Bradley Waterman v. IRS ( 2023 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 12, 2022 Decided February 21, 2023
No. 21-5258
BRADLEY S. WATERMAN,
APPELLANT
v.
INTERNAL REVENUE SERVICE,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:16-cv-01823)
David C. Vladeck argued the cause and filed the briefs for
appellant.
Julie Ciamporcero Avetta, Attorney, U.S. Department of
Justice, argued the cause for appellee. With her on the brief
was Jennifer M. Rubin, Attorney.
Before: WALKER, Circuit Judge, and ROGERS and TATEL,
Senior Circuit Judges.
Opinion for the Court filed by Senior Circuit Judge
ROGERS.
2
Opinion concurring in part and dissenting in part filed by
Circuit Judge WALKER.
ROGERS, Senior Circuit Judge: The Secretary of the
Treasury is empowered to “regulate the practice of
representatives of persons before the Department of the
Treasury.” 31 U.S.C. § 330. Pursuant to this authority, the
Office of Professional Responsibility (“OPR”) investigates
allegations of practitioner misconduct before the Internal
Revenue Service (“IRS”). 31 C.F.R. § 10.1. Bradley
Waterman sued the IRS under the Freedom of Information Act
(“FOIA”), 5 U.S.C. § 552, seeking disclosure of documents
relating to the OPR’s investigation of a misconduct report on
him. The district court ruled that the four documents were
protected from disclosure by FOIA Exemption 5’s deliberative
process privilege and granted summary judgment to the IRS.
Waterman contends that the withheld documents are
nondeliberative and therefore unprotected by Exemption 5.
For the following reasons, we affirm in part and reverse in part.
I.
“The fundamental principle animating FOIA is public
access to government documents.” Valencia-Lucena v. U.S.
Coast Guard, 180 F.3d 321, 325 (D.C. Cir. 1999). FOIA
requires federal agencies, “upon any request for records,” to
“make the records promptly available to any person.” 5 U.S.C.
§ 552(a)(3). While the Act “reflects a general philosophy of
full agency disclosure,” Pub. Citizen, Inc. v. Off. of Mgmt. &
Budget, 598 F.3d 865, 869 (D.C. Cir. 2010) (internal quotation
marks omitted), Congress also realized that “legitimate
governmental and private interests could be harmed by release
of certain types of information,” AquAlliance v. U.S. Bureau of
Reclamation, 856 F.3d 101, 102 (D.C. Cir. 2017) (quoting
Dep’t of Just. v. Julian, 486 U.S. 1, 8 (1988)). Consequently,
3
FOIA exempts nine categories of documents from “the
government’s otherwise broad duty of disclosure.” Id. at 103.
Exemption 5 shields from disclosure “inter-agency or
intra-agency memorandums or letters that would not be
available by law to a party other than an agency in litigation
with the agency.” 5 U.S.C. § 552(b)(5). The exemption
incorporates the deliberative process privilege, which protects
“documents reflecting advisory opinions, recommendations
and deliberations comprising part of a process by which
government decisions and policies are formulated.” NLRB v.
Sears, Roebuck & Co., 421 U.S. 132, 150 (1975) (internal
quotation marks omitted). To properly invoke Exemption 5, an
agency must show that withheld documents are “both
predecisional and deliberative.” U.S. Fish & Wildlife Serv. v.
Sierra Club, 141 S. Ct. 777, 788 (2021). A document is
predecisional if it was “generated before the agency’s final
decision on the matter” and deliberative if it was “prepared to
help the agency formulate its position.” Id. at 786.
The “ultimate purpose” of the deliberative process
privilege is “to prevent injury to the quality of agency
decisions.” Sears, 421 U.S. at 151. It reflects the view that if
agencies were “to operate in a fishbowl, the frank exchange of
ideas and opinions would cease and the quality of
administrative decisions would consequently suffer.” Dudman
Commc’ns Corp. v. Dep’t of the Air Force, 815 F.2d 1565,
1567 (D.C. Cir. 1987) (internal quotation marks and citation
omitted). The privilege also serves “to protect against
confusing the issues and misleading the public by
dissemination of documents suggesting reasons and rationales
for a course of action which were not in fact the ultimate
reasons for the agency’s action.” Coastal States Gas Corp. v.
Dep’t of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980).
