Court Opinion

ID: 4257995
Source: CourtListenerOpinion
Date Created: 2018-03-23 22:01:40.141965+00
Date Added: 2024-06-11T14:26:16.308434
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

 RICHARD EDELMAN,

                Plaintiff,

        v.                                          Civil Action No. 14-1140 (RDM)

 SECURITIES AND EXCHANGE
 COMMISSION,

                Defendant.

                                 MEMORANDUM OPINION

       Plaintiff Richard Edelman operates a website on which he publishes information relating

to the transfer of “ownership of the Empire State Building” to the Empire State Realty Trust

(“ESRT”). Edelman v. SEC, 172 F. Supp. 3d 133, 138 (D.D.C. 2016) (Edelman I). Following

the formation of the ESRT, investors in the Empire State Building “bec[a]me investors in the

ESRT.” Dkt. 39-2 at 1 (Pl.’s SUMF ¶ 2). In 2014, Edelman lodged six requests for records

under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, with the Securities and

Exchange Commission (“SEC”), seeking documents relating to the SEC’s “review of the . . .

transaction.” Edelman I, 172 F. Supp. 3d at 138. Among other records, Edelman requested “a

set of complaints submitted by Empire State Building investors to the SEC.” Id. at 140.

Dissatisfied with the SEC’s response, Edelman filed this FOIA action. Dkt. 1. The Court has

already resolved two rounds of dueling motions for summary judgment, see Edelman I, 172 F.

Supp. 3d 133; Edelman v. SEC, 239 F. Supp. 3d 45 (D.D.C. 2017) (Edelman II), and the matter

is now before the Court on the third—and final—round of summary judgment motions, see Dkt.

37; Dkt. 39.
        The only question that remains is whether the SEC may withhold the identities of thirty-

six investors (or associated parties) in the Empire State Building who contacted the SEC to voice

concerns regarding the creation of the ESRT. The answer turns on whether the complainants’

privacy interest outweighs the public interest in knowing their identities. Applying this

balancing test, the Court concludes that the SEC is not required to disclose the identities of the

thirty-six complainants. The Court, accordingly, will GRANT the SEC’s motion for summary

judgment, Dkt. 37, and will DENY Edelman’s cross-motion for summary judgment, Dkt. 39.

                                         I. BACKGROUND

        The factual background and procedural history of this case have been described at length

in the Court’s earlier memorandum opinions. See Edelman I, 172 F. Supp. 3d at 138–42;

Edelman II, 239 F. Supp. 3d at 49–50. As relevant to the motions currently before the Court, the

SEC produced 1,447 pages of consumer complaint documents. Dkt. 37-1 at 1–2 (Second Barss

Decl. ¶ 4). In doing so, however, the SEC redacted the names of seventy individuals “who had

communicated their concerns . . . about the ESRT transaction” to the SEC. Id. (Second Barss

Decl. ¶ 4). The seventy complainants “included individual investors in the [Empire State

Building], relatives of investors, and trustees of family trusts that hold . . . shares” in the

property. Id. (Second Barss Decl. ¶ 4).

        The last time this case was before the Court, the SEC invoked Exemption 6 to justify the

redactions. Exemption 6 “protects information about individuals in ‘personnel and medical files

and similar files’ when its disclosure ‘would constitute a clearly unwarranted invasion of

personal privacy.’” Shapiro v. U.S. Dep’t of Justice, 153 F. Supp. 3d 253, 257 (D.D.C. 2016)

(quoting 5 U.S.C. § 552(b)(6)). The SEC asserted that Exemption 6 permitted it “to shield [the]

complainants from being harassed or ridiculed by any person they may have criticized in their

                                                   2
complaints.” Edelman II, 239 F. Supp. 3d at 55 (internal quotation marks and citation omitted).

