National Security Counselors v. Central Intelligence Agency , 811 F.3d 22 ( 2016 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 15, 2015 Decided January 15, 2016
No. 14-5171
NATIONAL SECURITY COUNSELORS,
APPELLANT
v.
CENTRAL INTELLIGENCE AGENCY AND UNITED STATES
DEPARTMENT OF DEFENSE,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:11-cv-00442)
Bradley P. Moss argued the cause for appellant. With
him on the briefs was Kelly B. McClanahan.
Mark W. Pennak, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were
Benjamin C. Mizer, Acting Assistant Attorney General, and
Leonard Schaitman, Attorney.
Before: TATEL and PILLARD, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge PILLARD.
2
PILLARD, Circuit Judge: An individual who litigates pro
se is ineligible for attorney’s fees under the Freedom of
Information Act (FOIA); the same is not ordinarily true of an
organization that represents itself. This appeal asks whether a
particularly small nonprofit corporation that represented itself
is barred from recovering attorney’s fees under FOIA for the
same reasons that render a pro se individual ineligible.
Congress sought to encourage meritorious FOIA
litigation by making any “complainant” who substantially
prevails eligible to recover reasonable attorney’s fees. 5
U.S.C. § 552(a)(4)(E)(i). Courts have recognized an
exception from FOIA fee eligibility—which we have
described as “narrow”—barring attorney’s fees for legal work
by any individual who successfully represents himself pro se.
See Baker & Hostetler LLP v. U.S. Dep’t of Commerce, 473
F.3d 312, 324-25 (D.C. Cir. 2006) (citing Kay v. Ehrler, 499
U.S. 432, 437-38 (1991)); Burka v. U.S. Dep’t of Health &
Human Servs., 142 F.3d 1286, 1288-89 (D.C. Cir. 1998).
That exception is consistent with the broad statutory text of
FOIA’s fee provision because the statutory reference to
“attorney” fees contemplates an agency relationship that no
individual can have with her- or himself. See Burka, 142 F.3d
at 1288 (citing Kay, 499 U.S. at 435-36). It is the agency
relationship between a lawyer and client that serves fee-
shifting’s goal of enlarging access to independent, objective
legal advice. Id. Thus, although pro se individuals
sometimes prevail, they are ineligible for attorney’s fees.
The district court held National Security Counselors, Inc.
(NSC), a small, nonprofit corporation registered in Virginia,
ineligible for fees. A lawyer who was one of the firm’s three
co-founders and serves as its Executive Director represented
NSC in litigation to obtain, under FOIA, documents that the
government initially withheld. The court emphasized that the
3
attorney does virtually all of NSC’s work, including the legal
work for which it seeks fees in this case. It therefore treated
NSC as “a one-man operation” ineligible for fees under the
pro se litigant exception. Nat’l Sec. Counselors v. CIA, 15 F.
Supp. 3d 88, 93 (D.D.C. 2014).
The district court failed to account correctly for NSC’s
status as a nonprofit corporation. The Supreme Court has
drawn a clear distinction between an “organization, which is
always represented by counsel,” and a pro se individual. Kay,
499 U.S. at 436 n.7. We have drawn the same line between
organizations and individuals and held that “an organization
remains eligible for attorney’s fees even when it represents
itself in litigation.” Baker, 473 F.3d at 315 (fees under
FOIA); accord Bond v. Blum, 317 F.3d 385, 399-400 (4th Cir.
2003) (fees under 17 U.S.C. § 505); Gold, Weems, Bruser,
Sues & Rundell v. Metal Sales Mfg. Corp. (Gold), 236 F.3d
214, 218-19 (5th Cir. 2000) (fees under the Louisiana Open
Account Statute). In keeping with Kay, Baker, and the
decisions of our sister circuits, we hold that a corporation with
a legal identity distinct from the attorney who represents it in
litigation is eligible to recover attorney’s fees under FOIA.
Because NSC is such a corporation, it is not barred by the pro
se litigant exception.
I.
NSC is a tax-exempt, nonprofit Virginia corporation. In
2009, Kelly B. McClanahan co-founded NSC with Bradley P.
Moss and Sean Heare. The record sheds light on the firm’s
leadership and organizational structure. NSC operated
initially as a tax-exempt, public-interest nonprofit association.
It was established to serve four primary objectives:
[1] to lawfully acquire from the government material
related to national security matters and distribute it to
4
the public, [2] to use this material in the creation of
original publications discussing the respective
subjects, [3] to advocate for intelligent reform in the
national security and information and privacy arenas,
and [4] to provide a low-cost alternative to certain
deserving clients involved in security law or
information and privacy law-related proceedings.