4
Waterman is a tax controversy attorney who regularly
represents clients before the IRS. In 2012, Waterman’s client
approached the Tax Exempt Bonds office of the IRS to resolve
its potential liability under Treasury regulations resulting from
the use of a tax-accounting method known as “loan swapping.”
When no settlement was reached, the office began an audit of
the bonds issued by Waterman’s client. Internal Revenue
Agent Michael Marchetti conducted the audit. Marchetti
prepared a Suspected Practitioner Misconduct Report, which
was filed with the OPR on March 17, 2014. The Report alleged
that Waterman had unreasonably delayed the prompt
disposition of the client’s case before the IRS in violation of its
rules of practice. Two memoranda — one authored by
Marchetti and the other by his supervisor, Chelsea Kelly —
were attached to the Report in support of Marchetti’s
allegations.
On September 10, 2014, Waterman was notified by the
OPR that it had received allegations that his conduct had
violated the IRS’s rules of practice and that, upon review, the
OPR had determined that the Report did not “warrant further
investigation or action.” Specifically, the letter stated that he
was suspected of violating Subpart B of § 10.23 of the
Regulations Governing Practice Before the IRS, which
prohibits practitioner conduct that “unreasonably delay[s] the
prompt disposition of any matter before the Internal Revenue
Service.” While the OPR had decided against taking further
action, the letter noted that “the conduct alleged, if true, does
constitute a technical violation of provision Circular 230 §
10.23,” and so urged Waterman to “modify [his] future conduct
accordingly.” The letter also advised him that the OPR would
retain the administrative file containing the allegations against
him for 25 years and that those allegations could be considered
as “cumulative conduct” in any future investigation.
5
Failing to obtain a copy of Marchetti’s Misconduct Report
in his correspondence with the OPR, on January 7, 2016,
Waterman filed a FOIA request with the IRS seeking access to
the Misconduct Report and “all documents prepared in
connection or otherwise relating” to it. In response, the IRS
conducted a search and located fifty-four pages of relevant
material of which it released thirty-four pages. Invoking FOIA
Exemptions 3 and 5, the IRS withheld four documents, twenty
pages in full and two pages in part. The IRS denied
Waterman’s internal appeal concerning the four withheld
documents.
After Waterman sued the IRS under FOIA to compel
disclosure of the withheld documents, Waterman v. IRS
(Waterman I), 288 F. Supp. 3d 206 (D.D.C. 2018), the IRS
located more responsive documents and released portions of
previously withheld documents. Four documents (sixteen
pages) remain in dispute. On cross-motions for summary
judgment, the IRS maintained, inter alia, that the withheld
documents were properly exempt from disclosure under FOIA
Exemption 5’s deliberative process privilege, supported by
affidavits by agency personnel and a Vaughn index, see
Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973). As relevant,
IRS attorney Elizabeth Rawlins’s declaration sets forth the
IRS’s “rationale for partial and full withholdings,” and
augments the Vaughn index’s description of the withheld
documents. The district court granted summary judgment to
the IRS, ruling that the withholdings were justified under
Exemption 5. Waterman I, 288 F. Supp. 3d at 209.
Upon Waterman’s appeal, this court remanded for the
district court to enter a finding on whether portions of the
withheld documents were “reasonably segregable.” Waterman
v. IRS, (Waterman II), 755 F. App’x 26, 27-28 (D.C. Cir. 2019).
The parties agreed on remand to in camera review of the
6
documents. After reviewing the documents in camera, the
district court again granted summary judgment for the IRS,
finding that the IRS had released all reasonably segregable
information and reaffirming that the documents had properly
been withheld under Exemption 5. Waterman v. IRS, No. 16-
1823, 2021 WL 4262722, at *3–5 (D.D.C. Sept. 20, 2021).
II.
This court’s review of the district court’s grant of summary
judgment is de novo. Reps. Comm. for Freedom of the Press v.
FBI, 3 F.4th 350, 361 (D.C. Cir. 2021). To prevail on summary
judgment, the IRS must demonstrate that it adequately
searched for records responsive to Waterman’s FOIA request
and that the withheld documents are protected by Exemption 5
because they are predecisional and deliberative. Id. at 362. It
can meet this burden “by submitting a Vaughn index, along
with affidavits from agency employees that describe the
justifications for nondisclosure with reasonably specific detail,
demonstrate that the information withheld logically falls within
the claimed exemption, and are not controverted by either
contrary evidence in the record nor by evidence of agency bad
faith.” Am. Immigr. Laws. Ass’n v. Exec. Off. Immigr. Rev.,
830 F.3d 667, 673 (D.C. Cir. 2016) (citing Vaughn, 484 F.2d
at 820) (internal quotation marks omitted).
