Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-06-35718/USCOURTS-ca9-06-35718-0/pdf.json

Parties Involved:
Pacific Fisheries Inc
Appellant
United States of America
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PACIFIC FISHERIES INC., 

No. 06-35718 Plaintiff-Appellant,

D.C. No.

v.  CV-04-02436-JLR

UNITED STATES OF AMERICA,

OPINION Defendant-Appellee. 

Appeal from the United States District Court

for the Western District of Washington

James L. Robart, District Judge, Presiding

Argued and Submitted

March 11, 2008—Seattle, Washington

Filed August 21, 2008

Before: Betty B. Fletcher, Richard A. Paez, and

N. Randy Smith, Circuit Judges.

Opinion by Judge B. Fletcher

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COUNSEL

Robert J. Chicoine, Cori Flanders-Palmer, Cory L. Johnson,

Chicoine & Hallett, P.S., Seattle, Washington, for the

plaintiff-appellant. 

Jonathan S. Cohen, David M. Katinsky, Gretchen M. Wolfiner, U.S. Department of Justice, Tax Division, Washington,

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D.C.; John McKay, U.S. Attorney for the Western District of

Washington, Seattle, Washington, (on briefs) for the

defendant-appellee. 

OPINION

B. FLETCHER, Circuit Judge: 

Pacific Fisheries, Inc. (“Pacific Fisheries”) appeals the district court order granting summary judgment to the Internal

Revenue Service (“IRS”) on its claim that the IRS improperly

withheld or redacted certain documents responsive to Pacific

Fisheries’ Freedom of Information Act (“FOIA”) request. See

5 U.S.C. § 552. We reverse in part, affirm in part, and remand

to the district court to determine whether the treaty exemption

applies and whether factual portions of certain documents

subject to the deliberative process privilege were properly

segregated and disclosed. 

I

This case arises out of a tax investigation by the Russian

government of Mr. Konstantin Voloshenko (“Voloshenko”),

a Pacific Fisheries employee. Pursuant to the Convention

between the United States of America and the Russian Federation for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and

Capital (“Tax Treaty”), the Russian authorities requested the

U.S. government’s assistance in the investigation. On April

23, 2004, in furtherance of the Russian authorities’ request,

the IRS issued two third-party summonses to Bank of America, seeking records relating to Pacific Fisheries and Voloshenko. Pacific Fisheries notified the IRS that the summonses

were defective, but the government refused to withdraw them.

Pacific Fisheries then filed a petition to quash the summonses

for various reasons, including bad faith, relevance, and timeli11300 PACIFIC FISHERIES v. UNITED STATES

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ness. The IRS subsequently withdrew the summonses and did

not defend the action. 

Pacific Fisheries made several attempts to obtain the documents that served as the basis for the issuance of the summonses. These included a discovery request in the district court,

which the government opposed as moot after withdrawing the

summonses, and a FOIA request dated July 27, 2004. In its

FOIA request, Pacific Fisheries asked for all documents

related to the issuance of the summonses, as well as “[a]ny

and all tax returns, tax information or other documents which

may have been provided by the Internal Revenue Service to

Russian authorities concerning Pacific Fisheries, Inc.”

On August 23, 2004, the IRS Seattle Disclosure Office

notified Pacific Fisheries that it had transferred the FOIA

request to the IRS Headquarters FOIA Office in Washington,

D.C. On October 12, 2004, not having received a response,

Pacific Fisheries submitted a follow-up request for documents

to the Washington, D.C. office. On November 10, 2004, the

IRS informed Pacific Fisheries that it needed additional time

to determine whether it would produce the documents. As of

December 9, 2004, no documents had been produced. Pacific

Fisheries then filed this FOIA action in the district court seeking a court order requiring the IRS to produce the requested

documents. 

The government filed its answer on March 2, 2005, asserting that all documents responsive to the FOIA request were

exempt from disclosure. The government cited FOIA exemption three, which applies to documents that are “specifically

exempted from disclosure by statute,” 5 U.S.C. § 552(b)(3),

and two provisions of the Internal Revenue Code prohibiting

disclosure of tax-convention information and third-party tax

return information. 

Notwithstanding this initial refusal to disclose any responsive documents, on March 27, 2006, the day that dispositive

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motions were due in the district court, the government

released (in whole or in part) 313 of 465 responsive documents. At that time, the government also filed a motion for

summary judgment asserting that all other responsive documents were exempt from disclosure either under FOIA

exemption three and the Internal Revenue Code or under

FOIA exemption five, which incorporates both the executive

deliberative process privilege and the attorney work-product

privilege. In support of its motion the government filed a declaration from Helene R. Newsome of the Office of Chief

Counsel, Disclosure & Privacy Law, of the IRS (“Declaration

I”) stating which exemption or exemptions applied to each

document that was withheld in whole or in part. Withheld

documents were identified by page number and a general

description such as “letter” or “email.” Declaration I grouped

documents together according to these general descriptions,

and did not include identifying details such as dates or

authors. 

