Montgomery v. IRS, No. 21-5168, 2022 WL 2813242 (D.C. Cir. July 19, 2022) (Sentelle, J.)

Montgomery v. IRS, No. 21-5168, 2022 WL 2813242 (D.C. Cir. July 19, 2022) (Sentelle, J.)

Re:  Requests for records concerning certain whistleblower forms, as well as communications with any third parties regarding requesters’ taxes

Disposition:  Affirming district court’s grant in part and denial in part of parties’ motions for summary judgment, denial of requesters’ motion for reconsideration

• Exemption 7(D) & Litigation Considerations, Mootness and Other Grounds for Dismissal:  The Court of Appeals for the District of Columbia Circuit relates that “[the requesters] first allege that the IRS is collaterally estopped from asserting a Glomar Response [in response to the requesters’ request for records concerning certain whistleblower forms] because it successfully argued in the two underlying tax cases . . . that no informant existed.”  The court explains that “[c]ollateral estoppel requires that (1) ‘the same issue now being raised must have been contested by the parties and submitted for judicial determination in the prior case;’ (2) ‘the issue must have been actually and necessarily determined by a court of competent jurisdiction in that prior case;’ and (3) ‘preclusion in the second case must not work a basic unfairness to the party bound by the first determination.’”  The court finds that “[t]he issue of the existence of a confidential informant, decided by the previous Fifth Circuit cases [cited by the requesters], is not the same as the issue confronting [the court] now; namely, whether the IRS possesses any documents pertaining to a confidential informant.”  “Indeed, the documents requested by the [requesters] in [their requests] include such items as award applications and reportable transaction forms.”  “As the IRS and the district court correctly point out, the IRS does not pay awards for every form submitted to it.”  “So, these documents may very well exist outside of the presence of an actual whistleblower.”  “Because documents pertaining to a potential whistleblower can exist regardless of whether a whistleblower himself exists, the issue facing us now was not previously litigated in the Fifth Circuit [in the prior cases cited by the requesters].”  “The IRS is not collaterally estopped from its Glomar Response.”
  
  Similarly, the court relates that “[the requesters] next assert that the IRS is judicially estopped from asserting its Glomar Response.”  “Judicial estoppel ‘prevents a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding.’”  “[The requesters] argue that the IRS benefitted from its argument to the Fifth Circuit that no informant existed, resulting in favorable evidentiary and statute of limitations rulings.”  “The IRS cannot now, [the requesters] assert, change its position that no informant exists.”  The court holds that, “[a]s explained for the collateral estoppel issue above, the IRS has not changed its position on whether a confidential informant exists in this case.”  “The IRS’s Glomar Response to the existence of whistleblower documents, as requested by [the requesters] in [their FOIA requests for records concerning certain whistleblower forms], does not bear on its prior position in the Fifth Circuit cases regarding the existence of a whistleblower.”  “Since the IRS’s positions are not inconsistent, the IRS is not judicially estopped from its Glomar Response.”
   
• Exemption 7(D):  The Court of Appeals for the District of Columbia Circuit holds that “for the reasons stated exhaustively above, the information requested by [the requesters in their request for records concerning certain whistleblower forms] does not match the information previously released by the IRS and so fails the official acknowledgment test.”  “Namely, [these requests] seek whistleblower documents, while the IRS previously disclosed the non-existence of a whistleblower himself.”  “These two pieces of information differ . . . .”  Also, responding to the requesters’ argument that “the IRS officially acknowledged [that responsive records exist] in its Final Appeal Response Letter,” the court holds that “[i]n its Final Appeal Response Letter to [the requesters], the IRS stated that ‘[t]he withheld material contains information which could reasonably be expected to directly or indirectly disclose the identity of confidential sources in the course of a criminal investigation.’”  “[The requesters] aver that the IRS’s reference to ‘withheld material’ constitutes an official acknowledgment that such material exists.”  “This is incorrect.”  “As the Appeals Officer who reviewed [the requesters’] requests explained to the district court, the standard ‘withheld material’ language contained in the Letter was mistaken.”  “[The court] agree[s] with the district court that ‘[i]t would be draconian to penalize the Government in a sensitive matter concerning a potential informant by refusing to permit some leeway for an honest mistake.’”  “Moreover, [the court] further agrees with the district court that the IRS's vague reference to ‘withheld material’ does not match the information requested by [the requesters] . . . .”
  