Waterman contends that the withheld documents contain
only factual information and are therefore nondeliberative
records falling outside the scope of Exemption 5. Waterman
does not dispute that the withheld documents were
predecisional as to the OPR’s determination that disciplinary
proceedings were not warranted. Nor does he contest the
adequacy of the IRS’s search for responsive records. He also
acknowledges that the FOIA Improvement Act of 2016 does
not apply to his request, which was filed before the law took
7
effect. Pub. L. No. 114-185, 130 Stat. 538 (2016) (codified at
5 U.S.C. § 552(a)(8)(A)(i)).
“Purely factual material usually cannot be withheld under
Exemption 5 unless it reflects an exercise of discretion and
judgment calls.” Ancient Coin Collectors Guild v. U.S. Dep’t
of State, 641 F.3d 504, 513 (D.C. Cir. 2011) (internal quotation
marks omitted). The court has recognized that the fact-opinion
line “must not be applied mechanically.” Mapother v. Dep’t of
Just., 3 F.3d 1533, 1537 (D.C. Cir. 1993). Rather, the
legitimacy of withholding turns on “whether the selection or
organization of facts is part of an agency’s deliberative
process.” Ancient Coin Collectors, 641 F.3d at 513.
This court has consistently held that the deliberative
process privilege protects documents reflecting agency
officials’ selection and organization of facts to help the agency
formulate its position. In Montrose Chemical Corp. of
California v. Train, 491 F.2d 63, 65 (D.C. Cir. 1974), the court
affirmed the withholding of factual summaries of an
administrative record prepared by aides for the Administrator
of the Environmental Protection Agency to use in “his
consideration of [a] case.” In determining “what record
evidence would be important to the Administrator in making
his decision,” the court reasoned “the assistants were making
an evaluation of the relative significance of the facts recited in
the record,” which required them to “exercis[e] some kind of
judgment,” id. at 68, and, consequently, disclosure of the
summaries would expose the agency’s deliberative process, id.
at 68, 70-71. Applying Montrose’s logic, the court has
affirmed the withholding of “factual summaries . . . culled . . .
from the much larger universe of facts presented to it,” which
“reflect[ed] an exercise of judgment as to what issues are most
relevant,” Ancient Coin Collectors, 641 F.3d at 513 (internal
quotation marks omitted), an agency’s draft account of
8
historical events, Nat’l Sec. Archive v. CIA, 752 F.3d 460, 463-
64 (D.C. Cir. 2014), and factual information contained in a
legal opinion prepared by one agency for another, Elec.
Frontier Found. v. Dep’t of Just., 739 F.3d 1, 12–13 (D.C. Cir.
2014).
Conversely, agencies are obligated to disclose purely
factual records that do not reflect any judgment calls as to
which facts to include. For example, in Reporters Committee,
3 F.4th at 365–66, agency comments “on the accuracy of purely
factual statements in [a] draft report” were not deliberative
because this “fact-checking exercise . . . did not call for
judgment or the candid exchange of ideas.” Likewise, a list of
agencies that do not submit materials for clearance by the
Office of Management and Budget was presented with “no
commentary whatsoever” and was therefore not protected by
Exemption 5. Pub. Citizen, 598 F.3d at 876. Nor was a report
containing factual summaries “prepared only to inform the
Attorney General of facts which he in turn would make
available to members of Congress,” rather than to facilitate his
own decision-making. Playboy Enters. v. Dep’t of Just., 677
F.2d 931, 936 (D.C. Cir. 1982).
Here, the first group of documents withheld by the IRS
comprises the “Marchetti Memo” and the “Kelly Memo.” The
former was authored by Internal Revenue Agent Marchetti,
who audited the bonds issued by Waterman’s client, and the
latter by Kelly, Marchetti’s supervisor. Both memoranda were
attached to Marchetti’s Suspected Practitioner Misconduct
Report. While the IRS has already disclosed the Misconduct
Report and a two-page Explanation of Suspected Misconduct,
which summarizes the allegations in the Misconduct Report, it
has withheld the memoranda in full under Exemption 5.
