Court Opinion

ID: 9946829
Source: CourtListenerOpinion
Date Created: 2024-03-01 16:01:07.703628+00
Date Added: 2024-06-11T14:25:41.355961
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 4, 2023               Decided March 1, 2024

                        No. 22-5300

           JASON LEOPOLD AND BUZZFEED, INC.,
                     APPELLANTS

                             v.

          UNITED STATES DEPARTMENT OF JUSTICE,
                       APPELLEE

        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:19-cv-03192)

    Stephen Stich Match argued the cause for appellants. With
him on the briefs was Matthew Topic.

    Douglas C. Dreier, Assistant U.S. Attorney, argued the
cause for appellee. With him on the brief were Brian P. Hudak
and Jane M. Lyons, Assistant U.S. Attorneys.

   Before: PILLARD and KATSAS, Circuit Judges, and
ROGERS, Senior Circuit Judge.

   Opinion for the Court filed by Senior Circuit Judge
ROGERS.
                               2

      ROGERS, Senior Circuit Judge: BuzzFeed, Inc. and one of
its journalists, Jason Leopold, seek, pursuant to the Freedom of
Information Act (“FOIA”), the release of a partially redacted
Monitor’s Report of 2015 on HSBC Bank’s conduct as the
result of a deferred prosecution agreement relating to money
laundering. The district court granted summary judgment to
the Department of Justice as to the entirety of the Report based
on FOIA Exemption 8, which protects from disclosure “matters
that are contained in or related to examination, operating, or
condition reports prepared by, on behalf of, or for the use of an
agency responsible for the regulation or supervision of
financial institutions.”      5 U.S.C. § 552(b)(8).        Upon
BuzzFeed’s and Leopold’s appeal, this court remands the case
to the district court to determine whether the Department can
meet its burden to show that release of any portion of the
Report could foreseeably harm an interest protected by
Exemption 8.

                               I.

      In 2012, the Department of Justice and the United States
Attorney for the Eastern District of New York filed a five-year
deferred prosecution agreement in regard to an information
charging HSBC Bank USA, N.A. and HSBC Holdings plc
(together, “the Bank”) with violating the Bank Secrecy Act, 31
U.S.C. § 5318(h)-(i), the International Emergency Economic
Powers Act, 50 U.S.C. §§ 1702 & 1705, and the Trading with
the Enemy Act, id. App. §§ 3, 5 & 16. The deferred prosecution
agreement required the Bank to appoint an independent
monitor to report on its progress in maintaining an effective
program to prevent money laundering. Judge John Gleeson in
the Eastern District of New York approved the agreement and
retained jurisdiction. United States v. HSBC Bank USA, N.A.,
                              3
No. 12-cr-763, 2013 WL 3306161, at *11 (E.D.N.Y. July 1,
2013).

     In 2015, the independent monitor, Michael Cherkasky,
submitted his first annual report to the Department, the Bank,
the U.S. Federal Reserve, and the United Kingdom’s Financial
Conduct Authority. The Department filed the Report on the
docket under seal. In response to a third party’s motion to
unseal the Report under the First Amendment right of access,
Judge Gleeson ruled that the Report was a judicial document to
which the right of access applied and upon in camera review
that potential harms could be mitigated through redaction.
United States v. HSBC Bank USA, N.A., No. 12-cr-763, 2016
WL 347670, at *4 (E.D.N.Y. Jan. 28, 2016).

     Specifically, Judge Gleeson considered potential harms
from disclosure, including the chilling effect on future
cooperation by the HSBC employees with the Monitor, the
potential for criminals to exploit HSBC’s weaknesses, the
diminished effectiveness of future monitors by weakening of
the relationship between financial regulators and the
Department, and the worsened relationship between the
Monitor and foreign regulators. He ordered that the Report be
released, subject to the redaction of information identifying
Bank employees and processes by which criminals could
exploit the Bank, and country names, references to confidential
material from foreign jurisdictions, and the appendices
containing information from foreign regulators. Judge Gleeson
stayed his order to release a redacted Report pending appeal.
The Court of Appeals for the Second Circuit reversed, holding
that the Report was not a judicial document for purposes of the
First Amendment right of access. United States v. HSBC Bank
USA, N.A., 863 F.3d 125, 142 (2d Cir. 2017). It did not address
the redactions or the applicability of FOIA exemptions. Id. at
142 n.7.
                               4