Edelman countered that their privacy interest was “not particularly strong because the complaints

are commercial in nature and because several of the complainants have . . . agreed to the

disclosure of their identities.” Id. In Edelman II, the Court denied both motions for summary

judgment on this point. Id. at 57. The Court explained its reasoning as follows:

       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 . . . should conduct the relevant balancing
       in the first instance, the Court will deny summary judgment at this time.

Id.

       In accordance with Edelman II, the SEC subsequently disclosed the names of thirty-four

of the seventy complainants. Those complainants, the SEC explained, had (1) “stated in

affidavits . . . that their names need not be withheld;” (2) “given interviews about the ESRT

transaction;” (3) “posted their concerns on [the] [I]nternet;” or (4) “appeared as parties [or]

counsel [in] lawsuits against the ESRT trustees.” Dkt. 37-1 at 2 (Second Barss Decl. ¶ 5). The

remaining thirty-six complainants, however, do not appear to have engaged in any such public

activity. Id. (Second Barss Decl. ¶ 6). The SEC, accordingly, has continued to withhold their

names on the grounds that this information falls within Exemption 6. See id. (Second Barss

Decl. ¶ 6). The SEC has now renewed its motion for summary judgment, Dkt. 37, and Edelman

has renewed his cross-motion, Dkt. 39.

                                    II. LEGAL STANDARD

       FOIA cases are typically resolved on motions for summary judgment under Federal Rule

of Civil Procedure 56. See, e.g., Beltranena v. U.S. Dep’t of State, 821 F. Supp. 2d 167, 175

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(D.D.C. 2011). To prevail on a summary judgment motion, the moving party must demonstrate

that there are no genuine issues of material fact and that he or she is entitled to judgment as a

matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Fed. R. Civ. P. 56. In a

FOIA action, the agency may meet its burden by submitting “relatively detailed and non-

conclusory” affidavits or declarations, SafeCard Servs., Inc. v. SEC, 926 F.2d 1197, 1200 (D.C.

Cir. 1991), and an index of the information withheld, Vaughn v. Rosen, 484 F.2d 820, 826–28

(D.C. Cir. 1973); Summers v. Dep’t of Justice, 140 F.3d 1077, 1080 (D.C. Cir. 1998). Because

“it is the function, not the form, of the [Vaughn] index that is important,” Keys v. U.S. Dep’t of

Justice, 830 F.2d 337, 349 (D.C. Cir. 1987), an agency may submit a declaration “in lieu of the

index itself,” so long as the declaration adequately identifies the records withheld and the

agency’s reasons for doing so, Judicial Watch, Inc. v. Food & Drug Admin., 449 F.3d 141, 146

(D.C. Cir. 2006). An agency “is entitled to summary judgment if no material facts are in dispute

and if it demonstrates ‘that each document that falls within the class requested either has been

produced . . . or is wholly exempt from the [FOIA’s] inspection requirements.’” Students

Against Genocide v. U.S. Dep’t of State, 257 F.3d 828, 833 (D.C. Cir. 2001) (quoting Goland v.

CIA, 607 F.2d 339, 352 (D.C. Cir. 1978)). The Court reviews the agency’s decision de novo, and

the agency bears the burden of sustaining its action. 5 U.S.C. § 552(a)(4)(B).

                                         III. ANALYSIS

       The Freedom of Information Act “mandates that an agency disclose records on request,

unless they fall within one of nine [exclusive] exemptions.” Milner v. Dep’t of Navy, 562 U.S.

562, 565 (2011). All that remains at issue in this third round of cross-motions for summary

judgment is Exemption 6.

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       Exemption 6 provides that an agency need not disclose “personnel and medical files and

similar files the disclosure of which would constitute a clearly unwarranted invasion of personal

privacy.” 5 U.S.C. § 552(b)(6). The parties—and the Court—agree that the information at issue

here—the identities of the complainants—is contained in “similar files” and thus satisfy

Exemption 6’s threshold requirement. See Dkt. 37 at 4; Dkt. 39-1 at 2 n.2; see also Edelman I,

239 F. Supp. 3d at 54–55; People for the Am. Way Found. v. Nat’l Park Serv., 503 F. Supp. 2d

284, 303 (D.D.C. 2007). The more difficult question is whether disclosure of the thirty-six

complainants’ identities “would constitute a clearly unwarranted invasion of personal privacy.”

