Court Opinion

ID: 4912477
Source: CourtListenerOpinion
Date Created: 2021-09-21 00:02:05.656459+00
Date Added: 2024-06-11T08:13:41.368603
License: Public Domain

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

BRADLEY S. WATERMAN, )
Plaintiff,
Vv. ) Civil Case No. 16-1823 (RJL)
INTERNAL REVENUE
SERVICE, )
Defendant. )
MEMORANDUM OPINION

 

(September @®@ , 2021) [Dkts. ## 18, 24, 43, 44]

Bradley S. Waterman (“plaintiff’ or “Waterman”), a licensed tax attorney, brought
this suit against the Internal Revenue Service (“defendant” or “IRS”) pursuant to the
Freedom of Information Act (“FOIA”). Waterman claims that, in responding to his FOIA
request for information regarding an IRS Office of Professional Responsibility (“OPR”)
investigation into his alleged misconduct, the IRS improperly withheld certain responsive
information. See generally Compl. [Dkt. #1]. This Court previously granted summary
judgment to the IRS, concluding that the information in question was lawfully withheld by
the IRS pursuant to various FOIA exemptions. See Mem. Op. and Order [Dkts. ## 30, 31];
Waterman v. IRS (Waterman J), 288 F. Supp. 3d 206 (D.D.C. 2018). After Waterman
appealed, however, the Court of Appeals concluded that my previous decision did not make
a sufficient finding on the issue of segregability and remanded the case for this Court to
make such a finding in the first instance. See Waterman v. IRS (Waterman II), 755 F.

App’x 26, 28 (D.C. Cir. 2019).
Pursuant to this narrow remand, and having reviewed in camera unredacted versions
of the records at issue, the Court (1) reaffirms its previous conclusion that the IRS’s
withholding of responsive information was justified in each case under the exemptions to
FOIA cited by the agency and (2) now finds expressly that the IRS has met its burden of
showing that it disclosed all reasonably segregable information responsive to Waterman’s
FOIA request. Accordingly, the IRS’s motion for summary judgment on Count II of
Waterman’s complaint is GRANTED; Waterman’s second renewed motion for summary
judgment is DENIED; the IRS’s pending cross-motion to strike Waterman’s second

renewed motion is DENIED as MOOT; and this case is dismissed.

BACKGROUND

The parties are in agreement on the basic facts giving rise to this action, which are
detailed in my previous opinion.! To recount briefly, Waterman represents clients in
disputes with the IRS. During Waterman’s representation of the New Hampshire Health
and Education Facilities Authority (“the Authority”) before the IRS’s Tax-Exempt Bond
Office (“TEB”), the TEB apparently suspected misconduct on Waterman’s part and
thereafter filed a Report of Suspected Practitioner Misconduct (“Report”) with the OPR.
OPR thereafter opened a case file on Waterman, and OPR staff examined the Report. After
investigation, OPR eventually concluded that the allegations against Waterman warranted
no further inquiries or action. See Decl. of Keith C. Ott Jf] 3-8 [Dkt. # 18-3]. Waterman

was informed of the Report by OPR in September 2014. OPR also informed Waterman of

 

' See Waterman I, 288 F. Supp. 3d at 209-10.
its conclusion not to take any additional disciplinary action, of Waterman’s duty to abide
by IRS rules and regulations in the future, and that OPR would retain the file containing
the misconduct referral for twenty-five years and reserved the right to reference the file in
any future OPR investigations or proceedings. P1.’s Cross-Mot. for Summ. J., Ex. A. [Dkt.
# 24-1].

In January 2016, after Waterman unsuccessfully sought all information related to
the Report through informal communication with the IRS, Waterman submitted the FOIA
request at issue here. See Def.’s Mot. for Summ. J., Ex. A [Dkt. # 18-7]. In that request,
Waterman sought the Report as well as “all documents prepared in connection with or
otherwise relating to the Report,” including all “correspondence, memoranda, notes,
reports, and other documents” prepared by IRS personnel responsible for investigating and
reviewing the Report. Jd. at 2. Following a search for records, the IRS identified fifty-four
total pages of responsive records, segregated and produced the non-exempt records and
portions of records, and withheld the remaining records it had determined were within the
scope of FOIA’s disclosure exemptions. See Decl. of Elizabeth Rawlins (“Rawlins Decl.”)
4 8-14 [Dkt. # 18-4].

