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Edelman v. SEC, No. 14-1140, 2016 WL 1170927 (D.D.C. Mar. 24, 2016) (Moss, J.)

Thursday, March 24, 2016

Edelman v. SEC, No. 14-1140, 2016 WL 1170927 (D.D.C. Mar. 24, 2016) (Moss, J.)

Re: Request for records concerning creation of real estate investment trust

Disposition: Granting in part and denying in part defendant's motion for summary judgment; granting in part and denying in part plaintiff's motion for summary judgment

  • Litigation Considerations, Exhaustion of Administrative Remedies:  Regarding one request, the court finds that plaintiff did not exhaust his administrative remedies.  The court relates that "[t]he SEC remanded [plaintiff's] request" and "then provided a substantive response to the request nine business days later . . . and an additional substantive response five business days after that."  The court finds that "[plaintiff] concedes that he did not file an appeal from either response."  Responding to plaintiff's argument, the court finds that "the SEC cured its initial failure to respond to [plaintiff's] FOIA request in a timely manner by responding."  "Because it did so, [plaintiff] cannot now rely on the SEC's initial failure to timely respond to the request to excuse his failure to file an appeal from the Commission's subsequent decision."
  • Procedural Requirements, Searching for Responsive Records:  "The Court . . . concludes that the SEC conducted an adequate search in response to [plaintiff's] . . . request[s]."  The court finds that "the declarations submitted by the SEC demonstrate that its efforts were adequate and its methods well-tailored to [plaintiff's] request[s]."  Responding to plaintiff's argument, the court finds that "'the adequacy of a FOIA search is generally determined not by the fruits of the search, but by the appropriateness of the methods used to carry out the search.'"  The court finds that "[a]n agency's only obligation is to 'us[e] methods which can be reasonably expected to produce the information requested.'"  Specifically regarding one search, the court finds that defendant's previous "Glomar response . . . has no bearing on whether the search the SEC eventually conducted was adequate."  The court explains that there is "no reason to believe that it was issued for the purpose of delaying the SEC's eventual production of documents, nor is there any evidence that it was issued in 'bad faith.'"

However, "the Court will . . . direct that [defendant] conduct an additional search in response to [plaintiff's request for records concerning consumer complaints], on the understanding that—properly read—the request encompasses not just documents about the complaints but the complaints themselves."  The court finds that "agencies are obligated 'to construe a FOIA request liberally.'"  "[H]ere the more 'liberal' reading of [plaintiff's] request is also, in the Court's view, the more natural one."  "Although it would have been reasonable for the SEC to assume that [plaintiff] was primarily interested in the SEC's responses to consumer complaints, that does not mean that he was uninterested in the complaints themselves – if for no other reason than to contextualize the SEC's responses."

  • Procedural Requirements, "Agency Records":  The court "concludes that FOIA and the relevant caselaw do not support the categorical exclusion of notes taken and used solely by individual agency employees from the statute's reach."  The court considers the question of "whether notes taken by individual agency employees in the course of performing their official duties are 'agency records' subject to FOIA."  First, the court finds, "as a threshold matter, [that it] must ensure 'that "[t]he term 'agency records' . . . [is not] manipulated to avoid the basic structure of the FOIA: records are presumptively disclosable unless the government can show that one of the enumerated exemptions applies."'"  "This means, among other things, that the Court must avoid conflating the question whether records are 'agency records' with the distinct question whether those records can appropriately be withheld under a FOIA exemption."  "Second, . . . two important facts are not in dispute – the parties agree that the employee notes at issue here, like the calendars in those cases, 'were created by agency employees and were located within the agency.'"  "As a result, of the four 'principal factors identified . . . – creation, location/possession, control and use' – the dispositive factors here are control and use."  Regarding the 'control' factor, the court first finds that "there is no need to decide 'whether retention of the [notes] was wholly within the officials' discretion,' because it is clear that documents can be 'agency records' under FOIA even if they need not have been preserved (or created) under federal law or agency practice."  The court then finds that "there is little basis to believe that the notes did not enter the SEC's files under the commonsense meaning of that term."  In holding this, the court also finds that "it is hard to understand why it would matter, for the purposes of FOIA, whether a document is kept on an attorney's agency computer or in her agency desk – at least to the extent the document concerns agency business rather than personal matters."  "Indeed, it is safe to assume that some of the most consequential records in the government have at times resided in individual offices rather than in agencies' centralized filing systems."  "Treating those records as beyond FOIA's reach cannot be squared with the statutory goal of 'open[ing] agency action to the light of public scrutiny.'"  Turning to the 'use' factor, the court finds that "[t]he fact that the attorneys were not required to take notes does not mean that, when they did so, they were doing so for personal reasons rather than professional ones."  "Nothing in the record here suggests that the attorneys' notes were akin to 'a personal diary containing an individual's private reflections on his or her work—but which the individual does not rely upon to perform his or her duties.'"  "Instead, what little evidence the SEC has submitted shows that the notes 'facilitated the day-to-day operations of the' SEC's review of the ESRT transaction, whether or not they were incorporated into the official file that was created to accompany that review."  Overall, therefore, the court finds that "[b]ecause the SEC concluded as a categorical matter that the attorney notes here were not 'agency records' under FOIA, it did not search or index them, and thus the Court lacks any basis to determine whether any individual documents (or portions of documents) are either not subject to FOIA or not subject to disclosure under FOIA."  "What is clear from the present record is only that the notes are not categorically exempt from FOIA on the sole ground that they were maintained and used exclusively by their authors."
  • Exemptions 5 & 6:  "[T]he Court will grant the SEC's motion for summary judgment with respect to all of its withholdings except for those [plaintiff] has specifically challenged."  The court explains that "[plaintiff] does not challenge any of the SEC's Exemption 6 withholdings, and challenges only the SEC's invocation of Exemption 5 only with respect to six specific documents."
  • Exemption 5, Deliberative Process Privilege:  "[T]he Court will order the SEC to produce an unredacted version of Document 1 for in camera review."  The court explains that while "'post-decisional documents can fall under the privilege where they recount or reflect predecisional deliberations,'" "it is not possible to determine based on the redacted version of Document 1 and the SEC's declarations whether the redacted portions reflect 'recommendations or ... opinions on legal or policy matters.'"  Additionally, "[t]he Court concludes that the SEC has carried its burden with respect to Document 5."  The court explains that, "[b]ased on the parties' description of the table [in the document], it is not surprising that there would be no factual material in the 'notes' column; the remaining columns contain only factual content, leaving the 'notes' column for the attorneys to record their subjective opinions about the complaints and tips."  Also, "[t]he Court . . . concludes that the SEC appropriately withheld Documents 6 through 8 on the basis of the deliberative process privilege."  The court relates that "[t]he SEC explains that [two] documents were pre decisional: the notes predated the agency's decision with respect to ESRT's filings and raised questions and deliberations about those filings, and the talking points predated the attorneys' calls with investors and included suggestions about how to handle those calls" and the remaining document was a draft which "courts frequently permit agencies to withhold . . ., particularly where, as here, final versions of those documents are later released to the public."  Finally, "[t]he Court . . . concludes that the SEC appropriately withheld a portion of Document 47 on the basis of the deliberative process privilege" because "the very reason that the investors submitted complaints [discussed in this document] to the SEC was that the SEC had to decide whether to approve the ESRT transaction."
Agency Records
District Court
Exemption 5
Exemption 6
Litigation Considerations
Updated April 28, 2016