WP Co. LLC v. U.S. Small Bus. Admin., No. 20-1240, 20-1514, 2020 WL 6504534 (D.D.C. Nov. 5, 2020) (Boasberg, J.)

WP Co. LLC v. U.S. Small Bus. Admin., No. 20-1240, 20-1514, 2020 WL 6504534 (D.D.C. Nov. 5, 2020) (Boasberg, J.)

Re:  Requests for names, addresses, and precise loan amounts of all Paycheck Protection Program ("PPP") and Economic Injury Disaster Loans ("EIDL") borrowers

Disposition:  Granting plaintiffs' cross-motions for summary judgment

• Exemption 4:  The court relates that "[n]o party contends that the withheld information is not 'commercial or financial[]' . . . ."  "Neither do the news-organization Plaintiffs gainsay that it was 'obtained from a person[]' . . . ."  "To be sure, [one plaintiff] briefly argues otherwise, asserting that 'the amount of each loan' is not 'obtained from a person.'"  "The Court, however, need not resolve that issue."  The court then finds that "even assuming that a business's payroll qualifies as 'confidential' under Exemption 4, the agency may not withhold borrowers' names, addresses, and loan amounts pursuant to such provision, as disclosure would not reveal any commercial information that is “customarily and actually treated as private.'"  The court relates that "SBA does not argue that the requested loan data, or anything contained therein, is per se confidential business information."  "Rather, it contends that the loan data must be withheld because its release would necessarily reveal entirely different information that is confidential – specifically, a borrowing company's average payroll."  The court finds that "[i]n arguing that releasing a borrower's precise loan amount 'effectively would disclose its payroll information,' . . . therefore, SBA expressly 'assumes' two factual predicates:  1) 'that a [PPP] borrower took out a loan for the maximum amount allowed'; and 2) 'that a PPP borrower would pay few if any of its employees more than $100,000.'"  "If a borrower took out a maximum loan and pays no employees six figures or more, the agency maintains, a third party could calculate the borrower's average monthly payroll simply by dividing its loan amount by 2.5."  The court finds that "[n]either of SBA's two premises, however, is necessarily true for any given borrower."  The court explains that "far from creating a 'clear mathematical relationship' between PPP loan amount and average monthly payroll, . . . the CARES Act and its implementing regulations enable only bare speculation as to any connection between the two figures for a given borrower."  "Without knowledge of whether a borrower sought and received the maximum possible loan and pays any employees more than $100,000 annually (and, if so, how many and by how much), third parties are in the dark about payroll."  "As a final coda, even were SBA correct that releasing the loan data would enable calculation of salary and wage information for many borrowers, the agency likely still could not withhold such information under Exemption 4."  "This is so because the PPP loan application expressly notified potential borrowers – admittedly in a form disclaimer – that their names and loan amounts would be 'automatically released' upon a FOIA request."  "The Court need not resolve the open question . . . whether the government must assure borrowers that the loan data would remain private in order for it to fall within the scope of Exemption 4 — to recognize, as courts in this district already have, that 'whether the agency provided an "assurance of privacy" is undoubtedly relevant to determining whether commercial information possessed by [the agency] is "confidential."'"
   
• Exemption 6:  The court holds that "Exemption 6 does not protect the names and addresses of borrowers of PPP loans of less than $150,000, as well as those of sole proprietorships and independent contractors receiving EIDL loans."  The court relates that "Plaintiffs do not dispute that the information at issue qualifies as “personnel and medical files and similar files[]' . . . ."  Regarding the privacy interests, the court finds that "[a]ll individuals and businesses seeking PPP and EIDL loans completed application forms."  "The PPP application contained a series of notices, including a FOIA-related disclaimer" that "expressly informed potential PPP borrowers that their 'names' and 'amount of the loan' received would be 'automatically released' upon a FOIA request."  The court addresses defendant's argument that "because SBA hastily 'transplanted' the notice from that preexisting form 'in the midst of a global pandemic,' it 'cannot bear the weight that Plaintiffs would accord it.'"  The court finds that "any carelessness that the agency now cites cannot alter the fact that it explicitly told potential borrowers that their identities and loan amounts would be disclosed, thereby lessening their expectation of privacy."  Regarding the public interest, "the Court has little doubt that disclosure of the withheld information would serve the public interest."  "In light of SBA's awesome statutory responsibility to administer the federal government's effort at keeping the nation's small businesses afloat amidst an economic and health crisis of unprecedented proportions, the public interest in learning how well the agency fulfilled its charge is particularly pronounced."  "Plaintiffs identify an array of issues surrounding SBA's handling of its CARES Act duties on which disclosure of the withheld information would shed light."  "To start, they point to questions surrounding the PPP's effectiveness in achieving its goal of supporting small businesses and encouraging them 'to keep their workers on the payroll.'"  "Relatedly, Plaintiffs raise questions about alleged inequities in the dispensing of PPP loans."  "Even more critical – and particularly relevant to the substantial public interest at hand – are the well-documented allegations of fraud related to the disbursement and receipt of CARES Act funds."  "No doubt, SBA's prior disclosures have proven useful in shining a light on programs that previously were entirely opaque."  "But many important aspects of their operation remain veiled."  "Disclosure of the identities of recipients of PPP loans of less than $150,000, as well as the sole proprietors and independent contractors receiving EIDL loans, will contribute substantially to public understanding of SBA's 'performance of its statutory duties.'"  Finally, "the Court finds that the balancing is not particularly close."  "The significant public interest in shedding light on SBA's administration of the PPP and EIDL program dramatically outweighs any limited private interest in nondisclosure."