J.A. 26 (quoting http://nationalsecuritylaw.org).
In January 2011, the organization took the further step of
incorporating under Virginia law. Since then, it has
conducted its activities as a nonprofit corporation under the
name National Security Counselors, Inc. Virginia law
imposes governance obligations on nonprofit corporations
like NSC. Anyone acting as a director to such a corporation
owes a duty of loyalty to the interests of the corporation and
must guard against conflicts of interest. See Byelick v.
Vivadelli, 79 F. Supp. 2d 610, 623 (E.D. Va. 1999); see also
Dodge v. Trs. of Randolph-Macon Woman’s Coll., 661 S.E.2d
805, 809 (Va. 2008) (applying corporate directors’ duties to
directors of nonstock charitable corporation). A director must
discharge all directorial duties “in accordance with his [or
her] good faith business judgment of the best interests of the
corporation.” Va. Code § 13.1-870(A); see also Lake
Monticello Owners’ Ass’n v. Lake, 463 S.E.2d 652, 656 (Va.
1995). Virginia law subjects a nonprofit corporation like
NSC to corporate recordkeeping requirements related to
meetings, accounting, membership, articles of incorporation,
and bylaws. See Va. Code § 13.1-932(A)-(C), (E).
Record evidence identifies three NSC board members—
Kelly McClanahan, Bradley Moss, and Sean Heare—each of
whom wears multiple hats in working part time for NSC.
McClanahan, who specializes in national security and
5
information privacy law, is NSC’s CEO and Executive
Director. He is an experienced litigator of whistleblower and
FOIA matters who has dedicated much of his legal career to
advocating for government transparency in the national
security arena. McClanahan serves as the organization’s lead
counsel in all cases before federal agencies and courts. He
signs and submits all FOIA requests on NSC’s behalf and acts
as the principal liaison between NSC and federal agencies.
He is often the sole attorney of record on NSC’s cases, with
“Of Counsel” attorneys and a “rotating class of legal interns”
sometimes supporting those litigation efforts. J.A. 105.
Moss is NSC’s Deputy Executive Director and the
corporation’s registered agent. According to McClanahan’s
declaration, Moss “occasionally” “serves in an attorney
capacity” for NSC and has appeared on the organization’s
behalf in at least one FOIA case. J.A. 105; see also Docket,
Nat’l Sec. Counselors v. CIA, No. 12-284 (D.D.C.). Heare is
NSC’s Information Director and serves as the organization’s
information security expert.
In pursuit of its stated public-interest goal to increase the
transparency of the national security activities of the United
States government, NSC frequently requests documents from
federal agencies under FOIA. NSC also litigates cases, both
in pursuit of its own FOIA requests, see, e.g., J.A. 18; Nat’l
Sec. Counselors v. DOJ, No. 15-5117 (D.C. Cir. 2015); Nat’l
Sec. Counselors v. CIA, No. 12-284 (D.D.C.); Nat’l Sec.
Counselors v. CIA, No. 11-443 (D.D.C.), and on behalf of
other clients with national-security-related claims, see, e.g.,
Mobley v. CIA, 806 F.3d 568 (D.C. Cir. 2015).
Between April and December 2010, NSC submitted four
FOIA requests for disclosure of specified records of the
Central Intelligence Agency and the Defense Intelligence
6
Agency. Each of the requests stated that NSC was “a non-
profit organization under Virginia law.” J.A. 65, 71, 76, 82.
Unsatisfied with the agencies’ responses to those requests,
NSC filed this lawsuit, accompanied by NSC’s corporate
disclosure statement as required under Local Civil Rule 7.1. 1
McClanahan was lead counsel for NSC. He was the only
lawyer who entered an appearance in the district court. After
a couple years of dueling motions and settlement negotiations,
NSC was satisfied with the agencies’ identification and
disclosures of responsive documents and so voluntarily
dismissed the suit.2
NSC petitioned under FOIA for $14,794.90 in costs and
attorney’s fees for McClanahan’s work between January 27,
2011, and June 17, 2013. See NSC Fee Petition at 1, Nat’l
Sec. Counselors v. CIA, No. 11-442 (D.D.C.), ECF No. 55.
Without taking a position as to whether it might have been
eligible for them, NSC did not seek fees for work in the
underlying agency proceedings during the period when it was
operating as a tax-exempt association prior to its
incorporation. Nor did it request fees for work performed for
NSC by legal professionals other than McClanahan.