The present dispute arises from this latter determination by the IRS, i.e., which
records and portions of records it deemed to be exempt from disclosure and thus withheld
from Waterman. The IRS. through its Vaughn index, see Def.’s Mot. for Summary
Judgment, Attach. 5 (“Vaughn Index”) [Dkt. # 18-5], as well as in accompanying
declarations by agency personnel, see, e.g., Rawlins Decl., identified two general

categories of information withheld from Waterman. First, citing to Exemptions 6 and 7(c),

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the IRS redacted the telephone number and e-mail addresses of IRS employees from a set
of one-page e-mails between IRS employees. See Rawlins Decl. {] 23-24. Second, and
more significantly, the IRS withheld portions of two documents and the entire substance
of three memoranda related to Waterman’s representation of the Authority before the TEB,
the OPR’s investigation, and evaluations by agency personnel of whether to pursue any
disciplinary action against Waterman. See Rawlins Decl. ff 16-21. The IRS claimed its
decision to withhold this latter category of information was proper under either of two
FOIA exemptions: (1) Exemption 3, which the IRS asserted in conjunction with a federal
statute prohibiting disclosure of third-party tax return information; and (2) Exemption 5.
See Rawlins Decl. Jf 16, 18.

In my previous opinion, I upheld the IRS’s determinations as to the applicability of
Exemption 6 regarding the contact information of agency personnel and of Exemption 5 to
the withheld portions of documents and memoranda. See Waterman I, 288 F. Supp. 3d at
211-15. Asa result of that decision, summary judgment was entered in favor of the IRS.
Id. As noted above, however, on appeal the Court of Appeals vacated that order and
remanded for this Court to make, in the first instance, an express finding that the IRS had
complied with its obligation to disclose any non-exempt portions of records that are
“reasonably segregable” from exempt portions. See Waterman I,’755 F. App’x at 27-28;
see also 5 U.S.C. § 552(b). The Court of Appeals did not otherwise address the merits of
the IRS’s claimed exemptions.

At my request on remand, the Government has provided the Court with unredacted

versions of the documents at issue, as well as versions redacted in the same manner as those

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provided to plaintiff in response to his FOIA request. See Minute Entry, Nov. 4, 2019;
Minute Order, June 23, 2020. Thereafter I conducted an in camera review of the
documents for purposes of evaluating the IRS’s compliance with the segregability
requirement. In the interim, Waterman filed a renewed motion for summary judgment,
while the IRS filed a cross-motion to strike Waterman’s renewed motion as unnecessary
and procedurally improper. See Pl.’s Second Renewed Mot. for Summ. J. [Dkt. # 43];
Def.’s Cross-Mot. to Strike [Dkt. #44]. In total, Waterman continues to challenge the
validity of the IRS’s withholding of five records or portions of records spanning
approximately twenty pages. See Mem. in Support of Pl.’s Second Renewed Mot. for
Summary Judgment at 3 [Dkt. # 44-1]; see also Def.’s Not. of Filing Redacted Documents,

Ex. 1, 3-6 [Dkt. ## 42-1, 42-3 to -6].

STANDARD OF REVIEW

As before the remand, both parties have moved for summary judgment on Count II
of the complaint, with Waterman having filed a renewed motion for summary judgment
following remand as noted above.?, Summary judgment is appropriately granted “if the
movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). FOIA cases like this one
are routinely adjudicated on motions for summary judgment. See Brayton v. Office of U.S.

Trade Rep., 641 F.3d 521, 527 (D.C. Cir. 2011).

 

2 After the remand, Waterman filed a renewed motion for summary judgment, which the Court denied without
prejudice before requesting from the IRS the unredacted documents at issue to review in camera. See Minute Order,
Oct. 21, 2019. Waterman subsequently filed his second renewed motion for summary judgment, while the IRS has
relied on its motion for summary judgment that was granted by the Court previously, see Cross-Mot. to Strike 6—7.

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“FOIA requires executive branch agencies to make their records available ‘to any
person’ upon request, 5 U.S.C. § 552(a)(3)(A), subject to nine exemptions, id. § 552(b)(1)—
(9).” Newport Aeronautical Sales v. Dep’t of Air Force, 684 F.3d 160, 162 (D.C. Cir.
2012). To prevail on summary judgment in a FOIA case, an agency must show that it
adequately searched for records responsive to the relevant request and that any records
withheld by the agency fall within one of FOIA’s statutory exemptions. See id.; Weisberg
v. U.S. Dep’t of Justice, 705 F.2d 1344, 1351 (D.C. Cir. 1983). As noted above, FOIA
further requires the agency to disclose “any reasonably segregable portion of a record...
after deletion of the portions which are exempt,” 5 U.S.C. § 552(b), an obligation that
“applies to all FOIA exemptions.” Sussman v. U.S. Marshals Serv., 494 F.3d 1106, 1116
(D.C. Cir. 2007).

