Vento v. Internal Revenue Service ( 2010 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
RENEE VENTO, et al.,
Plaintiffs,
v. Civil Action No. 09-289 (JMF)
INTERNAL REVENUE SERVICE,
Defendant.
MEMORANDUM OPINION
Pending before me and ready for resolution are Plaintiffs’ Motion for Summary
Judgment [#11] (“Pls. Mot.”) and Internal Revenue Service’s Motion for Summary
Judgment [#14] (“Def. Mot.”).
I. Background
On June 6, 2007, plaintiffs made their initial Freedom of Information Act
(“FOIA”) request to the Internal Revenue Service (“IRS”). Complaint (“Compl.”) ¶ 6;
Pls. Mot. Ex. A. The IRS responded on July 9, 2007 and indicated that a response to
plaintiffs’ request would be forthcoming by October 10, 2007. Compl. ¶ 6; Pls. Mot. Ex.
B. On October 9, 2007 and again on January 10, 2008, the IRS contacted plaintiffs and
requested additional time to process and respond to plaintiffs’ FOIA request. Compl. ¶ 7;
Pls. Mot. Ex. C. On April 30, 2008, the IRS contacted plaintiffs to request payment in
the amount of $1955.00 for the estimated costs involved to produce the volume of
documents related to plaintiffs’ response. Compl. ¶ 8; Pls. Mot. Ex. D. Plaintiffs sent the
requested funds to the IRS on October 21, 2008, communicated with an IRS Disclosure
Specialist, and agreed that those documents not needing redactions should be sent to
plaintiffs as soon as possible, while those requiring redaction would be sent under
separate cover. Compl. ¶ 9; Pls. Mot. Ex. E. On October 31, 2008, plaintiffs received
approximately 2,136 documents from the IRS; however, on November 17, 2008, the IRS
sought an extension of time to release those documents requiring redactions. Compl. ¶¶
10-11; Pls. Mot. Exs. F & G. On December 3, 2008, the IRS released an additional 1,958
documents located in response to plaintiffs’ request and indicated that 18 documents
were redacted and two withheld completely according to FOIA exemption (b)(3). Compl.
¶ 12; Pls. Mot. Ex. H. The IRS requested a further extension of time to release the
documents, up to January 21, 2009, when it believed a final response could be provided.
Memorandum of Points and Authorities in Support of Plaintiffs’ Motion for Summary
Judgement [sic] [#12] (“Pls. Memo.”) at 2; Pls. Mot. Ex. G. On January 13, 2009, the
IRS released another 5,113 pages of responsive documents. Def. Mot. 2; Pls. Mot. Ex. I.
Finally, on February 9, 2009, the IRS released the remaining 2,721 responsive pages,
withholding 1,074 in full according to various FOIA exemptions. Def. Mot. 2; Pls. Mot.
Ex. I.
A subsequent review of the withheld documents allowed the IRS to release an
additional 244 pages in full or in part to plaintiffs. Def. Mot. 2; Pls. Mot. Ex. K.
Plaintiffs filed this case in February 2009, seeking a court order for the IRS to disclose all
remaining documents responsive to the request. Compl. ¶ 15.
II. Legal Standard
Both parties have filed motions for summary judgment pursuant to Federal Rule
of Civil Procedure 56(c). Summary judgment may be granted if “the pleadings, the
discovery and disclosure materials on file, and any affidavits show that there is no
2
genuine issue as to any material fact and that the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(c)(2). Substantive law is determinative of the facts
that are material, which are those “facts that might affect the outcome of the suit under
the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)
(citing 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice
and Procedure § 2725 at 93-95 (2d. ed. 1987)).
Summary judgment in FOIA cases is warranted “on the basis of agency affidavits
when the affidavits 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.” Miller v. Casey, 730 F.2d 733, 776 (D.C. Cir. 1984). The
court of appeals for the District of Columbia Circuit has found that an agency’s
justification for applying a FOIA exemption to withhold documents is sufficient if it
appears “‘logical’” or “‘plausible.’” Wolf v. CIA, 473 F.3d 370, 374-75 (D.C. Cir. 2007)
(quoting Gardels v. CIA, 689 F.2d 1100, 1105 (D.C. Cir. 1982); citing Hayden v. NSA,
608 F.2d 1381, 1388 (D.C. Cir. 1979)).
III. Analysis
Plaintiffs request that I grant summary judgment in their favor, finding no
genuine issue of material fact that defendant failed to disclose all of the documents
requested and that defendant withheld documents by improperly asserting FOIA
exemptions. Pls. Mot. 1. Plaintiffs claim that the IRS failed to produce the following
responsive documents: “(1) the case activity record for any IRS employee besides
[Revenue Agent] Moss; (2) internal documents relating to the Defendant’s position on
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the working law regarding the definition of Virgin Islands residency; (3) memorandum of
all interviews of persons regarding the individual income tax liabilities of the Plaintiffs;
(4) any IRS employee’s notes on any of the interviews of the Plaintiffs or of third parties
interviews regarding the Plaintiffs; (5) copies of all statements (sworn or otherwise)
given by individuals in connection with the investigation of the individual income tax
liabilities of the Plaintiffs; and (6) written reports and recommendations concerning the
proposed assessment of additional tax and penalties and any other information that is
related to the determinations by the Defendant.” Pls. Memo. 10.
Plaintiffs’ claims can be distilled down to two issues: (1) was the search adequate;
and (2) were documents properly withheld. I will consider each in turn.
A. The Search
According to plaintiffs, the IRS failed to perform a reasonable search for the
requested documents. Pls. Memo. 4. The IRS argues that the search was reasonably
calculated to uncover documents responsive to plaintiffs’ request. Internal Revenue
Service’s Brief in Opposition to Plaintiffs’ Motion for Summary Judgment [#16] (“Def.
Opp.”) at 3-4. The plaintiffs requested information related to their individual income tax
liabilities for tax years 2002 through 2004. Memorandum of Points and Authorities in
Support of Internal Revenue Service’s Motion for Summary Judgment [#14] (“Def.