1
Local Civil Rule 7.1 applies only to corporations and requires
their counsel of record to file a “certificate listing any parent,
subsidiary or affiliate of [the corporation] which, to the knowledge
of counsel, has any outstanding securities in the hands of the
public.” D.D.C. Local Civ. R. 7.1.
2
For purposes of this appeal, we give no consideration to NSC’s
references to statements purportedly made by the parties during the
course of settlement negotiations. As NSC concedes, those alleged
statements were “not part of the record below,” Appellant’s Reply
6, and therefore fall outside the appellate record. See Fed. R. App.
P. 10; Swanson Grp. Mfg. LLC v. Jewell, 790 F.3d 235, 240 (D.C.
Cir. 2015).
7
On February 2, 2014, the district court denied NSC’s fee
petition. The court relied on the Supreme Court’s decision in
Kay to hold NSC ineligible for attorney’s fees. The court
correctly observed that “this Circuit permits an ‘organization’
to recover attorney’s fees for its ‘in-house counsel’ where the
attorney acts as an agent on behalf of the corporation.” Nat’l
Sec. Counselors, 15 F. Supp. 3d at 92. But NSC was not an
eligible organization, in the court’s view, because
McClanahan does the lion’s share of NSC’s work and plays a
leadership role in the nonprofit corporation and NSC was the
only client in the case. The judge saw “little, if any,
distinction” between NSC and McClanahan, id., and so cast
NSC as essentially McClanahan’s “one-man operation,” id. at
93. Although she acknowledged NSC’s corporate status and
website, and mentioned unrefuted evidence that people other
than McClanahan act as officers and part-time staff of NSC,
the judge nonetheless demanded further evidence that NSC
“publicly identifies itself as an incorporated entity, or in any
other way distinct from Mr. McClanahan.” Id. She noted that
McClanahan’s colleague Bradley Moss appeared at least once
as NSC’s attorney in a different FOIA case, but discounted
that as “too slim a reed” to overcome other evidence showing
that NSC is nothing more than “Mr. McClanahan as a sole
practitioner.” Id. She emphasized McClanahan’s
statement—made in another case in which NSC sought
discovery of information subject to a protective order—that,
as NSC’s counsel and Executive Director, he was “in effect
both the counsel and the party.” Id. The court thus treated
NSC in this case not as a “client separate from Mr.
McClanahan,” but equivalent to a pro se individual “ineligible
for an award of attorney’s fees” under Kay and Burka. Id. at
93-94.
NSC timely sought reconsideration of the fee-denial
order under Federal Rules of Civil Procedure 59 and 60. The
8
district court denied the motion in relevant part, reaffirming
its determination that NSC is ineligible for attorney’s fees
under FOIA because “McClanahan is National Security
Counselors.” Order Granting in Part and Denying in Part
Pl.’s Mot. for Recons. at 3, Nat’l Sec. Counselors v. CIA, No.
11-442 (D.D.C.), ECF No. 73. 3 This appeal followed.
II.
We review de novo questions of law, including the legal
standards governing fee eligibility under FOIA. See Edmonds
v. FBI, 417 F.3d 1319, 1322 (D.C. Cir. 2005); see also
Pietrangelo v. U.S. Army, 568 F.3d 341, 343 (2d Cir. 2009);
cf. Gold, 236 F.3d at 216 (concluding that “[t]he district
court’s resolution of whether an attorney representing himself
could collect fees under the open account statute is a
conclusion of law we review de novo”).
A.
The question in this appeal is whether NSC is ineligible
for attorney’s fees under FOIA’s fee-shifting provision. The
government invokes the judicially created exception that bars
individuals who represent themselves from recovering fees.
Under that exception, individuals who successfully pursue
their own cases pro se, whether they are lawyers or not, are
ineligible to recover attorney’s fees. Kay, 499 U.S. at 433-36;
Baker, 473 F.3d at 324; Burka, 142 F.3d at 1289-90. NSC is
ineligible by the same token, the government contends,
because “McClanahan acted as a pro se attorney in this
matter.” Appellees’ Br. 15. NSC, for its part, contends that it
3
On reconsideration, the District Court correctly determined that
NSC was entitled to the $350 in litigation costs irrespective of
whether NSC is, in effect, a pro se individual litigant ineligible for
attorney’s fees.
9
has a legal status distinct from its in-house counsel,
McClanahan, and is therefore not ineligible for fees under
Kay and Burka. We agree with NSC.