Vaughn Index ¶¶ 15–16.
9
The IRS’s system for “regulat[ing] the practice of
representatives,” 31 U.S.C. § 330, depends on Internal
Revenue Agents, like Marchetti, to ferret out suspected
misconduct and marshal “facts and reasons” to initiate an
investigation by the OPR, 31 C.F.R. § 10.53; see id. § 10.1.
The IRS avers that the Marchetti Memo sets forth “actions and
statements” by Waterman in his “interactions with IRS
personnel over a period of several months” that Marchetti
“believed made the [OPR] referral appropriate.” Rawlins Decl.
¶¶ 17(b), 19(b). In camera review has revealed two passages,
appearing on pages 5 and 6 of the memorandum, that reflect
Marchetti’s evaluation of particular conduct he viewed as
evincing Waterman’s “intent to not cooperate with the
disposition of the matter[]” and his failure to “negotiate[] with
[the] IRS in good faith,” J.A. 120-21, which is punctuated with
references to the IRS’s internal strategy in its audit of
Waterman’s client. As to those portions, Marchetti exercised
his judgment to select and organize facts to support a
discretionary agency decision by the OPR, much like the
agency employees in Montrose and other cases in which this
court has affirmed the nondisclosure of factual material under
Exemption 5. See, e.g., Montrose, 491 F.2d at 68.; Ancient
Coin Collectors, 641 F.3d at 513-14; Mapother, 3 F.3d at1537–38. So too here.
But the remainder of the Marchetti Memo, which is a
chronological collection of Waterman’s statements over the
course of the audit, falls outside the scope of Exemption 5. The
IRS’s affidavit provides no indication that Marchetti exercised
his judgment to “separate[e] the pertinent from the
impertinent,” Montrose, 491 F.2d at 68, nor that he omitted a
“known datum” in creating the chronology, Mapother, 3 F.3d
at 1540. Exemption 5 does not protect such a “comprehensive
collection of the essential facts.” Id. Because it is “reasonably
segregable” from Marchetti’s evaluative commentary, 5 U.S.C.
10
§ 552(b), the chronological portion of the Marchetti Memo is
subject to disclosure. See Pub. Citizen, 598 F.3d at 876; Reps.
Comm., 3 F.4th at 366; Playboy Enters., 677 F.2d at 936-37.
That is not because Marchetti’s factual summary is organized
chronologically, as our dissenting colleague assumes, Dis. Op.
6, but rather because the IRS’s submissions fail even to indicate
that any factual material pertaining to Marchetti’s interactions
with Waterman has been left out, much less identify “the chaff”
from which “the wheat” supposedly has been separated,
Montrose, 491 F.2d at 71; Ancient Coin Collectors, 641 F.3d at
513-14. “To justify summary judgment, a declaration must
provide detailed and specific information demonstrating ‘that
material withheld is logically within the domain of the
exemption claimed,’” and “conclusory,” “vague,” or
“sweeping” assertions of privilege will not do. Campbell v.
U.S. Dep’t of Just., 164 F.3d 20, 30 (D.C. Cir. 1998) (quoting
King v. U.S. Dep’t of Just., 830 F.2d 210, 217 (D.C. Cir. 1987);
Hayden v. Nat’l Sec. Agency, 608 F.2d 1381, 1387 (D.C. Cir.
1979)).
The entirety of the Kelly Memo falls outside Exemption
5’s protection. The IRS avers that the three-page memorandum
of December 23, 2013, “summariz[es] a telephone
conversation []Kelly held on that date” with Waterman and that
“the memorandum sets forth part of the factual basis” that
Kelly “believed made the referral appropriate.” Rawlins Decl.
¶¶ 17(a), 19(a). This bare assertion provides no indication that
Kelly selected particular facts from the telephone conversation
in support of the misconduct referral. If the entirety of the
telephone conversation supplied “part of the factual basis” for
the misconduct referral, then there was no occasion for Kelly
to “winnow down” factual material by “making an evaluation
of the relative significance of the facts,” Montrose, 491 F.2d at
68. Nor does recording statements made in a telephone
conversation by itself “call for judgment.” Reps. Comm., 3
11
F.4th at 366. Our dissenting colleague surmises from the fact
that Kelly “chose to include” the summary that must have
involved a decision to include particular facts from the
telephone conversation while excluding others. Dis. Op. 6-7.