5 U.S.C. § 552(b)(6). To make that determination, the Court employs a two-step test. First, the

Court must decide whether “disclosure would compromise a substantial, as opposed to a de

minimis, privacy interest.” Nat’l Ass’n of Home Builders v. Norton, 309 F.3d 26, 33 (D.C. Cir.

2002) (internal quotation marks omitted). Second, if so, the Court must weigh “the private

interest involved (namely, the individual’s right of privacy) against the public interest (namely,

. . . to open agency action to the light of public scrutiny).” Judicial Watch, 449 F.3d at 153

(internal quotation marks omitted).

       With respect to the first step, the Court concludes that disclosure would compromise a

substantial privacy interest. To be sure, Exemption 6 “does not categorically exempt

individuals’ identities” from disclosure “because the privacy interest at stake may vary

depending on the context in which it is asserted.” Am. Immigration Lawyers’ Ass’n v. Exec.

Office of Immigration Review, 830 F.3d 667, 675 (D.C. Cir. 2016) (quoting Judicial Watch, 449

F.3d at 153). Here, however, the SEC—at least now—does not purport to assert a categorical

exemption. Rather, following the Court’s decision in Edelman II, the SEC engaged in a case-by-

case review of the privacy interests at stake, and it disclosed the identities of roughly half of the

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seventy complainants. Dkt. 37-1 at 2 (Second Barss Decl. ¶ 5). Those individuals, the SEC has

explained, had either previously indicated “that their names need not be withheld” or had made

public statements about the ESRT transaction or had appeared as parties or counsel in lawsuits

about the transaction. Id. (Second Barss Decl. ¶ 5). But, as to the remaining thirty-six

complainants, the SEC has concluded that disclosure of their identities “would interfere with a

general expectation that the public can complain to the government in privacy; could subject

them to retaliation, harassment[,] and ridicule; and could reveal information about their personal

financial interests.” Dkt. 37 at 4.

       Edelman does not dispute that harms of this type may at times meet the substantial-

privacy-interest hurdle of Exemption 6. In his view, however, this is not such a case because the

SEC has erroneously “assum[ed] that the identities of [the] investors . . . [are] confidential and

not generally known.” Dkt. 39-1 at 5. That assumption is incorrect, according to Edelman,

because “[t]he list of former investors in the [Empire State Building] is not confidential.” Dkt.

39-3 at 1 (Edelman Decl. ¶ 4); see also Dkt. 39-4 (list of former investors). To Edelman, this

fact “negates many of the [SEC’s] claims that the . . . complainants’ privacy interest will be

violated by the release of their identities.” Dkt. 39-1 at 5.

       Edelman’s argument is unavailing. First, the factual premise of the argument is incorrect.

As the SEC explains, it compared the list of former Empire State Building investors that

Edelman provided “against the names of the thirty-six complainants whose names were

withheld” and found that “[o]nly eight of those names were on [Edelman’s] list.” Dkt. 40-1 at 1

(Third Barss Decl. ¶ 4). But, even putting that significant factual limitation aside, Edelman’s

argument fails to join issue with the SEC’s principal concern: disclosing the identities of the

thirty-six complainants who have not publicly aired their objections “would interfere with a

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general expectation that the public can complain to the government in privacy” and could subject

those who filed complaints “to retaliation [and] harassment.” 1 Dkt. 37 at 4. That is, 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.

       The SEC’s concerns about potential harassment, moreover, are not merely conjectural.