While individuals who represent themselves may not
recover fees, organizations that represent themselves may so
recover. Baker, 473 F.3d at 324. The question here is
whether NSC’s characteristics, including its small size and
McClanahan’s large role within it, warrant treating NSC like
an individual rather than an organization. We think they do
not. In reaching this conclusion, we are influenced by the
statutory text, the Supreme Court’s decision in Kay, the
ensuing decisions of our court, and those of other circuits.
FOIA authorizes district courts to “assess against the
United States reasonable attorney fees and other litigation
costs reasonably incurred in any case . . . in which the
complainant has substantially prevailed.” 5 U.S.C.
§ 552(a)(4)(E)(i). The statute contains no express limitation
on who counts as an eligible “complainant” or whose work is
compensable by payment of “attorney fees.” See Baker, 473
F.3d at 324. We have interpreted section 552(a)(4)(E)(i) to
require a prevailing plaintiff to show that it is both eligible for
and entitled to fees. McKinley v. Fed. Hous. Fin. Agency, 739
F.3d 707, 710 (D.C. Cir. 2014). Once eligibility is
established, a plaintiff must further demonstrate entitlement to
fees “under the four criteria that the court weighs in
determining whether attorney’s fees are appropriate.” Burka,
142 F.3d at 1288 (listing the criteria as “(1) the public benefit
derived from the case; (2) the commercial benefit to the
plaintiff; (3) the nature of the plaintiff’s interest in the
records; and (4) the reasonableness of the agency’s
withholding of the requested documents” (quotation marks
omitted)). This appeal addresses only the threshold question
whether, assuming NSC substantially prevailed, it is eligible
10
for fees; we do not reach the further questions whether NSC
substantially prevailed or whether, if eligible, NSC is entitled
to fees. 4
The Supreme Court in Kay held that an individual who
represented himself and prevailed in his civil rights case was
ineligible for attorney’s fees under the civil rights fee-shifting
statute, 42 U.S.C. § 1988. 499 U.S. at 435-37. The Court
concluded that “[n]either the text of the statute [n]or its
legislative history provides a clear answer” to whether pro se
litigants are eligible for fees, but noted that section 1988’s
provision for “attorney” fees makes it likely that Congress
“contemplated an attorney-client relationship as the predicate
for an award under § 1988.” Id. at 435-36. Congress enacted
section 1988 to ensure “the effective prosecution of
meritorious claims,” id. at 437, by enabling victims of civil
rights violations to vindicate their rights with the assistance of
competent and independent counsel, id. at 436. The Court
reasoned that authorizing fee awards for pro se plaintiffs
would not serve the goal of promoting “the benefit of the
advice and advocacy of an independent attorney,” id. at 435,
but instead might encourage self-representation by any
plaintiff who “considered himself competent to litigate on his
own behalf,” id. at 438. The Court identified the “overriding
statutory concern” as “obtaining independent counsel for
victims of civil rights violations,” id. at 437, and concluded
that “[t]he statutory policy of furthering the successful
prosecution of meritorious claims is better served by a rule
that creates an incentive to retain counsel in every such case,”
id. at 438.
Kay distinguishes individuals who represent themselves
from organizations that do the same. Id. at 436 n.7. The
4
Because the district court denied NSC’s fee petition solely on
eligibility grounds, it did not consider the four entitlement factors.
11
Court recognized that “an organization is not comparable to a
pro se litigant because the organization is always represented
by counsel, whether in-house or pro bono, and thus, there is
always an attorney-client relationship.” Id. The statutory
focus on “an attorney-client relationship as the predicate for
an award,” id. at 436, therefore supports fees for self-
representing organizations even while it weighs against them
for pro se individuals.
For many years before Kay, “it was settled law in this
circuit that attorneys who prevailed in FOIA actions brought
on their own behalf were eligible to obtain attorney’s fees.”
Burka, 142 F.3d at 1288. Indeed, before Kay, we had held
that even non-attorneys who prevailed could recover FOIA
fees. See Cox v. U.S. Dep’t of Justice, 601 F.2d 1, 5-6 (D.C.
Cir. 1979). Kay, however, constrained us to change our
position. In Benavides v. Bureau of Prisons, 993 F.2d 257(D.C. Cir. 1993), we applied to a pro se non-attorney under
FOIA the fee eligibility exception for pro se individuals that
Kay had recognized under section 1988. Id. at 259-60. Five
years later in Burka, we again applied Kay in the FOIA
context and held that attorneys who proceed pro se are
equally ineligible for FOIA fees. 142 F.3d at 1289-90.