The IRS’s affidavits present no basis for that inference, and in
camera review has revealed no hint of Kelly’s “evaluative
commentary,” Pub. Citizen, 598 F.3d at 876, or “editorial
judgment,” Dudman, 815 F.2d at 1568. “The judicial role” is
not to fill the logical gaps in the agency’s submissions but to
“enforce that congressionally determined balance” embodied
by FOIA’s “handful of specified exemptions.” Milner v. Dep't
of Navy, 562 U.S. 562, 571 n.5 (2011). Because the IRS has
failed to meet its burden to demonstrate that the memorandum
logically falls within the scope of Exemption 5, the Kelly
Memo must be disclosed.
The distinctions between the Kelly Memo and the
protected portion of the Marchetti Memo come into sharper
focus when considered in light of the court’s decision in
Mapother, where the question was whether Exemption 5
protected a report that informed the Attorney General’s
decision to bar the President of Austria from entering the
United States due to his participation in Nazi war crimes. 3
F.3d at 1535. In preparing the Waldheim Report, Justice
Department staff “compiled source materials . . . and composed
[a] document” detailing Waldheim’s wartime activities. Id. at
1536. The court concluded that the “great bulk” of the
Waldheim Report was protected by the deliberative process
privilege because the task required “[t]he staff . . . to cull the
relevant documents, extract pertinent facts, organize them to
suit a specific purpose, and to identify the significant issues
they encountered along the way.” Id. at 1535, 1538. By
contrast, the court concluded that Exemption 5 did not protect
a chronology that was “neither more nor less than a
comprehensive collection of the essential facts of Mr.
12
Waldheim’s military career.” Id. at 1540. Like the portions of
the Mapother Report covered by Exemption 5, the Marchetti
Memo is shielded from disclosure insofar as it reflects its
author’s selection and organization of facts to aid the OPR’s
determination of the misconduct referral. The protected
portion of the Marchetti Memo provides an evaluative
commentary on Waterman’s “statements and actions” over “a
period of several months,” while the Kelly Memo is essentially
a same-day transcript of a single telephone conversation. In
camera review has revealed “neither more nor less than a
comprehensive” recounting of the telephone conversation, that
reflects “no point of view,” id., placing the Kelly Memo
beyond the scope of the deliberative process privilege.
The second group of withheld documents comprises the
“Brown Memo” and a partially redacted printout from the
OPR’s electronic Case and Correspondence Management
System (“CCMS”). Prepared by OPR analyst Kevin Brown
and addressed to a section manager in the Legal Analysis
Branch, the Brown Memo was written for the purpose of
recording his analysis of the disciplinary referral. Rawlins
Decl. ¶¶ 17(c), 19(c). The IRS withheld the Brown Memo in
full under Exemption 5, along with a portion of a four-page
printout from CCMS that tracks the progression of the OPR’s
administrative file in the Waterman matter. Vaughn Index ¶ 5;
Rawlins Decl. ¶¶ 17(d), 20. The redacted portion displays a
notation by Brown providing “a concise summary” of the
“same information” contained in his memorandum. Rawlins
Decl. ¶¶ 17(d), 20.
Both are shielded from disclosure by the deliberative
process privilege. The IRS avers that the Brown Memo
“summarize[s] the facts alleged, identif[ies] the violations
alleged, and recommend[s] further predecisional agency
actions.” Id. ¶ 17(c). Its affidavits make sufficiently clear that
13
Brown “extract[ed] pertinent facts” surrounding the alleged
misconduct by Waterman and, in view of the relevant
disciplinary standard, “organize[d] them to suit a specific
purpose”: to make a recommendation on whether to further
investigate Waterman or institute disciplinary proceedings.
Mapother, 3 F.3d at 1538. Such an analysis involves an
“exercise of judgment as to what issues are most relevant,”
Ancient Coin Collectors, 641 F.3d at 513, bringing the Brown
Memo within the scope of Exemption 5. Because it is an
abbreviated statement of Brown’s analysis, the redacted
portion of the CCMS printout is also protected by Exemption
5. Rawlins Decl. ¶ 20.
Finally, in March 2018, the IRS issued an email “Alert”
through its newswire service that “highlight[ed]” a
modification in the method by which the OPR notifies tax
practitioners of misconduct allegations filed against them.