  The court next responds to the requesters’ argument “that FOIA Exemption 7(D), the exemption on which the IRS and the district court relied, protects only the identity of a whistleblower and the information furnished by a whistleblower, not the existence of a whistleblower.”  “[The court] disagree[s].”  “Exemption 7(D) permits the IRS to withhold information that ‘could reasonably be expected to disclose the identity of a confidential source.’”  “As we have stated before, Congress intended 7(D) ‘to provide a broad exemption for law enforcement’ to allow for ‘agencies to obtain, and to maintain, confidential sources, as well as to guard the flow of information to these agencies.’”  “This policy makes sense.”  “If the IRS only asserts Glomar when whistleblower records exist, and gives a negative answer when no records exist, savvy requesters would both (1) recognize that a Glomar Response indicates the positive existence of whistleblower documents; and (2) may well be able to deduce the identity of a potential whistleblower himself, the very information the IRS is required to protect.”  “This is especially true when the pool of potential whistleblowers is very small, leading a revenge-seeking requester to narrow down the informant with relative ease.”
   
• Litigation Considerations, In Camera Inspection:  The Court of Appeals for the District of Columbia Circuit relates that “[the requesters] finally argue that the district court’s use of in camera declarations, as opposed to in camera review, contravenes FOIA and other binding authority.”  The court finds that this is “[n]ot so.”  “The district court properly applied this test and determined that the declarations proffered by the IRS could not be publicly released.”  “It further received, and ultimately rejected the merits of, three sets of briefs by [the requesters] on the subject of the in camera declarations.”  “In other words, [the requesters] had their voices heard with regard to the in camera declarations.”
   
• Litigation Considerations, Adequacy of Search:  “[The Court of Appeals for the District of Columbia Circuit] agree[s] that the IRS has finally carried its burden of showing the adequacy of its search for documents responsive to [the requesters’ requests for communications with any third parties regarding requesters’ taxes].”  “Although [the requesters] are not entitled ‘to dictate, through search instructions, the scope of [the IRS’s] search,’ . . . they have identified no further databases possibly containing relevant information . . . .”  “More importantly, the IRS has finally ‘explained its search process and why [certain] specified record systems are not reasonably likely to contain responsive records.’”  The court relates that “[i]n this appeal, [the requesters] chiefly focus on certain documents, which they number in the hundreds, that they contend were in the IRS’s possession but were not located by the IRS.”  “They also take issue with the IRS’s declaration explaining that these documents were either destroyed or consolidated.”  The court holds that, “[as it has] noted before, ‘particular documents may have been accidentally lost or destroyed, or a reasonable and thorough search may have missed them.’”  “This is why we judge the adequacy of a search not by its fruits, but rather ‘by the appropriateness of the methods used to carry out the search.’”  “While true a requester may cast doubt on the adequacy of a search through ‘positive indications of overlooked materials,’ . . . [the requesters] have not done so in this case . . . .”  “[The requesters] do not now ‘maintain that the [IRS] failed to search particular offices or files where the document[s] might well have been found,’ . . . nor that the IRS ‘failed or refused to interview government officials for whom there was strong evidence that they might have been helpful in finding the missing documents,’ . . . nor that the IRS ‘ignored indications in documents found in its initial search that there were additional responsive documents elsewhere,’ . . . .”  “Rather, [the requesters] aver only that ‘hundreds’ of documents are missing from the IRS’s search.”  The court holds that “[its] precedent makes clear, however, that even if this claim were true, the IRS’s search in this case was not inadequate, as it ‘made a good faith effort to conduct a search for the requested records, using methods which can be reasonably expected to produce the information requested.’”  “Nothing more is required.”
  
  “Finally, as the district court explained, the IRS's declaration as to the whereabouts of the ‘missing’ documents – namely that they were either destroyed or consolidated with other files – easily passes muster.”  The court explains that “FOIA declarants are not required to have personal knowledge of the search itself, but rather ‘personal knowledge of the procedures used in handling [a FOIA] request and familiarity with the documents in question.’”  “As the district court noted, the relevant declaration on this matter ‘reflect[ed] [the declarant's] comprehensive understanding of the documents at issue, as well as her extensive collaboration with the experienced agency employees who searched them.’”  “Again, no more is required.”