We then had occasion in Baker to consider how Kay and
its narrow pro se exception might apply to a law firm
partnership seeking fees for having represented itself in
litigation. Noting that FOIA’s fee provision contains “no
exception for a law firm that represents itself,” we held that
the firm qualified under FOIA’s plain language as a
“complainant” eligible for fees. See 473 F.3d at 324-26
(citing 5 U.S.C. § 552(a)(4)(E)(i)). Kay did not instruct
otherwise, in our view, for it only removed “individual
plaintiffs who represent themselves” from the universe of fee
eligibility. Id. at 325.
12
Baker is consistent with the law of other circuits, which
have concluded that, for fee-eligibility purposes, an
organization is different from an individual litigant. We are
not aware of any federal court of appeals that has relied on
Kay’s pro se litigant exception to deny attorney’s fees to any
kind of self-representing organization, much less a bona fide
corporation represented by in-house counsel. For example,
the Fourth Circuit in Bond held that a law firm’s
representation by its own lawyers did not render the firm
ineligible for fees, recognizing that there can be the requisite
agency relationship even where there is a close alignment and
institutional connection between attorney and client, as is the
case when “a State’s own attorney represent[s] the State” or
“in-house counsel represent[s] the corporation.” 317 F.3d at
400. That court concluded that “the principles of Kay” simply
“do not apply where entities represent themselves through in-
house or pro bono counsel.” Id. at 399. The Fifth Circuit
understood Kay in a similar manner and held that, “when an
organization is represented by an attorney employed by the
organization, the attorney has a status separate from the
client.” Gold, 236 F.3d at 219-20. Relying on the same
distinction between organizations and individuals, the Eighth
Circuit saw “no meaningful distinction between a law firm
and any other organization on the issue of whether there
exists an attorney-client relationship between the organization
and its attorney” and so held that, “where an attorney
represents his or her own firm, Kay does not forbid the award
of attorneys’ fees.” Treasurer, Trs. of Drury Indus., Inc.
Health Care Plan & Trust v. Goding, 692 F.3d 888, 898 (8th
Cir. 2012) (emphasis added).
Consistent with that line of precedent, we hold that a
bona fide corporation with a legally recognized, distinct
identity from the natural person who acts as its lawyer is
eligible for attorney’s fees under FOIA provided it
13
substantially prevails. Even a small corporation like NSC is
generally eligible for fees under FOIA. The existence of an
entity, formally separate from the natural person acting as its
lawyer, makes the difference. That conclusion is strongly
presaged by Baker, which speaks in categorical terms: Kay
“made crystal clear” that the “exception for individual
plaintiffs who represent themselves does not apply to
organizations.” Baker, 473 F.3d at 325 (emphasis in
original). “An attorney who works for a law firm is certainly
no less independent than an attorney who works for a
corporation.” Id. Lawyers represent many different kinds of
organizations, but there is always an attorney-client
relationship between an organization and its lawyer. We thus
declined “to slice and dice Kay’s conclusion regarding
‘organizations’ and apply footnote 7 to some organizations
but not others.” Id.The relevant doctrinal line is between a natural person
going it alone, who is ineligible, and a person or organization
who is represented by counsel and thus eligible for attorney’s
fees. As the Supreme Court explained in Kay, an organization
“is always represented by counsel,” but an individual is not.
499 U.S. at 436 n.7. The attorney-client relationship between
an organization and its counsel requires the lawyer to step into
a role, distinct from his personal capacity, in which he is
legally and ethically constrained as an independent, zealous,
and loyal representative of the organization. See A.B.A.
Model R. Prof’l Conduct 1.3 cmt. 1 (2013); A.B.A. Model R.
Prof’l Conduct 1.13(b) (2013); cf. Kay, 499 U.S. at 436 n.7;
Baker, 473 F.3d at 325. Even a lawyer for an organization he
founded and runs must fulfill his professional lawyering
responsibilities to that organization. He may not merely serve
his own preferences, moods, or tastes. He is legally and
ethically required to be loyal to client interests, as distinct
from his own. See, e.g., In re Gonzalez, 773 A.2d 1026, 1031
14
(D.C. 2001) (“[T]he attorney owes a fiduciary duty to his
client and must serve the client’s interests with the utmost
loyalty and devotion.”). An attorney who works in an
organization has a legally recognized, distinct identity from
that of the organization, putting the lawyer in an agency
relationship “sufficiently independent to ensure effective
prosecution of claims, thus justifying fees.” Baker, 473 F.3d
at 325 (citing Kay, 499 U.S. at 436 n.7).
