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Judicial Watch, Inc v. U.S. Department of the Treasury

July 11, 2011


The opinion of the court was delivered by: Beryl A. Howell United States District Judge


Plaintiff Judicial Watch, Inc. brought this case to compel the U.S. Department of the Treasury to respond to a Freedom of Information Act ("FOIA") request. The plaintiff's FOIA request sought documents related to the Treasury's Troubled Asset Relief Program ("TARP") and to the Treasury's investments, through that program, in a Massachusetts bank that the plaintiff asserts is favored by members of Congress. The FOIA generally requires the disclosure, upon request, of records held by a federal government agency unless the records are protected from disclosure under one of nine FOIA exemptions. In this case, the Treasury Department has produced several hundred pages of documents to the plaintiff and has also withheld, in whole or in part, other documents that the Treasury claims fall under one or more of the FOIA exemptions. The plaintiff claims that the Treasury improperly withheld or redacted 13 of these documents because, according to the plaintiff, these 13 documents are not subject to any FOIA exemptions. The Treasury has moved for summary judgment seeking a determination that it has fulfilled its obligations to respond to the plaintiff's FOIA request and that the 13 documents in question properly fall under FOIA exemptions. For the reasons explained below, the Court grants summary judgment to the Treasury for all disputed documents except for three withheld documents that contain some reasonably segregable material that should have been released.*fn1


On January 23, 2009, Plaintiff Judicial Watch, Inc. submitted a FOIA request to the U.S. Department of the Treasury seeking documents related to TARP, a federal program designed to assist troubled banks. Compl. ¶ 5. The plaintiff is a private foundation that regularly serves requests on government entities under the FOIA, 5 U.S.C. § 552, and shares its findings with the public. Compl. ¶ 3.

Congress created TARP as part of the Emergency Economic Stabilization Act ("EESA"), which was enacted on October 3, 2008 during a time of great financial turmoil. Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, 122 Stat. 3765 (2008). The EESA established the Office of Financial Stability ("OFS") within the Treasury, and authorized OFS to implement TARP. See 122 Stat. at 3767. Congress's intention in creating TARP included stabilizing the financial markets quickly and effectively, bolstering the housing market by avoiding preventable foreclosures and supporting mortgage finance, and protecting taxpayers. See 122 Stat. at 3765-66, 3770.

The Capital Purchase Program ("CPP") was one of the Treasury's largest TARP initiatives. Under the CPP, a qualified financial institution could apply for the opportunity to have the Treasury purchase the institution's securities. Def.'s Mem. in Supp. of Mot. for Summ. J. ("Def.'s Mem.") at 3. If the Treasury approved the application, the resulting government investment in the financial institution's securities would provide the institution with capital, increasing its stability. Id. The purpose of the CPP was to enhance market confidence in U.S. banks and to increase the banks' capacity to lend to businesses and consumers by strengthening their capital bases with the government's investment. Id.

Financial institutions interested in applying for CPP investments were required to consult with one of four primary federal regulators-the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Commission ("FDIC"), the Office of the Comptroller of the Currency ("OCC"), or the Office of Thrift Supervision. Id. at 4. After this consultation, financial institutions could submit an application to that same primary regulator for evaluation. Id. Once the regulator reviewed an institution's application, it would either send the application to a council of regulators for further review, or send the application along with its recommendation directly to the Treasury's OFS. Id. After OFS received the application with the regulator's recommendation, the Treasury reviewed it and decided whether or not to make the purchase of the institution's securities. Id.

In accordance with the CPP application process described above, OneUnited Bank based in Boston, Massachusetts ("OneUnited") submitted a CPP application to the FDIC, its primary federal banking regulator. Id. at 5.The FDIC reviewed OneUnited's application and submitted it to the Treasury with FDIC's recommendation for further review. Id. On December 19, 2008, the Treasury purchased $12,063,000 of OneUnited's preferred stock pursuant to the CPP. Id.

