Dorsen v. United States Securities & Exchange Commission

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DAVID M. DORSEN,
Plaintiff,
Civil Action No. 13-00288 (BAH)
v.
Judge Beryl A. Howell
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION,
Defendant.
MEMORANDUM OPINION
Pending before the Court is the plaintiff David M. Dorsen’s motion for attorneys’ fees
and costs, pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552(a)(4)(E)(ii)(II),
and Federal Rule of Civil Procedure 54, against the defendant Securities and Exchange
Commission (“SEC”). See Pl.’s Mot. for Att’ys Fees (“Pl.’s Mot.”) at 1, ECF No. 5. The
underlying FOIA request sought records which the plaintiff believed were relevant to overturn a
substantial civil judgment in favor of the SEC against the plaintiff’s client, Michael Lauer. See
generally id. at 4–12. Less than one month after the plaintiff initiated this lawsuit, the defendant
released three responsive documents, totaling five pages, that had previously been withheld, see
Pl.’s Mot. Exs. B, C,1 prompting the plaintiff to assert that he is a prevailing party both eligible
and entitled to the attorneys’ fees and costs demanded. Id. at 1–3, 13–14. For the reasons set
forth below, the plaintiff’s motion is denied.
1
The defendant released two documents on March 13, 2013, reflecting the Commission’s authorization, based on
staff information, to conduct an investigation of Lauer and his hedge funds and the Commission’s vote on the same.
See Pl.’s Mot. Ex. B. On March 28, 2013, the defendant released a version of a previously released document with
fewer redactions. See id., Ex. C.
1
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Protracted SEC Litigation
For over a decade, Michael Lauer and the SEC have been parties to litigation that began
in 2003, when the SEC authorized a formal investigation and the filing of a civil complaint
against Lauer and two companies operating as hedge fund asset managers, alleging that Lauer
overstated the value of the funds and manipulated the value of the funds’ securities in order to
increase his fees. See Pl.’s Mot. at 4–12; Def.’s Opp’n Mot. Att’ys Fees (Def.’s Opp’n) at 2,
ECF No. 8; see also SEC v. Lauer, No. 9:03-cv-80612, 2008 WL 4372896, at *2–13 (S.D. Fla.
Sept. 24, 2008), aff’d, 478 F. App’x 550 (11th Cir. 2012), cert. denied, 133 S. Ct. 545 (2012).
During the course of the SEC civil action, Lauer’s assets were frozen, and as a result Lauer
defended himself pro se throughout the civil litigation. Pl.’s Mot. at 5. On September 24, 2008,
the U.S. District Court for the Southern District of Florida granted summary judgment in favor of
the SEC and ordered Lauer to pay $62,596,807.74 in disgorgement, prejudgment interest, and a
civil penalty. See SEC v. Lauer, 2008 WL 4372896, at *26–27; Def.’s Opp’n at 2–3; Pl.’s Mot.
at 10. On appeal of the judgment to the U.S. Court of Appeals for the Eleventh Circuit, Lauer
retained the plaintiff for oral argument and for court-ordered supplemental briefing. Pl.’s Mot. at
10–11.
The Eleventh Circuit affirmed the district court’s decision in all respects on April 19,
2012, and the Supreme Court denied his petition for certiorari on October 29, 2012. Id. at 11.
Shortly thereafter, in early 2013, the plaintiff filed two motions on Lauer’s behalf to vacate the
judgment and dismiss the complaint on grounds, inter alia, that the SEC had not properly
2
authorized the filing of the suit against Lauer. Id.; Def.’s Opp’n at 3–4.2 Both motions were
denied.3
B. FOIA Lawsuit
Following the Eleventh Circuit’s denial of Lauer’s appeal and while his petition for writ
of certiorari was pending, the plaintiff filed a FOIA request on his client’s behalf with the SEC
on August 27, 2012, seeking disclosure of any agency records:
(1) submitted by the SEC staff to the Commissioners in the matter;
and (2) that indicate that by vote the Securities and Exchange
Commission authorized a formal investigation of Michael Lauer
and the filing of a civil complaint against him. In particular, we
seek the dates and nature of the actions taken or authorized by the
Commission as reflected in the available documents.
Def.’s Opp’n Ex. A (Letter, dated August 27, 2012). On November 5, 2012, the defendant
advised the plaintiff that documents responsive to his request were being withheld under FOIA
Exemption 5, 5 U.S.C. § 552(b)(5), as the documents were “protected from disclosure by the
attorney work-product, deliberative process and/or attorney-client privileges.” Def.’s Opp’n Ex.
B (Letter, dated November 5, 2012, from Dave Henshall, SEC FOIA Branch Chief, to plaintiff),
at 1.
The plaintiff appealed this decision by letter to the defendant on November 13, 2012.
Def.’s Opp’n Ex. C (Pl.’s Appeal Letter); see also Def.’s Opp’n at 4–5. In his appeal, the
plaintiff amended the scope of the request by “narrow[ing] and limit[ing]” the request to “any
and all documents that describe or reflect the collective vote of the Commissioners of the
2
See Mot. to Vacate J. and Dismiss Compl., SEC v. Lauer, No. 9:03-cv-80612 (S.D. Fla. Sept. 24, 2008), ECF No.
2676 (filed February 20, 2013); Mot. to Vacate J. on Grounds of Judicial Misconduct, SEC v. Lauer, No. 9:03-cv-
80612 (S.D. Fla. Sept. 24, 2008), ECF No. 2677 (filed February 20, 2013).
3
Order Denying Mot. to Vacate J. on Grounds of Judicial Misconduct, SEC v. Lauer, No. 9:03-cv-80612 (S.D. Fla.