The distinction between organizations and individuals is
all the more pronounced in the context of a corporation:
indeed, it is well settled that “a corporation may appear in the
federal courts only through licensed counsel.” Rowland v.
Cal. Men’s Colony, 506 U.S. 194, 201-02 (1993) (emphasis
added); see also Embassy of Fed. Rep. of Nigeria v.
Ugwuonye, 901 F. Supp. 2d 92, 97 (D.D.C. 2012) (noting that
even though individual could appear pro se in his personal
capacity, he cannot do so as the trustee on behalf of a
company). The law treats corporations—even small ones—as
distinct from the natural persons that create or work for them.
A corporation is “viewed as a distinct entity, even when it is
wholly owned by a single individual.” Quinn v. Butz, 510
F.2d 743, 757 (D.C. Cir. 1975) (footnote omitted).
In various contexts, the law takes seriously the formal
line between a corporation and a natural person, even when
the corporation is, in effect, a one-person firm. See, e.g.,
Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161-
65 (2001) (holding that closely held corporation and its sole
shareholder are distinct for purposes of federal Racketeer
Influenced and Corrupt Organizations Act). Individuals
experience burdens as well as benefits associated with the
separation between a company’s rights and their own. See,
e.g., United States v. White, 322 U.S. 694, 699 (1944)
(holding that Fifth Amendment privilege against self-
15
incrimination “is a purely personal one” that “cannot be
utilized by or on behalf of any organization, such as a
corporation”); In re Grand Jury Subpoena Issued June 18,
2009, 593 F.3d 155, 158 (2d Cir. 2010) (holding that “a one-
person corporation cannot avail itself of the Fifth Amendment
privilege” to resist grand jury subpoena of corporate records);
Williams v. Mordkofsky, 901 F.2d 158, 164 (D.C. Cir. 1990)
(holding that individual owners lacked standing to assert the
loss of a business opportunity that belonged to their firm and
not to them individually, noting that, “[h]ad [the corporation]
declared bankruptcy, it is certain that the [owners] would not
be so quick to request that we disregard the corporate form”).
“One-person corporations are authorized by law and should
not lightly be labeled sham.” Nelson v. Adams USA, Inc., 529
U.S. 460, 471 (2000).
It makes sense to respect the corporate form and the
distinctness of the lawyer from the organization, and to hold
Kay’s pro se litigant exception inapplicable in cases of
corporate self-representation. To incorporate NSC as a
Virginia “nonstock corporation,” its founders were required to
expend time and resources drafting articles of incorporation,
filing those articles with the Office of the Clerk and paying
the filing fee, obtaining a certificate of incorporation,
delineating a process for the selection of directors, and
appointing a registered agent, among other requirements. See,
e.g., Va. Code Ann. § 13.1-804 (enumerating the filing
requirements for Virginia nonstock corporations); id. § 13.1-
819 (listing requirements for articles of incorporation); id.
§ 13.1-829 (setting forth restrictions on names); cf. Wagner v.
Fed. Election Comm’n, 793 F.3d 1, 30 (D.C. Cir. 2015) (en
banc) (recognizing “the not insignificant costs involved in
both establishing and operating as an LLC”).
16
In addition, NSC’s section 501(c)(3) status places
operational limits on the firm’s activities and further
constrains its interests, as distinct from those of its board or
staff. To qualify for tax-exempt status under section
501(c)(3) of the Internal Revenue Code, a corporation must
serve defined public interests and operate under certain
constraints. A corporation like NSC must be “organized and
operated exclusively for . . . charitable . . . or educational
purposes . . . ,” 26 U.S.C. § 501(c)(3), and it must “engage[]
primarily in activities which accomplish” such purposes, 26
C.F.R. § 1.501(c)(3)-1(c)(1). Because a tax-exempt
organization must “serve[] a public rather than a private
interest,” it may not be “organized or operated for the benefit
of private interests such as designated individuals, the creator
or his family, shareholders of the organization, or persons
controlled, directly or indirectly, by such private interests.”
Id. § 1.501(c)(3)-1(d)(ii).
The government downplays the legally established
distinction between NSC and its attorney and contends that
NSC has failed to “demonstrate a sufficiently independent
arms-length relationship between the client and the attorney to
offer ‘independent third party’ legal advice and assistance.”
