Vern Mckinley v. Fed. Housing Finance Agency ( 2014 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 8, 2013 Decided January 10, 2014
No. 12-5267
VERN MCKINLEY,
APPELLANT
v.
FEDERAL HOUSING FINANCE AGENCY,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:10-cv-01165)
Michael Bekesha argued the cause. With him on the briefs
was Paul J. Orfanedes.
Steve Frank, Attorney, U.S. Department of Justice, argued
the cause for appellee. With him on the brief were Stuart F.
Delery, Assistant Attorney General, Ronald C. Machen Jr., U.S.
Attorney, and Leonard Schaitman, Attorney.
Before: GARLAND, Chief Judge, and ROGERS and BROWN,
Circuit Judges.
Opinion for the Court filed by Chief Judge GARLAND.
2
GARLAND, Chief Judge: Appellant Vern McKinley seeks
attorneys’ fees following his largely unsuccessful attempt to
obtain documents from the Federal Housing Finance Agency
under the Freedom of Information Act. Although the district
court doubted that McKinley was eligible for fees, it determined
that, even if McKinley were eligible, he was not entitled to
attorneys’ fees. We review such a determination only for an
abuse of discretion. Because we find none, we affirm the
district court’s denial of fees.
I
Vern McKinley is a “consultant, legal advisor[,] regulatory
policy expert,” and author “on financial sector issues.”
Appellant’s Br. 3. In May 2010, he filed the Freedom of
Information Act (FOIA) request, see 5 U.S.C. § 552(a)(3)(A),
that led to the present controversy. In that request, he sought
from the Federal Housing Finance Agency (FHFA) “any and all
communications and records concerning . . . how the FHFA and
the Department of the Treasury determined that
conservatorship,” instead of receivership, “was the preferred
option” for addressing the unstable condition of the Federal
National Mortgage Association (“Fannie Mae”) and the Federal
Home Loan Mortgage Corporation (“Freddie Mac”) in early
September 2008. McKinley v. Fed. Hous. Fin. Agency, 789 F.
Supp. 2d 85, 87 (D.D.C. 2011) (citation and internal quotation
marks omitted); see also James B. Lockhart, Director, Fed.
Hous. Fin. Agency, Statement (Sept. 7, 2008) (announcing that,
in order to “address[] safety and soundness concerns,” the
agency “has placed Fannie Mae and Freddie Mac into
conservatorship”).
In response to McKinley’s request, the FHFA searched for
and, by July 2010, identified three documents that came within
the terms McKinley had specified. McKinley, 789 F. Supp. 2d
3
at 87. McKinley sought disclosure of just two of the responsive
documents. Id. at 88. According to the “Vaughn index”
prepared by the agency to describe the documents,1 the first of
these was a three-page “[u]ndated draft chart containing
discussion of the features, strengths and weaknesses” of a
receivership and a conservatorship. Declaration of Frank R.
Wright, Attachment A, Final Vaughn Index. The second was a
ten-page “August 18, 2008 draft memorandum on options for
addressing a troubled regulated entity.” Id. The FHFA did not
find final versions of either document in its files. Id. Upon
providing a description of the two documents, the agency
notified McKinley of its decision to withhold them. The
documents, the FHFA said, were protected against disclosure by
both the deliberative process privilege and the attorney work-
product privilege. See 5 U.S.C. § 552(b)(5) (authorizing the
withholding of “intra-agency memorandums or letters which
would not be available by law to a party other than an agency in
litigation with the agency”).
McKinley, who had filed suit before the FHFA completed
its search, contested the asserted exemptions in the district court.
On June 7, 2011, the court ruled that the agency had properly
invoked the deliberative process privilege because the
documents were both “predecisional” and part of the
deliberative process, and their disclosure would necessarily
“harm an agency’s decisionmaking process” by stifling internal
agency debate. McKinley, 789 F. Supp. 2d at 88 (quoting
McKinley v. Bd. of Governors of Fed. Reserve Sys., 647 F.3d
331, 339 (D.C. Cir. 2011)) (internal quotation marks omitted).