     Thereafter, on July 29, 2019, Leopold filed a FOIA request
with the Department seeking release of the Monitor’s Report of
2015 “at least in part.” FOIA Request (July 29, 2019) 1. When
the Department failed timely to respond, 5 U.S.C.
§ 552(a)(6)(A)(i), Leopold and BuzzFeed sued in the U.S.
District Court for the District of Columbia on October 24, 2019.
The parties filed cross-motions for summary judgment. The
Department attached declarations, affidavits, and letters from
the Monitor, Department officials, a Bank attorney, the Board
of Governors of the Federal Reserve System, and foreign
regulators.    Judge Rudolph Contreras ruled that FOIA
Exemptions 4 and 8 applied to the Report and ordered further
briefing on segregability, particularly on “the basis for
withholding the specific portions of the Report that Judge
Gleeson concluded were appropriate for release to the public.”
Mem. Op. (Jan. 13, 2021) 23–24. The Department submitted
additional declarations from David Kessler, an Assistant U.S.
Attorney in the Eastern District, and Benjamin Naftalis, a Bank
attorney; neither meaningfully explained why releasing the
information that Judge Gleeson thought could be released
would foreseeably harm an interest protected by Exemption 8.
Judge Contreras granted summary judgment to the Department,
ruling that Exemption 8 applied to the Report “in [f]ull.” Mem.
Op. (Sept. 19, 2022) 13.            He acknowledged that the
supplemental filings were “relatively brief and somewhat
conclusory,” id. at 17, while distinguishing Judge Gleeson’s
analysis as relying on the First Amendment, not FOIA. Id. at
21. Leopold and BuzzFeed appeal.

                              II.

    It is long established that the Freedom of Information Act
provides a way for persons to obtain information about the
conduct of their government. Dep't of Air Force v. Rose, 425
                              5
U.S. 352, 360–61 (1976). Its provisions are generally to be
construed liberally, id. at 366, subject to nine exemptions,
which are to be construed narrowly, id. at 361, 366.
Significantly, in 2016 Congress enacted the FOIA
Improvement Act, Pub. L. No. 114–185, 130 Stat. 538 (2016),
which further limited withholding pursuant to all exemptions,
except Exemption 3. Under this limit, the agency bears the
burden of showing that it “reasonably foresees that disclosure
would harm an interest protected by an exemption” or that
“disclosure is prohibited by law.” 5 U.S.C. § 552(a)(8)(A)(i);
see Reps. Comm. for Freedom of the Press v. FBI, 3 F.4th 350,
369 (D.C. Cir. 2021). This court reviews de novo the district
court’s grant of summary judgment. Larson v. Dep’t of State,
565 F.3d 857, 869 (D.C. Cir. 2009); see Gallant v. NLRB, 26
F.3d 168, 171 (D.C. Cir. 1994).

     FOIA also requires agencies to release “[a]ny reasonably
segregable portion of a record.” 5 U.S.C. § 552(b). And in
2016, Congress re-emphasized this point when adding the
foreseeable harm requirement. Specifically, it provided that an
agency must “consider whether partial disclosure of
information is possible whenever the agency determines that a
full disclosure of a requested record is not possible” and must
“take reasonable steps necessary to segregate and release
nonexempt information.” Id. § 552(a)(8)(A)(ii)(I)–(II). The
segregability requirement thus extends to both steps of FOIA’s
sequential inquiry: Even if an exemption covers an entire
agency record, the agency still must release any reasonably
segregable information within the record that could be
disclosed without causing reasonably foreseeable harm to an
interest that the exemption protects.

    In Reporters Committee for Freedom of the Press v.
Federal Bureau of Investigation, 3 F.4th 350 (D.C. Cir. 2021),
the court emphasized that Congress adopted the foreseeable
                                6
harm requirement because of concern that federal agencies
were overusing FOIA’s exemptions. Id. at 369 (citing S. REP.
NO. 4, 114th Cong., 1st Sess. 2 (2015); H.R. REP. NO. 391,
114th Cong., 2d Sess. 9 (2016)). Quoting Chief Judge Beryl
Howell’s opinion in Center for Investigative Reporting v.
United States Customs & Border Protection, 436 F. Supp. 3d
90, 106 (D.D.C. 2019), this court agreed that “the foreseeable
harm requirement ‘impose[s] an independent and meaningful
burden on agencies.’” Reps. Comm., 3 F.4th at 369. Further,
this court instructed that whether a requested record falls within
an exemption and whether the disclosure of that record would
foreseeably harm an interest protected by the exemption are
distinct, consecutive inquiries. Id. Agencies, therefore, must
provide “a focused and concrete demonstration of why
disclosure of the particular type of material at issue will, in the
specific context of the agency action at issue, actually impede”
the interests protected by a FOIA exemption. Id. at 370. The
court in Reporters Committee in part reversed and remanded
the case to the district court because the FBI had failed to
demonstrate foreseeable harm when it had “submitted a series
of boilerplate and generic assertions,” described as “wholly
generalized and conclusory,” id. at 370, and “perfunctory,
sweeping, and undifferentiated,” id. at 372.

