Source: http://foiaproject.org/case_detail/?title=on&amp;style=foia&amp;case_id=24752
Timestamp: 2019-04-23 11:57:54+00:00

Document:
Case Description Richard Edelman, who operates a website providing information to investors in the Empire State Building, submitted six FOIA requests to the Securities and Exchange Commission concerning investments related to the Empire State Building. After the agency failed to respond to any of his requests within the statutory time limit, Edelman appealed the denial of his requests. In response to two of his appeals, the agency issued a Glomar response, neither confirming nor denying the existence of records, under Exemption 7(A) (ongoing investigation). Edelman finally filed suit.
FOIA Project Annotation: In a decision that has far-reaching effects on what records qualify as agency records, Judge Randolph Moss has ruled that notes taken by SEC attorneys during meetings and phone conversations are not categorically exempt from FOIA because they are personal records rather than agency records. While the distinction between agency and personal records comes up in litigation only occasionally, as a matter of interpretation agencies generally assume that notes taken by an employee to memorialize an exchange are personal to that employee and are not agency records unless specifically relied upon by the agency. Instead of a presumption that the notes were personal, Moss concluded the notes were taken by the attorneys as part of their jobs and reflected work done for the agency, not for their personal convenience. Moss noted that "what little evidence the SEC has submitted shows that the notes 'facilitated the day-to-day operations of the' SEC's review of the transaction, whether or not they were incorporated into the official file that was created to accompany that review. It is thus incorrect to assert that the notes were created for the 'personal convenience' of the attorneys; it is more accurate to say that they were created for the attorneys' 'professional convenience.' Such records are not categorically shielded from FOIA's reach, whether or not they were distributed within the agency. To make distribution the centerpiece of the 'agency records' analysis cannot be squared with the purposes of FOIA." The case involved multiple requests made by Richard Edelman for records concerning the SEC's decision to approve the formation of the Empire State Realty Trust, which converted ownership of the Empire State Building into a real estate investment trust. Edelman was a former investor in the Empire State Building and maintained a website that provides information to investors and the public about the conversion. Edelman eventually filed suit over six requests he had made for records pertaining to the transaction. Edelman had appealed the agency's failure to respond for several of the requests. The agency acknowledged that it had failed to respond within the statutory time limits and remanded most of his requests, all of which had been processed by the time Moss decided the case. The status of the attorneys' notes was part of the agency's response to Edelman's request for records concerning the agency's reviews of consumer complaints about the transaction. The agency claimed that Edelman had failed to exhaust his administrative remedies for a request for confidential records submitted by the Empire State Realty Trust. Edelman had appealed the agency's failure to respond on time and the agency remanded the case for processing. Without reference to the remand, two weeks later the agency responded to the request, telling Edelman that it had found no records and that he had the right to appeal that decision. The next day, Edelman received a letter acknowledging the remand on appeal and indicating the agency would begin processing the remand. A week after that, Edelman received another letter from the agency explaining in more detail the basis for its no records claim and, again, indicating he had the right to appeal that decision. Edelman did not appeal. The agency argued Moss did not have jurisdiction over the request because Edelman had failed to appeal before filing suit. Moss found that Oglesby v. Dept of Army applied in these circumstances. Moss explained that "if 'an administrative appeal is mandatory if the agency cures its failure to respond within the statutory period by responding to the FOIA request before suit is filed,' it stands to reason that the appeal is mandatory even if the agency's failure to respond initially is 'cured' only after a remand. . .Edelman cannot now rely on the SEC's initial failure to timely respond to the request to excuse his failure to file an appeal from the Commission's subsequent decision." Turning to the records status of the attorneys' notes, Moss indicated that "surprisingly, it is an open question within this circuit whether notes taken by individual agency employees in the course of performing their official duties are 'agency records' subject to FOIA. The district judges who have considered the question have held, by and large, that they are not. . .[H]owever, the Court disagrees and concludes that FOIA and the relevant caselaw do not support the categorical exclusion of notes taken and used solely by individual agency employees from the statute's reach." The Supreme Court first interpreted the statutory meaning of agency records in two cases�"Kissinger v. Reporters Committee, 445 U.S. 136 (1980), and Forsham v. Harris, 445 U.S. 169 (1980)�"ruling that to be subject to FOIA a record must be in the custody and possession of the agency. The Court tweaked that definition in Dept of Justice v. Tax Analysts, 492 U.S. 136 (1989), in which the Court ruled that records obtained and controlled by an agency were agency records. Moss found that two D.C. Circuit decisions�"Bureau of National Affairs v. Dept of Justice, 742 F.2d 1484 (D.C. Cir. 1984), and Consumer Federation of America v. Dept of Agriculture, 455 F.3d 283 (D.C. Cir. 2006), both of which involved appointment calendars�"were the most relevant case law to the circumstances here. He pointed out, however, that both cases involved a mix of personal and agency information. He explained that "by contrast, the notes in this case contain no personal content whatsoever, or