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Edelman v. Securities & Exchange Commission

United States District Court, District of Columbia

March 24, 2016

RICHARD EDELMAN, Plaintiff,
v.
SECURITIES AND EXCHANGE COMMISSION, Defendant

MEMORANDUM OPINION

RANDOLPH D. MOSS UNITED STATES DISTRICT JUDGE.

Between 2011 and 2013, the limited liability corporation that owned the Empire State Building was merged with other entities in a contentious process that led to the creation of a real estate investment trust called Empire State Realty Trust, Inc. One of the shareholders who opposed the transaction is a California resident named Richard Edelman. Between January and April 2014, Edelman filed six requests under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, with the Securities and Exchange Commission (“SEC”) for documents that related to the formation of Empire State Realty Trust. By July 2014, Edelman had received responses from the SEC to some of his requests, but not to others, and the SEC had produced no responsive documents. In an effort to compel the SEC to produce documents responsive to his requests, Edelman filed this FOIA action.

The SEC has now responded to all six of Edelman’s requests and has produced over 2, 000 pages of responsive records. Having done so, the Commission moves for summary judgment, arguing that it conducted an adequate search for responsive records and withheld only information it is authorized to withhold under FOIA. Edelman has cross-moved for summary judgment, arguing that the SEC has not shown that it conducted an adequate search and that it has improperly withheld records not protected by the Act. For the reasons set out below, the Court will grant in part and deny in part each party’s motion.

I. BACKGROUND

A. Factual Background

Richard Edelman is a former investor in the Empire State Building. Compl. ¶ 3. For several years, he has operated a website that provides information to investors and the public regarding the contentious process of converting the ownership of the Empire State Building into a real estate investment trust. Compl. ¶¶ 3, 5-11; see www.empirestatebuildinginvestors.com (last updated Mar. 18, 2016). Among other things, he has posted documents filed with and issued by the SEC, which was required to approve the creation of the trust, known as the Empire State Realty Trust, Inc., or ESRT for short. Compl. ¶¶ 7-11. This action arises out of six FOIA requests that Edelman submitted to the SEC in order to obtain documents about its review of the proposed transaction. Because the procedural history of these requests differs, the Court will describe them request-by-request.

1. Request No. 14-03043 (ESRT/SEC Communications)

Edelman sent the first of these FOIA requests to the SEC on January 6, 2014. Dkt. 15-3 at 2 (Livornese Decl., Ex. 1). In that request, he described several filings submitted by ESRT to the SEC and sought “all comment letters from SEC staff not currently displayed on [the] SEC public website”; “all submissions from [ESRT] in response to SEC comment letters”; “all submissions from [ESRT] submitted under” 17 C.F.R. § 200.83, which permits persons to request that filings be shielded from FOIA; “all emails to and from SEC attorney[s] David Orlick, Tom Kluck, and Angela McHale”; and “all notes from meetings” attended by those attorneys. Id. Although the SEC acknowledged the receipt of Edelman’s request, and assigned it a processing number (No. 14-0343), it did not provide a substantive response within the 20-day period in which the statute requires an agency to respond to a FOIA request. Dkt. 16-2 at 15 (Edelman Aff., Ex. A); id. at 6 (Edelman Aff. ¶ 19); see 5 U.S.C. § 552(a)(6)(A)(i).

Edelman appealed the constructive denial of his FOIA request on March 26, 2014. Dkt. 16-2 at 40 (Edelman Aff., Ex. H); see 17 C.F.R. § 200.80(d)(6). On April 16, 2014, the associate general counsel of the SEC, Richard Humes, acknowledged that the statutory timeframe had not been met and remanded the request to the agency’s FOIA office for processing. Id. at 57 (Edelman Aff., Ex. J). The FOIA office did not provide a substantive response, and on July 3, 2014, Edelman brought this action. Dkt. 1. Finally, on September 30, 2014, the SEC responded to this request (and to Edelman’s third FOIA request, discussed below). See Dkt. 15-3 at 12 (Livornese Decl., Ex. 5). It produced 2, 034 pages of records responsive to the two requests. Id. at 13. The SEC withheld nine responsive pages in full under FOIA Exemptions 5 and 6 and redacted other material on the basis of those exemptions. Dkt. 15-1 at 5-6 (Livornese Decl. ¶ 16). The SEC informed Edelman that it had also located “notes . . . from SEC meetings” attended by Orlick, Kluck, and McHale, but had determined that “the majority of these notes . . . are for [the attorneys’] personal use and convenience, ” and were not subject to FOIA. Dkt. 15-3 at 14 (Livornese Decl., Ex. 5).