Appellees’ Br. 31. But that argument confuses the rule’s
rationale with the rule itself. Precedent does not call on courts
to evaluate the objectivity and independence of each
particular attorney-client relationship, or of counsel’s legal
advice in the individual case. Instead, the cases make
structural judgments at a higher level of generality,
distinguishing self-representing individuals, who are not
eligible for FOIA fees, from organizational litigants like
corporations, that are. See Baker, 473 F.3d at 325 (relying on
Kay, 499 U.S. at 436 n.7). No doubt, sometimes an individual
gives himself objective and highly effective advice, and
attorney advice to organizational clients may at times lack
17
independent, arms-length judgment. As we understand the
binding precedent, however, such facts would neither render
eligible the pro se individual whose legal decisions are
objectively sound, nor defeat the eligibility of a prevailing
corporation whose lawyer’s advice lacked independence. See
id. Our precedent instead looks to an entity’s status as a
proxy, however rough, for the independence and objectivity
of the advice; it does not require an organization-by-
organization, attorney-by-attorney, or case-by-case inquiry
into either of those attributes.
For example, even as the Supreme Court in Kay held pro
se litigants ineligible for fees because of the risk that they
would lack “the judgment of an independent third party” and
be governed by “emotion” rather than “reason,” 499 U.S. at
437, the Court acknowledged the reality that the plaintiff
before it “obviously handled his professional responsibilities
. . . in a competent manner,” 499 U.S. at 435. Conversely,
when the Fourth Circuit in Bond held that a law firm partner
was eligible for fees for representing his firm, it
acknowledged the “increased risk of emotional involvement
and loss of independence” when a firm’s own lawyers
represent it. 317 F.3d at 399. But that was not dispositive
because the firm “still remain[ed] a business and professional
entity distinct from its members” with “distinct interests.” Id.
at 400. 5 The Bond court thus categorically distinguished
5
We implicitly recognized in Burka the importance of the formal
identification of the party in interest. The plaintiff there claimed he
had clients apart from himself, but he was ineligible for attorney’s
fees because he “chose to bring the case in his own name and to
maintain the case in his own name throughout the litigation.” 142
F.3d at 1290; see also Pub. Emps. For Envtl. Responsibility v. U.S.
Int’l Boundary & Water Comm’n, 968 F. Supp. 2d 85, 87 (D.D.C.
2013) (observing that “it is only the party-in-interest—in other
words, the party in whose name the action was brought by or
18
precedent denying fees to parents representing their own
children under the Individuals with Disabilities Education
Act, who had been deemed “generally incapable of
exercising sufficient independent judgment on behalf of their
children to ensure that ‘reason, rather than emotion,’ will
dictate the conduct of the litigation.” Bond, 317 F.3d at 399(quoting Doe v. Bd. of Educ. of Balt. Cty., 165 F.3d 260, 263
(4th Cir. 1998)). Bond, by contrast, addressed a distinct type
of circumstances “where entities represent themselves through
in-house or pro bono counsel.” Id.To be sure, Kay teaches that the purpose of the pro se
litigant exception to fee eligibility is to avoid creating a
disincentive to hire independent and objective counsel. 499
U.S. at 438. The exception serves that purpose because it
takes away the plaintiff’s temptation to represent himself and
keep the fees as reimbursement for his own time if he
prevails. Removing that temptation encourages the individual
to hire a lawyer and thereby gain the benefit of dispassionate
legal advice. But we need not worry that a corporation will
miss out on independent advice when, as happened here, it
opts for in-house over outside counsel. As Kay highlighted,
there is an attorney-client relationship between in-house
counsel and a corporation, id., and, as we have explained, that
relationship is not an empty formalism. Even if in-house
counsel plays a major operational role within the corporation,
as McClanahan did here, and is personally committed to the
objectives of a corporation, as many lawyers are, a lawyer
wearing two professional hats is legally required to maintain
the distinction between his roles as a lawyer and a director or
member of the corporation. Here, for example, McClanahan,
in his capacity as the corporation’s lawyer, was constrained to
against—that concerns the court; no one else is considered a pro se
litigant for attorneys’-fees purposes”).
19
act to further NSC’s public-regarding, nonprofit objectives,
and to respect its board-governed, corporate interests as
independent of his own. See, e.g., A.B.A. Model R. Prof’l
Conduct 1.13 (identifying ethical constraints when client is an
organization).
