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

August 16, 2011

JUDICIAL WATCH, INC., PLAINTIFF,
v.
U.S. DEPARTMENT OF THE TREASURY, DEFENDANT.



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

MEMORANDUM OPINION

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"). Specifically, the requests relate to three meetings involving Kenneth Feinberg, an official who served as Special Master for Executive Compensation under TARP. 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 44 pages of responsive 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 seven of these documents because, according to the plaintiff, these seven 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 seven documents in question properly fall under FOIA exemptions. The plaintiff filed a cross-motion for summary judgment seeking a determination that the asserted exemptions are not applicable and that the documents should be released. For the reasons explained below, the Court grants summary judgment to the Treasury for all disputed documents and denies summary judgment to the plaintiff, except that the Court finds that one document contains some reasonably segregable material that should have been released.

I.BACKGROUND

On November 23, 2009, Plaintiff Judicial Watch, Inc. submitted a FOIA request to Defendant 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 Freedom of Information Act, 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.

Section 111 of EESA prescribes certain standards for compensation and corporate governance for recipients of financial assistance under TARP. Def.'s Mem. in Supp. of Mot. for Summ. J. ("Def.'s Mem.") at 3. To assist with the implementation of Section 111, the Treasury appointed Kenneth R. Feinberg as Special Master for TARP Executive Compensation (the "Special Master") and established the Office of the Special Master for TARP Executive Compensation (the "Office"). Id. at 3-4. One of the Special Master's primary responsibilities is reviewing and approving compensation payments and structures of executives of entities designated as "Exceptional Assistance Recipients," including, as relevant here, the large insurance company known as the American International Group or AIG. Id.

Additionally, the Treasury published an Interim Final Rule under Section 111 of EESA (the "Interim Final Rule"), which provided guidance on the compensation and corporate governance provisions. Id. Under the Interim Final Rule, Exceptional Assistance Recipients, such as AIG, must obtain approval from the Special Master for the compensation structures and payments to their "Top 25 executives" and for the compensation structures of "Covered Employees 26-100." Id. The Special Master is tasked with determining whether these compensation structures are inconsistent with Section 111 of EESA or TARP, or otherwise contrary to the public interest. Id. The Special Master's determinations are presented in memoranda, which describe the analysis and rationale behind the Special Master's conclusions. Id.

In preparing these written determinations, the Office officially requests data from each Exceptional Assistance Recipient regarding the historical and proposed compensation structures. Based on this information, the Special Master is required to issue his initial determination regarding approval of the compensation structure. Id. at 4-5. Exceptional Assistance Recipients may then request reconsideration of the initial determination. Id. at 5. Subsequently, the Special Master must provide a final determination. Id.

Throughout this process, the staff of the Office maintain regular communication with Exceptional Assistance Recipients regarding both procedural matters and substantive concerns about proposed compensation structures. Id. Additionally, Office staff review the data submissions from the Exceptional Assistance Recipients and produce an issues list for the Special Master's consideration. Id. The Special Master and members of his staff also regularly interact with Exceptional Assistance Recipients, including formal, in-person meetings with a recipient's senior executives, to discuss proposed compensation structures. Id. at 6.

On November 23, 2009, the plaintiff submitted a FOIA request to the Treasury seeking records related to these formal, in-person meetings involving the Special Master and Exceptional Assistance Recipients, in particular, AIG. Id.;Compl. ¶ 5. Specifically, the plaintiff's request, in its entirety, sought the following documents:

1. Any and all records, including agendas, briefing papers, memoranda, minutes, notes, presentations, and/or summaries of the meeting on November 4, 2009 between Kenneth Feinberg, the special master for TARP executive compensation of the U.S. Treasury, Robert Benmosche, the CEO of the American International Group, and AIG's Board of Directors.

2. Any and all records, including agendas, briefing papers, memoranda, minutes, notes, presentations, and/or summaries of the meeting on November 12, 2009 between Kenneth Feinberg, the special master for TARP executive compensation of the U.S. Treasury, and William Dudley, president of the New York Federal Reserve Bank.