2. Request No. 14-03257 (Sublease Documents)

Edelman sent a second FOIA request to the SEC on January 8, 2014. See Dkt. 15-3 at 17 (Livornese Decl., Ex. 6). He requested any exhibits filed by ESRT or the predecessor LLC “that reference the Sublease of the Empire State Building”; all submissions filed by either entity under 17 C.F.R. § 200.83 that referenced the Sublease; “any and all emails” to or from any SEC employee referencing the Sublease; “any notes from SEC meetings” in which the Sublease was mentioned; and “any notes from phone conversations or correspondence of any nature between the SEC” and both entities, or their representatives, in which the Sublease was mentioned. Id. at 17-18. The SEC acknowledged the request and assigned it a processing number (No. 14-03257), but again did not provide a substantive response within 20 days. Dkt. 16-2 at 19 (Edelman Aff., Ex. B); id. at 6 (Edelman Aff. ¶ 19).

Edelman appealed the constructive denial of his FOIA request on March 26, 2014. Dkt. 16-2 at 41 (Edelman Aff., Ex. H). On April 16, 2014, Humes acknowledged that the statutory timeframe had not been met and remanded the request to the agency’s FOIA office. Id. at 57 (Edelman Aff., Ex. J). The FOIA office once again did not provide a substantive response, and on July 3, 2014, Edelman brought this action. Dkt. 1. The SEC ultimately responded to this request on September 3, 2014. Dkt. 15-3 at 20 (Livornese Decl., Ex. 7). It produced 215 pages of records that it viewed as potentially responsive to the portion of Edelman’s request referring to e-mails. Id. at 21. The SEC withheld portions of these records under Exemptions 5 and 6. Id. It also explained that, with respect to the rest of Edelman’s request, it had either found no records or found no records not available on the SEC’s public website. Id. at 21-22.

3. Request No. 14-03398 (Confidential Documents)

Edelman sent his third FOIA request to the SEC on January 10, 2014. Dkt. 15-3 at 25 (Livornese Decl., Ex. 8). This request sought “any and all documents submitted by [ESRT] and granted confidential treatment” under any of three SEC rules permitting confidential filings. Id. Edelman also requested each document’s submission date and subject, and the name of the SEC official who granted ESRT leave to file the document confidentially. Id. The SEC assigned the request a processing number (No. 14-03398) but did not provide a substantive response within 20 days. Dkt. 16-2 at 22 (Edelman Aff., Ex. C); id. at 6 (Edelman Aff. ¶ 19).

Edelman appealed the constructive denial of his FOIA request on March 26, 2014. Dkt. 16-2 at 42 (Edelman Aff., Ex. H). On April 16, 2014, Humes acknowledged that the statutory timeframe had not been met and remanded the request to the agency’s FOIA office. Id. at 57 (Edelman Aff., Ex. J). On April 29, 2014, seemingly unaware of the appeal or the remand, the SEC responded to Edelman’s request by informing him that it had “conducted a thorough search, ” but had not identified any responsive records. Id. at 63 (Edelman Aff., Ex. L). The subsequent day, April 30, it sent him a letter acknowledging the remand. Id. at 65. Finally, on May 6, 2014, the SEC sent Edelman a third letter that more fully described his original request and reiterated the agency’s original conclusion that no responsive records existed. See Dkt. 15-3 at 27 (Livornese Decl., Ex. 9). Edelman did not appeal, and instead filed this action. Dkt. 1.