The SEC notes, for example, that a number of the investors who voiced objections to the SEC

regarding the ESRT transaction “expressed their fear that ESRT management would retaliate

against them if ESRT discovered that they submitted complaints to the SEC regarding the

transaction,” and “a number of investors . . . asked for confidentiality.” Dkt. 37-2 at 2 (Second

Kluck Decl. ¶ 5). Although the SEC failed to maintain a list of those who requested

confidentiality, id. (Second Kluck Decl. ¶ 6), and although an agency’s promise of

confidentiality is not dispositive, see Wash. Post Co. v. U.S. Dep’t of Health & Human Servs.,

690 F.2d 252, 263 (D.C. Cir. 1982), these comments demonstrate that the SEC’s stated concerns

are not hypothetical and that at least some of the thirty-six complainants whose identities the

SEC has withheld fear retaliation or harassment. Their concerns, moreover, find some validation

in the fact that the transaction at issue remains the subject of litigation in which those in favor of,

and those opposed to, the transaction have been urged to take sides. See Shasha v. Malkin, No.

14-cv-9989 (S.D.N.Y). Indeed, by Edelman’s own account, all of the investors in the Empire

State Building “have already been contacted by the plaintiffs in that case to join as plaintiffs or

1
  The SEC also asserts that disclosure “could reveal information about [the complainants’]
personal financial interests.” Dkt. 37 at 4. On the present record, the Court cannot determine the
extent to which the financial information contained in the complaints overlaps with the
information that can be gleaned from Edelman’s list of purported former investors in the Empire
State Building. See Dkt. 42 at 3–4. But, given the Court’s conclusion that the risk of retaliation
and harassment is sufficient to establish a substantial privacy interest, the Court need not rely on
this additional basis for the SEC’s decision.
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witnesses.” Dkt. 39-3 at 2 (Edelman Decl. ¶ 8). 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.

        Under other circumstances, courts have recognized that disclosing the identity of

complainants may implicate substantial privacy interests. In Wisdom v. U.S. Trustee Program,

for example, a FOIA requester objected to the redaction “of the names of individuals who [had]

complained to the agency about [a private bankruptcy trustee’s] demeanor” and “similar

identifying information.” 232 F. Supp. 3d 97, 123 (D.D.C. 2017). In sustaining the agency’s

invocation of Exemption 6, the court observed that, even where other “identifying information is

. . . available in public records, individuals may still retain a privacy interest in avoiding the

association of their names with complaints or other disciplinary actions.” Id. at 124. There, as

here, the agency asserted that disclosure of the complainant’s identities “could subject the

individuals involved to ‘unnecessary public attention, harassment, or embarrassment’” and could

“stymie the government’s efforts to obtain candid information.” Id. at 125. The court concluded

that this asserted privacy interest was substantial. Id. “Indeed,” the Wisdom court explained,

“courts have routinely upheld the withholding of complainants’ names on similar rationales.” Id.

(citing Lakin Law Firm, P.C. v. FTC, 352 F.3d 1122, 1125 (7th Cir. 2003)). Years earlier, Judge

Gesell touched on a similar theme in Center for Auto Safety v. National Highway Traffic Safety

Administration, stressing that “[t]he public interest . . . encompasses . . . the interests of citizens

generally to complain to their government in privacy.” 809 F. Supp. 148, 150 (D.D.C. 1993).

        To be sure, that interest is not universal, and it does not categorically protect the identities

of those who complain to the government. In light of the particular facts of this case, however,

                                                   8
the Court concludes that the privacy interests of the thirty-six complainants, who have not joined

the public debate over the wisdom or lawfulness of the ESRT transaction, are substantial.

       The second step of the inquiry requires the Court to weigh this (substantial) privacy

interest against the public interest in disclosure. As the Supreme Court has explained, “the only

relevant ‘public interest in disclosure’ to be weighed . . . is the extent to which disclosure would

serve the ‘core purpose of the FOIA,’ which is ‘contributing significantly to public

understanding of the operations or activities of the government.’” U.S. Dep’t of Def. v. Fed.