Memo.”) at 5; Compl. Ex. A. The IRS determined who was the agent assigned to the
examination of plaintiffs’ tax liabilities during that period, Revenue Agent Moss, and
obtained the responsive documents from her. Def. Memo. 3-4 (citing Declaration of
Kathleen Brewer (“Brewer Decl.”) ¶¶ 2-7). Plaintiffs argue that this is unreasonable,
because at least eleven other individuals were involved in the fact-finding process for the
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IRS case against plaintiffs and at least fourteen people may have responsive documents,
but their files were not searched for responsive documents. Pls. Memo. 13-14.
The standard by which the Court must consider reasonableness is not whether
there was absolute exhaustion of the files, see Miller v. Dep’t of State, 779 F.2d 1378,
1385 (8th Cir. 1985), but whether the agency has shown that the search was “reasonably
calculated to uncover all relevant documents.” Steinberg v. Dep’t of Justice, 23 F.3d 548,
551 (D.C. Cir. 1994) (quoting Weisberg v. Dep’t of Justice, 745 F.2d 1476, 1485 (D.C.
Cir. 1984)). The court of appeals has warned that “[t]he question is not whether there
might exist any other documents possibly responsive to the request, but rather whether
the search for those documents was adequate,” which is judged by a standard of
reasonableness that depends on the facts of the case. Steinberg, 23 F.3d at 551. An
agency may rely upon “reasonably detailed, nonconclusory affidavits submitted in good
faith” to demonstrate the adequacy and reasonableness of a search. Id.Here, the IRS has submitted an affidavit by Kathleen Brewer, a Senior Disclosure
Specialist in the Office of Disclosure at the IRS, detailing the procedure followed in
conducting the search for documents. See Brewer Decl. ¶¶ 2-7. Brewer received the
assignment to process plaintiffs’ FOIA requests after the it was transferred from another
disclosure specialist, Glendsey Tucker. Id. at ¶ 2. After receiving plaintiffs’ requests on
June 11, 2007, Tucker searched the IRS’s Integrated Data Retrieval System (“IDRS”) for
records pertaining to plaintiffs. Id. at ¶ 3. The search produced information that there
was examination activity in plaintiffs’ records for each tax year requested. Id. From this
information, Tucker searched the IRS’s Audit Information Management System
(“AIMS”) transcripts and determined that either Rosemary Burke or Eloise McCullogh
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was the assigned Revenue Agent on the examination. Id. On June 18, 2007, based on
that information, Tucker e-mailed both revenue agents to inquire which of the two
actually had the case. Id. On June 20, 2007, Jacqueline Moss responded that she was in
fact the agent assigned to the case and requested that Tucker provide her with a search
memo and a copy of the requests. Id. at ¶ 4. On February 21, 2008, the requests were
transferred to Brewer, who reviewed the documents provided by Moss, determined what
information should be withheld, and calculated the processing fees due. Id. at ¶¶ 5 & 7.
According to plaintiffs, this search is unreasonable because it did not include a
search of any other files from IRS employees whom plaintiffs allege to have relevant
documents. Pls. Memo. 13. Plaintiffs provide evidence that other IRS employees
participated in their case by showing that employees other than Moss attended certain
interviews that took place beginning January 18, 2008. Id. at 13-14. Further, e-mails
from Moss, produced on July 28, 2009, show that other possible IRS employees were
involved in the audit of plaintiffs. Id. at 14. Defendant argues FOIA requests have
temporal limits, and that, in determining which records are responsive to a request, IRS
regulations set the cut-off date for a FOIA request as “the date of the receipt of the
request by the appropriate disclosure officer.” Def. Opp. 2 (quoting 26 C.F.R. § 601.702(c)(8)(ii)). Plaintiffs argue that, despite the regulation, the cut-off date should be January
8, 2008, the date when the IRS wrote to plaintiffs, asking for additional time to process
their request. See Statement of Material Facts for Which There is No Genuine Issue In
Support of Plaintiffs’ Motion for Summary Judgment, Pls. Mot. at Ex. C. Plaintiffs’
finding of significance in the typical request of IRS for additional time is misplaced.
That the IRS needed more time to process the request and suggested that it would finish
6
by a certain date did not somehow retroactively amend plaintiffs’ request so that it should
be deemed to include documents created after the date of the request, June 6, 2007, but
before the date IRS proposed as the day it hoped to finish, April 10, 2008. Plaintiffs are,
of course, entitled to file another FOIA request, and the cut-off date for that request will
be, once again, the date of its request. Plaintiffs’ notion, that somehow the cut-off date is
miraculously transmuted into the date for the proposed response, would unfairly permit
plaintiffs to “jump the queue” in front of all the other requests received by IRS after June
6, 2007.
There is no inconsistency between this conclusion and the decision in Public
Citizen v. Dep’t of State, 276 F.3d 634, 644 (D.C. Cir. 2002), in which the court of
appeals rejected the Department of State’s use of the request date as the cut-off date for
the search and held “that with minimal administrative hassle, the Department could apply
a date-of-search cut-off” to a particular search. In the same breath, the court stated that
“nothing in this opinion precludes the Department [of State] or any other federal agency
from attempting a more compelling justification for imposing a date-of-request cut-off on
a particular FOIA request.” Id.It is clear, however, from Kathleen Brewer’s affidavit, that plaintiffs’ request was
received on June 11, 2007 and that an IRS employee almost immediately began
researching the IRS database for records pertaining to the plaintiffs. Brewer Decl. at ¶ 3.
Within a week, that employee had asked two IRS agents who had the case, and another
responded two days later that she had the case. Thus, the search began within five days
of the request, and I see no reason to use any date other than the request date as the cut-
off, since the search date is only a few days later. The IRS’s use of the request date can
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hardly be described as arbitrary. On the other hand, plaintiffs’ use of January 10, 2008,
the date the IRS asked for more time to complete the search, has nothing to recommend it
for all the reasons stated above.
Glendsey Tucker, an IRS employee, transferred plaintiffs’ request to Kathleen
Brewer, a senior IRS disclosure specialist. Brewer determined that the IRS revenue
agent assigned to the case was either Rosemary Burke or Eloise McCullogh. Tucker e-
mailed both of them, asking who had plaintiffs’ case. Neither replied. Instead,
Jacqueline Moss responded that she was the assigned agent. Brewer Decl. ¶¶ 2-3.
