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Lawrence, Jr. v. SBA, No. 20-11637, 2021 WL 4398328 (E.D. Mich. Sept. 27, 2021) (Goldsmith, J.)

Date

Lawrence, Jr. v. SBA, No. 20-11637, 2021 WL 4398328 (E.D. Mich. Sept. 27, 2021) (Goldsmith, J.)

Re:  Request for records concerning loans that three specific entities and three individuals applied for or received through Paycheck Protection Program ("PPP")

Disposition:  Denying plaintiff's motion for sanctions; granting plaintiff's motion for attorney fees

  • Litigation Considerations:  The court holds that "[b]ecause SBA's position was not objectively unreasonable, sanctions are not warranted under Rule 11."  The court relates that "Rule 11 states that an attorney who presents written motions to a court is deemed to have made certain representations to the best of the attorney's 'knowledge, information, and belief, formed after an inquiry reasonable under the circumstances.'"  "[Plaintiff's] central argument in his motion is that SBA's response letter dated June 8, 2020 did not 'constitute a "determination" in conformance with the FOIA' and that '[a]ny argument to the contrary is frivolous.'"  "The Court determines that SBA's contention that [plaintiff] must first appeal to the agency before seeking judicial review is not frivolous such that it violated Rule 11."  The court finds that "SBA's June 8, 2020 letter, which [plaintiff] received before bringing this action, did not postpone a decision for a later date, and it did not state that it was not subject to appeal."  "Instead, the letter expressly told [plaintiff] that he could appeal."  The court finds that "individuals must generally exhaust administrative remedies before seeking judicial review of a FOIA request – it was not objectively unreasonable under the circumstances for SBA to determine that its June 8, 2020 letter was sufficient to constitute an appealable decision."
     
  • Attorney Fees, Eligibility:  The court first notes that "[t]he Sixth Circuit has not yet addressed this issue [of whether a "'catalyst theory'" applies to the eligibility analysis]."  "However, the Court need not decide whether a FOIA plaintiff seeking attorney fees must show that the lawsuit caused the agency to change its position because it finds that [plaintiff] has substantially prevailed even if this theory applies."  "SBA did not produce any documents in response to [plaintiff's] request until six months after [plaintiff] brought this action."
     
  • Attorney Fees, Entitlement:  "In assessing the . . . equitable factors, the Court finds that on balance, they favor an award of attorney fees."  First, the court finds that "[e]ven if, as SBA points out, [plaintiff] desired to know whether there was evidence of fraud by his particular employer and did not suggest that the information he obtained would be disseminated to the public, his request was tied to the issue of '[f]urther[ing] the public's urgent and immediate interest in assessing the results of an unprecedented federal relief effort financed by taxpayer dollars,' including whether funds were distributed without fraud and waste."  "It was also connected to the public-facing issue of transparency in regard to the distribution of PPP loans."  "Therefore, this factor weighs in favor of [plaintiff]."  Second, the court finds that "[plaintiff's] interest in the distribution of taxpayer funds without fraud or waste and in SBA's proper response to FOIA requests also encompasses a matter of public concern."  "Moreover, this action had the potential to give further insight into the way that the PPP was managed and the way its loans were distributed."  "Indeed, [plaintiff] asserted at the outset that because of this action's ability to help illuminate the workings of SBA and a large government subsidy program, there was more at stake than his private interest in obtaining records."  "Thus, this factor weighs in favor of [plaintiff]."  Finally, the court finds that "[b]ecause the merit of the Government's position is somewhat opaque, this element does not favor either side."  "As noted above, [plaintiff] asserts that SBA's withholding of information on the grounds that he failed to exhaust his administrative remedies had no reasonable basis in law."  "SBA responds by arguing that, in light of the need to balance the urgency of dispensing loans to small businesses and preserving privacy, it erred on the side of caution by opting not to produce potentially confidential information about PPP loans – and that such action was reasonable."  "If the agency's stance is merely 'founded on a colorable basis in law, that will be weighed along with other relevant considerations in the entitlement calculus.'"
     
  • Attorney Fees, Calculations:  The court finds that "[plaintiff] filed his amended complaint in pursuit of his aim to obtain the documents he requested."  "While SBA states that the motion for sanctions had a punitive purpose, [plaintiff's] contention had a foundation in existing case law, and he was reasonably justified in challenging SBA's motion to dismiss."  "And SBA does not expand on why [plaintiff] should have known that a motion to supplement should have been administratively appealed."  "Moreover, none [of] these entries appears excessive."  "[Plaintiff's] attorney indicated that he spent three hours on the first amended complaint, approximately ten hours on the motion for sanctions, and about fifteen minutes inquiring about a motion to supplement."  "Therefore, [plaintiff] may recover [$16,167 in] billing fees for these entries."
Court Decision Topic(s)
District Court opinions
Attorney Fees
Litigation Considerations, Supplemental to Main Categories
Updated October 28, 2021