Labor Relations Auth., 510 U.S. 487, 496 (1994) (emphasis omitted) (quoting U.S. Dep’t of

Justice v. Reporters Comm. for Freedom of Press, 489 U.S. 749, 775 (1989)). The SEC

previously produced 71 pages of attorney notes and 1,447 pages of consumer complaints to

Edelman, see Edelman II, 239 F. Supp. 3d at 50, and has now “produced the names of thirty-four

of the[] [c]omplainants,” Dkt. 37-1 at 2 (Second Barss Decl. ¶ 5). The “relevant question, then,

. . . is whether, given the information already disclosed by [the SEC], the ‘incremental value’

served by disclosing [the complainants’] name[s] outweighs [their] privacy interest.” Am.

Immigration Lawyers, 830 F.3d at 674.

       When this case was last before the Court, the SEC asserted—without elaboration—that

disclosing the names of the complainants “would not shed light on how the government

operates.” Dkt. 26 at 11; see Dkt. 30 at 10. The Court rejected this conclusory assertion, noting

that it ignored the public interest (1) in “‘knowing who may be exerting influence on [SEC]

officials sufficient to convince them to’ approve or disapprove a transaction,” Edelman II, 239 F.

Supp. 3d at 55 (quoting People for the Am. Way Found., 503 F. Supp. 2d at 306); (2) in

“knowing whether the SEC gives ‘greater weight to the comments submitted by’ some

complainants than others,” id. (quoting All. for Wild Rockies v. Dep’t of Interior, 53 F. Supp. 2d

                                                  9
32, 37 (D.D.C. 1999)); and (3) in “understanding whether particular complaints, which were

credited or rejected by the SEC, were based on personal knowledge, financial interests, or other

factors,” id. at 55–56.

        In its renewed motion for summary judgment, the SEC has provided the Court with more

information on the SEC’s role with respect to the ESRT formation and the purposes for which it

considered the complaints. According to Samuel Kluck, a Legal Branch Chief in the Office of

Real Estate and Commodities of the SEC, the ESRT “filed the Form S-4 registration statement

that involved a consent solicitation to approve the consolidation of several properties, including

[the Empire State Building], into [the] ESRT[,] which would then qualify as a real estate

investment trust.” Dkt. 37-2 at 1 (Second Kluck Decl. ¶ 2). The SEC then “review[ed] [the]

ESRT’s registration statement and related filings” in order to “comment on any potential

disclosure deficiencies under the federal securities laws.” Id. at 2 (Second Kluck Decl. ¶ 4). The

SEC “did not make any policy determinations on whether the ESRT transaction was fair to

investors, nor [did the SEC] pass upon its merits, [its] fairness[,] or the accuracy of the

disclosure.” Id. (Second Kluck Decl. ¶ 4). The complaints, according to the SEC, played only a

limited role in its review of the registration statement: SEC personnel merely “considered

whether the complaints identified any legal issues about the ESRT transaction,” and, more

importantly, they “did not look to the complaints [for] policy guidance.” Dkt. 37 at 9. Edelman

has received the complaints, and he has now learned the identity of about half of the

complainants. Beyond that, he also knows that the remaining complainants were “individual

investors, relatives of investors, and trustees of family trusts that hold . . . shares” in the Empire

State Building and, thus, had an interest in the transaction. Id.

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       With the benefit of this additional information, the Court agrees with the SEC that the

public interest in the identities of the thirty-six remaining complainants is minimal. Under

FOIA, the only relevant public interest is the interest in illuminating “the operations or activities

of the government.” Am. Immigration Lawyers, 830 F.3d at 674 (citation omitted). It is difficult

to discern what “incremental” insight into the work of the SEC the specific identities of the

thirty-six remaining complainants might convey. Edelman posits that this information would,

“when taken into account with the complaints themselves, show how the SEC evaluated and

weighed the communications on the ESRT issues.” Dkt. 39-1 at 8. But 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. Id.

