Court Opinion

ID: 4665958
Source: CourtListenerOpinion
Date Created: 2021-03-09 16:01:07.072443+00
Date Added: 2024-06-11T08:02:46.157003
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 16, 2020                Decided March 9, 2021

                         No. 19-5310

                   MARGARET B. KWOKA,
                       APPELLANT

                              v.

                INTERNAL REVENUE SERVICE,
                        APPELLEE

        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:17-cv-01157)

    Adina H. Rosenbaum argued the cause for appellant. With
her on the briefs were Patrick D. Llewellyn and Allison M.
Zieve.

    Kathleen E. Lyon, Attorney, U.S. Department of Justice,
argued the cause for appellee. With her on the brief was
Michael J. Haungs, Attorney.

    Before: TATEL, MILLETT, and KATSAS, Circuit Judges.

    Opinion for the Court filed by Circuit Judge TATEL.

    TATEL, Circuit Judge: This case presents a recurring
question in our court: under what circumstances is a prevailing
                               2
plaintiff in a Freedom of Information Act (FOIA) case—here a
law professor seeking information from the Internal Revenue
Service—entitled to an award of attorney’s fees? The district
court denied the professor’s request for fees. For the reasons
set forth below, we vacate and remand for further proceedings
consistent with this opinion.

                               I.
      This dispute began with a FOIA request about FOIA
requests. Margaret Kwoka, a law professor at the University of
Denver, studies federal agency administration of FOIA. Kwoka
submitted a FOIA request for nine categories of information
about each FOIA request received by the IRS in Fiscal Year
2015. FOIA Request at 1, Joint Appendix (J.A.) 23. Although
the IRS had already produced a publicly available “log”
containing some data about each of its FOIA requests, Kwoka
sought “additional fields that are not included in [the] version
that is published” on the IRS’s website. Id. Relevant to this
appeal, she sought (1) the names of all “third-party” requesters,
i.e., those who requested information about another person, and
(2) the organizational affiliations of all requesters who
provided one. Kwoka needed this information “to examine
whether the IRS is administering its FOIA obligations in a
manner that is efficient and effective given the nature of
frequent requesters.” Kwoka Decl. ¶ 8, J.A. 79. She plans to
include her analysis of the expanded FOIA logs in a
forthcoming book, as well as in presentations and articles.

    The IRS granted most of Kwoka’s request but denied it
with respect to the two categories of information described
above. It relied on Exemption 3, which excludes matters
“specifically exempted from disclosure by statute,” and on
Exemption 6, which excludes disclosures that “would
constitute a clearly unwarranted invasion of personal privacy.”
5 U.S.C. § 552(b)(3), (6); see IRS FOIA Response at 2, J.A. 36.
                              3
After exhausting her administrative remedies, Kwoka filed suit
in the district court, and the parties cross-moved for summary
judgment.

     The district court granted each party’s summary judgment
motion in part, rejecting the IRS’s blanket withholding of the
two categories of information, but allowing for the possibility
of limited redactions on a case-by-case basis. Kwoka v. IRS,
No. 17-cv-1157, 2018 WL 4681000 (D.D.C. Sept. 28, 2018).
Defending its invocation of Exemption 3, the IRS relied on
section 6103 of the Internal Revenue Code, which prohibits the
disclosure of “return information,” including “a taxpayer’s
identity” and “whether the taxpayer’s return was, is being, or
will be examined or subject to other investigation or
processing.” I.R.C. § 6103(a), (b)(2)(A). According to the IRS,
knowledge of a requester’s identity could allow someone to
infer the identity of the taxpayer targeted by a request. The
district court was unconvinced, explaining that “the IRS’s
conclusion does not follow from its premises.” Kwoka, 2018
WL 4681000, at *2. Releasing the two categories of
information would not lead to the disclosure of return
information because “[n]either the log nor the information
Kwoka requests generally reveals the target of a FOIA
request—i.e., the person whose tax records the requester is
seeking.” Id. “Even armed with the information she requests
and the publicly accessible FOIA log, in most cases Kwoka
could not know with any certainty the identity of particular
taxpayers.” Id. Even for many of the examples raised by the
IRS—such as a request targeting a company made by a
shareholder or a request targeting a recently deceased taxpayer
made by a relative—“Kwoka would have no way of knowing”
who the target of the request was based on the information she
seeks. Id. Although the district court agreed with the IRS that
redactions could be warranted in some scenarios, it concluded
that the Service would have to make those redactions on a case-
                               4
by-case basis. See id. at *3. “Because of the logical problems
with the IRS’s argument,” the district court explained, the
Service had failed to justify blanket withholding under
Exemption 3. Id.