As recounted in my prior opinion, Waterman does not challenge the adequacy of
the search for records undertaken by the IRS; instead, he challenges only the extent to
which the IRS has validly withheld certain responsive records under FOJA’s exemptions.
See Waterman I, 288 F. Supp. 3d at 210. In adjudicating such a claim, a court may grant
summary judgment to an agency if, upon de novo review of the agency’s decision to
withhold responsive records, the court concludes that the agency “had not withheld any
segregable, nonexempt materials.” Sussman, 494 F.3d at 1117. To make such a
determination, the Court may rely solely on information provided in an agency’s affidavits
or declarations when those materials “describe[] the justifications for withholding the
information with specific detail, demonstrate[] that the information withheld logically falls

within the claimed exemption, and [are] not contradicted by contrary evidence in the record

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or by evidence of the agency’s bad faith.” Am. Civil Liberties Union v. U.S. Dep’t of
Defense, 628 F.3d 612, 619 (D.C. Cir. 2011) (internal quotation marks omitted). In
addition, the Court has “broad discretion” to undertake in camera review of the records at
issue if such review would be appropriate to aid in evaluating the agency’s withholding of
records under its claimed exemptions. Armstrong v. Executive Office of the President, 97
F.3d 575, 577-78 (D.C. Cir. 1996); see also Stolt-Nielson Transp. Group Ltd. v. United

States, 534 F.3d 728, 734-35 (D.C. Cir. 2008).

ANALYSIS

The scope of the remand here is narrow: our Court of Appeals specifically called
for an “express” finding in the first instance that the withheld records and portions of
records did not contain “reasonably segregable” information that could and should have
been disclosed by the IRS to Waterman pursuant to his FOIA request. See Waterman II,
755 F. App’x at 28. The Court of Appeals did not address my conclusion that the IRS had
properly invoked FOIA’s Exemption 5, see 5 U.S.C. § 552(b)(5), in withholding records
(or portions thereof) that were otherwise responsive to Waterman’s request.? The Court
therefore reaffirms its prior conclusion that the withholding of each of the records at issue

was justified pursuant to Exemption 5,’ and, for the following reasons, now further finds

 

3 As described above, in my previous opinion, I also upheld the IRS’s invocation of FOIA Exemption 6 to withhold
phone numbers of certain personnel. See Waterman J, 288 F. Supp. 3d at 211-12 & n.2. Waterman does not now
challenge this withholding nor the Court’s decision regarding it, see P1.’s Second Renewed Mot. at 3; Pl.’s Cross-Mot.
for Summary Judgment at 10, but, in any event, I find once more that the withholding of this information was
appropriate and, further, that the IRS’s limited redactions of the exempt information from the otherwise fully disclosed
records clearly satisfied the IRS’s duty to disclose segregable information not subject to the exemption.

“Tn his renewed motions for summary judgment, Waterman raises a new argument concerning the applicability of
Exemption 5 to the withheld records, based on a recently enacted IRS policy under which “OPR now sends a letter to
the practitioner advising of the issues presented in the matter under investigation and gives the practitioner an

a
expressly that the IRS complied with its obligation under FOIA to disclose any records
reasonably segregable from exempt records or portions of records.

FOIA’s segregability requirement has been interpreted as imposing a duty on
agencies to disclose “non-exempt portions of a document . . . unless they are inextricably
intertwined with exempt portions.” Mead Data Central, Inc. v. Dep't of the Air Force, 566
F.2d 242, 260 (D.C. Cir. 1977). Our Circuit Court has noted that this rule implies that “an
entire document is not exempt merely because an isolated portion need not be disclosed.”
Vaughn v. Rosen, 484 F.2d 820, 825 (D.C. Cir. 1973). “[T]he agency may not sweep a
document under a general allegation of exemption” because “it is quite possible that part
of a document should be kept secret while part should be disclosed.” Jd.

Here, while citing Exemption 5, the IRS partially redacted two of the documents at
issue—a four-page computer print-out from OPR’s case management system and a portion

of a September 4, 2014 e-mail from the IRS Legal Analysis Branch manager to an OPR

 