3. Any and all records, including agendas, briefing papers, memoranda, minutes, notes, presentations, and/or summaries of the meeting on November 17, 2009 between Kenneth Feinberg, the special master for TARP executive compensation of the U.S. Treasury, and Robert Benmosche, the CEO of the American International Group.

Compl. ¶ 5.

The plaintiff brought this case on February 25, 2010 to compel the defendant's response to its FOIA request. See Compl. The defendant subsequently produced 44 pages of responsive documents, with certain information redacted based on various statutory exemptions to FOIA's disclosure requirements. Def.'s Mem. at 9. The defendant also withheld in full an additional 19 pages based on various statutory exemptions to FOIA's disclosure requirements. Id.

The plaintiff challenges the defendant's withholding or redaction of seven of these documents ("disputed documents") based on two of the nine statutory FOIA exemptions: Exemption 4, which protects privileged and confidential trade secrets and commercial or financial information; and Exemption 5, which protects documents that would not ordinarily be available through discovery to a litigant in a civil suit with the agency. See Pl.'s Mem. in Opp'n to Def.'s Mot. for Summ. J. and in Supp. of Pl.'s Cross Mot. for Summ. J. ("Pl.'s Mem.") at 3; see also 5 U.S.C. §§ 552(b)(4) and (b)(5). The disputed documents all concern the November 3, 2009 meeting between the Special Master and the AIG Board of Directors, during which AIG provided a summary of its employee retention programs and an overview of its business recovery and stability, as well as raised issues related to compensation structures.*fn1 Def.'s Mem. at 4-6. The plaintiff is interested in disclosure of the disputed documents because, according to the plaintiff, it is "time to shed light on AIG, a corporation owned largely by the federal government, and thus, owned largely by the public." Pl.'s Mem. at 21.

The seven disputed documents are described below:*fn2

a.Four e-mail strings, redacted in part: The emails strings, dated November 2, 2009, are between TreasuryStaff and Treasury Legal regarding Special Master Feinberg's anticipated meeting with AIG scheduled for November 3, 2009 (Bates numbers 35-36, 37, 38, and 39-40);

b.Three attachments, withheld in full:

1. "Current Draft Talking Points," dated November 2, 2009 (Bates numbers W1-9);

2. Two "draft issues list" memoranda, dated November 2, 2009 (Bates numbers W10-12, W13-15).*fn3

Vaughn Index, Exhibit A to the Declaration of Joseph J. Samarias, dated September 28, 2010.

The defendant asserts that these disputed documents or the redacted portions of them fall under the following FOIA exemptions:

1. Exemption 4 (privileged and confidential commercial information): All disputed documents.*fn4

2. Exemption 5 (documents that would not be available in civil discovery): All disputed documents except "Current Draft Talking Points."

Def.'s Mem. at 14, 23-24;

On September 28, 2010, the defendant moved for summary judgment on the disputed documents pursuant to Rule 56 of the Federal Rules of Civil Procedure. Along with its summary judgment filing, the defendant has provided a Vaughn index and four declarations that describe the basis for its assertion that each of the disputed documents is covered by an exemption. See Declaration of Joseph J. Samarias, dated September 28, 2010 ("Samarias Decl."); Samarias Decl., Exhibit A ("Vaughn Index"); Declaration of Eric Litzky, dated September 28, 2010 ("Litzky Decl."); Declaration of Jeffrey Hurd, dated September 28, 2010 ("Hurd Decl.");

Supplemental Declaration of Joseph J. Samarias, dated November 22, 2010 ("Suppl. Samarias Decl.").

On October 29, 2010, the plaintiff filed a cross-motion for summary judgment alleging that the defendant has failed to meet its burden in demonstrating the applicability of both FOIA Exemptions 4 and 5. Pl.'s Mem. at 3, 21. The plaintiff does not challenge the adequacy of the defendant's search for documents responsive to its request. Id. at 3. The sole issue before the Court is whether the defendant properly withheld the disputed documents under FOIA Exemptions 4 and 5.

On July 19, 2011, the Court directed the defendant to provide unredacted versions of the disputed documents for in camera inspection. The defendant submitted the documents for in camera inspection on July 25, 2011.

II.DISCUSSION

A.Standard of ...


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