That same day, Pacific Fisheries filed its own motion for

summary judgment, arguing that the government had failed to

carry its burden of demonstrating that the withheld documents

were exempt. Pacific Fisheries also took issue with the fact

that the government did not disclose the documents until the

day that dispositive motions were due, a delay that was

unnecessary, in violation of the statute and regulations, and

which deprived Pacific Fisheries of the opportunity to review

the documents and claimed exemptions before filing its

motion for summary judgment. 

On April 24, 2006, after reviewing the disclosed documents

and Declaration I, Pacific Fisheries filed its opposition to the

government’s motion for summary judgment. In its opposition, Pacific Fisheries specifically challenged the government’s failure to segregate and disclose factual portions of the

documents that were withheld pursuant to the deliberative

process privilege. In response, the government submitted a

second declaration from Helene Newsome (“Declaration II”)

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reiterating the previous description of the document search,

stating that Newsome “attempted to make all reasonably segregable non-exempt portions of documents available to plaintiff,” and noting that many documents are covered by more

than one exemption, a factor that could affect the segregability analysis. 

Finally, on May 5, 2006, Pacific Fisheries filed its reply to

the government’s opposition to Pacific Fisheries’ motion for

summary judgment. Pacific Fisheries continued to argue that

the government failed to demonstrate the adequacy of its

search or to produce all relevant documents. Additionally, and

for the first time, it challenged the government’s assertion that

the tax-convention information is exempt from disclosure

under 26 U.S.C. § 6105(c)(1)(E), arguing that the government’s position was based on an erroneous interpretation of

the law because the requested information was not confidential vis-à-vis Pacific Fisheries. 

On June 1, 2006, the district court filed its order denying

Pacific Fisheries’ motion for summary judgment and granting

the government’s motion. The court first concluded that the

IRS’s search for responsive documents was reasonable. Next,

the court concluded that Declaration I was sufficiently thorough to permit Pacific Fisheries to “intelligently advocate

release of the withheld documents.” 

Turning to the specific exemptions, the district court

rejected Pacific Fisheries’ arguments regarding segregation of

factual portions of documents withheld pursuant to FOIA

exemption five because Pacific Fisheries had failed to explain

why it believed that some of the redacted materials might contain factual portions that must be segregated and disclosed,

and because the attorney work-product privilege extends to

factual material contained in work product. The court therefore concluded that the IRS had sustained its burden of showing that the documents were properly redacted or withheld.

The court also rejected Pacific Fisheries’ tax convention

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information argument. Although the court noted that Pacific

Fisheries “inexplicably” waited until its reply brief to raise the

issue, thus depriving the IRS of the opportunity to respond,

the court rejected the argument on the merits, concluding that

Pacific Fisheries had not created any question of fact over

whether the IRS properly withheld treaty information. 

Finally, the district court ordered the government to show

cause why the court should not impose sanctions. The court

opined that the IRS “unreasonably and vexatiously multiplied

proceedings” by refusing to disclose documents for almost

two years and then producing the disclosed documents on the

day that dispositive motions were due. The court ordered the

parties to attempt to negotiate a settlement on the issue of

appropriate compensation for Pacific Fisheries and ordered

the IRS to file a pleading in response to the order to show

cause if the parties were unable to reach an agreement. 

On June 22, 2006, Pacific Fisheries filed a notice of settlement with the district court. The government agreed to pay

Pacific Fisheries $17,274.10 as reimbursement for attorneys’

fees. Both parties reserved the right to appeal the district

court’s order with respect to any issue other than sanctions.

That same day, the district court dismissed the case. Pacific

Fisheries timely appealed. 

II

The Freedom of Information Act is premised on the theory

that in order for democracy to function properly, citizens must

have access to government information, particularly where

access might be “needed to check against corruption and to

hold the governors accountable to the governed.” John Doe

Agency v. John Doe Corp., 493 U.S. 146, 152 (1989) (quoting

NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 242

(1978)). It thus mandates “full agency disclosure” unless

information is clearly exempted under one of FOIA’s nine

statutory exemptions. Id. 

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A.

[1] Although FOIA espouses a policy of broad disclosure,

exemption three protects documents “specifically exempted

from disclosure by statute.” 5 U.S.C. § 552(b)(3). At issue

here is 26 U.S.C. § 6105(a), a provision of the Internal Revenue Code prohibiting the disclosure of tax-convention information, which is defined as “information exchanged pursuant

to a tax convention which is treated as confidential or secret

under the tax convention,” 26 U.S.C. § 6105(c)(1)(E). 