Waterman’s view that the Alert undermines the IRS’s reliance
on Exemption 5 is unpersuasive.
The Alert deals not with the IRS’s FOIA disclosure
obligations but with its ability to release certain third-party tax
information pursuant to I.R.C. § 6103(l)(4)(A)(ii). There is no
textual support for Waterman’s contention that the Alert
precludes the IRS from invoking Exemption 5 to withhold
factual materials related to a disciplinary investigation by the
OPR. Even when there is an ongoing disciplinary proceeding
that triggers the statutory right of access under § 6103,
“[d]iscovery shall not be authorized if . . . [t]he material sought
is privileged or otherwise protected from disclosure by law.”
31 C.F.R. § 10.71(d)(6). The revised notification procedure
“highlight[ed]” by the Alert only augments a practitioner’s
ability to obtain nonprivileged material containing third-party
return information.
14
Yet Waterman takes the view that the pro-disclosure thrust
of the Alert demonstrates that withholding the contested
documents does not serve any legitimate purpose of Exemption
5. Because the OPR would have notified him of the factual
basis of the disciplinary proceedings had it chosen to pursue his
case, Waterman maintains, the authors of the documents did
not have an expectation of privacy to begin with and
consequently the quality of future agency decision-making
would not suffer were those documents disclosed. But this
incorrectly assumes that disclosure of the particular documents
underlying the initial disciplinary referral is the only means
through which he could have been apprised of the factual basis
of the disciplinary proceedings subsequently brought against
him. Had the OPR initiated a disciplinary proceeding, it would
have been required to provide Waterman with a “description of
the facts . . . that constitute the basis for the proceeding,” 31
C.F.R. §§ 10.60(c), 10.62(a), but it could have lawfully denied
him access to documents covered by the deliberative process
privilege, 31 C.F.R. § 10.71(d)(6).
Under these circumstances, withholding the contested
documents, with the exception of the Kelly Memo and the
unprotected portion of the Marchetti Memo, is consonant with
Exemption 5’s purposes. At least some of the
recommendations in the contested documents were not adopted
in the OPR’s ultimate determination, so disclosure of the
authors’ potentially mistaken recommendations might have a
chilling effect on their willingness to make such
recommendations. See, e.g., Sears, 421 U.S. at 150-51;
Dudman, 815 F.2d at 1569. Insofar as the OPR’s ultimate
determination departs from the course of action proposed by at
least some of the contested documents or from their reasoning,
release of those predecisional documents might well mislead
the public about the OPR’s view of Waterman’s conduct. See,
e.g., Coastal States, 617 F.2d at 866.
15
Accordingly, the court affirms in part the district court’s
grant of summary judgment to the IRS and reverses in part as
to the Marchetti Memo and the Kelly Memo.
WALKER, Circuit Judge, concurring in part and dissenting in
part:
An agency’s sound decisionmaking depends on “the
candid and frank exchange of ideas.” National Security
Archive v. CIA, 752 F.3d 460, 462 (D.C. Cir. 2014). But were
agencies “to operate in a fishbowl, the frank exchange of ideas
and opinions would cease and the quality of administrative
decisions would consequently suffer.” Id. (cleaned up). That’s
why the Freedom of Information Act’s disclosure requirements
do not extend to records that are pre-decisional and
deliberative.
In this case, the district court respected FOIA’s limits and
thereby protected the executive branch’s decisionmaking
process.
I would affirm.
I
A client hired Bradley Waterman to represent it before the
Internal Revenue Service. When the sides failed to reach a
settlement regarding the client’s tax liability, the IRS initiated
an audit.
Unbeknownst to Waterman, the IRS auditors, Michael
Marchetti and Chelsea Kelly, also filed a misconduct report
against him with the IRS’s Office of Professional
Responsibility. They suspected that Waterman had
“unreasonably delay[ed]” the case. 31 C.F.R. § 10.23.
Eventually, the Office sent Waterman a letter explaining that it
was not going to bring administrative charges against him. But
the letter urged Waterman to behave better, and it warned that
his conduct had been recorded in a file for use against him if
any future allegations arise.