Sept. 24, 2008), ECF No. 2723 (filed June 13, 2013); Omnibus Order, SEC v. Lauer, No. 9:03-cv-80612 (S.D. Fla.
Sept. 24, 2008), ECF. No. 2724 (filed June 13, 2013).
3
Securities and Exchange Commission that authorized both a formal investigation of Michael
Lauer and the commencement of a civil action against Michael Lauer,” including “just the date
and the vote.” See Def.’s Opp’n Ex. C, at 1. The plaintiff explained that “[a]s narrowed, the
appeal does not seek to learn the votes by the individual Commissioners” or “memoranda, letters,
or instructions that may have accompanied the Commissioners’ votes.” Id.Over three months after submitting the administrative appeal, with no response from the
defendant, the plaintiff filed the instant suit on March 5, 2013, seeking disclosure of documents
“[a]s narrowed during the administrative proceeding,” namely, “for documents that reflect the
decision and the date of the decision of the SEC Commission or any individual (or Duty)
Commissioner to authorize the filing of” the civil action against Lauer in the Southern District of
Florida. See Complaint (“Compl.”) ¶ 18, ECF No. 1. On March 13 and 28, 2013, the defendant
released a total of five pages of three responsive documents that the plaintiff had requested in his
administrative appeal. See Pl.’s Mot. Exs. B, C. The plaintiff subsequently advised this Court
that the merits of the case were resolved. See Notice of Resolution of the Merits of the Case
(“Notice”) at 1, ECF No. 7. The plaintiff’s motion for attorneys’ fees is now before the Court.
See Pl.’s Mot. at 1.
II. LEGAL STANDARD
The FOIA authorizes the award of attorneys’ fees reasonably incurred by a plaintiff who
is in litigation to obtain “the production of any agency records improperly withheld,” 5 U.S.C. §
552(a)(4)(B), when “the complainant has substantially prevailed,” id. at § 552(a)(4)(E)(i). The
D.C. Circuit has construed this statutory provision as “naturally divid[ing] the attorney-fee
inquiry into two prongs, which our case law has long described as fee ‘eligibility’ and fee
‘entitlement.’” Brayton v. Office of the U.S. Trade Representative, 641 F.3d 521, 524 (D.C. Cir.
4
2011) (citing Judicial Watch, Inc. v. U.S. Dep’t of Commerce, 470 F.3d 363, 368–69 (D.C. Cir.
2006)). Thus, to obtain attorneys’ fees under the FOIA, the plaintiff must demonstrate both
eligibility and entitlement to the award. See McKinley v. Fed. Hous. Fin. Agency, 739 F.3d 707,
710 (D.C. Cir. 2014); see also Weisberg v. U.S. Dep’t of Justice, 745 F.2d 1476, 1495 (D.C. Cir.
1984) (“[E]ligibility alone is not enough. . . . the complainant must [also] show that he or she is
‘entitled’ to an award.”).
To satisfy the first requirement regarding eligibility for attorneys’ fees, a claimant must
show that he “substantially prevailed” in the underlying FOIA litigation. See 5 U.S.C. §
552(a)(4)(E)(i). The statute provides that the claimant “substantially prevail[s]” by gaining relief
from either: “(I) a judicial order, or an enforceable written agreement or consent decree; or (II) a
voluntary or unilateral change in position by the agency, if the complainant’s claim is not
insubstantial.” Id. at § 552(a)(4)(E)(ii).4
If the plaintiff has “substantially prevailed and thus may receive fees . . . the court
proceeds to the entitlement prong and considers a variety of factors to determine whether the
plaintiff should receive fees.” Brayton, 641 F.3d at 524 (emphasis in original) (quotation marks
and citations omitted). “This circuit has long applied a multi-factor standard” involving
consideration of “[f]our non-exclusive factors:” “‘(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;
4
The term “not insubstantial,” which was added as part of the FOIA amendments in the OPEN Government Act of
2007, is not defined in the statute. See Pub. L. No. 110-175, 121 Stat. 2524 (codified at 5 U.S.C. § 552 (Supp. III
2009)) [hereinafter 2007 Act]. The House-passed version of these FOIA amendments did not use this term and,
instead, provided that a claimant qualified for attorneys’ fees upon a “voluntary or unilateral change in position by
the opposing party, in a case in which the complainant’s claim or defense was not frivolous.” H.R. Rep. No. 110-45,
at 15 (2007) (Report by House Committee on Oversight and Government Reform). The Senate-passed version of
the bill, which was ultimately enacted as the 2007 Act, adopted the current language, 153 CONG. REC. S15702
(2007), which the lead sponsor of the legislation, Senator Patrick Leahy, explained “would not allow the requester to
recover attorneys’ fees if the requester’s claim is wholly insubstantial,” Id. at S15704 (statement of Sen. Leahy).
Inquiry as to whether the claim is “not insubstantial” is “properly considered under the entitlement prong of the fee
analysis, not the eligibility prong.” Judicial Watch, Inc. v. U.S. Dep’t of Justice, 878 F. Supp. 2d 225, 233 (D.D.C.
2012) (citing Brayton, 641 F.3d at 526).