Plaintiffs first object to the failure of Brewer to ascertain whether Burke or
McCullogh had any responsive records. It must be recalled, however, that plaintiffs now
have thousands of documents, and they do not point to one suggesting the involvement of
either Burke or McCullogh. From their names showing up in a database as assigned
agents hardly follows that they had any thing to do with plaintiffs’ case, let alone that
they have any responsive documents.
The presence of other IRS employees at interviews in 2008, after the date of the
request, does not in itself provide any evidence that those or other employees would have
documents that were created prior to the cut-off date. Plaintiffs provide a string of e-
mails from Moss to other individuals regarding a request for “the 2004 returns of the
Vento’s.” See Pls. Mot. Ex. P. Moss asks two people to make the requests; they then ask
another person to “take care of this.” Id. There is no reference to additional documents in
the e-mails. In addition, there is an e-mail string in the same exhibit regarding an
extension document from Lana Vento. Id. Moss is e-mailing a group of individuals about
the status of the documents. Id. She indicates that she will let them know when she has
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received the documents in question. Id. Moss refers to documents, which she is waiting
to receive from plaintiffs in this case and of which she confirms receipt. Id. There is no
indication that recipients or authors of these e-mails possessed any documents, much less
that they possessed documents that Moss herself did not also have. Id. The court of
appeals has found that speculating about the existence of other documents does not rebut
the presumption of good faith accorded to affidavits submitted by the agency. SafeCard
Services, Inc. v. SEC, 926 F.2d 1197, 1200 (D.C. Cir. 1991) (citing Ground Saucer
Watch, Inc. v. CIA, 692 F.2d 770, 771 (D.C. Cir. 1981) (citations and quotation marks
omitted)). Plaintiffs do not provide the Court with more than speculation that other
documents exist and cannot adequately rebut the presumption of good faith. As such, I
find the IRS’s search to be reasonable.
B. Withheld Documents
FOIA vests the court with the authority to determine whether a document or any
part of a document is properly withheld under the enumerated FOIA exemptions. 5
U.S.C. § 552(a)(4)(B).1 The agency has the burden of proving that “each document that
falls within the class requested either has been produced, is unidentifiable, or is wholly
exempt from the Act’s inspection requirements.” Citizens for Responsibility and Ethics
in Washington v. Dep’t of Homeland Sec., 648 F. Supp. 2d 152, 155 (D.D.C. 2009)
(citing Goland v. CIA, 607 F.2d 339, 352 (D.C. Cir. 1978), cert. denied, 445 U.S. 927,
(1980); see also Maydak v. Dep’t of Justice, 218 F.3d 760, 764 (D.C. Cir. 2000)). In
granting summary judgment, the Court may only consider the information provided by
the government in affidavits or declarations that “the documents and the justifications for
1
All references to the United States Code or the Code of Federal Regulations are to the
electronic versions that appear in Westlaw or Lexis.
9
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.” Military Audit Project v.
Casey, 656 F.2d 724, 738 (D.C. Cir. 1981).
1. Structure of the Analysis
Only 46 of the withheld documents are at issue, with the IRS claiming one or
more exemptions as a basis for withholding them. As to certain documents, plaintiffs
concede the applicability of one exemption while protesting against IRS’s reliance on
another. The following chart illustrates the parties’ dispute and my rulings, resolving
them. Thus, it shows the Bates number of the document, the exemptions claimed by IRS,
any concession made by plaintiffs that an exemption applies, plaintiffs’ objection to the
claim of exemption as to that same document and my conclusion that a particular
exemption applies.
Bates Exemptions Plaintiffs Plaintiffs object Sufficient
Number claimed concede to Exemption Basis Court
Exemption finds for
Exemption
#00027 3, 6 6 3 6
#00028 3, 6 6 3 6
#00231 3, 5 3, 5 5
#00232 3 (one line), 5 5 3 5
#00238-239 5, 7(C) 5 5, 7(C)
#00240-241 3, 5, 7(A) 3, 5 7(A)
#00242 3, 5 3, 5 --
#00243 5, 7(C) 7(C) 5 5, 7(C)
#00246 3, 7(C) 3 7(C)
10
#00302 3, 5, 7(A) 5 5, 7(A)
#00314 3, 5, 7(A), (C) 5 3 5, 7(A), 7(C)
#00325-326 3, 5, 6, 7(A) 6 3 6, 7(A)
#00455 3, 7(C) 3 7(C)
#00456 5, 7(C) 5 5, 7(C)
#00457-461 5, 7(E) 7(E) 5 5, 7(E)
#00464-466 3, 5, 7(A), (C) 3, 5 5, 7(A), (C)
#00475 3, 6, 7(A) 6 3 6, 7(A)
#00494 3, 7(A) 3 7(A)
#00496 3 (one line), 3 5 3, 5, 7(A)
5, 7(A)
#00497-498 5, 7(A) 5, 7(A) 3 5, 7(A)
#00518-520 3 (one line), 3, 5 7(A)
5, 7(A)
#00529 3, 5, 7(A) 3, 5 7(A)
#00530 3, 5, 7(A) 3, 5 7(A)
#00532-533 3, 5, 7(A) 3 5 3, 5, 7(A)
#00534 3, 7(A) 3 7(A)
#00535 3,6, 7(A), (C) 6 3 6, 7(A), 7(C)
#00608 3,6, 7(C) 6 3 6, 7(C)
#00609 3, 5, 7(A) 3, 5 7(A)
#00612 6, 7(C) 6 3 6, 7(C)
#00616-618 3, 5, 7(A) 3, 5 7(A)
#00622 3, 7(C) 3 7(C)
#00623 3 3 7(C)
#00626 3, 5, 7(C) 3, 5 7(C)
#00633-634 5, 7(A) 5 5, 7(A)
#00638 3, 5, 7(A), (C) 5 3 5, 7(A), 7(C)
#00639-643 3, 7(C) 3 7(C)
11
#00645-646 3, 5 5 3 5
#00647-648 3, 5 3, 5 5
#00653 3, 5, 7(A), (C) 5 3 5, 7(A), 7(C)
#00752-753 3, 5 5 3 5
#00755, 766 3, 5 5 3 5
#00757-758 5 5 5
#00761 3, 5, 7(A) 3 7(A)
#00877 3, 6, 7(C) 6 3 6, 7(C)
#00886 3, 7(C) 3 7(C)
#001036 5, 6, 7(A), (C) 6 5 5, 6, 7(A),
7(C)
Obviously, if plaintiffs concede the applicability of an exemption, the document
is exempt and there is no reason to reach the question of whether it is exempt under any
other exemption. Additionally, even if plaintiffs do not concede the point, if I conclude
that one exemption has been properly applied, there is no reason to reach the question of
whether any other was properly applied as well. I will therefore consider the exemptions
claimed in the following order: Section B(2) will consider plaintiffs’ objections to the
application of Exemption 7(A) & 7(C); Section B(3) will consider plaintiffs’ objections
to the application of Exemption 5 and the attorney-client privilege; Section B(4) will
consider plaintiffs’ objections to the application of Exemption 5 and the work product
privilege; Section B(5) will consider plaintiffs’ objections to the application of
Exemption 5 and the deliberative process privilege; and Section B(6) will consider
plaintiffs’ objections to the application of Exemption 3.