at least the SEC has not suggested that they do." He added that "the SEC merely argues that the notes are not agency records because, although the attorneys created them in furtherance of their official duties, they did so individually, not at the agency's behest." Based on those two cases, Moss examined whether the SEC had control and use of the notes. He observed that "the SEC argues that it did not control the notes because the employees were not required to keep them. . .and they were not incorporated into the SEC's files. But the Commission's assertions rest on misunderstanding the law and facts. As a matter of law, it is not at all clear whether the Federal Records Act, or the SEC's regulations would have obligated the attorneys to maintain the notes that were the topic of Edelman's two requests." Moss pointed out that "it is difficult to imagine that the SEC does not at least require that its staff maintain some record of witness interviews." The agency also argued the notes were not integrated into the agency's files. Moss indicated that "it is hard to understand why it would matter, for purposes of FOIA, whether a document is kept on an attorney's agency computer or in her agency desk�"at least to the extent the document concerns agency business rather than personal matters. Indeed, it is safe to assume that some of the most consequential records in the government have at times resided in individual offices rather than in agencies' centralized filing systems. Treating those records as beyond FOIA's reach cannot be squared with the statutory goal of 'opening agency action to the light of public scrutiny.'" Moss recognized that his ruling might impact agency employees' willingness to take notes at all. But he indicated that "many of the notes that may be subject to the Court's interpretation will likely be exempt from disclosure under one of FOIA's statutory exemptions." Stressing that his ruling was limited, Moss observed that "all the Court concludes at this juncture is that the notes in this case are not categorically exempt from FOIA simply because they were maintained and used exclusively by their authors."
FOIA Project Annotation: Judge Randolph Moss has ruled that the SEC conducted an adequate search for records concerning the agency's review of the conversion of ownership in the Empire State Building into a real estate investment trust and that it properly withheld portions of attorney's notes under Exemption 5 (privileges), but that the agency has not shown that personally-identifying information of individuals who filed complaints about the real estate trust conversion is categorically protected by Exemption 6 (invasion of privacy). Richard Edelman, an investor who maintained a website about the real estate trust, sued the SEC after it failed to respond to his request. The agency located 2,034 pages, withholding 112 pages of attorney's notes and redacting the names of complainants. After Moss ruled in favor of Edelman in a previous opinion, finding that the agency had interpreted his requests too narrowly to exclude the complaints themselves and that the agency had not shown that the attorney's notes were completely protected, the agency released 71 pages with redactions and withheld 41 pages entirely. It also disclosed 1,446 pages of complaints with personally-identifying information redacted. Edelman challenged the search, claiming the agency failed to disclose complaints from eight individuals who had independently contacted Edelman to say their complaints were missing. Moss rejected the claim, noting that "to the extent that some of the declarants made oral complaints, any records pertaining to those complaints�"the notes taken during telephone interviews and emails describing interviews between SEC staff members and oral complainants�"were (subject to other exemptions) already produced after a search that this Court has previously determined was 'reasonable and adequate.'" Edelman complained about the lack of detail supporting some of the agency's Exemption 5 claims. Moss observed that "although Edelman seeks greater detail, the Court has already explained that there is 'no basis to require the SEC to specify the decisions to which each specific [document] was antecedent' because, as the supplemental Vaughn index states, the documents were produced 'in anticipation of the SEC's determination about whether to allow the ESRT transaction to proceed.' Greater detail is not necessary to facilitate judicial review or to promote any other purpose embodied in FOIA." Moss found the SEC's conclusion that disclosure of identifying information about complainants would not shed light on government operations was too narrow under the circumstances, indicating the agency should consider the public interest in who may have been exerting influence on the agency to approve the transaction and the relative weight the agency gave to various complaints. Citing Board of Trade v. Commodity Futures Trading Commission, 627 F.2d392 (D.C. Cir. 1980), Moss explained that "the Court takes from this line of precedent that personal information that relates to commercial activity is not categorically beyond the reach of Exemption 6, but that the Court must engage in a case-specific weighing of interests at stake and that it is likely, as Edelman suggests, that the names of commenters on commercial matters implicates less weighty privacy interests than the type of information that lies at the core of Exemption 6." He added that "given the fact-intensive nature of the required inquiry, the Court cannot accept the SEC's invitation to sustain its application of Exemption 6 to all identifying information about all of the complainants. This is not to say, however, that the SEC cannot make a sufficient showing that the identities of some of the complainants implicate privacy interests that outweigh the public interest in disclosure. But because the current record lacks sufficient information for the Court to conduct the required balancing, and because the SEC (which mistaken concluded that providing the complainants' names 'would not shed light on how the government operates) should conduct the relevant balancing in the first instance, the Court will deny summary judgement at this time."