The government nevertheless suggests that we conduct a
case-specific, fact-intensive inquiry into the nature of the
specific organization and its relationship to its in-house
attorney. That approach strikes us as anomalous and
untenable for at least two reasons. First, it likely would result
in differing treatment among and within categories of
organizational plaintiffs—the very result we sought to avoid
in Baker by cautioning against allowing fees to some self-
representing organizations and not others. 473 F.3d at 325.
Second, even as it would have us disregard the familiar legal
distinction between organizations and individuals, the
government has not proposed a readily administrable and
clear test for determining whether an organization is
independent enough to be eligible for fees under Baker. Proof
that a putative organization lacks a legal identity distinct from
that of the natural person(s) that comprise it might suffice to
render it ineligible for FOIA fees, but the government has not
persuasively made that case here.
B.
The district court applied the wrong legal standard and
thus erred in concluding that NSC is ineligible for fees as a
pro se individual litigant under Kay and Burka.
There is no question that NSC is a bona fide corporation,
and that it has been during the entirety of this litigation and
20
the underlying work for which NSC seeks fees. 6 In support of
its fee petition, NSC established that it was a bona fide
nonprofit corporation with its own legal identity. The
government, by contrast, made no showing that could have
supported the district court’s decision to disregard NSC’s
corporate status. It failed to present evidence that, although
duly incorporated, NSC is “simply the alter ego” of
McClanahan. Quinn, 510 F.2d at 758. The government did
not demonstrate that McClanahan dominates NSC in such a
way that “negate[s] [the corporation’s] separate personality.”
Id.; see also Founding Church of Scientology of Wash., D.C.,
Inc. v. Webster, 802 F.2d 1448, 1452 (D.C. Cir. 1986)
(“Under the alter ego theory, the court may ignore the
existence of the corporate form . . . .”). Neither the small size
of a corporation nor the “deliberate adoption and use of a
corporate form in order to secure its legitimate advantages”
are reasons to apply the pro se exception. Quinn, 510 F.2d at
758. McClanahan’s pervasive involvement in the
corporation’s operations and litigation efforts does not negate
NSC’s separate corporate status.
Finally, the government contends that the district court’s
holding is “[m]ost tellingly” supported by NSC’s statement
regarding civil discovery in a different case before a different
judge, Appellees’ Br. 33, but that statement cannot bear the
weight the government assigns it. The government quotes
McClanahan, as NSC’s Executive Director and counsel of
record in that other case, saying that he was “in effect both the
counsel and the party.” Id. (quoting J.A. 101 n.1 (Plaintiff’s
Reply In Support of its Motion to Compel Compliance With
6
NSC does not seek fees for the administrative FOIA work it did
before it filed the complaint in this case, when NSC was an
unincorporated nonprofit association. We therefore need not decide
in this appeal which other kinds of organizations might be eligible
for FOIA fees.
21
The Court’s 15 August 2012 Order, Nat’l Sec. Counselors v.
CIA, No. 11-00443 (D.D.C.))). NSC’s assertion of identity
between attorney and client was made in the materially
distinct context of eligibility to receive in discovery
information that the government asserted would be exempt
from general public disclosure under FOIA. NSC proposed a
protective order to keep the information confidential, and
noted that, “[w]ith respect to the general rule that it is not
good practice to provide information to a party’s counsel that
cannot be shared with the party itself, such is not the case
here, since the undersigned is both NSC’s counsel and the
Executive Director of NSC, in effect both the counsel and the
party.” J.A. 101 n.1. The asserted functional identity of NSC
and its counsel for purposes of maintaining confidentiality
does not in any way nullify NSC’s status as an independent
corporate entity or negate the attorney-client relationship
between the corporation and McClanahan, who presumptively
provides his client firm with objective and independent legal
advice.
Because the government did not challenge NSC’s
corporate status, the district court should have concluded that
NSC was not ineligible for fees under the pro se litigant
exception. In the absence of grounds in the record on which a
reasonable factfinder could conclude that NSC was not a
corporation legally distinct from McClanahan, NSC remained
eligible for fees, for it did not fall into the “narrow exception”
to fee eligibility for pro se litigants. Baker, 473 F.3d at 324.
By holding otherwise, the court effectively disregarded the
corporate form without a legal or factual basis for doing so.
22
We therefore reverse the district court’s holding that NSC
is ineligible for fees under FOIA, and remand to the district
court for further proceedings consistent with this opinion. 7
So ordered.
7
In light of our disposition of NSC’s appeal of the initial fee-denial
order, we need not reach the government’s claim that NSC failed to
give sufficient notice of its intent to appeal the order denying
reconsideration.