Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00180/USCOURTS-caed-1_05-cv-00180-34/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

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IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

MICHAEL F. SCHULZE., 

 Plaintiff,

 

 vs.

FEDERAL BUREAU OF INVESTIGATION, 

DRUG ENFORCEMENT 

ADMINISTRATION, UNITED STATES 

MARSHALS SERVICE and DEPARTMENT 

OF JUSTICE,

 

 

 Defendants. 

 

1:05-cv-00180-AWI-GSA 

ORDER GRANTING MOTION OF 

DEFENDANT DRUG ENFORCEMENT 

ADMINISTRATION FOR 

RECONSIDERATION OF COURT’S 

ORDER OF OCTOBER 29, 2014; 

ORDER DENYING PLAINTIFF’S 

MOTION FOR INSTRUCTIVE ORDER

AND ORDER DENYING PLAINTIFF’S 

MOTION TO COMPEL

Doc. #’s 131, 133, & 142 

 On October 29, 2014, the court issued an order denying without prejudice the motions of 

defendants United States Drug Enforcement Administration (“DEA”) and Federal Bureau of 

Investigation (“FBI”) for summary judgment as to all claims by plaintiff Michael Schultz 

(“Plaintiff”) (the “October 29 Order”). Both DEA and FBI had moved for summary judgement 

on the ground that the documents requested by Plaintiff were protected from disclosure by 

statutory exemptions pursuant to the Freedom of Information Act (“FOIA”). The motions for 

summary judgment by DEA and FBI were denied without prejudice as premature and both 

parties were ordered to produce Vaughn indexes. In so ordering, the court overlooked the fact 

that DEA had also moved for summary judgment on the alternative ground that Plaintiff 

expressed no willingness to pay the fees for production of documents estimated by DEA 

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pursuant to 28 C.F.R. § 16.1. On December 10, 2014, DEA moved for reconsideration of the 

court’s October 29 Order as to it only on the ground Plaintiff had failed to exhaust administrative 

claims by failing to indicate willingness to pay the estimated fees. For the reasons that follow, 

DEA’s motion for reconsideration will be granted.

FACTUAL BACKGROUND

 The general factual background of this case has been reviewed previously and need not 

be repeated here. The following are facts alleged by DEA that pertain only to the issue of fee 

requirements associated with Plaintiff’s FOIA request to DEA.

 Defendant DEA alleges it: 

. . . commenced its search of the [IRFS] files by querying under OIaes’

and Ahlo’s identifiers, and located potentially responsive investigation 

files. [. . . .] It then estimated the total search time needed, including 

searching those files manually for the particular records in them that 

pertain to Olaes or Ahlo. At the standard hourly rate ($28.00), the 

estimated search cost was $8,400.00. [. . . .] DEA wrote [P]laintiff with 

the fee amount and requested payment. [. . . .] DEA said that it would be 

“presumed that you do not wish to pay the fees to conduct the search of 

IRFS files” if response was not received within 30 days. [. . . .] Plaintiff 

returned the letter to DEA and expressed unwillingness to pay the fees, 

giving as his reasons the fact that DEA had already “located his 

potentially responsive files” and the non sequitur that DEA had already 

“processed my request.” [. . . .] Although Plaintiff was given 30 days to 

express willingness to pay, he has not done so. 

Doc. # 114 at 26:4-15. 

LEGAL STANDARD

Rule 60(b) permits a district court to relieve a party from a final order or judgment on 

grounds of: “(1) mistake, inadvertence, surprise, or excusable neglect; (3) fraud . . . of an 

adverse party, . . . or (6) any other reason justifying relief from the operation of the judgment.” 

The motion for reconsideration must be made within a reasonable time, in any event “not more 

than one year after the judgment, order, or proceeding was entered or taken.” Id. Motions to 

reconsider are committed to the discretion of the trial court. Combs v. Nick Garin Trucking, 825 

F.2d 437, 441 (D.C.Cir. 1987); Rodgers v. Watt, 722 F.2d 456, 460 (9th Cir. 1983) (en banc). 