2. Exemption 7(A) & 7(C)
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As noted in the chart, 34 documents are withheld under Exemption 7(A) and (C),
which allows an agency to withhold documents that are compiled for law enforcement
purposes when the information “could reasonably be expected to interfere with
enforcement proceedings” or “could reasonably be expected to constitute an unwarranted
invasion of personal privacy.” 5 U.S.C. § 552(b)(7)(A) & (C).
The Court may rely on affidavits that describe the withheld documents in
sufficient detail to determine that they were compiled in the course of an investigation
and for law enforcement purposes. See, e.g., Barney v. IRS, 618 F.2d 1268, 1272-73 (8th
Cir. 1980) (government need only establish that the documents were investigatory
records compiled for law enforcement purposes and that production would interfere with
pending enforcement proceedings and finding that it was apparent by the very nature of
plaintiffs’ request that they sought disclosure of all investigatory records compiled on
them by the IRS). In this case, plaintiffs seek the “administrative file” for the audit,
including:
any worksheets, workpapers, notes, documents, memoranda, computations and
other materials prepared or accumulated relative to this examination and other
materials prepared or accumulated relative to this examination by employees of
the [IRS], any other governmental agency, or otherwise, including internal
documents, memoranda, memoranda of all interviews of persons regarding the
individual income tax liabilities of the taxpayer, copies of all statements (sworn or
otherwise) given by individuals in connection with the investigation of the
individual income tax liabilities of the taxpayer, case activity record, written
reports and recommendations concerning the proposed assessment of additional
tax and penalties and any other information that is related to the determinations
by the [IRS].
Pls. Mot. Ex. A. The very nature of the documents sought implicates Exemption 7. They
were clearly compiled in the course of an investigation into plaintiffs’ tax liability.
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The documents related to the examination, or audit, of the plaintiffs’ tax liability
are most certainly “law enforcement records” under this exemption. Plaintiffs’ assertion
that a distinction should be drawn between civil and criminal enforcement of the Internal
Revenue Code is incorrect. The Internal Revenue Code is a law and the IRS enforces it,
no matter the ultimate nature of the proceeding brought against the taxpayer. To create
the narrower exemption that plaintiffs want, premised on the popular use of the words
“law enforcement” to mean police agencies, amends the statute and imputes to Congress
an irrational intention to distinguish between the manner in which various agencies
enforce law so that the records of, let us say, the FBI are exempt, but the records of the
Department of Agriculture are not, even though both obviously enforce the law in
different ways. There is no warrant in the law for that distinction and the federal courts
have rejected it. See, e.g., EduCap Inc v. IRS, No. 07-CV-2106, 2009 WL 416428, at *4
(D.D.C. Feb. 18, 2009) (citing Faiella v. IRS, No. 05-CV-238, 2006 WL 2040130, at *4
(D.N.H. July 20, 2006)); see also White v. IRS, 707 F.2d 897, 901 (6th Cir. 1983) (citing
Williams v. IRS, 345 F. Supp. 591, 593 (D.Del. 1972), aff’d 479 F.2d 317 (3rd Cir.
1973), cert. denied sub nom. Donlon v. IRS, 414 U.S. 1024 (1973); Pope v. United
States, 599 F.2d 1383, 1385 (5th Cir. 1979) (finding FOIA Exemption 7(A) applicable to
investigation-developed documents, whether potentially civil or criminal in import)).
The IRS clearly indicated that the release of the withheld information in this case could
reasonably be expected to interfere with enforcement proceedings, claiming that the
disclosure “could reveal the identity of cooperating witnesses and reveal physical and/or
testimonial evidence gathered to date, reveal transactions being investigated; or the
reliance placed by the government on such information.” Singh Decl. ¶ 23.
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Other than their asserted distinction between audits and criminal enforcement,
plaintiffs do not otherwise object to the application of Exemption 7(A) to these
documents. I therefore conclude that the documents fall within Exemption 7(A). Thus, I
find that all of the documents withheld in accordance with this exemption were properly
withheld, including Bates ## 00240-241, 00302, 00314, 00325-326, 00464-466, 00475,
00494, 00496, 00497-498, 00518-520, 00529, 00530, 00532-533, 00534, 00535, 00609,
00616-618, 00633-634, 00638, 00653, 00761, and 001036.
The other grounds asserted by the IRS for withholding documents under
Exemption 7 is that the withheld documents “could reasonably be expected to constitute
an unwarranted invasion of personal privacy.” 5 U.S.C. § 552(b)(7)(C). The IRS
indicated that it asserted Exemption 7(C) on documents to protect the names, addresses,
telephone numbers, and social security/EIN numbers for third party witnesses not
directly involved with the examination of the plaintiffs’ tax liability. Singh Decl. ¶ 24.