5
and (4) the reasonableness of the agency’s withholding’ of the requested documents.” McKinley,
739 F.3d at 711 (quoting Tax Analysts v. U.S. Dep’t of Justice, 965 F.2d 1092, 1093 (D.C. Cir.
1992), superseded by statute, 5 U.S.C. § 552(a)(4)(E)(i), as recognized in Summers v. U.S. Dep’t
of Justice, 569 F.3d 500, 502 (D.C. Cir. 2009)); see also Cotton v. Heyman, 63 F.3d 1115, 1117
(D.C. Cir. 1995). No single factor is dispositive. See Judicial Watch, Inc. v. U.S. Dep’t of
Justice, 878 F. Supp. 2d 225, 234 (D.D.C. 2012); Elec. Privacy Info. Ctr. v. U.S. Dep’t of
Homeland Sec., 811 F. Supp. 2d 216, 232 (D.D.C. 2011) (citing Piper v. U.S. Dep’t of Justice,
339 F. Supp. 2d 13, 20 (D.D.C. 2004)). “The sifting of those criteria over the facts of a case is a
matter of district court discretion.” Tax Analysts, 965 F.2d at 1094 (citing Church of Scientology
of California v. Harris, 653 F.2d 584, 590 (D.C. Cir. 1981)); see also Judicial Watch, Inc. v.
FBI, 522 F.3d 364, 371 (D.C. Cir. 2008) (“Balancing these factors is a matter for the district
court.”).
III. DISCUSSION
At the outset, the Court makes clear that any evaluation of the eligibility and entitlement
prerequisites for attorneys’ fees in this case must be focused on the circumstances of Michael
Lauer. Although Lauer’s attorney made the underlying FOIA request, is named as the plaintiff
in the complaint, and filed the pending motion for attorneys’ fees, these actions were taken on
behalf of Lauer. See Compl. ¶ 3 (“Plaintiff David M. Dorsen is an attorney at law who is the
attorney for Michael Lauer [and]… is pursuing this action on behalf of Mr. Lauer”); Pl.’s Mot. at
1 (noting that “[p]etitioner filed a FOIA request … on behalf of Michael Lauer”).5 Indeed, if this
motion were successful, any attorneys’ fees would be awarded to Lauer, not to the plaintiff. See
Astrue v. Ratliff, 130 S.Ct. 2521, 2526 (2010) (attorneys’ fees are awarded to the prevailing party
5
Notably, the plaintiff would not be entitled to attorneys’ fees if he were proceeding pro se. See Burka v U.S. Dep’t
of Health & Human Servs., 142 F.3d 1286, 1289 (D.C. Cir 1998) (litigants who are attorneys are not entitled to
attorneys’ fees under FOIA).
6
on whose behalf the litigation was initiated). Thus, the Court will first examine whether Lauer is
eligible for attorneys’ fees as a “prevailing party” before turning to an analysis of the factors
relevant to consideration of his entitlement to attorneys’ fees. For the reasons set out below,
even if Lauer were eligible for attorneys’ fees, he is not entitled to this award and, consequently,
the motion brought on his behalf by the plaintiff is denied.
A. LAUER IS ELIGIBLE FOR ATTORNEYS’ FEES
The plaintiff addresses the eligibility requirement in an abbreviated manner, relying
entirely on the timing sequence of his FOIA request and subsequent litigation. The plaintiff
argues summarily that Lauer’s eligibility for attorneys’ fees “is clear” because the defendant
initially withheld responsive documents and only produced them shortly after the plaintiff filed
suit. See Pl.’s Mot. at 2. He is nonetheless correct that while the agency’s release of responsive
records was not made pursuant to “a judicial order, or an enforceable written agreement or
consent decree,” the timing of the defendant’s production shortly after initiation of this lawsuit
demonstrates that this suit prodded “a voluntary or unilateral change in position by the agency.”
See 5 U.S.C. § 552(a)(4)(E); see also Pl.’s Reply Supp. Att’ys Fees (“Pl.’s Reply”) at 3, ECF
No. 9 (noting that the plaintiff’s complaint “was meritorious and resulted in the SEC’s providing
the documents sought.”).
In assessing whether a claimant is a “prevailing party” under the FOIA statute, “[i]t is
well established in this circuit that this inquiry is largely a question of causation.” See Weisberg,
745 F.2d at 1496. The D.C. Circuit has long employed a “catalyst theory,” which evaluates
whether a plaintiff has substantially prevailed based on whether he or she “substantially caused
the government to release the requested documents before the final judgment.” Brayton, 641
7
F.3d at 524–25.6 Thus, a plaintiff substantially prevails when he or she can demonstrate that “the
institution and prosecution of the litigation cause[d] the agency to release the documents
obtained during the pendency of the litigation.” Church of Scientology, 653 F.2d at 587; see also
Davis v. U.S. Dep’t of Justice, 610 F.3d 750, 752 (D.C. Cir. 2010) (under the catalyst theory
“plaintiffs [are] eligible for a fee award if the lawsuit substantially caused the agency to release
the requested records”); Burka v. U.S. Dep’t of Health & Human Servs., 142 F.3d 1286, 1288
(D.C. Cir. 1998) (to be eligible the plaintiff must show that the “litigation substantially caused
the requested records to be released”); Brayton, 641 F.3d at 524–25 (finding that defendant
substantially prevailed under FOIA where lawsuit was catalyst for government releasing the
requested documents). The plaintiff “must show that the prosecution of the action could
reasonably be regarded as necessary to obtain the information.” See Weisberg, 745 F.2d at 1496(quoting Cox v. U.S. Dep’t of Justice, 601 F.2d 1, 6 (D.C. Cir. 1979)).
Causation requires more than correlation and, consequently, the D.C. Circuit has made
clear that, in the FOIA attorneys’ fees context, “the mere filing of the complaint and the
subsequent release of the documents is insufficient to establish causation.” Id. Even if not
dispositive, the timing of a release of responsive records after the filing of a FOIA lawsuit “is
certainly a salient factor in the analysis.” Elec. Privacy Info. Ctr., 811 F. Supp. 2d at 232(quoting Judicial Watch, Inc. v. U.S. Dep’t of Homeland Sec., 2009 WL 1743757, at *3 (D.D.C.