4. Request No. 14-03452 (“Consumer Complaints”)

Edelman sent a fourth FOIA request to the SEC on January 15, 2014. See Dkt. 15-3 at 5 (Livornese Decl., Ex. 2). Using the SEC’s online FOIA form, Edelman selected “Consumer complaints” as the “[t]ype of document” he sought in this request. Id.; see Request for Copies of Documents, U.S. Sec. & Exch. Comm’n, https://www.sec.gov/forms/requestpublicdocs (last visited Mar. 23, 2016). He described a set of complaints submitted by Empire State Building investors to the SEC during its review of the proposed transaction, and alleged that the same SEC lawyers whom he named in his first request-Orlick, Kluck, and McHale-had interviewed the investors who had submitted the complaints. See Dkt. 15-3 at 5 (Livornese Decl., Ex. 2). He requested “all notes, reports, emails or any other accounts from these interviews” and “all emails to and from the . . . SEC lawyers where those complaints and interviews are discussed.” Id. The SEC assigned Edelman’s request a processing number (No. 14-03452) but did not provide a substantive response within 20 days. Dkt. 16-2 at 25 (Edelman Aff., Ex. D); id. at 6 (Edelman Aff. ¶ 19).

Edelman appealed the constructive denial of his FOIA request on March 26, 2014. Dkt. 16-2 at 42 (Edelman Aff., Ex. H). On April 16, 2014, Humes acknowledged that the statutory timeframe had not been met and remanded the request to the agency’s FOIA office. Id. at 57 (Edelman Aff., Ex. J). On April 30, 2014, the SEC issued a Glomar response to Edelman’s request, asserting that it could “neither confirm nor deny the existence of any records responsive to [his] request.”[1] Dkt. 15-3 at 7 (Livornese Decl., Ex. 3). On May 19, 2014, Edelman filed an appeal of the Commission’s Glomar response, and on July 2, 2014, Humes remanded the request to the agency’s FOIA office. Id. at 10 (Livornese Decl., Ex. 4). Having not yet received Humes’s response, Edelman brought this action the next day. Dkt. 1. On September 30, 2014, the SEC issued a combined response to this request and Edelman’s first FOIA request. See Dkt. 15-3 at 12 (Livornese Decl., Ex. 5). As described more fully above, it produced 2, 034 pages of records responsive to the two requests, but withheld some material on the basis of FOIA Exemptions 5 and 6. Id. at 13.

5. Requests No. 14-06366 to 14-06369 (ESRT E-mails and FOIA Records)

Edelman sent his fifth FOIA request to the SEC on March 27, 2014. See Dkt. 15-3 at 30 (Livornese Decl., Ex. 10). He requested e-mails and letters between the SEC and ESRT, as well as e-mails and letters between the SEC and Malkin Holdings, the company advocating the conversion of the Empire State Building’s ownership structure into a real estate investment trust. Id. He also requested e-mails, letters, and notes from meetings and phone conversations between the SEC’s FOIA office and other SEC departments about FOIA requests regarding ESRT and/or Malkin Holdings. Id. He finally requested the same materials regarding the SEC’s Division of Corporate Finance. Id. The SEC informed Edelman that it would treat his request as four FOIA requests (one for e-mails and letters between ESRT and the SEC, a second for e-mails and letters between Malkin and the SEC, a third for communications about FOIA requests regarding ESRT, and a fourth for communications about FOIA requests regarding Malkin). Id. at 32 (Livornese Decl., Ex. 11). It assigned his requests four processing numbers (No. 14-06366 through No. 14-06369), but did not provide a substantive response within 20 days. Id.; Dkt. 16-2 at 6 (Edelman Aff. ¶ 19).