FOIA Project Annotation: Judge Randolph Moss has ruled that the SEC properly withheld the names of 36 investors who complained to the agency about transfer of ownership of the Empire State Building to the Empire State Realty Trust under Exemption 6 (invasion of privacy). Richard Edelman, an investor who operates a website about the transfer, requested information about the SEC's review of the transaction. In an earlier decision, Moss found the agency had not provided sufficient justification for categorically withholding complaints by 70 investors. He ordered the SEC to reconsider the balance in light of evidence that at least some complainants had been willing to be publicly identified. As a result, the SEC disclosed 34 of the complaints, but continued to withhold the 36 remaining complaints. Edelman argued that the names of investors in the trust were already public. But Moss agreed with the agency's broader concern that the public should be able to complain to the government in private. He pointed out that "although the identity of the Empire State Building investors may already be known, the complainants' interest lies in not being known as complainants, and that information is not public." Moss indicated that litigation over the sale was ongoing and observed that "it is not difficult to imagine that, armed with complaints that could be tied to particular investors, those investors might be contacted again or that others �" such as investors' family members �" might be contacted." Edelman argued that disclosure would reveal information about the agency's review of the complaints. But Moss noted that "that conclusion is at odds with the SEC's description of both its limited role in the transaction and the even more limited role of the complainants. Edelman has not offered any reason to think that the name corresponding to a given complaint will reveal 'how the SEC evaluated [or] weighed' that complaint."
FOIA Project Annotation: Judge Randolph Moss has ruled that while Richard Edelman is eligible for attorney's fees because he substantially prevailed on several issues during his FOIA litigation against the SEC he is not entitled to fees because there was no public interest in the records he sought, and the agency had a reasonable basis in law for resisting disclosure. Edelman, a blogger whose website was devoted to the Empire State Realty Trust, which owns the Empire State Building, submitted six FOIA requests to the SEC for records concerning filings by the ERST to the SEC, any communications with Malkin Holdings, a company advocating for conversion of the Empire State Building's ownership structure, and any consumer complaints pertaining to the conversion attempt. Edelman filed suit after the agency failed to respond to five of his requests. In his first ruling in the case, Moss agreed with the agency that it had conducted an adequate search and properly withheld parts of six documents under Exemption 5 (privileges). But Moss ruled against the agency in finding that it had interpreted Edelman's request for consumer complaints too narrowly, that it had not shown that attorney's notes were categorically exempt under Exemption 5, and that he could not determine if a single document was properly redacted under Exemption 5. In his second ruling, Moss agreed with the agency's search for consumer complaints but was unable to resolve whether the agency had properly redacted personally-identifying information from 70 consumer complaints based on Edelman's claim that those individuals had publicly identified themselves in some way as ESRT investors. The third time around, Moss found that the agency had properly disclosed 34 complaints but redacted the names of 31 complainants. Edelman then filed a motion for $100,000 in attorney's fees and costs. Moss found Edelman was eligible for fees. He noted that "the Court's 'judicial order' in Edelman I afforded Edelman tangible 'relief' in the form of agency records that he would not have obtained without filing suit, and Edelman, accordingly, 'has substantially prevailed' in this litigation." But he then pointed out that none of the four factors used by courts in assessing entitlement to attorney's fees �" public interest in disclosure, personal interest, commercial interest, and reasonableness of the agency's legal position �" favored granting Edelman's fee request. Edelman argued that his request forced the agency to disclose thousands of previously undisclosed records. Moss observed, however, that "to the extent that Edelman means that his requests yielded a public benefit because they caused the SEC to produce a large quantity of records, Edelman confuses the 'eligibility' and 'entitlement' inquiries." He added that "the potential value of the records sought is a wholly distinct inquiry from the actual quantity of records actually received." Moss explained that "the Court does not doubt that a request for records relating to the SEC's review of a transaction might, at times, reveal records of significant public interest. But the Court cannot discern on the present record what that interest might have been in this case, and Edelman's 'bare allegation that [his] request bears a nexus to a matter of public concern does not automatically mean that a public benefit [was] present.'" The SEC indicated that Edelman's family had an ownership interest in the ESRT, but Moss noted that "the relevant question, however, is whether that financial interest is enough to give Edelman an independent basis for seeking the information despite the potential costs of the FOIA litigation." In this case, Moss found that Edelman's personal or commercial interest did not weigh substantially against an award. Moss then reviewed the issues on which Edelman had prevailed. He indicated that the agency's position was not unreasonable as to any of them, even the issue of categorically withholding attorneys' notes. Here, Moss pointed out that "to the contrary, as the Court wrote in Edelman I, 'it is an open question within this circuit whether notes taken by individual agency employees in the course of their official duties are 'agency records' subject to FOIA." Moss concluded that "none of the four entitlement factors 'is dispositive.' Here, however, the fourth factor weighes against awarding fees, and the remaining three factors tip, if at all, modestly in the same direction. As a result, the Court finds that an award of fees is not 'necessary to implement FOIA' and that the cost of litigating a case like this one would not 'dissuade' a FOIA applicant 'who has been denied information from invoking [her] right to judicial review.'"

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