2
Wishing to know more, Waterman asked the IRS to
disclose internal documents about his case. When the IRS
refused to disclose everything, Waterman sued. He claimed
that the Freedom of Information Act entitled him to the
documents. 5 U.S.C. § 552.
The IRS later released more information, but it maintained
that four documents could not be fully disclosed, including one
memo by Marchetti and another by Kelly. The district court
agreed with the IRS, holding that those documents fell within
FOIA’s exemption for records covered by the deliberative
process privilege. Id. § 552(b)(5).
Today the court concludes that the IRS was entitled to
withhold two of those documents. I concur with that part of its
opinion.
But I respectfully disagree with the court’s decision
regarding the Marchetti and Kelly memos. FOIA allows the
IRS to withhold them in their entirety.
II
FOIA requires the federal government to disclose many
types of records upon request — but not records that are pre-
decisional and deliberative. It expressly shields from
disclosure “inter-agency or intra-agency memorandums or
letters that would not be available by law to a party other than
an agency in litigation with the agency.” 5 U.S.C. § 552(b)(5).
FOIA thereby incorporates the “deliberative process privilege”
that is available to the government in civil litigation. United
States Fish & Wildlife Service v. Sierra Club, Inc., 141 S. Ct.
777, 785 (2021).
3
Whether a pre-decisional record is deliberative turns on
whether it was “prepared to help the agency formulate its
position” and “reflects the give-and-take of the consultative
process.” Reporters Committee for Freedom of the Press v.
FBI, 3 F.4th 350, 362 (D.C. Cir. 2021) (cleaned up). Generally,
facts must be disclosed while opinions are protected. Id. at 365.
But this distinction between facts and opinions cannot be
applied “mechanically.” Mapother v. DOJ, 3 F.3d 1533, 1537
(D.C. Cir. 1993). That’s because, for deliberative records, “the
selection of the facts thought to be relevant clearly involves the
formulation or exercise of policy-oriented judgment.” Id. at
1539 (cleaned up).
Two key factors inform whether the government must
disclose a pre-decisional factual summary.
First, we ask what purpose the factual summary served.
This factor matters the most. A factual summary need not be
disclosed if it was “prepared to aid an administrator in
resolution of a difficult, complex question” — as in Montrose
Chemical Corp. v. Train, 491 F.2d 63, 68 (D.C. Cir. 1974). But
FOIA requires a factual summary’s disclosure if it was meant
“to investigate the facts” and to “inform” an agency’s head
about “facts which he in turn would make available to members
of Congress” — as in Playboy Enterprises, Inc. v. DOJ, 677
F.2d 931, 935-36 (D.C. Cir. 1982) (cleaned up); see also id. at
936 (distinguishing Montrose because there the “summaries
were prepared for the sole purpose of assisting the
Administrator”).
Second, we ask if the authors of the factual summary
exercised judgment when deciding which facts to include. If
yes, that cuts against disclosure. See Ancient Coin Collectors
Guild v. U.S. Department of State, 641 F.3d 504, 513 (D.C. Cir.
2011) (the protected factual summaries came from a “much
4
larger universe of facts” and reflected a judgment about the
“most relevant” facts); Russell v. Department of the Air Force,
682 F.2d 1045, 1048 (D.C. Cir. 1982) (choice of what to
include in “histories” was deliberative); Montrose, 491 F.2d at
68 (assistants exercised “their judgment as to what record
evidence would be important to the Administrator”).
For both factors, Mapother v. DOJ is instructive. 3 F.3d
1533 (D.C. Cir. 1993). At issue was a government report about
a former Austrian president. Id. at 1535. Because the former
president had been accused of war crimes, the report
recommended that he be denied entry into the United States.
Id.This court concluded that most of the pre-decisional report
was deliberative and thus protected against
disclosure — including a significant amount of pure facts. Id.
at 1537-40. Mapother reasoned that the protected facts had
been “assembled through an exercise of judgment in extracting
pertinent material from a vast number of documents for the
benefit of an official called upon to take discretionary action.”
Id. at 1539. Thus Mapother relied on the two key factors
described above: (1) an advisory purpose, and (2) the exercise
of discretion regarding which facts to include.
At the same time, Mapother required the government to
disclose a small part of the report — a comprehensive
“chronology” of the former president’s military service. Id. at
1540. The chronology differed from the rest of the report
because it “in no way betray[ed] the occasion that gave rise to
its compilation” and “reflect[ed] no point of view.” Id. Unlike
the rest of the report, “no known datum” had “been omitted”
from it. Id. In other words, (1) it reflected no advisory purpose,
and (2) its list of facts did not depend on choices made by its
authors.