2009)) (quotation marks omitted). Something “more than post hoc, ergo propter hoc must be
6
The catalyst theory was utilized by this Circuit until 2001, when the Supreme Court held that “the ‘catalyst theory’
is not a permissible basis for the award of attorney’s fees.” Buckhannon Bd. & Care Home, Inc. v. W. Virginia
Dep’t of Health & Human Res., 532 U.S. 598, 610 (2001). Congress responded by resurrecting the catalyst theory
for FOIA cases in the Open Government Act of 2007. See Judicial Watch, Inc., 878 F. Supp. 2d at 231 n.2 (D.D.C.
2012) (citing Davis v. U.S. Dep’t of Justice, 610 F.3d 750, 752 (D.C. Cir. 2010)). “The purpose and effect of this
law, which remains in effect today, was to change the ‘eligibility’ prong back to its pre-Buckhannon form. The
result is that plaintiffs can now qualify as ‘substantially prevail[ing],’ and thus become eligible for attorney fees,
without winning court-ordered relief on the merits of their FOIA claims.” Brayton, 641 F.3d at 525.
8
shown.” Public Law Educ. Inst. v. U.S. Dep’t of Justice, 744 F.2d 181, 183 (D.C. Cir. 1984).
For example, an agency’s delay in response until after a lawsuit is filed may be due to factors
having nothing to do with the filing of the lawsuit but instead with administrative delays due to
backlogs of FOIA requests, the volume of responsive records requiring processing, the necessity
of inter-agency searches and responses, or a combination of these factors. See, e.g., Church of
Scientology, 653 F.2d at 588 (where “an unavoidable delay accompanied by due diligence in the
administrative process was the actual reason for the agency’s failure to respond to a request, then
it cannot be said that the complainant substantially prevailed in [its] suit.”) (quoting Cox, 601
F.2d at 6) (internal citations omitted); Calypso Cargo, Ltd. v. U.S. Coast Guard, 850 F. Supp. 2d
1, 5–6 (D.D.C. 2012) (finding that plaintiffs were not “eligible” for attorneys’ fees because the
suit did not cause agency’s release of documents, as shown by “detailed timeline” reflecting
“diligent, ongoing process that began before the initiation of the instant lawsuit” to respond to
FOIA request); Short v. U.S. Army Corps of Eng’rs, 613 F. Supp. 2d 103, 106 (D.D.C. 2009)
(“The causation requirement is missing when disclosure results not from the suit but from
delayed administrative processing.”).
In the instant case, the defendant withheld all documents responsive to the plaintiff’s
request based solely on the agency’s assertion that the documents were exempt from disclosure.
Approximately three months after the plaintiff filed an administrative appeal, eight days after this
lawsuit was filed, and “one day after it received the Complaint,” Def.’s Opp’n at 8, the defendant
made the first of two releases of responsive documents to plaintiff as an “exercise [of]
discretion” and without “a waiver of any applicable exemption.” Pl.’s Mot. Ex. B.
Notwithstanding the close proximity in timing between the filing of the lawsuit and the release of
responsive records, the defendant argues that a causal nexus between the suit and the release of
9
the documents is missing since there is “no evidence that, in light of [the plaintiff’s] narrowed
and clarified request on appeal, the SEC would have denied his appeal.” See Def.’s Opp’n at 8.
The defendant makes no effort to argue that any administrative processing delays caused the
delay in production of responsive records; indeed, the number of responsive documents totaling
five pages is clearly not a voluminous amount. See Pl.’s Reply at 3; cf. Elec. Privacy Info., 811
F. Supp. 2d at 232 (finding eligibility where production of “hundreds of pages” of documents
seven months after initial FOIA request could reasonably be attributed to plaintiff filing suit one
month prior to disclosure). Instead, the defendant’s argument boils down to the assertion that if
the plaintiff had patiently waited until resolution of the administrative appeal, he might have
prevailed administratively on the narrowed scope of his request and, thus, the filing of the
lawsuit did not “affect[] anything more than the timing of the release.” Def.’s Opp’n at 8. In
other words, even if the lawsuit expedited the release of the requested information, the defendant
contends this falls short of showing that the lawsuit caused the defendant to release the
documents.7
The defendant overlooks the significant flaw in this argument, namely, that it is
predicated on the notion that the administrative appeal would have resulted in the release of
responsive records. Given the SEC’s assertion of proper withholding under Exemption 5 both in
its original response to the plaintiff’s FOIA request, by letter, dated November 5, 2012, and in its
subsequent letter, dated March 13, 2013, making a “discretionary release,” the prediction that
7
The defendant relies upon Republic of New Afrika v. FBI, 645 F. Supp. 117 (D.D.C. 1986), to support its
contention that a delay in producing documents is not sufficient to “constitute a basis for awarding” attorneys’ fees.
See Def.’s Opp’n at 8 & n.3. To the contrary, that case held that a claimant was entitled to attorneys’ fees in part
because his lawsuit “forced the [agency] to quicken the pace of its disclosures.” Republic of New Afrika, 645 F.