A little over a month later, on January 23, 2009, the plaintiff submitted a FOIA request to the Treasury that, in its entirety, sought the following documents:

a. Any and all records concerning evaluation procedures for federal banking agencies and the Treasury Department to distribute/award TARP Funds (Tranche Report to Congress for the Period Through 5 November 14, 2008 states on page 2 "Treasury has worked with the Federal banking agencies to establish streamlined evaluation procedures;" disclosure should include a copy of evaluation procedures produced to federal banking agencies, any correspondence between the Treasury and any federal banking agencies concerning such procedures, memos, briefing materials, etc).

b. Correspondence with Congressman Barney Frank or any representative of his Office concerning TARP Funds and/or any bank in Massachusetts.

c. Any and all records concerning OneUnited Bank in Boston, Massachusetts (including correspondence from any lobbyist, correspondence from any other government agency, correspondence with any elected government official, correspondence directly with the Bank, the Bank's application for TARP funds, etc).

Compl. ¶ 5.

The plaintiff's interest in the requested documents arises from its concern about the "possible misuse of taxpayer money from [TARP] to assist a financial institution favored by members of Congress, OneUnited Bank." Pl.'s Opp'n to Def.'s Mot. for Summ. J. ("Pl.'s Mem.") at 1. While the plaintiff states that "it is possible that no misconduct actually occurred in this matter," the plaintiff asserts that "at least two politicians interceded on OneUnited's behalf in an effort to secure TARP funds for" OneUnited -- Representative Barney Frank of Massachusetts and Representative Maxine Waters of California. Id. at 1-3. According to the plaintiff, this factual background suggests that "as much information as possible about the government's decision to distribute TARP funds to OneUnited Bank should be made available for public scrutiny." Id. at 4.

The plaintiff brought this case on August 11, 2009 to compel the defendant's response to its FOIA request. See Compl. To date, the defendant has made four productions of documents to the plaintiff in response to the request: 428 pages on December 7, 2009; 168 pages on December 17, 2009; 12 pages on February 28, 2010; and 44 pages on September 13, 2010.

Def.'s 7-8;Def.'s Mem. in Supp. of Def.'s Supplemental Mot. for Summ. J. ("Def.'s Suppl. Mem.") at 2.

In total, the defendant produced 652 pages and redacted or withheld 209 pages from its document productions based on various statutory exemptions to FOIA's disclosure requirements. Def.'s Mem. at 7-8; Def.'s Suppl. Mem. at 1. The plaintiff challenges the defendant's withholding or redaction of 13 of these documents based on three of the nine statutory FOIA exemptions: Exemption 4, which protects privileged and confidential trade secrets and commercial or financial information; Exemption 5, which protects documents that would not ordinarily be available through discovery to a litigant in a civil suit with the agency; and Exemption 8, which protects certain matters related to the regulation of financial institutions. See Pl.'s Mem. at 5; Pl.'s Opp'n to Def.'s Suppl. Mot. for Summ. J. ("Pl.'s Suppl. Mem.") at 5; 5 U.S.C. §§ 552(b)(4), (b)(5), and (b)(8).

The 13 documents, withheld in whole or in part by the Treasury based upon exemptions disputed by the plaintiff (the "Disputed Documents"), are described below:*fn2

a. Five internal Treasury staff memoranda, which were redacted in part:

1) "TARP Capital Purchase Team Analysis Regarding OneUnited's Application," November 2008, Bates number 71;

2) "CPP Status Memo," December 3, 2008, Bates number 117;

3) Email attachment regarding presenting OneUnited's application to the OFS Investment Committee, November 14, 2008, Bates numbers 275-276;

4) Memorandum regarding summary information related to OneUnited, October 17, 2008, Bates numbers 815-817;

5) Memorandum summarizing background and supervisory information related to OneUnited, September 10, 2008, Bates numbers 819-821;

b. Three email strings, which were redacted in part:

6) Email strings among Treasury staff regarding Treasury meeting with a minority bankers association, October 17, 2008, Bates numbers 296-297 and 466;

7) Email strings among Treasury staff regarding timing for consideration of OneUnited's application, November 20, 2008, Bates numbers 475-477;

8) Email string among Treasury staff and partially between Treasury staff and Treasury legal department regarding response to press inquiries, March 12, 2009, Bates numbers 530-533;

c. Three sets of meeting minutes, which were withheld in full:

9) OFS Investment Committee Meeting Minutes, November 13, 2008, Bates numbers 537-538;

10) OFS Investment Committee Meeting Minutes, November 19, 2008, Bates numbers 539-540;

11) Draft OFS Investment Committee Meeting Minutes, November 25, 2008, Bates numbers 541-542;

d. Two documents received from other agencies, which were withheld in full:

12) FDIC recommendation, November 2008: five-page document prepared by the Federal Deposit Insurance ...

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