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To succeed, a party must set forth facts or law of a strongly convincing nature to induce the court 

to reverse its prior decision. See, e.g., Kern Tulare Water Dist. v. City of Bakersfield, 634 

F.Supp. 656, 665 (E.D.Cal. 1986), aff’d in part and rev’d in part on other grounds, 828 F.2d 514 

(9th Cir. 1987), cert. denied, 486 U.S. 1015, 108 S.Ct. 1752, 100 L.Ed.2d 214 (1988). 

DISCUSSION 

I. Issue to be Determined

Plaintiff’s request for an order compelling the production of a Vaughn index from DEA, 

Document Number 142, presents the issue of whether DEA waived the right to assert the defense 

of failure to exhaust administrative remedies based on failure to pay the estimated processing 

fees because the issue was not raised during the administrative process. Plaintiff cites Friends of 

the Coast Fork v. U.S. Dept. Interior, 110 F.3d 53 (9th Cir. 1997), among others, for the 

proposition that a district court may not consider arguments that are raised by the agency before 

the district court that were not raised during the administrative process. See id. at 55 (“the 

agency must stand on whatever reasons for denial it gave in the administrative proceeding”). In 

his motion to compel, Plaintiff alleges “[t]o be sure, at no point during the administrative process 

did [D]efendant DEA request a payment from [Plaintiff], nor was it ever cited as a reason for 

denying his FOIA requests.” Doc. # 142 at 6. 

The proposition asserted by Plaintiff through his reliance on the Ninth Circuit’s holding 

in Friends of the Coast Fork originated in a pair of Supreme Court decisions; SEC v. Chenery 

Corp., 318 U.S. 80 (1943) (“Chenery I”) and SEC v. Chenery Corp., 332 U.S. 194 (1947) 

(“Chenery II”). In Chenery I, the Court prohibited courts reviewing agency decisions from 

supplying any determination that the agency was solely empowered to make but which the 

agency did not make. Chenery I 318 U.S. at 88 (“If an order is valid only as a determination of 

policy or judgment which the agency alone is authorized to make and which it has not made, a 

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judicial judgment cannot be made to do service for an administrative judgment.”) In the second 

decision the Supreme Court clarifies the first by holding that when a court reviews an agency 

decision that the agency alone is empowered to make, the court “must judge the propriety of 

such action solely by the grounds invoked by the agency.” Chnery II, 332 U.S. at 196. The 

shorthand for the holdings in this pair of cases is the prohibition against “post-hoc 

rationalization.” See Louis v. U.S. Dep’t of Labor, 419 F.3d 970, 978 (9th Cir. 2005) (using the 

term to describe the application of Chenery I and Chenery II in Friends of the Coast Fork, 110 

F.3d 53). 

 As Plaintiff correctly notes, the refusal of DEA to provide documents responsive to 

Plaintiff’s FOIA request on the ground Plaintiff refused to pay the estimated costs of production 

first appeared in a letter from DEA to Plaintiff dated June 18, 2012; approximately seven years 

and four months after the institution of this action. See Doc. # 114-4. Also, Plaintiff correctly 

notes that his initial requests to DEA for information pertaining to Olaes was denied by DEA for 

the first time on October 1, 2004, and on administrative appeal on December 27, 2004. Neither 

the original denial nor the denial on administrative appeal mentioned Plaintiff’s failure to pay 

estimated fees. Plaintiff’s FOIA request to DEA with regard to Ahlo was denied and the 

administrative appeal was denied on the approximately the same dates – that is, approximately 

seven years before the 2012 letter explaining DEA’s refusal to produce documents in the 

absence of Plaintiff’s commitment to pay estimated fees. 

The initial and fundamental problem with DEA’s motion for reconsideration and with 

Plaintiff’s response to it is that both mischaracterize the issue that is properly before the court. 

For reasons that will be explained, DEA’s characterization of its grounds for summary judgment 

as “failure to exhaust administrative remedies” misses the mark as does Plaintiff’s 

characterization of DEA’s grounds as a post-hoc rationalization of a prior final denial. 