Supp. at 120. Two additional cases from outside this circuit on which the defendant relies refer to a plaintiff’s
entitlement, not his eligibility. See Ellis v. United States, 941 F. Supp. 1068, 1078, 1081 (D. Utah 1996) (finding
that “plaintiffs have substantially prevailed on their FOIA claim,” but that delay in producing documents was not
tantamount to unreasonably withholding documents); Frydman v. U.S. Dep’t of Justice, 852 F. Supp. 1497, 1503,
1505 (D. Kan. 1994) (holding that the plaintiff “substantially prevailed” but that delay in disclosure was not
sufficient to show bad faith withholding of documents).
10
the plaintiff would have been successful on appeal appears purely speculative. See Def.’s Opp’n
Ex. B; Pl’s Mot. Ex. B; see also Judicial Watch, Inc., 878 F. Supp. 2d at 232 (“[I]t was
reasonable for [the plaintiff] to believe that the records would not be unconditionally released
absent a lawsuit, given the [agency’s] initial invocation of Exemptions”). Moreover, this
prediction about the plaintiff’s potential success on administrative appeal implicitly suggests that
the released records were not properly subject to withholding under Exemption 5. The defendant
cannot simultaneously argue that the documents would have been released in response to the
plaintiff’s appeal, and assert that the records were exempt from disclosure and, thus, were
reasonably withheld. See Def.’s Opp’n at 8, 11–12. The defendant cannot have it both ways.
Thus, the Court finds that the lawsuit did, in fact, prompt a speedier release of responsive records
before the resolution of the appeal, as amply confirmed by the timing of the releases shortly after
the initiation of this lawsuit.
Accordingly, the Court finds that the plaintiff has demonstrated that Lauer substantially
prevailed in this case and is therefore eligible for an award of attorneys’ fees.
B. LAUER IS NOT ENTITLED TO ATTORNEYS’ FEES
Even if the plaintiff demonstrates that Lauer is eligible for an award of attorneys’ fees, he
must also show that Lauer is entitled to an award. See Weisberg, 745 F.2d at 1495. As noted,
entitlement is determined under a balancing of four factors: “(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) whether the government has a reasonable basis for withholding the requested
information.” Cotton, 63 F.3d at 1117.8 In practice, the D.C. Circuit has “combined the second
8
Some Judges on the D.C. Circuit have urged elimination of the four-factor test, Morley v. CIA, 719 F.3d 689, 690–
91 (D.C. Cir. 2013) (Kavanaugh, J., concurring) (opining that “[w]e should ditch the four-factor standard”), on the
grounds that this test has “no basis in the statutory text.” Id. at 690 (citing Davy v. CIA, 550 F.3d 1155, 1166 (D.C.
Cir. 2008) (Randolph, J., dissenting); Burka, 142 F.3d at 1293–94 (Randolph, J., concurring)). Moreover, these
11
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.” See McKinley,
739 F.3d at 711 (quoting Davy v. CIA, 550 F.3d 1155, 1160 (D.C. Cir. 2008)) (internal quotation
marks omitted). Moreover, although the Circuit has instructed that no particular factor should be
given disproportionate weight, in some circumstances the final factor may be dispositive.
Specifically, the D.C. Circuit has made clear that “[i]f the Government’s position is correct as a
matter of law, that will be dispositive. If the Government’s position is founded on a colorable
basis in law, that will be weighed along with other relevant considerations in the entitlement
calculus.” Davy, 550 F.3d at 1162 (quoting Chesapeake Bay Found., Inc. v. U.S. Dep’t of Agric.,
11 F.3d 211, 216 (D.C. Cir. 1993)); see also Chesapeake Bay Found, Inc., 11 F.3d at 216
(“[T]here can be no doubt that a party is not entitled to fees if the Government’s legal basis for
withholding requested records is correct.”), abrogation on other grounds recognized by Davy,
550 F.3d at 1159. Indeed, the Circuit recently confirmed the “long-established rule of never
granting a fee award to a plaintiff whose FOIA claim was incorrect as a matter of law.” Brayton,
641 F.3d at 526.
In applying the multi-factor test, as required by binding precedent in this Circuit, the
Court finds that the plaintiff is not entitled to attorneys’ fees because the plaintiff had a
Judges have pointed out that the multi-factor test was “deliberate[ly]” not included by Congress in the statutory text.
Id. The conference committee removed language in the Senate’s version of the attorneys’ fees provision added in
1974, which language would have instructed courts to “consider the benefit to the public, if any, deriving from the
case, the commercial benefit to the complainant and the nature of his interest in the records sought, and whether the
Government’s withholding of the records sought had a reasonable basis in law.” See Nationwide Bldg. Maint., Inc.
v. Sampson, 559 F.2d 704, 711 (D.C. Cir. 1977) (citing 120 CONG. REC. S17014; H.R. Rep. No. 93-1380, at 9–10
(1974) (Conf. Rep.)); see also Morley, 719 F.3d at 690–91 (Kavanaugh, J., concurring). These Judges have
concluded that the test “is arbitrary and inconsistent with the structure and purposes of FOIA.” Id. at 691.
Nevertheless, this test continues to be binding in application to cases before this Court.
12
commercial and personal interest for bringing suit even without reimbursement of fees, and the
defendant’s initial withholding was reasonable.
1. Public Benefit
The public benefit entitlement factor “requires consideration of both the effect of the
litigation for which fees are requested and the potential public value of the information sought.”