The government withheld 24 documents in their entirety

and 45 documents in part as confidential tax-convention information. In its reply brief to the district court, Pacific Fisheries

argued that the government’s position was based on an erroneous interpretation of law. The district court rejected this

argument on the merits. On appeal, the government argues

that Pacific Fisheries waived the tax convention information

argument by failing to raise it in its motion for summary judgment or opposition brief. 

[2] We decline to hold that Pacific Fisheries waived the tax

convention information argument. Pacific Fisheries received

the disclosed documents and Declaration I on the same day

that dispositive motions were due in the district court. By

waiting until that day to make the disclosure, the government

deprived Pacific Fisheries of the opportunity to review and

challenge the claimed exemptions in its motion for summary

judgment. Although Pacific Fisheries could have raised the

argument in its opposition to the government’s motion for

summary judgment, it was not required to do so. It is enough

that Pacific Fisheries raised the issue in the district court and

that the district court rejected the argument on the merits. See

Glaziers & Glassworkers Local Union No. 767 v. Custom

Auto Glass Distribs., 689 F.2d 1339, 1342 n.1 (9th Cir. 1982).

However, because the government has not briefed the merits

of this issue, we remand so that the district court can consider

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the question in the first instance, after thorough briefing by

the parties.

B.

[3] Under FOIA exemption five, an agency can withhold

“inter-agency or intra-agency memorandums [sic] or letters

which [sic] 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). This exemption “entitles an agency to withhold

. . . ‘documents which a private party could not discover in

litigation with the agency.’ ” Maricopa Audubon Soc’y v. U.S.

Forest Serv., 108 F.3d 1089, 1092 (9th Cir. 1997) (quoting

NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 148 (1975)).

Specifically, it protects documents that would be covered by

the attorney work-product privilege and the executive deliberative process privilege.1

Id. However, the agency must disclose “[a]ny reasonably segregable portion of a record . . .

after deletion of the [exempt] portions.” 5 U.S.C. § 552(b). 

[4] The attorney work-product and deliberative process

privileges are both rooted in the law of discovery and are

designed (in part) to encourage the author of a document to

be candid. See Coastal States Gas Corp. v. Dep’t of Energy,

617 F.2d 854, 864, 867 (D.C. Cir. 1980). But they differ in

important ways, not the least of which is their treatment of

factual material within documents. Factual portions of documents covered by the deliberative process privilege must be

segregated and disclosed unless they are “so interwoven with

the deliberative material that [they are] not [segregable].”

United States v. Fernandez, 231 F.3d 1240, 1247 (9th Cir.

2000). 

[5] The same is not true for documents withheld pursuant

to the attorney work-product privilege. See id. That privilege

1

It also incorporates the attorney-client privilege, but that privilege is

not at issue in this appeal. 

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shields both opinion and factual work product from discovery.

Fed. R. Civ. P. 26(b)(3) (“Ordinarily, a party may not discover documents and tangible things that are prepared in

anticipation of litigation . . . .”); Hickman v. Taylor, 329 U.S.

495, 510 (1947) (holding that attorney’s notes of client interviews are not discoverable absent a showing of “necessity or

justification”); cf. Fed. R. Crim. P. 16(a)(2) (providing that as

a general matter, criminal defendants are not entitled to “discovery or inspection of reports, memoranda, or other internal

government documents made by an attorney for the government or other government agent in connection with investigating or prosecuting the case”). Therefore, if a document is

covered by the attorney work-product privilege, the government need not segregate and disclose its factual contents. See

5 U.S.C. § 552(b); Maricopa Audubon Soc’y, 108 F.3d at

1092. 

The burden is on the agency to establish that all reasonably

segregable portions of a document have been segregated and

disclosed. 5 U.S.C. § 552(a)(4)(B), (b). “Courts must apply

that burden with an awareness that the plaintiff, who does not

have access to the withheld materials, is at a distinct disadvantage in attempting to controvert the agency’s claims.”

Maricopa Audubon Soc’y, 108 F.3d at 1092 (internal quotation omitted). The agency can meet its burden by offering an

affidavit with reasonably detailed descriptions of the withheld

portions of the documents and alleging facts sufficient to

establish an exemption. Id.; see also Wiener v. FBI, 943 F.2d

972, 979 (9th Cir. 1991) (holding that the FBI’s explanation

was not sufficiently specific when it “provide[d] no information about particular documents and portions of documents

that might be useful in contesting nondisclosure”). The affidavits must not be conclusory. Church of Scientology of Cal. v.