Edelman appealed the constructive denial of his FOIA request on May 20, 2014. Dkt. 16-2 at 44 (Edelman Aff., Ex. H). The SEC acknowledged his appeal, id. at 52 (Edelman Aff., Ex. I), but did not provide a substantive response, and on July 3, 2014, Edelman filed this suit, Dkt. 1. The SEC responded to Edelman’s requests in September 2014. On September 3, 2014, it informed him that it had identified no records responsive to Request No. 14-06367; identified and released 36 pages in response to Request No. 14-06368; and identified no records responsive to Request No. 14-06369. Dkt. 15-3 at 36 (Livornese Decl., Ex. 12), 42 (Ex. 14), 45 (Ex. 15). The SEC withheld portions of several pages under Exemptions 5 and 6. Id. at 42-43. On September 18, 2014, the SEC informed Edelman that it had identified and was releasing two pages in response to Request No. 14-06366, but that it had withheld portions of these pages under Exemption 6. Id. at 39 (Ex. 13).

6. Request No. 14-06652 (Intragovernmental Communications Regarding ESRT)

Edelman submitted his final FOIA request to the SEC on April 4, 2014. Dkt. 15-3 at 48 (Livornese Decl., Ex. 16). There, he requested “letters [and] e-mails to the SEC” and “notes from meetings or phone calls with the SEC from any government official” not employed by the SEC regarding ESRT. Id. The SEC assigned the request a processing number (No. 14-06652) but, as with the preceding requests, did not provide a substantive response within 20 days. Dkt. 16-2 at 34 (Edelman Aff., Ex. F); id. at 6 (Edelman Aff. ¶ 19).

Edelman appealed the constructive denial of his FOIA request on May 9, 2014. Dkt. 16-2 at 45 (Edelman Aff., Ex. H). On June 3, 2014, Humes acknowledged that the 20-day statutory timeframe had not been met and remanded the request to the agency’s FOIA office. Id. at 55 (Edelman Aff., Ex. I). The FOIA office did not provide a substantive response, and on July 3, 2014, Edelman brought this action. Dkt. 1. The SEC responded to this request on July 17, 2014. Dkt. 15-3 at 50 (Livornese Decl., Ex. 17). It told Edelman that it had not found any responsive records. Id.

B. Procedural Background

Edelman brought this suit on July 3, 2014, to compel the SEC to respond to his FOIA requests. Dkt. 1. He seeks injunctive and declaratory relief, as well as an award of costs and fees. Id. at 9-10. As noted above, after Edelman brought suit, the SEC responded to the five FOIA requests that were still outstanding. The Commission then moved for summary judgment, arguing that it had conducted adequate searches in response to all of Edelman’s requests and that all of its withholdings were permitted by FOIA. Dkt. 15. The SEC supports its motion with the declarations of two SEC officials-John Livornese, the SEC’s FOIA officer, and Patti Dennis, the official responsible for FOIA requests at the SEC’s Division of Corporate Finance-and a 26-page Vaughn index. See Dkts. 15-1, 15-2, 15-5. Edelman cross-moved for summary judgment, arguing that the SEC’s search was inadequate and that its withholdings are not permitted under FOIA. Dkt. 16. The motions are now fully briefed. Dkts. 18, 20.

II. LEGAL FRAMEWORK

The Freedom of Information Act is premised on the notion that an informed citizenry is “vital to the functioning of a democratic society, needed to check against corruption and to hold the governors accountable to the governed.” NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 242 (1978). The Act embodies a “general philosophy of full agency disclosure.” U.S. Dep’t of Defense v. FLRA, 510 U.S. 487, 494 (1994) (quoting Dep’t of Air Force v. Rose, 425 U.S. 352, 360-61 (1976)). It thus mandates that an agency disclose “agency records” on request, unless they fall within one of nine exemptions. “These exemptions are ‘explicitly made exclusive’ and must be ‘narrowly construed.’” Milner v. Dep’t of Navy, 562 U.S. 562, 565 (2011) (quoting EPA v. Mink, 410 U.S. 73, 79 (1973), and FBI v. Abramson, 456 U.S. 615, 630 (1982)). As explained further below, the present dispute turns in part on the meaning and application of Exemption 5. Exemption 5 protects “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.” See 5 U.S.C. § 552(b)(5). It exempts “those documents, and only those documents, normally privileged in the civil discovery context.” NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 149 (1975) (emphasis added). The dispute also turns on the meaning of the phrase “agency records, ” which the statute does not define.

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 (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). 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. DISCUSSION


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