     The district court rejected the IRS’s Exemption 6
arguments on similar grounds. “[I]n most cases, revealing the
organizational affiliations of first-party requesters and the
names and organizational affiliations of third-party requesters
would not reveal the target of the request.” Id. (emphasis
omitted). Moreover, the FOIA requesters themselves lack a
sufficient privacy interest to justify withholding, since they
“‘freely and voluntarily address[] their inquiries to the IRS,
without a hint of expectation that the nature and origin of their
correspondence w[ill] be kept confidential.’” Id. (alterations in
original) (quoting Stauss v. IRS, 516 F. Supp. 1218, 1223
(D.D.C. 1981)). Again, the district court found that although
some redaction may be warranted on a case-by-case basis, “the
existence of a few possible exceptions does not justify the
IRS’s blanket withholding here.” Id. at *4.

      The IRS’s other arguments in favor of blanket withholding
fared no better. The district court rejected the Service’s
contention that Kwoka’s request would require the creation of
new records, since “the IRS has admitted it has the information
Kwoka seeks,” and simply redacting parts of a document does
not transform it into a new record. Id. (citing Yeager v. Drug
Enforcement Administration, 678 F.2d 315, 321 (D.C. Cir.
1982)). Finally, the district court disagreed with the IRS that
the disclosable information was not “reasonably segregable.”
Id. It found that “redacting individual names and organizational
affiliations of exempt entries . . . would not render the
remaining record unintelligible,” and that directing the IRS to
comply with Kwoka’s request would not impose an
unreasonable burden. Id. at *4–5. “[W]here the IRS already has
                                5
all the requested records in its possession, the Court will not
allow it to withhold the documents wholesale simply because
it will (potentially) take 2,200 hours to review them for
redactions.” Id. at *5. The IRS ultimately produced the
requested information for over 12,000 FOIA requests,
redacting (without objection from Kwoka) only 147 third-party
requester names and 220 organizational affiliations.

     Setting the stage for the issue now before us, Kwoka then
filed a motion for fees pursuant to section 552(a)(4)(E)(i),
which provides that a district court “may assess against the
United States reasonable attorney fees and other litigation costs
reasonably incurred in any case under this section in which the
complainant has substantially prevailed.” 5 U.S.C.
§ 552(a)(4)(E)(i). The district court denied the motion, and
Kwoka now appeals. See Kwoka v. IRS (Fees Minute Order),
No. 17-cv-1157 (D.D.C. Oct. 25, 2019).

                                II.
     FOIA’s fee recovery provision fulfills two objectives.
First, it serves “to encourage Freedom of Information Act suits
that benefit the public interest” when “sufficient private interest
in the requested information” is lacking. LaSalle Extension
University v. FTC, 627 F.2d 481, 484 (D.C. Cir. 1980) (per
curiam). “A grudging application of this provision . . . would
dissuade those who have been denied information from
invoking their right to judicial review . . . .” Nationwide
Building Maintenance, Inc. v. Sampson, 559 F.2d 704, 715
(D.C. Cir. 1977). Second, it provides “compensation for
enduring an agency’s unreasonable obduracy in refusing to
comply with the Freedom of Information Act’s requirements.”
LaSalle Extension University, 627 F.2d at 484. Moreover, an
allowance for fees “remove[s] the incentive for administrative
resistance to disclosure requests based not on the merits of
exemption claims, but on the knowledge that many FOIA
                                 6
plaintiffs do not have the financial resources or economic
incentives to pursue their requests through expensive
litigation.” Nationwide Building Maintenance, Inc., 559 F.2d
at 711.