5
III
Marchetti and Kelly wrote their memos before the IRS
decided whether to charge Waterman. The memos are
deliberative because (1) their purpose was to help the IRS make
that decision and (2) the selection of facts within them reveals
how the agents exercised their judgment.
The first document is a nine-page memo written by
Marchetti detailing the factual basis for his belief that
Waterman violated IRS rules. By regulation, the IRS relies on
agents like Marchetti explaining their “facts and reasons” to
initiate misconduct investigations. 31 C.F.R. §§ 10.53(a), 10.1.
Marchetti’s memo about those “facts and reasons” formed the
core of the referral and was sent as an attachment to the Office
of Professional Responsibility. Its “sole purpose” was to
explain the basis for his referral so the Office could “make a
decision” on Waterman’s alleged misconduct. Playboy, 677
F.2d at 936 (citing Montrose, 491 F.2d at 65).
Moreover, Marchetti’s inclusion of specific actions and
statements by Waterman over the course of months reflects his
judgment as to which facts were “most relevant” to the referral.
Ancient Coin Collectors, 641 F.3d at 513. That will almost
inevitably be the case when months of frequent interactions
between investigators and an attorney are summarized in a
mere nine pages. To explain why he believed the Office should
investigate Waterman, Marchetti had to choose certain facts
over others, “separating the wheat from the chaff,” which is
“part of the deliberative process.” Montrose, 491 F.2d at 71;
see also Mapother, 3 F.3d at 1537-40. Indeed, tucked away in
6
the factual summaries are Marchetti’s opinions about
Waterman’s actions and motives. Montrose, 491 F.2d at 68.1
True, the Marchetti memo lists facts chronologically. But
that alone does not make the memo like the unprotected factual
chronology in Mapother, 3 F.3d at 1537-40. Instead, the
memo’s chronological order was essential to Marchetti’s
purpose and “point of view,” id. at 1540, regarding what “made
the referral appropriate,” JA 48. The sense of time underscored
Marchetti’s belief that for several months Waterman
“unreasonably delay[ed]” the proceedings in violation of IRS
rules. 31 C.F.R. § 10.23. So Marchetti’s selection and
organization of particular facts to support his referral decision
are “inextricably intertwined” with his opinions. Mead Data
Central, Inc. v. United States Department of the Air Force, 566
F.2d 242, 260 (D.C. Cir. 1977). As a result, disclosing the facts
would reveal the IRS’s deliberative process. Mapother, 3 F.3d
at 1537-40.
The second document, a three-page memo written by
Kelly summarizing a phone call with Waterman, is a closer
question. The “universe” of facts about the phone call is much
smaller than the months of interactions “culled” for Marchetti’s
memo. Ancient Coin Collectors, 641 F.3d at 513. Perhaps
there was little said on the call that was not summarized in the
memo.
But like Marchetti’s memo, Kelly’s memo formed part of
the basis for referring Waterman and was attached to the
misconduct report to assist the Office in its determination.
Montrose, 491 F.2d at 68. And Kelly’s decision to summarize
the phone call was itself an exercise in judgment regarding
1
Today’s court properly allows the IRS to redact those opinions from
the memo.
7
which facts she considered “pertinent” to the referral. Ancient
Coin Collectors, 641 F.3d at 513. After all, Kelly could have
entirely omitted a summary of the call from her referral. But
to persuade the Office to investigate Waterman, Kelly chose to
include it. That decision involved “an exercise of judgment in
extracting pertinent material . . . for the benefit of an official
called upon to take discretionary action.” Mapother, 3 F.3d at
1539.
To sum up, FOIA allows the IRS to withhold both memos
because (1) their purpose was to assist in a discretionary
decision (whether to further investigate Waterman) and
(2) their authors selected facts that reflected a point of view
(that Waterman should be investigated).
* * *
It’s easy to understand Waterman’s desire for the memos
he has requested. They include details of allegations against
him by employees of an agency that wields considerable power
over tax lawyers — and over the rest of us, for that matter. But
FOIA does not require disclosure of the records Waterman
wants to see. I therefore respectfully concur in part and dissent
in part.