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03/09/81 Common Cause, Et Al., v. Revenue Service

March 9, 1981




Before McGOWAN, Chief Judge, and GINSBURG, Circuit Judge, and GREEN, JOYCE HENS,* United States District Judge for the District of Columbia.


Appeal from the United States District Court for the District of Columbia (D.C.Civil No. 78-2075).



Common Cause and two individual plaintiffs, David Cohen and Nan Waterman, *fn1 filed suit pursuant to the Freedom of Information Act , 5 U.S.C. § 552 (Supp. III 1979), to compel the Internal Revenue Service (IRS or Service) to produce, among other things, certain correspondence, internal documents, and memoranda which related to the Service's decision not to implement procedures for public disclosure of contacts between high-ranking federal officials and the IRS regarding the tax matters of third parties. *fn2 The District Court ruled that some of the requested documents, 22 internal IRS memoranda and a draft of the proposed plan, were exempt from disclosure under Exemption 5 of the FOIA, 5 U.S.C. § 552(b)(5) (Supp. III 1979), as "predecisional, deliberative material." Common Cause v. IRS, 80-1 U.S. Tax Cas. P9208, 45 A.F.T.R.2d 582 (D.D.C. 1979) (memorandum, order, and judgment) (C.C.J.A. 113-116). The court further concluded, from its in camera inspection of the withheld documents, that disclosure of any arguably segregable material would be meaningless and thus the entire documents could be withheld. (Memorandum at 2; C.C.J.A. 114). *fn3 In its memorandum, the District Court, per Judge Oberdorfer, relied in part on Judge Smith's opinion in Neufeld v. IRS, 79-2 U.S. Tax Cas. P9610, 44A.F.T.R.2d 5841 (D.D.C. 1979) (N.J.A. 49-53), in which the court had held, among other things, that the 22 internal IRS documents were exempt from disclosure under Exemption 5. *fn4 The plaintiffs' appeals in Common Cause and Neufeld were scheduled for oral argument seriatim. See note 2 supra. Upon review of the decisions of the District Court in both Neufeld and Common Cause that Exemption 5 authorizes the withholding of the 22 internal IRS documents, we affirm. *fn5 I.

The Commissioner of Internal Revenue announced in May, 1976, that the Service would soon establish procedures to disclose the names of federal officials who had approached the IRS about the tax matters of third parties, as well as the subjects of such contacts. (C.C.J.A. 20). Staff members prepared a draft supplement to the IRS Manual detailing the disclosure plan, and several memoranda discussing the feasibility of the plan were circulated. The Service never implemented the disclosure plan and did not officially express a reason for its failure to do so. *fn6

In early 1978, plaintiffs had requested access to several documents, including (1) the text of the IRS disclosure-plan proposal; (2) all documents relating to contacts with non-IRS personnel regarding the disclosure plan; (3) all written reasons for not implementing the plan; and (4) all written logs of congressional inquiries about the tax matters of third parties. The IRS failed to grant this request.

Plaintiffs were unsuccessful in their administrative appeal and filed this FOIA suit in November, 1978. During discovery, the parties identified three classes of documents which fell within plaintiff's FOIA request: (1) the text of the disclosure plan, which had never been publicly disseminated; (2) twenty-two internal memoranda *fn7 discussing the plan; and (3) logs of congressional contacts with the IRS. *fn8 The District Court ordered the IRS to disclose the logs, but held that the text of the plan and the 22 memoranda were properly withheld under Exemption 5.

Relying in part on Judge Smith's memorandum opinion in Neufeld, Judge Oberdorfer noted that although plaintiffs had presented "serious arguments" regarding the inapplicability of the attorney-client privilege to the memoranda, most of those documents fell within the deliberative privilege for internal governmental decisionmaking. (Memorandum at 2; C.C.J.A. 114).

The IRS appealed the judgment and Common Cause cross-appealed. By stipulation, the IRS dismissed its appeal. Thus, the only issue presented on appeal is that of whether the District Court correctly ruled that the IRS could withhold the 22 internal memoranda, including the draft of the disclosure plan, under Exemption 5. II.

Documents which a private party could not obtain from an agency in civil discovery are exempt from disclosure under Exemption 5:

(b) this section does not apply to matters that are

(5) inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.

5 U.S.C. § 552(b)(5) (Supp. III 1979). This exemption is necessary to preserve the efficacy of the decision-making process and to encourage the free exchange of ideas within the agency without the threat of public scrutiny. See NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150, 95 S. Ct. 1504, 1516, 44 L. Ed. 2d 29 (1975); Coastal States Gas Corp. v. DOE, 199 U.S. App. D.C. 272, 617 F.2d 854, 866-69 (D.C. Cir. 1980); Bristol-Myers Co. v. FTC, 194 U.S. App. D.C. 99, 598 F.2d 18, 23-24 (D.C. Cir. 1978). Common Cause argues that because the IRS decided not to adopt the disclosure plan all 22 memoranda, particularly those urging that the Service not implement the plan, constitute the reasons which supply the basis for the agency policy actually adopted (i. e., the ...

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