     In evaluating a fee petition, the district court assesses
whether the plaintiff “substantially prevailed” within the
meaning of the statute. 5 U.S.C. § 552(a)(4)(E)(i). Here, the
district court found Kwoka had done so, a conclusion the IRS
does not contest. But that is not enough. Because the statute
provides that an eligible party “may” receive fees, the district
court must also decide whether the plaintiff is “entitled” to a
fee award. Edmonds v. FBI, 417 F.3d 1319, 1327 (D.C. Cir.
2005).

     Drawing from legislative history, our court has devised a
four-factor test to guide district courts in determining whether
a plaintiff is “entitled” to fees. That test “looks to (1) the public
benefit derived from the case; (2) the commercial benefit to the
plaintiff; (3) the nature of the plaintiff’s interest in the records;
and (4) the reasonableness of the agency’s withholding of the
requested documents.” Morley v. CIA (Morley II), 810 F.3d
841, 842 (D.C. Cir. 2016) (internal quotation marks omitted).
“No one factor is dispositive,” except that “the court will not
assess fees when the agency has demonstrated that it had a
lawful right to withhold disclosure.” Davy v. CIA, 550 F.3d
1155, 1159 (D.C. Cir. 2008). We review a district court’s
entitlement determination for abuse of discretion. Morley v.
CIA (Morley III), 894 F.3d 389, 391 (D.C. Cir. 2018) (per
curiam). “In other words, was the district court’s decision on
attorney’s fees at least within the zone of reasonableness, even
if we might disagree with the decision?” Id.

   In this case, the district court weighed the first factor in
Kwoka’s favor. Although the parties spar over the proper
                               7
magnitude the district court gave or should have given to that
factor, the IRS does not argue that the court abused its
discretion by finding “some benefit to the public” from the
lawsuit. Fees Minute Order (internal quotation marks omitted).

     With respect to the second and third factors, the district
court stated that Kwoka will “derive some commercial benefit
from the records, and the nature of [her] interest in the records
is both professional and pecuniary.” Id. (alteration in original)
(internal quotation marks omitted). Both Kwoka and the IRS
interpret this statement as weighing the two factors against
Kwoka. The district court went on to weigh the fourth factor
against Kwoka, explaining that “the government’s withholding
of the records had a reasonable basis in law as an ex ante
matter.” Id. (internal quotation marks omitted). Then, “[t]aking
into account all of the circumstances of this case and weighing
the relevant factors,” the district court denied Kwoka’s fee
petition. Id. On appeal, Kwoka contends that the district court
erred with respect to the second, third, and fourth factors.

     We agree with Kwoka that the second and third factors—
“commercial benefit” and “plaintiff’s interest”—support a fee
award. “[C]losely related and often considered together,” Tax
Analysts v. U.S. Department of Justice, 965 F.2d 1092, 1095
(D.C. Cir. 1992), the two factors “assess whether a plaintiff has
sufficient private incentive to seek disclosure without
attorney’s fees,” Davy, 550 F.3d at 1160 (internal quotation
marks omitted).

    In Davy v. CIA, we explained how factors two and three
apply to scholars and journalists. “Congress did not intend for
scholars (or journalists and public interest groups) to forgo
compensation when acting within the scope of their
professional roles.” Id. at 1161 (internal quotation marks
omitted). Individuals like scholars and journalists who
                                 8
“gather[] information of potential interest to a segment of the
public, use[] [their] editorial skills to turn the raw materials into
a distinct work, and distribute[] that work to an audience” are
“among those whom Congress intended to be favorably treated
under FOIA’s fee provision.” Id. at 1161–62 (internal quotation
marks omitted); see also id. at 1165 (Tatel, J., concurring)
(“Always searching for information that the public will want to
consume, journalists must surely be thought of as pursuing
records in the public interest.”).

     As we explained in Davy, then, “news interests, regardless
of private incentive, generally should not be considered
commercial interests,” and the second and third factors
“generally” should weigh in favor of scholars and journalists
unless their interest “was of a frivolous or purely commercial
nature.” Id. at 1160–61 (majority opinion) (alterations omitted)
(internal quotation marks omitted). These two factors should
therefore generally aid scholars and journalists even if, in some
cases, they do not weigh strongly in a plaintiff’s favor and
therefore ultimately “do little to advance [their] position” when
weighing all four factors. McKinley v. Federal Housing
Finance Agency, 739 F.3d 707, 712 (D.C. Cir. 2014) (emphasis
omitted) (internal quotation marks omitted).