Davy, 550 F.3d at 1159; see also McKinley, 739 F.3d at 711 (“The first factor considers the
significance of the contribution that the released information makes to the fund of public
knowledge.”). There is public benefit where release of the requested information “is likely to
add to the fund of information that citizens may use in making vital political choices.” Cotton,
63 F.3d at 1120 (quoting Fenster v. Brown, 617 F.2d 740, 744 (D.C. Cir. 1979)). Generally,
released documents have an insufficient public benefit when they pertain to such highly
particularized interactions with an agency that non-participants would have only a limited
interest in the records as a means of learning what the agency was doing. In other words, a mere
increase in general public knowledge of governmental actions is generally not enough to show a
public benefit. Id.; see also Fenster, 617 F.2d at 744 (“The release of any government document
benefits the public by increasing citizens’ knowledge of their government. Congress did not
have this sort of broadly defined benefit in mind” under FOIA). For example, in Cotton, the
D.C. Circuit found that the release of two Smithsonian museum shop documents did not provide
a public benefit where the “sole purpose” for requesting the information was to “facilitat[e the
plaintiff’s] employment discrimination suit.” See 63 F.3d at 1120. Similarly, in Fenster there
was “little” public benefit in disclosure of a government manual to help contractors handle
performance audits, since only contractors, and not the general public, would be interested in
such documents. See 617 F.2d at 744–45. By contrast, in Davy v. CIA, the court found a great
13
public benefit to a claimant’s request for information relating to the assassination of President
John F. Kennedy. 550 F.3d at 1159.
Here, the plaintiff argues that there is a general public benefit to the release of the
requested information because it will expose “lawlessness that is of major interest to the three
branches of the government . . . and to the public at large.” Pl.’s Mot. at 13. He further asserts
that the public generally “benefits when justice is done and benefits further when improper
activities are brought to light.” Id. at 12. The Court acknowledges the public’s interest in
monitoring how the SEC conducts its business, particularly when exercising its enforcement
powers by initiating investigations and civil actions, and, further, that the plaintiff’s FOIA
request would meet the FOIA’s central purpose of providing some public scrutiny of this agency
activity. Nevertheless, these public benefits are significantly limited given the particularized
nature of the released information. Specifically, the released records reveal only the dates of the
votes cast by specific members of the Commission and the order regarding Lauer, and others,
resulting from that vote. See Pl.’s Mot. Exs. B, C. As the defendant points out, the documents
“confirm[] a fact as to which there has never been any real issue: when the SEC brought a case
against Lauer, the Commission had authorized the filing of the case.” Def.’s Opp’n at 10.
The public knowledge gained by learning the date and result of SEC Commissioners’
votes to investigate and sue Lauer is not a matter of significant or widespread public concern,
such as the assassination of a former President, and is primarily relevant to Lauer in his attempt
to vacate the civil judgment against him. While in this respect the released information has
limited public benefit, it is also the case that such information about the SEC’s exercise of its
enforcement powers will virtually always be limited to particular targets. Although scrutiny of
this agency activity through FOIA requests by individual targets may, therefore, fall short of the
14
general public benefit factor, some value attaches to the disclosure of the SEC’s discrete
decisions by shedding light on this enforcement activity and, in the aggregate, such information
may provide significant public benefit. See Morley, 719 F.3d at 691 (Kavanaugh, J., concurring)
(noting deficiencies in application of public benefit factor since “information sometimes
becomes meaningful only when later pieced together with other information.”). In sum, the
public benefit factor neither favors nor disfavors an award of attorneys’ fees to Lauer.9
2. Commercial Benefit and Nature of Interest
Since the second and third entitlement factors—the commercial benefit of the request and
the nature of the plaintiff’s interest—both pertain to Lauer’s stakes in the litigation, they are
more easily evaluated together. See Tax Analysts, 965 F.2d at 1095. Where a plaintiff has a
commercial benefit or a personal interest in pursuing litigation, “an award of fees is generally
inappropriate” because there is already sufficient motivation for the claimant to bring suit
without the promise of attorneys’ fees. See Fenster, 617 F.2d at 743; see also Cotton, 63 F.3d at
1120 (“When a litigant seeks disclosure for a commercial benefit or other personal reasons, an
award of fees is usually inappropriate.”) (citation omitted). Courts have found that a plaintiff
stands to gain a commercial benefit when he or she seeks documents that could aid his efforts in
ongoing civil litigation. See Republic of New Afrika, 645 F. Supp 117, 121 (D.D.C. 1986);
Simon v. United States, 587 F. Supp. 1029, 1033 (D.D.C. 1984). “The primary purpose of the
FOIA was not to benefit private litigants or to serve as a substitute for civil discovery.” Baldrige
v. Shapiro, 455 U.S. 345, 360 n.14 (1982); see also Simon, 587 F. Supp. at 1033 (noting that
using FOIA “as a substitute for civil discovery . . . is not proper and this court will not encourage
9
In making this assessment, the Court is acutely aware of the shortcomings in this factor identified by Judge
Kavanaugh in Morely. Specifically, “the public-benefit factor is riddled with arbitrariness” since “the degree of
public benefit may become apparent only years … after the litigation has ended,” and “even if the information is of
value only to a small group or segment of the public,” it is unclear why those citizens should be treated “as second
class in determining who gets attorney’s fees.” Morley, 719 F.3d at 691(Kavanaugh, J., concurring).
15
it by awarding fees.”); Republic of New Afrika, 645 F. Supp at 121 (finding personal interest
where plaintiff used FOIA requests to “circumvent civil discovery”). Ongoing litigation
provides “sufficient incentive for parties to bring suit under FOIA regardless of whether fees and
costs are recovered under the Act.” Id.