The court went on, however, to remind the FHFA that the
deliberative process privilege does “not protect documents in
their entirety” and that, “if the government can segregate and
disclose non-privileged factual information within a document,
1
See Vaughn v. Rosen, 484 F.2d 820, 827 (D.C. Cir. 1973).
4
it must.” Id. at 89 (quoting Loving v. Dep’t of Def., 550 F.3d 32,
38 (D.C. Cir. 2008)) (internal quotation marks omitted). This
meant that the propriety of the agency’s decision to bar
disclosure of the documents in their entirety turned on its second
assertion of privilege: the attorney work-product privilege.
Unlike the deliberative process privilege, the latter “does not
require the segregation of disclosable material.” Id. (citing
Judicial Watch, Inc. v. Dep’t of Justice, 432 F.3d 366, 371 (D.C.
Cir. 2005)).
After reviewing the two documents in camera, the district
court concluded that the work-product privilege did not apply to
either document because neither was “prepared in anticipation
of litigation.” McKinley v. Fed. Hous. Fin. Agency, No. 10-
1165, slip op. at 2 (Aug. 26, 2011) (quoting FED. R. CIV. P.
26(b)(3)(A)) (internal quotation marks omitted). Consequently,
the court ordered the FHFA to disclose all portions of the
documents “reasonably segregable from the material . . .
protected by the deliberative-process privilege.” Id. at 4. The
FHFA complied, producing heavily redacted versions of both
documents. See Joint Status Report, Attachment A (Sept. 16,
2011). Thereafter, the district court granted the agency’s motion
for summary judgment, finding that the FHFA had satisfied its
obligations under FOIA. McKinley v. Fed. Hous. Fin. Agency,
No. 10-1165, 2012 WL 1415518, at *2-3 (Jan. 25, 2012).
McKinley then moved for attorneys’ fees. On June 27,
2012, the district court denied the motion. McKinley v. Fed.
Hous. Fin. Agency, No. 10-1165, slip op. at 4-6 (June 27, 2012)
(hereinafter Attorneys’ Fees Opinion). The court first expressed
“serious doubts” about whether McKinley was even eligible for
fees under FOIA. Id. at 4. FOIA permits the award of
attorneys’ fees to plaintiffs who have “substantially prevailed,”
5 U.S.C. § 552(a)(4)(E)(i), and, although the “FHFA did turn
over additional pages . . . pursuant to a court order,” the court
5
doubted whether the receipt of two heavily redacted documents
“amount[ed] to ‘substantially’ prevailing.” Attorneys’ Fees
Opinion, slip op. at 4. The court found that it was unnecessary
to address that question, however, because it determined that
McKinley was not entitled to fees even if he were eligible for
them. Id. at 6.
II
To obtain attorneys’ fees under FOIA, a plaintiff must
satisfy two requirements. First, he must be eligible for fees,
which requires that he “substantially prevail” as defined by 5
U.S.C. § 552(a)(4)(E)(ii). Second, an eligible plaintiff must
demonstrate that he is entitled to fees. See Cotton v. Heyman,
63 F.3d 1115, 1117 (D.C. Cir. 1995). On appeal, McKinley
challenges the district court's reasoning with respect to both
requirements.
We find the plaintiff’s challenge to the district court’s
treatment of the first requirement perplexing. As should be
apparent from our recitation of the district court’s opinion, the
court could not have incorrectly decided the question of
eligibility because it did not decide the issue at all. Rather, it
assumed arguendo that McKinley satisfied the eligibility
requirement and concluded that he nonetheless failed to satisfy
the entitlement requirement. The district court’s perfectly
appropriate decision not to decide a question it did not have to
decide did not disadvantage McKinley in any way. Cf. Earle v.
Dist. of Columbia, 707 F.3d 299, 304 (D.C. Cir. 2012) (“In our
circuit it is a venerable practice, and one frequently observed, to
assume arguendo the answer to one question . . . in order to
resolve a given case by answering another and equally
dispositive one.” (citation and internal quotation marks
omitted)). If McKinley has a claim on appeal, then, it is limited
to his challenge to the court’s determination that he was not
6
entitled to attorneys’ fees. We therefore move directly to that
question.