The D.C. Circuit has held that, “unless access to the names and addresses of private
individuals appearing in files within the ambit of Exemption 7(C) is necessary in order to
confirm or refute compelling evidence that the agency is engaged in illegal activity, such
information is exempt from disclosure.” SafeCard, 926 F.2d at 1206. While plaintiffs
claim that they have a right to this third-party information under 26 U.S.C. § 7602, which
requires the IRS to inform plaintiffs of third-party summons,2 plaintiffs have not claimed
that the IRS is engaged in an illegal activity, and this information is necessary either to
refute or establish that assertion. Further, relying on SafeCard, the court of appeals
2
This argument has been rejected by a judge of this Court, finding that “there is nothing
in the FOIA that precludes the government from relying on an otherwise applicable
FOIA exemption when a non-FOIA statute requires disclosure.” EduCap, 2009 WL
416428, at *4.
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protects those portions of responsive documents from disclosure “to the extent any
information contained in 7(C) investigatory files would reveal the identities of
individuals who are subjects, witnesses, or informants in law enforcement
investigations.” Nation Magazine, Washington Bureau v. U.S. Customs Serv., 71 F.3d
885, 896 (D.C. Cir. 1995). Nevertheless, the court of appeals notes that SafeCard cannot
be read to permit “an agency to exempt from disclosure all of the material in an
investigatory record solely on the grounds that the record includes some information
which identifies a private citizen or provides that person’s name and address in order to
protect the privacy of those persons,” and it indicates that records pertaining to an
individual’s activity might not be exempt when the records are cloaked in the public
interest because they shed light on agency action. Nation Magazine, 71 F.3d at 895.
While a person’s privacy interest represented by this exemption might yield in
some cases to the public interest, the plaintiffs seek this information to benefit
themselves as private litigants. They cannot claim that the disclosure of the identifying
information the IRS deleted would advance any public interest. The FOIA was
“fundamentally designed to inform the public about agency action and not to benefit
private litigants.” N.L.R.B. v. Sears, Roebuck & Co., 421 U.S. 132, 143 n.10 (1975); see
also Renegotiation Bd. v. Bannercraft Clothing Co., Inc., 415 U.S. 1, 24 (1974) (finding
that discovery for litigation purposes is not an indicated purpose of FOIA)). To disclose
the information concerning the identity of third-party individuals would not provide the
public with information about agency action, and plaintiffs do not claim that it will. See,
e.g., Johnson v. Comm’r of Internal Revenue, 239 F. Supp. 2d 1125, 1137 (W.D. Wash.
2002) (finding that the IRS properly withhold documents “identifying third parties and
16
witnesses contacted during an IRS investigation, as well as information that these parties
gave to the IRS”).
Instead, plaintiffs claim that the public interest tips in favor of disclosure because
the public interest being asserted is to show that the IRS acted in a negligent or improper
manner in its performance of its statutory duty under FOIA by improperly withholding
documents from the plaintiffs. Pls. Memo. at 29. To support their argument, plaintiffs
rely on National Archives and Records Administration v. Favish, 541 U.S. 157 (2004),
which indicates “a requester must produce evidence that would warrant a belief by a
reasonable person that the alleged Government impropriety might have occurred.” Id. at
174.
Plaintiffs’ argument is tautological and misconceives the ruling in National
Archives and Records Administration. The plaintiffs argue that the IRS improperly
withheld documents and that the court must order the disclosure of the documents to
prove that the IRS improperly withheld the documents. First of all, Congress clearly
provided a procedure for parties claiming the government has improperly withheld
documents under a FOIA exemption; it is the very process of judicial review that I am
currently undertaking. See 5 U.S.C. § 552(a)(4)(B). The plaintiffs’ suggestion that the
IRS should disclose the documents to them in order to prove that they did not improperly
withhold the documents goes completely against the process of review provided in FOIA.
In addition, the improper withholding of requested documents is not the type of
government “impropriety” to which the interest of privacy yields. Further, the evidence
plaintiffs provide for the impropriety is that the IRS did not disclose the information
related to a witness interviewed in 2008. The interview occurred outside of the temporal
17
period covered by the request, thus, it has no significance as evidence of IRS
impropriety.
Thus, I find the documents in the chart, which are withheld according to
Exemption 7(C), were properly withheld, including: Bates ## 00238-239, 00243, 00246,
00314 00455, 00456, 00464-466, 00535, 00608, 00612, 00622, 00626, 00638, 00639-
643, 00653, 00877, 00886, 001036. Further, I find that Bates # 00623 can also be
withheld pursuant to Exemption 7(C).3 Some of these documents, as indicated above, are
also properly withheld under Exemption 7(A).
3. Documents Withheld Pursuant to Exemption 5 and Attorney-Client Privilege
Exemption 5 allows agencies to withhold “inter-agency or intra-agency
memorandums or letters which 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). Exemption 5 serves to
incorporate the privileges the government would enjoy under the relevant statutory or
case law in the pretrial discovery context. F.T.C. v. Grolier Inc., 462 U.S. 19, 27 (1983)
(quoting Renegotiation Bd. v. Grumman Aircraft Engineering Corp., 421 U.S. 168, 184
(1975)). The attorney-client privilege is one such evidentiary privilege encompassed by
Exemption 5. See, e.g., Tax Analysts v. IRS, 294 F.3d 71, 76 (D.C. Cir. 2002) (citing
Burka v. HHS, 87 F.3d 508, 516 (D.C. Cir. 1996)); see also Mead Data Central, Inc. v.
U.S. Dep’t of Air Force, 566 F.2d 242, 252 (D.C. Cir. 1977).
3
The description of the document, “Memorandum to File from Moss memorializing her
impression of a telephone conversation with a third party taxpayer regarding an interview
pursuant to a summons,” is almost identical to that of Bates # 455, “Memorandum to File
written by Moss memorializing her impressions of a telephone conversation with a third
party regarding a summon [sic].” App. A.