The defendant argues that Lauer has a commercial interest in the FOIA litigation because
his ultimate goal is to “obtain relief from a $63 million judgment against him.” See Def.’s Opp’n
at 10. The defendant further contends that Lauer has a personal interest because he is seeking the
records to defend himself in his litigation against the defendant. See id. at 11. The plaintiff does
not substantively contest the defendant’s contentions, confirming that the defendant had
“refus[ed] to produce in discovery” the requested documents during prior litigation, Pl.’s Mot. at
12, and that Lauer sought these documents to “vindicate himself,” id., and “rehabilitate” his
image “in the eyes of the community,” which he admits is “a personal, but not commercial,
aspect of his efforts.” Pl.’s Reply at 4. Moreover, the plaintiff concedes that his aim was to use
the FOIA request to develop his arguments in support of his efforts to vacate the civil judgment
against Lauer. See Pl.’s Mot. at 11–12. The plaintiff’s stated motives are primarily commercial
and personal interests, thus this factor weighs against an award of attorneys’ fees.
3. Reasonable Basis for Withholding Information
Even if the plaintiff is otherwise eligible, attorneys’ fees may not be awarded if the
government “had a reasonable basis in law” for withholding the requested documents. See Tax
Analysts, 965 F.2d at 1096. This final entitlement factor evaluates “‘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.”
McKinley, 739 F.3d at 712 (quoting Davy, 550 F.3d at 1162) (internal quotation marks omitted);
16
see also Judicial Watch, Inc., 878 F. Supp. 2d at 237.10 As noted, “[i]f the Government’s
position is correct as a matter of law, that will be dispositive. If the Government’s position is
founded on a colorable basis in law, that will be weighed along with other relevant
considerations in the entitlement calculus.” Davy, 550 F.3d at 1162 (citation omitted). In
response to the criticism that “evaluat[ing] the government’s nondisclosure decisions will open
the floodgates by transforming every motion for attorney fees into a mini-trial on the merits of
the underlying FOIA claim,” the D. C. Circuit has acknowledged as “undeniable that considering
the merits of an agency’s nondisclosure decision will frequently complicate the adjudication of
motions for attorney fees.” Brayton, 641 F.3d at 528.
The defendant claims that this factor does not weigh in the plaintiff’s favor because the
SEC “acted reasonably in initially withholding the records because the produced records contain,
in part, attorney-client communications from Staff to the Commission.” Def.’s Opp’n at 11–
12.11 The plaintiff counters that the defendant had no legal basis for withholding the records
because, first, the documents were eventually disclosed and, second, at least part of the records
10
Judge Kavanaugh has identified the fourth factor regarding the reasonableness of withholding documents as “the
one factor from the current four-factor standard that makes some sense in the FOIA context” because “it discourages
a federal agency from using its superior administrative and litigation resources to unfairly wear down meritorious
FOIA plaintiffs.” Morley, 719 F.3d at 692–93 (Kavanaugh, J., concurring).
11
In fact, the plaintiff’s original request expressly asked for documents from “the SEC staff to the Commissioners in
the matter . . . that indicate that by vote the Securities and Exchange Commission authorized a formal investigation
of Michael Lauer and the filing of a civil complaint against him.” Def.’s Opp’n, Ex. A. The plaintiff narrowed his
request in his administrative appeal and in this lawsuit to “documents that describe or reflect the collective vote of
the Commissioners of the Securities and Exchange Commission that authorized both a formal investigation of
Michael Lauer and the commencement of a civil action against” him. Def.’s Opp’n, Ex. C. “As narrowed, the
appeal does not seek to learn the votes by the individual Commissioners, just the date and the vote.” Id. Even
though the plaintiff’s modified request was more specific, as explained below, the defendant still had a reasonable
basis in law to justify the withholding.
17
were “covered by FOIA” because, as the defendant concedes, they only contained attorney-client
communications “in part.” Pl.’s Reply at 3.12
Contrary to the plaintiff’s assertion, the fact that the SEC exercised its discretion to
release requested records does not demonstrate Lauer’s entitlement to attorneys’ fees. The D.C.
Circuit fully addressed this circumstance in Brayton. There, as here, the agency initially
withheld the requested document but, subsequently, after initiation of the lawsuit, agreed to
declassify and release the document. See 641 F.3d at 523–24. The plaintiff sought attorneys’
fees, arguing that “fee awards should not be foreclosed despite the fact that the government was
correct as a matter of law to withhold the documents he requested,” because “this effectively
nullifies the statute’s lenient ‘not insubstantial’ standard, replacing it with the stricter
requirement that a plaintiff’s claim be correct on the merits to qualify for an award.” Id. at 526.
The Circuit rejected this argument, noting “the irony that awarding fees to plaintiffs in
[plaintiff]’s situation might prod government agencies to be less rather than more transparent.”
Id. at 528. Instead, the rule applied in this Circuit avoids penalizing agencies that “choose to
relent for the sake of transparency and release requested documents without exposing themselves
to monetary penalties: the fact that their initial nondisclosure decision rested on a solid legal
basis creates a safe harbor against the assessment of attorney fees.” Id. Otherwise, “agencies
with legal authority to withhold requested documents would have no such safe harbor” and
“might hesitate to release the documents, since doing so would risk creating a ‘substantially
prevail[ing]’ plaintiff who might be entitled to fees.” Id.12
The plaintiff raises no argument that the defendant should have turned over “any reasonably segregable portion of
a record . . . after deletion of the portions which are exempt under this subsection.” See 5 U.S.C. § 552(b); Judicial
Watch, Inc. v. U.S. Dep’t of Treasury, 796 F. Supp. 2d 13, 27 (D.D.C. 2011) (“In withholding a responsive record
under one of FOIA’s enumerated exemptions, an agency must nevertheless disclose any non-exempt information
that is ‘reasonably segregable’ from the responsive record.”). Accordingly, the Court does not decide whether the
defendant correctly withheld the entirety of the responsive documents in response to the plaintiff’s initial request.