     Kwoka undoubtedly has a serious, scholarly interest in
how federal agencies administer FOIA. She has published
articles about FOIA in the Yale and Duke Law Journals, see
Margaret B. Kwoka, First-Person FOIA, 127 Yale L.J. 2204
(2018); Margaret B. Kwoka, FOIA, Inc., 65 Duke L.J. 1361
(2016), and her work has been cited by multiple circuit courts,
see NLRB v. New Vista Nursing & Rehabilitation, 870 F.3d
113, 133 n.12 (3d Cir. 2017); Moffat v. U.S. Department of
Justice, 716 F.3d 244, 254 n.10 (1st Cir. 2013), as well as our
own district court, see National Security Counselors v. CIA,
960 F. Supp. 2d 101, 204 n.77 (D.D.C. 2013). Additionally, she
                               9
has either testified about FOIA or presented her research to the
Senate Judiciary Committee, the Securities and Exchange
Commission’s FOIA Office, and the National Archives and
Records Administration’s FOIA Advisory Committee, while
also previously serving on the latter committee as Co-Chair of
the Proactive Disclosures Subcommittee. And especially
relevant here, she says that she will soon publish a book with
Cambridge University Press featuring her analysis of the very
information she obtained in this case.

     Moreover, the IRS does not contend that Kwoka’s interest
was “frivolous” or “purely commercial.” Davy, 550 F.3d at
1161 (internal quotation marks omitted). In fact, Kwoka’s use
of the information she obtained through these requests to
research trends in FOIA requests and propose improvements to
agency administration represents an important type of “public-
interest oriented” scholarly endeavor that FOIA’s fee provision
exists to encourage. Id. (internal quotation marks omitted).
Although Kwoka plans to publish some of her analysis in a
forthcoming book, Davy makes clear that the “mere intention
to publish a book does not necessarily mean that the nature of
the plaintiff’s interest is purely commercial.” Id. at 1160
(internal quotation marks omitted). Indeed, scholarly interest,
“regardless of private incentive, generally should not be
considered commercial.” Id. (internal quotation marks
omitted). In any event, a scholarly book on FOIA is unlikely to
become a bestseller. As in Davy, “nothing in the record would
suggest that [Kwoka’s] private commercial interest outweighs
[her] scholarly interest, much less the public value in providing
[her] an incentive to ferret out and publish this information.”
Id. at 1161. Because Kwoka lacks “sufficient private incentive
to seek disclosure without attorney’s fees,” the second and third
factors weigh in her favor. Id. at 1160 (internal quotation marks
omitted).
                              10
     The fourth factor “considers whether the agency’s
opposition to disclosure had a reasonable basis in law and
whether the agency had not been recalcitrant in its opposition
to a valid claim or otherwise engaged in obdurate behavior.”
Id. at 1162 (internal quotation marks and citations omitted). To
benefit from this factor, the agency must show that it had a
“colorable or reasonable basis for not disclosing the material.”
Id. at 1163.

     In the district court, the IRS argued that it had denied
Kwoka’s request because it reasonably believed (1) that the
information she sought “was exempt in full under FOIA
exemption 3 in conjunction with Internal Revenue Code . . .
[section] 6103,” Smith Decl. ¶ 16, Kwoka v. IRS, No. 17-cv-
1157 (D.D.C. Oct. 25, 2019), ECF No. 26-1; and (2) “that
reviewing and redacting the files of each of the approximate[ly]
12,000 requests” would impose “an unreasonable burden,”
Opposition to Fees at 11, Kwoka v. IRS, No. 17-cv-1157
(D.D.C. Oct. 25, 2019), ECF No. 27-1. The district court
agreed with the first argument. Observing that the IRS’s
“principal motivation in withholding the records was to comply
with its statutory obligation to avoid improper disclosure of
third-party taxpayer return information,” it stated that this
“concern was not unfounded at the outset of the litigation.”
Fees Minute Order. According to the district court, moreover,
its “authorization of redactions” demonstrates “that there
remains some cause for legitimate concern.” Id.