18
The purpose of the attorney-client privilege is to protect a client’s confidences to
his or her attorney, thereby encouraging an open and honest relationship between the
client and the attorney. Coastal States Gas Corp. v. Dep’t of Energy, 617 F.2d 854, 862
(D.C. Cir. 1980). Federal courts have extended the privilege in the converse direction,
protecting attorney’s written communication to a client, with the purpose of again
protecting against inadvertent disclosure of client’s confidences; however, the court of
appeals has determined that communication from the attorney is only protected if it is
based on confidential information provided by the client. Mead Data Central, Inc., 566
F.2d at 254. Thus, “when an attorney conveys to his client facts acquired from other
persons or sources, those facts are not privileged.” In re Sealed Case, 737 F.2d 94, 99
(D.C. Cir. 1984) (citing Brinton v. Dep’t of State, 636 F.2d 600, 604 (D.C. Cir. 1980),
cert. denied, 452 U.S. 905 (1981)).
As indicated in the chart, plaintiffs concede the application of Exemption 5 to
some of these documents. I will now consider the documents to which the plaintiffs
object in response to defendant’s assertion of Exemption 5 and the attorney-client
privilege. In determining whether the attorney-client privilege exists in a FOIA context,
the court of appeals has considered whether the information in the withheld documents
“was communicated to or by an attorney as part of a professional relationship in order to
provide the [agency] with advice on the legal ramifications of its actions” and whether
“the information is confidential.” Mead Data Central, Inc., 566 F.2d at 253. As the
plaintiffs rightly argue, the mere fact that an attorney is listed as a recipient or author
does not make a document protected under this privilege. Pls. Memo. at 22.
Nevertheless, all of the documents in question, save two, Bates ## 00242 and 00457-461,
19
are clearly communications to or by an attorney and relate to advice on the legal
ramifications of agency action. See, e.g., App. B at Row 19 (Bates # 001036: “e-mail
between Moss and IRS Counsel seeking advice on addressing a third party’s
noncompliance with summons”). Further, plaintiffs provide no evidence to suggest that
the confidentiality of the documents is in question. Thus, I find Bates ## 00231, 00238-
239, 00456, 00464-466, 00496, 00532-533, 0633-634, 00757-758, and 001036.
Plaintiffs also argue that factual information should be segregated and disclosed.
Id. On this point, plaintiff is incorrect. Factual information provided by the client to the
attorney is the essence of the privilege; only when the attorney conveys facts acquired
from a third party does the protection of the privilege come into question. In re Sealed
Case, 737 F.2d at 99 (citing Briton, 636 F.2d at 604)). There is no such instance here,
and the IRS may continue to withhold the content of these documents in their entirety.
I turn now to the two documents which do not clearly represent an attorney-client
communication: Bates ## 00242 and 00457-461. The first document, # 00242, is a
“‘Conference or Contact Memorandum’ written by revenue agent regarding a third party
taxpayer’s interview.” Singh Decl. 16. I believe that this document was inadvertently
withheld under Exemption 5 and that the IRS would have grounds to withhold this
document that were not asserted. In cases involving privilege in the discovery context, I
have found that inadvertent mistakes on a privilege log do not justify the harsh sanction
of the production of a privileged document. See, e.g., Trustees of Elec. Workers Local
No. 26 Pension Trust Fund v. Trust Fund Advisors, Inc., No. 03-CV-2332, 2010 WL
558719, *8 n.8 (D.D.C. Feb. 12, 2010)). I will not impose such a sanction here. Instead,
I will order the IRS to show cause, within 10 days of this Order, why it should not
20
disclose Bates # 00242. Further, for the reasons stated below, I find that the IRS properly
withheld Bates ## 00457-461 according to Exemption 5 and the work-product privilege;
therefore, I will not need to consider whether it was also properly withheld under the
attorney-client privilege.
4. Documents Withheld Pursuant to Exemption 5
and the Attorney-Work Product Privilege
Plaintiffs object to the IRS’s claim of attorney-work product privilege in
reference to the 7 documents listed in their Appendix C. App. C to Pls. Mot. Further,
plaintiffs ask that the Court require the IRS to produce the identities of the third parties in
those instances where it asserted the attorney-work product doctrine and for an in camera
review of the 7 contested documents. Pls. Mot. 1-2.
Like the attorney-client privilege, the work-product privilege falls within the
protection of Exemption 5. N.L.R.B. v. Sears, Roebuck & Co., 421 U.S. at 154. The
work-product privilege protects written materials lawyers prepare “in anticipation of
litigation.” Fed. R. Civ. P. 26(b)(3). According to Federal Rule 26(b)(3), “documents
and tangible things that are prepared in anticipation of litigation or for trial by or for
another party or its representative” may not be discovered. Fed. R. Civ. P. 26(b)(3)(A).
The purpose of the privilege is to protect the adversary process by ensuring that lawyers
work with a “degree of privacy, free from unnecessary intrusion by opposing parties and
their counsel.” Hickman v. Taylor, 329 U.S. 495, 510 (1947).
The attorney work-product privilege is not an absolute protection; rather, it is
“qualified and may be overcome by need and undue hardship.” In re Seagate
Technology, LLC, 497 F.3d 1360, 1375 (Fed. Cir. 2007) (citing Fed. R. Civ. P. 26(b)(3)).
21
A distinction is drawn between work product that is factual and work product that is the
result of mental processes such as plans, strategies, tactics, and impressions, whether
memorialized in writing or not. Id. A showing of substantial need and inability to obtain
the equivalent without undue hardship can overcome the privilege as to factual work
product. See Fed. R. Civ. P. 26(b)(3); see also Upjohn Co. v. United States, 449 U.S.
383, 400 (1981); Director, Office of Thrift Supervision v. Vinson & Elkins, LLP, 124
F.3d 1304, 1307 (D.C. Cir. 1997).
I have already found Bates ## 00231, 00238-239, 00240-241, 00243, and 001036
to be properly withheld under other exemptions; therefore, I will not have the occasion to
consider whether they were also properly withheld here, as they will be withheld
regardless. As for Bates # 00242, I have asked the IRS to provide supplemental
information supporting its decision to withhold the document. Thus, the only document
that remains is Bates ## 00457-461, a “[m]emorandum from DOJ to the IRS/DOJ
working group regarding international cases, providing litigation guidelines for enforcing
IRS summonses issued under Bank of Nova Scotia rules.” App. C to Pls. Mot.