       Edelman also asserts that disclosure would “verify the statements about the government’s

action on the ESRT transaction stated in the Kluck Declaration.” Id. To the extent that Edelman

is suggesting that the averments in the Kluck Declaration are unreliable, it suffices to note that

“declarations provided by agencies are generally ‘accorded a presumption of good faith, which

cannot be rebutted by purely speculative claims.’” Spataro v. Dep’t of Justice, 279 F. Supp. 3d

191, 204 (D.D.C. 2017) (quoting SafeCard, 926 F.2d at 1200). And Edelman has failed to

present any reason to doubt the veracity of the Kluck Declaration.

       Edelman contends that “the Court has [already] found . . . [that] there is a public interest

in the withheld information.” Dkt. 39-1 at 8; see Dkt. 42 at 6. As explained above, however, the

Court in Edelman II simply concluded that the SEC had failed to substantiate its assertion that

the public interest would not be served by disclosure based on the record before the Court at that

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time. In contrast, the SEC’s renewed motion for summary judgment and the accompanying

Kluck Declaration demonstrate that disclosing the identities of the complainants would reveal

little, if anything, about the SEC’s efforts to identify disclosure defects in the ESRT’s

registration statement. As the Supreme Court has explained, FOIA’s objectives are “not fostered

by disclosure of information about private citizens that is accumulated in various governmental

files but that reveals little or nothing about an agency’s own conduct.” Reporters Comm. for

Freedom of Press, 489 U.S. at 773. In this case, disclosing the identities of the thirty-six

complainants “would not shed any [meaningful] light on the conduct of [the SEC].” Id.

       On the other side of the scale, moreover, the Court has already concluded that the

unidentified complainants have a substantial privacy interest in maintaining the confidentiality of

their submissions. That interest might, of course, diminish over time. For present purposes,

however, there is no reason to doubt the SEC’s implicit representation that the interest remains

live, and the pending litigation over the ESRT transaction provides some confirmation of that

premise. Finally, neither Edelman nor the SEC identified any “other tools” that the SEC might

employ to prevent harassment of the complainants. See Edelman II, 239 F. Supp. 3d at 56 (citing

Bd. of Trade v. Commodity Futures Trading Comm’n, 627 F.2d 392, 400 (D.C. Cir. 1980)).

       Because the complainants’ privacy interest in nondisclosure is substantial and the public

interest in disclosure is de minimis, disclosing the identities of the complainants “would

constitute a clearly unwarranted invasion of personal privacy.” 2 5 U.S.C. § 552(b)(6). The

2
  Edelman contends that the SEC must produce a Vaughn index “listing each of the 36 instances
where the identities of the complainant is withheld.” Dkt. 39-1 at 4. As the D.C. Circuit has
explained, the agency need only “give the reviewing court a reasonable basis to evaluate the
claim of privilege.” Gallant v. NLRB, 26 F.3d 168, 173 (D.C. Cir. 1994). Here, “[i]t would
make little sense . . . for the [SEC] to address each of the [complainants] separately; the [Kluck]
[D]eclaration makes clear that all [thirty-six complainants’ identities] are being withheld for the
very same reasons.” Judicial Watch, Inc. v. U.S. Dep’t of State, 2017 WL 3913212, at *5
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Court will, accordingly, GRANT the SEC’s motion for summary judgment, Dkt. 37, and will

DENY Edelman’s cross-motion for summary judgment, Dkt. 39.

       A separate Order will issue.

                                                    /s/ Randolph D. Moss
                                                    RANDOLPH D. MOSS
                                                    United States District Judge

Date: March 23, 2018

(D.D.C. Sept. 6, 2017). Furthermore, a Vaughn index in these circumstances would have little, if
any, value. As the SEC explains, “[t]he only reason Edelman provides for seeking a Vaughn
index is [that] he believes that the SEC [should indicate] which [c]omplainants sought
confidentiality.” Dkt. 40 at 3. But the fact that only some of the complainants sought
confidentiality does not alter the Court’s conclusion that all of them have a substantial privacy
interest in the nondisclosure of their identities.
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