     Judge Contreras determined that at least some material in
the Report was covered by Exemption 8. He ordered the
Department to conduct a line-by-line review as to “whether any
non-exempt information can be reasonably segregated.” Mem.
Op. (Jan. 13, 2021) 23 n.11. In response, an Assistant United
States Attorney in the Eastern District of New York and a Bank
attorney stated in sworn declarations that the Report contained
no non-exempt information. But instead of considering anew
whether any portion of the Report, even though exempt, could
be released without foreseeable harm to the interests protected
by Exemption 8, the district court ruled that Exemption 8
                                7
barred release of any part of the Report. Mem. Op. (Sept. 19,
2022) 20.

     The sequentiality instruction in Reporters Committee
cannot be brushed aside in this context. Congress has protected
the public’s right of access and balanced those interests in nine
exemptions that are to be narrowly construed and, apart from
Exemption 3, subject to the foreseeable harm requirement.
Nothing in Reporters Committee would prevent the district
court from reaching the same result it reached here. But the
agency has the burden to submit evidence and offer reasoning
based on that evidence. Reps. Comm., 3 F.4th at 369. The
district court in turn must explain its conclusion. Here,
Leopold and BuzzFeed sought only the Report as redacted by
Judge Gleeson. The burden is on the Department to present
reasoned grounds to support a district court’s ruling in its favor.
Id. Vague and conclusory filings will be insufficient. See id.
at 370, 372.

     The record does not enable this court to conclude that the
sequential inquiry was conducted or that the Department
satisfied its “independent and meaningful burden” to establish
the absence of a material factual dispute that the Report cannot
be disclosed without foreseeable harm to an interest protected
by Exemption 8. Id. at 369; 5 U.S.C. § 552(a)(8)(A)(i)(I). The
district court acknowledged that the declarations were
“relatively brief and somewhat conclusory,” Mem. Op. (Sept.
19, 2022) 17, yet referred in a footnote only to a brief
discussion of foreseeable harm in its initial opinion. Id. at 18
n.5. The Department’s declarations fold a perfunctory
assertion of foreseeable harm into their application of
Exemption 8 to the entirety of the Report. This appears to
“ignore that the agency must specifically and thoughtfully”
consider foreseeable harm from disclosure of otherwise-exempt
information, Reps. Comm., 3 F.4th at 372, including whether
                               8
“partial disclosure of information is possible,” 5 U.S.C.
§ 552(a)(8)(A)(ii)(I). The record does not enable this court to
conclude that the sequential inquiry was conducted or that the
Department satisfied its “independent and meaningful burden”
to establish the absence of a material factual dispute that the
Report cannot be disclosed without foreseeable harm to an
interest protected by Exemption 8. Reps. Comm., 3 F.4th at
369; 5 U.S.C. § 552(a)(8)(A)(i)(I).

     The Department maintains that a redacted report would
lack important context, Cherkasky Aff. ¶ 13, but that concern
falls outside the scope of Exemption 8. 5 U.S.C. § 552(b)(8).
The government “need not disclose a redacted version of [a
record] if the unredacted markings would have minimal or no
information content.” Perioperative Servs. & Logistics, LLC
v. U.S. Dep’t of Veterans Affairs, 57 F.4th 1061, 1069 (D.C.
Cir. 2023) (internal quotation marks and citation omitted). But
the Cherkasky Affidavit does not establish that the redaction of
all information that would cause a foreseeable harm to an
interest protected by Exemption 8 would leave the Report with
“minimal or no information content.”

     To the extent the Department also maintains that
disclosure of any aspect of the Report would chill future
cooperation by foreign regulators and financial institutions, see
Appellee’s Br. 12–13, 15–17, 22, this assertion is insufficiently
supported. Because the Department’s declarations fail to
explain how that harm would result from disclosure of every
portion of the Report, it falls short of meeting the burden to
“directly articulate[] ‘[a] link between the specified harm and
the specific information contained in the material withheld.’”
Reps. Comm., 3 F.4th at 371 (second alteration in original)
(quoting H.R. REP. NO. 391, at 9). The Department must
provide more than “a perfunctory, sweeping, and
undifferentiated declaration.” Id. at 372. In view of Judge
                               9
Gleeson’s analysis and the affidavit of the Monitor, Cherkasky
Aff. ¶ 13, a reasonable factfinder could conclude on this record
that the Report can be partially disclosed without harming
Exemption 8 interests.        The declarations before Judge
Contreras did not address Judge Gleeson’s findings about the
sufficiency of redactions to protect future cooperation.

    Accordingly, the court vacates the grant of summary
judgment to the Department and the denial of Leopold’s and
BuzzFeed’s motion for summary judgment, and remands the
case to the district court.