The IRS has withheld Bates ## 457-461 according to Exemption 5, asserting
attorney-client and work-product privileges, and to Exemption 7(E), which allows the
agency to withhold from disclosure information that “would disclose techniques and
procedures for law enforcement investigations or prosecutions, or would disclose
guidelines for law enforcement investigations or prosecutions if such disclosure could
reasonably be expected to risk circumvention of the law.” 5 U.S.C. § 552(b)(7)(E). The
plaintiffs have not objected to the application of Exemption 7(E). Instead, the plaintiffs
argue generally that the work-product privilege is improperly applied because the
22
documents were not created in anticipation of litigation and that the IRS did not release
factual portions of the withheld documents. Pls. Memo. at 25. The IRS claims that the
memorandum sets forth “litigation guidelines for enforcing IRS summons” and that
disclosure of the memorandum “could provide parties who do not wish to comply with
the summons with information they could use to fight or otherwise circumvent the
summons.” Def. Opp. 18-19. As such, the IRS argues that the memorandum could be
used to circumvent the law. Id. at 19. This rationale also indicates that the document is
used in preparation of potential litigation to enforce a summons. Thus, under either
Exemption 5 or 7, the IRS has properly withheld the document and will not be forced to
disclose it.
5. Documents Withheld Pursuant to Exemption 5 and Deliberative Process Privilege
Plaintiffs object generally to the IRS’s application of Exemption 5 and the
deliberative process privilege, without naming specific documents. Pls. Memo. 18-21.
Instead, plaintiffs assert that the privilege is overly applied in this case and that “there is a
good possibility that numerous documents Moss and other IRS employees working on
the ‘V.I. Project’ have received qualify as the IRS’s ‘working law’ and should be
disclosed as they would fall within the definition of [requested information].” Pls. Memo.
20-21.
The deliberative process privilege provides protection for those documents which
reflect “advisory opinions, recommendations, and deliberations that are part of a process
by which Government decisions and policies are formulated.” Dep’t of the Interior v.
Klamath Water Users Protective Assoc., 532 U.S. 1, 8-9 (2001) (citing N.L.R.B. v. Sears,
Roebuck & Co., 421 U.S. at 150). The purpose of the privilege is three-fold: first, it
23
“protects candid discussions within an agency;” second, “it prevents public confusion
from premature disclosure of agency opinions before the agency established its final
policy;” and, third, “it protects the integrity of an agency’s decision,” preventing the
public from judging officials based on information they may have considered prior to
issuing their final decision. Alexander v. F.B.I., 192 F.R.D. 50, 55 (D.D.C. 2000) (citing
Judicial Watch v. Clinton, 880 F. Supp. 1, 12 (D.D.C. 1995), aff’d, 76 F.3d 1232 (D.C.
Cir. 1996)). The privilege promotes the quality of agency decision-making by protecting
decision-makers’ ability to communicate freely and privately without concern that
deliberations will become the subject of discovery. Klamath Water Users Protective
Assoc., 532 U.S. at 8-9.
For the privilege to apply, communications must be pre-decisional. N.L.R.B. v.
Sears, Roebuck & Co., 421 U.S. at 151. Not every document related to a given decision
will be protected by the privilege simply because it is pre-decisional. N.L.R.B. v. Jackson
Hosp. Corp., 257 F.R.D. 302, 308 (D.D.C. 2009). Pre-decisional documents must also be
deliberative to qualify for the privilege. Id. “A document is ‘predecisional’ if it plays a
role in the agency’s decision-making process, and information within that document is
deliberative if it involves the weighing of arguments for and against various outcomes.”
Wilson v. Dep’t of Justice, 87-CV-2415, 1991 WL 111457, at *4 (D.D.C. June 13, 1991)
(citing Access Reports v. Dep’t of Justice, 926 F.2d 1192 (D.C. Cir. 1991)). A document
is deliberative if it reflects the give-and-take of the consultative process. Coastal States
Gas Corp., 617 F.2d at 866 (D.C. Cir. 1980). In other words, “the document must be a
direct part of the deliberative process in that it makes recommendations or expresses
opinions on legal or policy matters.” Vaughn v. Rosen, 523 F.2d 1136, 1144 (D.C. Cir.
24
1975). Thus, purely factual material is not protected, “‘unless the material is so
inextricably intertwined with the deliberative sections of documents that its disclosure
would inevitably reveal the government’s deliberations.’” N.L.R.B. v. Jackson Hosp.
Corp., 257 F.R.D. at 308 (quoting In re Sealed Case, 121 F.3d 729, 737 (D.C. Cir.
1997)). Therefore, documents will not be protected in their entirety, unless redacting the
portions of the documents that reveal deliberations is impossible. Id. at 309. Documents
that “‘memorialize or evidence the policy an agency ultimately adopts on an issue’” or
“documents that the agency used in dealing with the public” are not privileged. Id.
Plaintiffs rest their objection to the use of the privilege to withhold documents on
mere speculation that some of the documents might include working law. I cannot find
that the exemption was improperly withheld on mere speculation, nor I will order the
defendant to release the documents because of this same speculation.
6. Documents Withheld Pursuant to Exemption 3
The IRS withheld a large number of the documents according to 5 U.S.C. §
552(b)(3), which provides an exemption from production under FOIA for information
“specifically exempted from disclosure by statute.” Id. The plaintiffs object to the
withholding of 37 documents pursuant to this exemption, hereinafter referred to as
Exemption 3. See App. A to Pls. Mot. (“App. A”). For this FOIA exemption to apply,
the statute in question must require that “the matters be withheld from the public in such
a manner as to leave no discretion on the issue,” or it must “[establish] particular criteria
for withholding or [refer] to particular types of matters to be withheld.” Id. Thus, for the
statutory exemption to apply, the IRS must be able to look to another statute to meet the
exemption.