18
In this case, the defendant has established a colorable basis in law for denying the
plaintiff’s FOIA request under the belief that Exemption 5 applied since the requested records
contain “attorney-client communications from Staff to the Commission” and include details of
internal meetings and deliberations. See Def.’s Opp’n at 11–12; Pl.’s Mot. Exs. B, C; see also
Dep’t of Interior v. Klamath Water Users Protective Ass’n, 532 U.S. 1, 8 (2001) (noting that the
“deliberative process covers ‘documents reflecting advisory opinions, recommendations and
deliberations comprising part of a process by which governmental decisions and policies are
formulated.’”) (quoting NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150 (1975)) (internal
quotation marks omitted); Checkosky v. SEC (In Re Checkosky), 23 F.3d 452, 489 (D.C. Cir.
1994), superseded on other grounds by rule, 17 C.F.R. § 201.102(e), as recognized in Marrie v.
SEC, 374 F.3d 1196, 1202 (D.C. Cir. 2004) (recognizing that “[u]p to the point of
announcement, agency decisions are freely changeable” and that “votes are not final until
decisions are final; and decisions do not become final until they are released”) (internal quotation
marks and citations omitted); Lawrence v. Van Aken, 4:03-CV-20, 2004 WL 228989, at *7
(W.D. Mich. Jan. 14, 2004), aff’d, 316 F. Supp. 2d 547 (W.D. Mich. 2004) (“The deliberative
process privilege would certainly protect from disclosure . . . minutes or other documents
reflecting the deliberations and votes of Commissioners.”).13 Moreover, the plaintiff has failed
to demonstrate that the agency was “recalcitrant in its opposition to a valid claim or otherwise
13
The plaintiff summarily argues that “an agency decision is not part of the deliberative pre-decisional process,”
relying on Envtl. Prot. Agency v. Mink, 410 U.S. 73, 87–88 (1973), superseded on other grounds by statute, 5 U.S.C.
§ 552(b)(1), as recognized in CIA v. Sims, 471 U.S. 159, 189 & n.5 (1985), and Bristol-Meyers Co. v. FTC, 598 F.2d
18, 25 (D.C. Cir. 1978), for support. Pl.’s Mot. at 13–14. Both these cases are inapposite. In Mink, the Supreme
Court found that Exemption 5 did not apply to “purely factual material contained in deliberative memoranda and
severable from its context.” 410 U.S. at 88. That is not the case with the documents here, which contain
recommendations and internal deliberations. See Pl.’s Mot. Exs. B, C. Bristol-Meyers is also inapplicable. In that
case, the D.C. Circuit held that a “negative” decision, that is, one which “has the practical effect of disposing of a
matter before the agency is ‘final’ for purposes of FOIA,” and may have to be disclosed if it is “accompanied by a
written explanation.” 598 F.2d at 25 & n.13. This is inapplicable to the documents at issue here, which pertain to a
then-ongoing investigation, not a final adjudication “disposing of the matter.” Id.19
engaged in obdurate behavior.” See Judicial Watch, Inc., 878 F. Supp. 2d at 237–38 (quoting
Davy, 550 F.3d at 1162) (internal quotation marks omitted) (finding that “reasonableness” factor
weighed in neither party’s favor where agency had not fulfilled its burden but that plaintiff had
also failed to argue that agency was recalcitrant or obdurate).
Thus, the fourth and final factor weighs strongly, if not dispositively, against awarding
the plaintiff attorneys’ fees. Since the last three factors strongly weigh against Lauer, the
plaintiff has not demonstrated that he is entitled to an attorneys’ fees award.14
III. CONCLUSION
For the foregoing reasons, the Court concludes that, although the plaintiff’s client,
Michael Lauer, is eligible for attorneys’ fees, he is not entitled to this award of attorneys’ fees
because the plaintiff acknowledges Lauer’s commercial and personal interests in obtaining the
requested documents, and the defendant’s initial withholding was reasonable.15 Accordingly, the
plaintiff’s motion for an attorneys’ fees award is DENIED. An appropriate Order accompanies
this memorandum opinion.
Digitally signed by Hon. Beryl A. Howell
DN: cn=Hon. Beryl A. Howell, o=District
Date: February 14, 2014 of Columbia, ou=U.S. District Court for
the,
email=Howell_Chambers@dcd.uscourt
s.gov, c=US
Date: 2014.02.14 18:27:07 -05'00'
__________________
BERYL A. HOWELL
United States District Judge
14
In addition to attorneys’ fees, the plaintiff also seeks to recover the costs of this lawsuit, under Federal Rule of
Civil Procedure 54(d)(1), which provides “for the award of costs against the losing party as a matter of course.”
Haarhuis v. Kunnan Enters., Ltd., 177 F.3d 1007, 1015 (D.C. Cir. 1999). Such costs, “other than attorneys’ fees,”
may be imposed against the United States and its agencies “only to the extent allowed by law.” FED. R. CIV. P.
54(d)(1). The payment of costs by a federal agency to the prevailing party is authorized under the FOIA. See 5
U.S.C. § 552(a)(4)(E) (authorizing assessment against the United States of “reasonable attorney fees and other
litigation costs reasonably incurred”) (emphasis added). Since Lauer is not a prevailing party for purposes of an
attorneys’ fees award, he is likewise not entitled to payment of his costs.
15
Since Lauer is entitled to no attorneys’ fees, the Court need not resolve the defendant’s contention that any fee
award should be offset by the outstanding civil judgment against Lauer. Def.’s Opp’n at 6–7.
20