     On this issue, our review is especially deferential. “The
question for us is whether the District Court reasonably (even
if incorrectly) concluded that the agency reasonably (even if
incorrectly) withheld documents.” Morley III, 894 F.3d at 393.
But even this “double dose of deference,” id., cannot save the
district court’s conclusion with respect to section 6103.
                               11
     To begin with, the IRS failed to give any logical
explanation as to how someone could reliably infer taxpayer
identities from the vast majority of the information Kwoka
sought. As the district court pointed out, even many of the
hypotheticals posed by the IRS made no sense on their own
terms. For example, the IRS argued that if a corporate
shareholder requested examination files about the company for
which he owned shares, someone could infer the protected
identity of the company targeted by the request from the
requester’s publicly-known ownership. But as the district court
explained, this “conclusion does not follow,” because “the
‘corporate shareholder’ might be requesting information about
the corporation, but he might also be requesting information
about any number of other organizations (or individuals),” and
“Kwoka would have no way of knowing.” Kwoka, 2018 WL
4681000, at *2. Moreover, one of the IRS’s own summary
judgment declarations admitted that “some” of Kwoka’s
“requests for non-tax records likely do not implicate significant
privacy interests” and are therefore “non-exempt.” Rowe Decl.
¶ 17, Kwoka v. IRS, No. 17-cv-1157 (D.D.C. Sept. 28, 2018),
ECF No. 9-3; see also id. ¶ 20 (“Disclosing the requester names
and organizational affiliations with respect to only those
requests for non-tax records would not reveal tax information
that is protected under I.R.C. § 6103.”). From the beginning of
this litigation, then, the IRS knew that at least some of the
information Kwoka sought was not subject to section 6103.
Lacking basis in either logic or fact, the IRS’s argument that
section 6103 exempted all of the requested information was
plainly unreasonable.

    This, however, does not end the matter, as the district court
never addressed the IRS’s other argument—that at the time of
Kwoka’s initial request, it reasonably believed that segregating
the exempt and non-exempt materials would impose an
unreasonable burden. See 5 U.S.C. § 552(a)(8)(A)(ii)(II)
                                12
(Agencies must “take reasonable steps necessary to segregate
and release non[-]exempt information[.]”). To be sure, at
summary judgment, the district court rejected the argument on
the merits. Indeed, it doubted that time spent processing
records for redactions, as opposed to searching for the records
in the first place, could even qualify as an unreasonable burden,
observing that “the IRS has already located the responsive
records and thus need not conduct any additional search; the
only issue is whether it must spend the time to review those
records to make redactions.” Kwoka, 2018 WL 4681000, at *5.
The district court went on to explain that “[e]ven if reviewing
an already-identified set of documents qualifies as a search,
[other] courts in this Circuit have required production of
records much more voluminous than the records requested
here.” Id. (citing Public Citizen v. Department of Education,
292 F. Supp. 2d 1, 6 (D.D.C. 2003)).

     The district court, however, never answered the question
critical to Kwoka’s fee request. Even though it found at the
summary judgment stage that processing the records for
redactions imposed no unreasonable burden, the question at the
fee stage is whether the IRS “had a reasonable basis in law”
when it “initially” concluded otherwise. Morley III, 894 F.3d
at 392 (internal quotation marks omitted). Accordingly,
because our role is to “review the district court’s attorney’s fees
determination only for abuse of discretion,” id. at 391, we shall
follow our court’s consistent practice and remand to the district
court to evaluate the reasonableness of the IRS’s burden
argument in the first instance and then to re-balance the four
factors in view of our conclusion that factors two and three
weigh in Kwoka’s favor. See Morley II, 810 F.3d at 845
(vacating a FOIA fees decision and remanding for
reconsideration of the factors); Davy v. CIA, 456 F.3d 162, 167
(D.C. Cir. 2006) (“If the district court fails to articulate the
                             13
basis for its attorney fee decision, we believe remand for
adequate explanation of its reasoning is in order.”).

                            III.
    For the foregoing reasons, we vacate the district court’s
denial of Kwoka’s fee motion and remand for further
proceedings consistent with this opinion.

                                                 So ordered.