This circuit has long applied a multi-factor standard for
evaluating whether a plaintiff who is eligible for attorneys’ fees
is also entitled to such fees. See, e.g., Nationwide Bldg. Maint.,
Inc. v. Sampson, 559 F.2d 704, 712, 714 (D.C. Cir. 1977). Four
non-exclusive factors typically govern the entitlement inquiry:
“(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. Tax Analysts v. U.S.
Dep’t of Justice, 965 F.2d 1092, 1093 (D.C. Cir. 1992); see
Davy v. CIA, 550 F.3d 1155, 1159 (D.C. Cir. 2008). In practice,
we have often combined the second and third factors into a
single factor assessing whether a plaintiff “has ‘sufficient
private incentive to seek disclosure’” of the documents without
expecting to be compensated for it. Davy, 550 F.3d at 1160
(quoting Tax Analysts, 965 F.2d at 1095). We review the district
court’s appraisal and balancing of those factors solely for abuse
of discretion. Id. at 1158; see Brayton v. Office of the U.S.
Trade Representative, 641 F.3d 521, 524 (D.C. Cir. 2011).
The first factor considers the significance of the
contribution that the released information makes to the fund of
public knowledge. See Cotton, 63 F.3d at 1120. The district
court found that this first factor “strongly counsels” against
awarding fees, reasoning that the two documents McKinley
ultimately obtained were so heavily redacted that they
contributed only “scant” information to the public record.
Attorneys’ Fees Opinion, slip op. at 4. We detect no abuse of
discretion in that finding.
Of the thirteen redacted pages that the FHFA produced,
McKinley draws our attention to just three unredacted phrases
7
in the first document that he claims contribute to the fund of
public knowledge: “public perception,” “unsafe or unsound
practices,” and “labor intensive.” He maintains that those
phrases publicly disclose, for the first time, the considerations
that played a role in the agency’s decision to place Fannie Mae
and Freddie Mac into conservatorships. Appellant’s Br. 16.
But, in context, it is not at all clear what those phrases mean.
The first document is a table with a “topic” column and two
side-by-side columns concerning receiverships and
conservatorships respectively. See Joint Status Report,
Attachment A. On the face of the document, the three phrases
appear to be nothing more than boilerplate terms used to
compare the strengths and weaknesses of any receivership and
any conservatorship in any case. Moreover, because the phrases
are contained in a document marked “draft,” it is not clear that
they played a role in the agency’s final decision. Nor does
McKinley argue that, even if “not of immediate public interest,”
the disclosed information “nevertheless enables further research
ultimately of great value and interest,” Davy, 550 F.3d at 1162
n.3.2
2
With respect to the second document, McKinley does not draw
our attention to any unredacted text. Instead, he points to the date of
the document (August 18, 2008) as providing a public benefit,
contending it shows that the FHFA did not begin to analyze the
condition of Fannie Mae and Freddie Mac until three weeks before
they were placed into conservatorship. But the date of the document
cannot show what McKinley contends because the other two
documents identified by the FHFA in response to McKinley’s FOIA
request (the three-page draft that the FHFA produced and the third
document that the agency identified but McKinley did not request)
were undated. See Final Vaughn Index. Nor is creating a document
the only way in which an agency can begin to analyze an unstable
financial situation.
8
The second and third entitlement factors, considered
together, address whether the plaintiff had a “sufficient private
incentive” to pursue his FOIA request even without the prospect
of obtaining attorneys’ fees. Davy, 550 F.3d at 1160 (citation
and internal quotation marks omitted). In the district court, the
agency argued that McKinley’s work as a regulatory policy
expert gave him a commercial incentive to seek disclosure of the
documents. Attorneys’ Fees Opinion, slip op. at 5. McKinley
argued that he had no commercial incentive and that his interest
was purely academic. Id. On appeal, he maintains that his
academic interest put him in the same position as the plaintiff in
Davy, a case in which we held that the district court abused its
discretion by concluding that the plaintiff’s “scholarly interest”
“weighed against” him in the award of fees. 550 F.3d at 1161-
62.