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The fee provisions of 5 U.S.C. § 552(a)(4)(A) do not specify a particular point in the 

process where fees are to be calculated and the requestor is required to either pay the fee or 

apply for waiver. Certainly an agency cannot be required to establish an estimated fee where the 

extent of its obligation to respond is being challenged. In this case, it cannot be held that DEA 

was obliged to estimate fees where it had made the initial determination that Plaintiff’s FOIA 

requests for Oales and Alho failed to adequately state a request to which DEA could respond. 

It is significant that DEA as well as FBI maintained a consistent position that they were not 

obliged to “confirm or deny” the existence of documents in their possession that were responsive 

to Plaintiff’s FOIA request up until the court’s memorandum of July 22, 2010, denying without 

prejudice Defendants’ motions to dismiss and for summary judgment. Doc. # 86. Up to that 

point, it is reasonable the DEA would not have brought up the issue of fees because there was no 

basis to expect that production of documents would be required. 

Although the court did not use the term “Vaughn index” in its July 22 memorandum, the 

court did make clear that DEA’s reliance on FOIA exemptions requires record-specific reasons 

for application of the exemptions claimed. See Doc. # 86 at 36:3-12. Due to continuances 

requested by both parties, the court did not address Defendants’ motion to dismiss filed on 

September 13, 2010, until July of 2012. In the intervening time, the Ninth Circuit’s decision in 

Pickard v. Dep’t of Justice, 653 F.3d 782 (9th Cir. 2011) had been published and it became clear 

to DEA and FBI that a Vaughn index would be required in order to justify the application of 

FOIA exemptions or exclusions to documents responsive to Plaintiff’s FOIA request. It was not 

until this time that DEA had reason to know that it would be required to do actual research to 

find documents responsive to Plaintiff’s FOIA request and therefore that the requirement for 

payment of estimated fees would become applicable. 

Plaintiff’s first error, therefore, is to characterize DEA’s 2004 letters denying Plaintiff’s 

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FOIA requests as to Alho and Olaes as “final denials” of Plaintiff’s FOIA requests and his 

characterization of the June 18, 2012, letter as a second “final denial” on different grounds. The 

DEA’s 2004 letters were notifications that DEA would do no further work on Plaintiff’s FOIA 

requests as submitted, but were also notifications that DEA would proceed with the FOIA 

requests if the deficiencies noted by DEA were corrected. Similarly, DEA’s letter of June 18, 

2012, is not a second letter of denial, it is a further notice of deficiencies in Plaintiff’s FOIA 

requests because of defects in the descriptions of the documents requested, and a notice that if 

the deficiencies were corrected, DEA would proceed to search for and process responsive 

documents upon payment of the estimated fee. So far as this court is aware, Plaintiff has never 

received a “final” denial of his FOIA requests; the only “final” determination to date is the 

denial of Plaintiff’s implied application for waiver of fees. Therefore, the issue properly before 

the court is not whether DEA is entitled to summary judgment because Plaintiff failed to exhaust 

administrative remedies; it is whether DEA properly denied Plaintiff’s application for waiver of 

fees. So far as the court can determine, that issue was administratively exhausted and is the crux 

of Plaintiff’s motion to compel DEA to produce a Vaughn index. It is to that issue the court 

directs its attention. 

II. DEA Properly Denied Waiver of Fees as to FOIA Requests for Ahlo and Olaes 

 To offset the cost of fulfilling document requests, FOIA authorizes 

agencies to collect processing fees. [5 U.S.C.] § 552(a)(4). There are 

three basic types of fees: “”search” fees to cover the cost of agency 

personnel time spent locating the requested documents, “review” fees to 

cover the cost of personnel time spent determining whether any requested 

documents are exempt from disclosure, and “duplication” fees to recover 

the cost of actual duplication as well as any personnel time spent in the 

duplication process. 28 C.F.R. § 16.11(b), (c). When records are 

“requested for commercial use,” an agency may, in accord with its own 

regulations, assess search, review and duplication fees. 5 U.S.C. § 

552(a)(4)(A)(iii)(I). When records are “not sought for commercial use 

and the request is made by an educational or noncommercial scientific 

institution . . . or a representative of the news media,” the agency may 

collect only duplication fees, not search or review fees. Id. § 

552(a)(4)(A)(ii)(II). Any other requests for noncommercial use are 

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subject to both search and duplication fees, but not review fees. Id. § 

552(a)(4)(A)(ii)(III). 

