Robbins, Geller, Rudman & Dowd, LLP v. SEC, No. 14-2197, 2016 WL 950995 (M.D. Tenn. Mar. 12, 2016) (Campbell, J.)

Robbins, Geller, Rudman & Dowd, LLP v. SEC, No. 14-2197, 2016 WL 950995 (M.D. Tenn. Mar. 12, 2016) (Campbell, J.)

Re: Request for records concerning Walmart's possible violation of the Foreign Corrupt Practices Act

Disposition: Granting defendant's motion for summary judgment

• Exemption 7, Threshold:  The court holds that "[t]he records the Plaintiff seeks were compiled by the SEC, which is a law enforcement agency" and "were 'compiled for law enforcement purposes.'"
   
• Exemption 7(A):  "[T]he Court concludes that the SEC properly has withheld the records responsive to the Plaintiff’s FOIA request, in their entirety, under Exemption 7(A)."  The court finds that "[defendant's] Declaration, which is entitled to a presumption of good faith, clearly demonstrates that a law enforcement action is pending or prospective."  The court notes that the declaration states "that the Walmart investigation 'remains open,' and that the SEC staff 'is actively receiving and reviewing documents, interviewing witnesses, determining which additional witnesses to contact, and evaluating evidence regarding potential violations of the FCPA or other provisions of the federal securities laws.'"  Next, "[t]he Court finds that the SEC defined functional categories in this matter."  "The Court concludes that the SEC has appropriately walked the Exemption 7(A) tightrope in this case."  "The Court is able to trace a rational link between the nature of the documents produced by Walmart in response to the SEC’s investigation and the interference the SEC alleges could reasonably be expected if it is required to disclose those documents."  "The Court agrees that, if the SEC were required to release to the Plaintiff the documents it has obtained from Walmart through its investigation, those documents likely would reveal the nature, scope, direction, and strategy of the agency’s investigation."  "Simply put, the responsive documents reveal what the SEC finds to be important and relevant to its investigation."  Responding to plaintiff's argument, the court finds that "[t]he fact that the first category[, "documents Walmart produced in response to SEC documents requests and subpoenas,"] encompasses a variety of types of documents produced by Walmart does not render it a non-functional category."  "Although there are different types of documents contained in the category, they are all documents that were in Walmart's possession that the SEC believed were important to its investigation."  The court then finds that defendant "conducted a document-by-document review in order to assign documents to the proper category."  Next, the court finds that "'[t]he release of information in investigatory files prior to the completion of an actual, contemplated enforcement proceeding was precisely the kind of interference that Congress continued to want to protect against.'"  Responding to plaintiff's argument, the court also finds that "Walmart's choice to reveal publicly some of the documents it allegedly has provided to the SEC . . . in no way obligates the SEC to compromise its investigation by releasing documents that, until that point, entities and individuals subject to its investigation could only speculate were in the SEC's investigatory file."  "The motivations and interests of a private company subject to an investigation by a government agency, journalists, and Congress, are far different than those of the government agency tasked with investigating and bringing legal actions against those who have violated the law."  "None of the disclosures by these other entities rob the SEC of the sanctuary afforded by Exemption 7(A) to avoid interference with its investigation."
   
• Litigation Considerations, "Reasonably Segregable" Requirements:  First, "the court disagrees with the Plaintiff's position that the government is required to create a document-by-document Vaughn index for purposes of segregability in an Exemption 7(A) case."  The court finds that, "[a]lthough an agency's use of the categorical approach to show that the withheld documents fit into FOIA Exemption 7(A) does not discharge its obligation to consider whether any portion of the records are reasonably segregable, an agency need not create a Vaughn index to account for the agency's determination that none of the responsive records are reasonably segregable."  "Requiring the government to provide a Vaughn index for purposes of its segregability analysis would eviscerate the policy considerations that have led courts to conclude that the government need not provide such an index to show that its withholding of responsive FOIA documents is justified under Exemption 7(A)."  Second, "[t]he Court concludes that in this case, given the manner in which the Plaintiff framed its FOIA request (all documents provided by Walmart to the SEC related to possible violations of the Federal Corrupt Practices Act) and given the nature of the exemption the government has persuaded the Court it has properly claimed (Exemption 7(A)), the SEC's assertion that all responsive documents in its first category are exempt from disclosure and not reasonably able to be segregated satisfies FOIA's segregability requirements."  "The SEC's release of any document or portion of a document, in response to the Plaintiff's request in this case, clearly identifies the document as one that the SEC itself believes to be important to its investigation, which, as a result, reveals the SEC investigation's focus, scope, direction, and strategy."