25
The IRS argues that 26 U.S.C. § 6103(a) mandates that tax return information be
held confidential, except for a number of strictly construed exemptions. Def. Memo. 5
(citing 26 U.S.C. § 6103(a); and Church of Scientology of Cal. v. IRS, 484 U.S. 9(1987)). Plaintiffs do not resist the assertion that § 6103 meets the standard for
Exemption 3, but they argue that the IRS wrongly applied the exemption to 37
documents. Pls. Memo. 17; see also App. A.
According to the statute, “return information” has a very broad definition,
encompassing:
a taxpayer’s identity, the nature, source, or amount of his
income, payments, receipts, deductions, exemptions,
credits, assets, liabilities, net worth, tax liability, tax
withheld, deficiencies, overassessments, or tax payments,
whether the taxpayer’s return was, is being, or will be
examined or subject to other investigation or processing, or
any other data, received by, recorded by, prepared by,
furnished to, or collected by the Secretary with respect to a
return or with respect to the determination of the existence,
or possible existence, of liability (or the amount thereof) of
any person under this title for any tax, penalty, interest,
fine, forfeiture, or other imposition, or offense, and . . . any
part of any written determination or any background file
document relating to such written determination.
26 U.S.C. § 6103(b)(2)(A-B).
Plaintiffs argue that the IRS has: (1) over-applied Exemption 3, by withholding
all third-party information; and (2) withheld information that, under agency regulations,
plaintiffs should have been given. Pls. Memo. 17. Plaintiffs further assert that the IRS
cannot withhold the identity of and the content of conversations with third parties the IRS
interviewed regarding the tax liability of plaintiffs. Id. I do not reach that question. First,
I have found that each of the documents in question are properly withheld under other
26
exemptions. Second, several of the documents withheld under Exemption 3 are also
withheld under Exemption 6 and plaintiffs do not object that the documents are properly
withheld under this exemption. Thus, the IRS may continue to withhold the documents.
The only document to which plaintiffs object to the application of Exemption 3
and for which I have not found another exemption applies is Bates # 00242. I have
already ordered defendant to provide supplemental briefing on the application of the
Exemption 5 to this document. Upon receiving this, I will make a determination
regarding Bates # 00242.
Lastly, I note that plaintiffs object to the IRS withholding Bates ## 00497-498
and 00612 according to Exemption 3. See Pls. Mot. at App. A. The IRS did not list
these documents as withheld according to Exemption 3. Plaintiffs do not object to the
withholding of the documents under any of the exemptions by which they were actually
withheld. Thus, I find that the IRS may continue to withhold the documents.
D. Senders and Recipients of Withheld E-mails
Plaintiffs also argue that even if the content of the withheld e-mails are exempt
from disclosure, the sender and receiver information should be disclosed. Plaintiffs’
Reply to the Defendant’s Response in Opposition to the Plaintiffs’ Motion for Summary
Judgment [#17] at 3. For many of the documents where this information has not been
disclosed, defendant has not claimed an exemption, such as exemption 6, specifically to
withhold the name of the IRS Counsel, other IRS employees, and DOJ Counsel. The
IRS must demonstrate that it has released all reasonably segregable portions of each
withheld document. See 5 U.S.C. § 552(b). The IRS “cannot justify withholding an
entire document simply by showing that it contains some exempt material.” Mead Data
27
Central, 566 F.2d at 260. While Singh indicates that she is “aware of the duty to
segregate the portion of a record that can be released from withheld portions,” she does
not indicate why sender and receiver information was not disclosed for all withheld e-
mails. Singh Decl. ¶ 10. I will order, within 10 days, the IRS to show cause as to why the
sender and recipient information of all withheld e-mails should not be disclosed to
plaintiffs.
IV. Conclusion
For the reasons stated herein, I will deny pendente lite Plaintiffs’
Motion for Summary Judgment [#11] and Internal Revenue Service’s Motion for
Summary Judgment [#14]. Defendant is ordered to show cause in 10 days why Bates #
00242 and sender and receiver information for withheld e-mails should not be disclosed.
SO ORDERED.
Digitally signed by John
M. Facciola
Date: 2010.06.02
15:02:01 -04'00'
JOHN M. FACCIOLA
UNITED STATES MAGISTRATE JUDGE
28
ADDENDUM
Apparently unwilling to ruin the surprise, neither party advised this Court that
another court, the United States District Court for the U.S. Virgin Islands, was
simultaneously entertaining a challenge by different but related plaintiffs to the IRS’
refusal to disclose the records at issue in this case. This led both courts to expend the
time reaching independent conclusions, a process that could have been avoided, or at
least shortened substantially, had plaintiffs only informed both courts of the pendency of
the challenges and suggested that one stay its hand until the other had ruled.
That being water under the bridge, it makes sense to review both opinions now so
that the differences between them can be highlighted, a process that one can hope will
expedite further review of both of them.
First, this Court rejected plaintiffs’ contention that the cut-off date for the search
should be January 10, 2008, while the district court in the U.S. Virgin Islands held that
using the date of the request, June 6, 2007, was unreasonable and that there was a
genuine issue of material fact as to when the IRS began its search. As I have explained,
however, the difference between using the request date and the search date is
insignificant and plaintiffs’ contention that the Court use January 10, 2008, the date the
IRS asked for more time to complete the search, has nothing to recommend it.
Second, the Virgin Islands court held that while section 6103 applied and justified
the exemption the IRS claimed, the IRS must still segregate and disclose data, including
names of employees, that could not be classified as taxpayer data. It was unnecessary for
me to reach that issue, because I held that the concerned documents were exempt under
other exemptions.
29
Third, the Virgin Islands court held that items three and four in Appendix C,
described as “Moss’s notes and impressions of a third party interview” and “conference
or contact memorandum written by revenue agent regarding a third party taxpayer’s
interview” were not covered under the attorney-client and work-product privileges.
Again, it was unnecessary for me to reach that issue since I held those documents to be
exempt under other exemptions or requested additional briefing.
Fourth, while the Virgin Islands court held that IRS must disclose the names and
personal information of IRS employees, I have required additional briefing of that issue.
Finally, in all other respects, the two courts agreed.
30