Notwithstanding the foregoing fee assessment criteria, FOIA requests 

must be processed “without any charge or at a charge reduced below” the 

agency’s established fee schedule “if disclosure of the information is in 

the public interest because it is likely to contribute significantly to public 

understanding of the operations or activities of the government and is not 

primarily in the commercial interest of the requester.” Id. § 

552(a)(4)(A)(iii). If no fee waiver applies, an agency may require 

prepayment before beginning to process a request if “the agency has 

determined that the fee will exceed $250. Id. § 552(a)(4)(A)(v). If the 

requester refuses to prepay these fees, “the request shall not be considered 

received and further work will not be done on it until the required 

payment is received.” 28 C.F.R. § 16.11(i)(4). 

Coleman v. Drug Enforcement Administration, 714 F.3d 816, 819 (4th Cir. 2013). 

In this case there is no dispute that DEA estimated the total of applicable fees would be 

in excess of $2,000 and requested that Plaintiff pay the fees, or promise to pay the fees, in 

advance. Plaintiff has not disputed that he declined to pay or promise to pay DEA the requested 

fees. As a consequence, DEA is justified in declining to do further work to prepare documents 

responsive to Plaintiff’s FOIA request and in declining to provide any information responsive to 

Plaintiff’s request unless Plaintiff’s FOIA request falls within the category of requests “likely to 

contribute significantly to public understanding of the operations or activities of the 

government.” 

Plaintiff’s purposes in making his FOIA requests are explained in the affidavit attached 

to his amended complaint. See generally Doc. # 11 at 21-31. In his affidavit, Plaintiff alleges 

the purposes with regard to his FOIA requests as to the subjects Olaes and Alho. With regard to 

Olaes, Plaintiff’s affidavit alleges that US Attorney Sorenson was informed that Olaes “(1) stole 

various amounts of drug from each [FBI or DEA directed drug] purchase prior to turning it over 

to the FBI; (2) purchased methamphetamine on a weekly basis from an undisclosed source; (3) 

obtained methamphetamine on a number of occasions from his targets for further distribution 

without informing the FBI; (4) smoked methamphetamine throughout his entire participation; 

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and (5) lied to federal investigators.” Doc. # 11 at ¶ 20. Plaintiff alleges his trial began with a 

statement by US Attorney Sorenson told the jury that Plaintiff “had been a target of a DEA 

investigation since September of 1999, after being implicated of [sic] involvement in drug 

trafficking following the arrest and conviction of a Donald Grimm.” Doc. # 11 at ¶22. 

Plaintiff states that with regard to DEA, the purpose of making the FOIA requests with 

regard to Olaes is to gain evidence to challenge Sorensen’s allegedly prejudicial statement 

regarding Plaintiff’s status as the subject of a DEA investigation since 1999. As far as the court 

can discern from Plaintiff’s affidavit, Plaintiff’s only reason for seeking information regarding 

Alho from DEA is to show that Alho functioned as a paid informant for both FBI and DEA. 

Overall, Plaintiff’s affidavit makes a number of accusations regarding the relationship between 

FBI and Olaes and FBI and Alho. Plaintiff characterizes these relationships as reflecting 

governmental corruption which Plaintiff hopes to evince by retrieving documents through FOIA 

that show the profiting of individual FBI agents from seized property, the profiting of informants 

through the governmental practice of paying for information provided, and collusion between 

the state law enforcement agencies and the FBI to further the scheme of corruption. However, 

Plaintiff’s explanation of his purposes in obtaining information from DEA are devoid of any 

accusation of agency misconduct other than the misconduct suggested by the practice of 

rewarding informants for their cooperation. 

