided by the loan applicant.’”  “This account, while general, is sufficient to show that the redacted information was deliberative – it reflected internal discussions about agency concerns about the applications, well within the ambit of the deliberative process.”  “For their part, Plaintiffs fault SBA’s Vaughn indices for ‘grouping all withheld documents together’ and ‘provid[ing] no details as to what the information’ redacted consists of.”  “Plaintiffs cite no authority, however, requiring an agency to create a separate Vaughn index entry for each individual document.”  “Here, given that all internal deliberations regarding the same loan application would be exempt for the same reasons, it was reasonable for SBA to group its explanations of the redactions by the loan application number referred to in the case file notes.”
   
• Exemption 6: The court relates that “[defendant] redacted, from the spreadsheet, the names, business addresses, and bank account information of third-party borrowers (i.e. EIDL applicants other than Plaintiffs).”  The court finds that “[t]he spreadsheet at issue here sets forth individual names, addresses, and bank account numbers traceable to specific loan applicants – information that falls easily into the ambit of Exemption 6.”  “As the names and addresses of EIDL applicants are not protected by privacy interests, SBA does not explain why identifying such information in the spreadsheet would create new privacy concerns.” “At least as regarding the names and addresses of EIDL loan applicants, disclosure is not ‘clearly unwarranted.’” “The redacted bank accounts are a different story.”  “Unlike names and addresses, bank account numbers are not included in SBA’s publicly available records, nor are applicants apprised in SBA’s forms that such information may be disclosed.”  “Disclosing bank account numbers to the public exposes the individuals and entities in SBA’s records to fraud and potential identity theft.”  “As Plaintiffs have not identified any reason why the disclosure of these bank account numbers would significantly aid the Act’s purpose in scrutinizing SBA’s functions, SBA was justified in redacting individual bank account numbers under Exemption 6.”  “The court’s analysis of the redacted bank account numbers cannot end there, however, because SBA redacted not only bank accounts belonging to individuals, but ‘entities’ as well.”  “Exemption 6 does not protect the privacy interests of businesses.”  “Insofar as SBA withheld the bank account number belonging to a business or corporation, rather than an individual, its invocation of Exemption 6 was improper.”
  
  Defendant also “withheld from production pursuant to Exemption 6 . . . third-party EIDL application information.”  “Specifically, . . . Plaintiff seeks ‘statistical data’ and records involving third-party loan applications.”  “As reflected in the Vaughn indices, SBA declined to provide any information concerning EIDL loans that had been approved for increased funding, but for which the funding was stalled or never received.”  “SBA further declined to respond to the information sought by [one request] regarding occasions where CARES Act funds were received by a bank other than the one listed on the EIDL applications, where CARES Act funds were transferred to EIDL applicants using the same I.P. address on multiple applications, and where approved EIDL applicants used the same business address on multiple applications.”  “Neither [of defendants’] declarations mention any search relating to these specific requests; it thus appears that SBA invoked Exemption 6 to not only withhold responsive documents it identified, but to refrain from conducting a search at all.”  “Even assuming that disclosure of some of the statistical data sought by Plaintiffs would threaten the personal privacy of certain third-party loan applicants, SBA has not offered a basis for the conclusion that all responsive information would ne