opportunity to comment, and, then, when it’s an appropriate disposition of the case, sends a second letter” to close the
case. Pl.’s Second Renewed Mot. for Summ. J., Ex. 1, at 2 [Dkt. #43-2]. Waterman contends that this new policy
requires disclosure by the agency of the same factual information contained in the withheld records, and thus the
agency can no longer validly rely on the deliberative process privilege to withhold that information from Waterman.
While the IRS asserts that this argument is outside of the scope of the remand and should be disregarded, see generally
Def.’s Cross-Mot. to Strike, it is in any event unpersuasive. The bulletin announces only that the IRS has now adopted
a policy by which the agency will provide relevant factual information via letter to the subjects of OPR inquiries.
Even accepting Waterman’s premise that the factual information in this letter would be the same as that contained in
the records at issue, the fact that the IRS may in the future choose to provide similarly situated individuals with similar
factual information in some form does not inexorably lead to the conclusion that Waterman is entitled to deliberative
and predecisional records that happen to also contain such factual information in response to a FOJA request. In the
final analysis, I did not uphold the IRS’s invocation of Exemption 5 and the deliberative process privilege because of
the nature of the factual material contained within the records at issue, but instead because of how those documents
were prepared and for what purpose. See Waterman I, 288 F. Supp. 3d at 214 (“[T]he particular facts included in the
[OPR] memorand[a] were ‘extract[ed]’ from a ‘larger universe of facts’ regarding Waterman’s representation in an
‘exercise of judgment as to what issues seemed most relevant’ to the referring employees’ decision to file an OPR
Report.” (quoting Hardy v. Bureau of Alcohol, Tobacco, Firearms & Explosives, 243 F. Supp. 3d 155, 170 (D.D.C.
2017))). The IRS policy relied on by Waterman thus has no effect on my conclusion that those records were validly
withheld under Exemption 5.
attorney—and withheld in full the contents of three memoranda prepared by IRS personnel.
See, e.g., Vaughn Index at 1-4; Def.’s Not. of Filing Redacted Documents, Ex. 1, at 3-6;
see also Waterman I, 288 F. Supp. 3d at 212.9 The question of segregability is most
straightforward as to the two redacted records: Regarding the four-page computer print-
out, the IRS redacted only a limited portion of the document (amounting to a single
paragraph) that is comprised entirely of an OPR analyst’s opinion and recommendation
concerning Waterman’s conduct and the IRS’s response. Such interim analysis and
conclusions shared among agency personnel are quintessentially predecisional and
deliberative in nature, and the redacted portion contains no material that would fall outside
of that category. Similarly, the portions of the September 4, 2014 email redacted pursuant
to Exemption 5 are comprised exclusively of the agency employee sender’s summary of
the interim recommendations of the agency concerning whether to discipline Waterman.
The redactions in both documents, therefore, reflect the IRS’s lawful withholding of
records protected by Exemption 5 and the deliberative process privilege while disclosing
to Waterman the remaining reasonably segregable portions of those documents.

The IRS withheld the other three documents at issue in their entirety, meaning the
agency reached the conclusion that no portion of those documents was both outside of the

scope of FOIA’s exemptions and reasonably segregable from those portions that were

 

> As noted in my previous opinion, the IRS also cited to FOIA Exemption 3 and § 6103(a) of the Internal Revenue
Code—which together preclude the disclosure of third-party taxpayer information without the taxpayer’s consent—
to justify its withholding of information contained in four of the records at issue in this case. See generally Vaughn
Index; see also Waterman I, 288 F. Supp. 3d at 212 n.3. However, the IRS has since abandoned this justification,
and, in any event, the Court’s conclusion as to the validity of the IRS’s Exemption 5 claim again would have
rendered analysis of the applicability of Exemption 3 unnecessary.

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exempt. I agree with the IRS’s conclusions regarding these three documents as well,
largely for reasons articulated in my previous opinion, see Waterman I, 288 F. Supp. 3d at
213-15. Each of the withheld documents is predecisional and deliberative in nature,
reflecting preliminary, interim summaries and analyses of Waterman’s alleged conduct.
And as I stated before, the fact that these memoranda contain summations of the factual
allegations concerning Waterman—even straightforward recitals of his interactions with
the agencies—does not alone render the deliberative process privilege inapplicable, as the
very choice of which facts to present and rely upon in reaching investigative
recommendations and decisions is shielded by the privilege and thus by Exemption 5. The
December 2014 memorandum, like the redacted portion of the computer print-out,
additionally contains an analyst’s opinions and recommendations as to the agency’s course
of action regarding Waterman, the archetypal form of record shielded by the deliberative
process privilege. Because I find that the entirety of each of these memoranda is comprised
of predecisional deliberation by agency personnel, I necessarily also find that the IRS was
justified in entirely withholding the memoranda from Waterman pursuant to Exemption 5.
In short, there is no portion of these documents that would be considered non-exempt and
thus no question of whether such a portion could have been segregable and required to be

disclosed.®

 

©] would note that, while I undertook an in camera review of the documents at issue and have reached these
conclusions based on that review, the descriptions provided by the IRS in its Vaughn Index and accompanying
affidavits align fully with the actual contents of the documents reviewed by the Court.

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As such, I find that the IRS fully complied with its obligations under FOIA to
disclose all reasonably segregable non-exempt records to Waterman, and I therefore once

more find that the IRS’s disclosures in response to Waterman’s FOIA request were lawful.

CONCLUSION

For the foregoing reasons, the Court GRANTS defendant’s motion for summary
judgment, DENIES plaintiff's cross-motion for summary judgment and plaintiff's second
renewed motion for summary judgment, and DENIES as MOOT defendant’s cross-motion

to strike. An Order consistent with this decision accompanies this Memorandum Opinion.

    

RICHARD J (LEG N
United States DfStrict Judge

1]