U.S. Dep’t of the Army, 611 F.2d 738, 742 (9th Cir. 1979). 

Rather they should disclose “as much information as possible

without thwarting the claimed exemption’s purpose.” Wiener,

943 F.2d at 979 (citation omitted). 

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We employ a two-part test in reviewing a district court

order granting summary judgment in a FOIA case. Lion Raisins v. U.S. Dep’t of Agric., 354 F.3d 1072, 1078 (9th Cir.

2004). First, we determine “whether the district court had an

adequate factual basis for its decision.” Id. Whether a particular set of documents gives the court an adequate factual basis

for its decision is a question of law that we review de novo.

Id. If we determine that an adequate factual basis exists to

support the district court’s decision, we review the district

court’s conclusions under either the clearly erroneous or de

novo standard of review, depending on whether the district

court’s conclusions are primarily factual or legal. See id.

The government withheld 108 documents in their entirety

and 26 documents in part claiming that they were protected by

either the deliberative process privilege, the attorney workproduct privilege, or both. In the district court, Pacific Fisheries challenged the government’s failure to segregate and

disclose factual materials in documents withheld pursuant to

the deliberative process privilege. In response, the government filed Declaration II, stating that “[i]n asserting the deliberative process privilege, [Newsome] attempted to make all

reasonably segregable non-exempt portions of documents

available to plaintiff,” but noting that many documents were

withheld under both the deliberative process privilege and the

attorney work-product privilege, the latter of which covers

factual material as well as opinions. The district court granted

summary judgment to the government because Pacific Fisheries had failed to explain why it believed that the government

might have improperly redacted factual material and, moreover, the attorney work product privilege extends to factual

materials contained in work product. On appeal, Pacific Fisheries argues that the district court improperly shifted the burden of proof from the government to Pacific Fisheries and that

factual portions of documents are not exempt from disclosure.

Pacific Fisheries further argues that the district court erred by

not conducting in camera review of the redacted documents.

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[6] We interpret Pacific Fisheries’ first argument as a challenge to the sufficiency of the factual record on which the district court based its decision. We conclude that the record was

insufficient because it did not provide Pacific Fisheries or the

district court with specific enough information to determine

whether the IRS had properly segregated and disclosed factual

portions of those documents that the IRS claimed were

exempt under the deliberative process privilege but not the

attorney work-product privilege. We have identified five

pages of responsive documents that meet this description.2

Although Declaration II states that Newsome attempted to

segregate all factual portions of these documents, that statement is too conclusory to meet the agency’s burden. Given

the inadequacy of the factual record, the district court erred in

granting the IRS’s motion for summary judgment on this

point. 

[7] On remand the district court must make specific findings as to whether factual information has been properly segregated and disclosed in all documents or portions of

documents that the IRS claims are exempt from disclosure

under the deliberative process privilege but not the attorney

work-product privilege. See Church of Scientology of Cal.,

611 F.2d at 744. In order to assist the district court, the IRS

should submit affidavits describing in more detail the with2We identified pages 59, 138, 143, 193, and 199. On remand, however,

Pacific Fisheries may identify additional documents. We understand that

the IRS claimed that each of the documents we identified was also exempt

in part because they contained either tax-convention information or confidential information regarding a third party. This does not alter our conclusion that the agency has failed to meet its burden. Given that we have

ordered the district court to consider Pacific Fisheries’ tax convention

information argument on remand, we currently cannot rely on that claimed

exemption as a basis for determining that the IRS has met its burden. As

for the documents containing confidential third-party information, the

record is insufficient to establish that these documents do not contain disclosable factual information that could be reasonably segregated from any

confidential information regarding third parties. 

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held portions of these documents so that both the district court

and Pacific Fisheries can evaluate the government’s claims of

exemption. If the government is unable to provide sufficiently

specific affidavits, the district court should review the documents in camera to determine whether the factual portions

were properly segregated and disclosed. See Harvey’s Wagon

Wheel, Inc. v. NLRB, 550 F.2d 1139, 1143 (9th Cir. 1976)

(noting that in camera review is “appropriate and perhaps

necessary” where there is a factual dispute as to the nature of

the documents withheld).

III

[8] We affirm the district court order in so far as it held that

factual portions of documents withheld pursuant to the attorney work-product privilege need not be segregated and disclosed. We reverse the district court order in so far as it held

that the IRS was not required to segregate and disclose factual

portions of documents withheld pursuant to the deliberative

process privilege, as well as the conclusory holding, without

the benefit of thorough briefing by the parties, that the IRS

properly applied the tax convention information exemption.

The order of the district court is vacated and the case is

remanded for further proceedings consistent with this opinion.

Each side shall bear their own costs on appeal. 

VACATED AND REMANDED.

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