Thus, while Plaintiff’s affidavit arguably states a basis for public interest in the 

relationship of either Alho or Olaes to FBI, the court can find nothing that could arguably fit 

within the realm of public interest with regard to Plaintiff’s FOIA request to DEA. Plaintiff’s 

averments that either or both Alho or Olaes functioned as paid informants to DEA is not a matter 

of public interest inasmuch as the allegation represents nothing more than a specific instance of 

an allegedly general practice. Similarly, whether Sorenson’s statement that Plaintiff had been 

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the subject of DEA investigation for a substantial period of time is either false or prejudicial is 

not a matter of public interest; it is a matter of interest to Plaintiff and his defense only. It is 

therefore this court’s conclusion that, with regard to Plaintiff’s FOIA requests to DEA, Plaintiff 

has failed to show that his FOIA request to DEA qualifies for waiver of applicable fees. 

Because the waiver provisions of section 552(a)(4)(A)(iii) do not apply under the facts of this 

case, DEA had no obligation, and continues to have no obligation, to act on Plaintiff’s FOIA 

request in the absence of payment or the promise of payment of fees. 

III. Plaintiff’s Request for Instructive Order and Conclusion 

Following DEA’s motion for reconsideration, Plaintiff filed a request for instructive 

order regarding the motion for reconsideration. The gist of Plaintiff’s request for instructive 

order is he appears to have been under the impression that the court’s order of October 29, 2014, 

denying summary judgment as to DEA was somehow final and not susceptible to a motion under 

Rule 60(b). That impression is, of course, erroneous. The court is aware that, because it did not 

specifically inform Plaintiff that the October 29 Order was reviewable under Rule 6(b), Plaintiff 

did not submit a formal opposition to DEA’s motion for reconsideration. 

While the fact the court did not respond to Plaintiff’s request is something of an 

oversight, the court nonetheless finds that it need not solicit Plaintiff’s opposition prior to 

granting the DEA’s motion for reconsideration. There are two reasons for this finding. First,

Plaintiff adequately explained his position regarding qualification for waiver in his affidavit and 

adequately presented his argument regarding post-hoc rationalization in his motion to compel. 

The court finds that in sum, Plaintiff presented all relevant arguments for application of fee 

waiver. Second, and perhaps more important, the court’s ruling on DEA’s motion for summary 

judgment does not prejudice Plaintiff because it has relatively little effect on Plaintiff’s overall 

effort to gain access to information to the relationship between DEA and Oales or Alho. The 

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quality and quantity of information that Plaintiff is legally entitled to recover through the FOIA 

process will be determined by the extent to which the court finds FBI’s invocation of FOIA 

exemptions apply in light of the Vaughn index that has been produced by FBI or any future 

Vaughn index that may be required by the court. Once it becomes clear what information 

Plaintiff may recover under FOIA under the particular facts of this case, Plaintiff is free to 

resubmit his FOIA request to DEA if he finds that the information recoverable is worth the cost. 

Because there is no prejudice to Plaintiff, the court finds that further prolongation of proceedings 

to receive an opposition to DEA’s motion for reconsideration is not necessary.

 THEREFORE, for the reasons stated, it is hereby ORDERED, that the motion of 

defendant DEA for summary judgment is DEEMED to be a motion to dismiss Plaintiff’s FOIA 

claim against DEA for failure to state a claim upon which relief can be granted. The court finds 

Plaintiff has failed to state a claim for which relief can be granted because Plaintiff has failed to 

pay the statutory fees and has failed to show entitlement to fee waiver. The DEA’s motion to 

Dismiss is therefore GRANTED. Plaintiff’s claim under FOIA against DEA is hereby 

DISMISSED without prejudice. Plaintiff’s motion to require DEA to produce a Vaughn index is 

correspondingly DENIED. 

IT IS SO ORDERED. 

Dated: September 28, 2015 

 SENIOR DISTRICT JUDGE 

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