Even if we assume arguendo that McKinley has the same
status as Mr. Davy -- an assumption we make to avoid deciding
a question we need not decide -- Davy does not help McKinley’s
case. Here, the district court did not conclude that the second
and third factors “weighed against” the award of fees. Davy,
550 F.3d at 1162 (emphasis added). Rather, it found that they
“neither strongly support . . . nor counsel against” the award of
fees. Attorneys’ Fees Opinion, slip op. at 5. This conclusion is
neither inconsistent with Davy nor an abuse of discretion. The
same is true of the court’s further finding that, “when viewed in
relation to the lack of a quantifiable public benefit, the [two]
factors do little to advance Plaintiff’s position.” Id. (emphasis
added).
The fourth and final factor “considers whether the agency’s
opposition to disclosure had a reasonable basis in law” and
“whether the agency had not been recalcitrant in its opposition
to a valid claim or otherwise engaged in obdurate behavior.”
Davy, 550 F.3d at 1162 (citation and internal quotation marks
9
omitted). McKinley concedes, as the district court found, that
the FHFA’s opposition to disclosure was neither legally
unreasonable nor obdurate. See Appellant’s Br. 18-19
(“McKinley does not dispute that FHFA had a colorable or
reasonable basis for withholding the information.”); cf.
Chesapeake Bay Found., Inc. v. Dep’t of Agric., 11 F.3d 211,
216 (D.C. Cir. 1993) (holding that “the Government need only
have ‘a colorable basis in law’ for the court to consider the
‘reasonable basis in law’ factor in determining a FOIA
plaintiff’s entitlement to attorneys’ fees” (citation omitted)).
The district court pointed out that it had “countenanced the
[agency’s] argument that the documents were protected, either
in whole or in part, by the deliberative process privilege.”
Attorneys’ Fees Opinion, slip op. at 5. Indeed, the court ruled
that the agency had properly invoked the deliberative process
privilege for the two documents, McKinley, 789 F. Supp. 2d at
88-89; instructed the agency to determine whether segregation
and disclosure of non-privileged factual information was
possible, McKinley, slip op. at 3-4 (Aug. 26, 2011); and then
granted summary judgment based on the determinations the
agency made, McKinley, 2012 WL 1415518, at *2-3 (Jan. 25,
2012). Moreover, although the court “ultimately found that the
work product privilege was too attenuated to justify blanket
protection of the documents,” it “noted that the assertion of the
work product privilege was not wholly untenable given the
documents’ mention of the possibility for future litigation.”
Attorneys’ Fees Opinion, slip op. at 5. In the court’s view, “it
was not unreasonable to assert the privilege as a basis for
withholding the information.” Id. at 6. As we have noted,
McKinley does not dispute the point.
Nor was the agency recalcitrant or obdurate. It responded
to McKinley’s FOIA request within twenty working days by
seeking clarification of the scope of the request. Just one month
10
later, it reported the results of its search to McKinley. And
when the district court directed it to consider segregability with
respect to the two documents, the agency responded within three
weeks. On this record, the court’s determination that the fourth
“factor strongly favors against awarding fees and costs,” id. at
6, was well within its discretion.
Given that we have found no abuse of discretion in the
district court’s assessment of each of the factors of the
entitlement inquiry, it should come as no surprise that we
likewise find no abuse in the court’s final balancing. With the
first and fourth factors “strongly” weighing against fees, and the
remaining factors “do[ing] little to advance Plaintiff’s position,”
we could hardly find an abuse of discretion in the court’s
ultimate determination that, based on a “careful balance of the
relevant factors . . . Plaintiff is not entitled to receive an award
of fees and costs.” Attorneys’ Fees Opinion, slip op. at 5-6.
III
For the foregoing reasons, the judgment of the district court
is
Affirmed.