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Edelman v. Securities and Exchange Commission

United States District Court, District of Columbia

March 6, 2017



          RANDOLPH D. MOSS United States District Judge.

         In 2014, Plaintiff Richard Edelman filed six requests under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, with Defendant, the Securities and Exchange Commission (“SEC”), seeking documents related to the formation of a real estate investment trust. After the SEC failed to produce any responsive documents, Edelman filed this FOIA action, Dkt. 1, and, in turn, the SEC released over 2, 000 pages of responsive records. The SEC then moved for summary judgment, arguing that it had “conducted a reasonable search for documents responsive to [Edelman's] FOIA requests” and had “withh[eld] only information that was . . . protected by FOIA exemptions.” Dkt. 15 at 2. Edelman cross-moved for summary judgment, asserting that the SEC's search for records was inadequate and that the SEC improperly withheld certain records. See Dkt. 16.

         On March 24, 2016, the Court issued a decision, granting in part and denying in part both parties' motions. Edelman v. SEC, 172 F.Supp.3d 133 (D.D.C. 2016) (“Edelman I”). The Court identified two outstanding issues, see Dkt. 25 at 1-2, and ordered the SEC (1) to “conduct an additional search” as to Edelman's “[C]onsumer [C]omplaints” FOIA request, Edelman I, 172 F.Supp.3d at 156, and (2) to “search the 113 pages” of attorney notes identified as potentially responsive to that same FOIA request; to “produce [any] pages” not subject to an exemption; and to file “a supplemental Vaughn index, ” id. at 154. The next month, the SEC filed a renewed motion for summary judgment, Dkt. 26, and a supplemental Vaughn index, Dkt. 26-2, asserting that, in compliance with the Court's orders, it had produced more than a thousand additional pages of “unredacted or partially redacted” responsive documents to Edelman. Dkt. 26 at 2. Edelman, in turn, renewed his cross-motion for summary judgment, Dkt. 28, asserting that the SEC did “not conduct an adequate search for additional documents pertaining” to his FOIA request for “consumer complaints, ” and did not “adequately justif[y] the withholding of certain information pursuant to FOIA Exemptions 5 and 6.” Dkt. 28-1 at 2. As explained below, the Court will grant in part and deny in part the SEC's renewed motion, and will deny Edelman's renewed motion.

         I. BACKGROUND

         As discussed at greater length in the Court's prior opinion, see Edelman I, 172 F.Supp.3d at 138-41, “Edelman is a former investor in the Empire State Building, ” and he “operate[s] 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.” Id. at 138. On his website, Edelman “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.” Id. “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.” Id.

         As relevant to the motions currently before the Court, Edelman submitted a “FOIA request to the SEC on January 15, 2014, ” seeking “[c]onsumer complaints.” Id. at 140; see also Dkt. 26-1 at 1-2 (Second Livornese Decl. ¶ 3).[1] In that request, Edelman “described a set of complaints submitted by Empire State Building investors to the SEC during its review of the proposed transaction, ” and he “alleged that [three] SEC lawyers . . . interviewed the investors who had submitted the complaints.” Edelman I, 172 F.Supp.3d at 140. In particular, the request sought “‘all notes, reports, emails or any other accounts from th[o]se interviews' and ‘all emails to and from the . . . SEC lawyers where those complaints and interviews [we]re discussed.'” Id. (first alteration in original) (quoting Dkt. 15-3 at 5 (Ex. 2)); see also Dkt. 26-1 at 2 (Second Livornese Decl. ¶ 3(a)-(b)). After pursuing the SEC's internal FOIA appeals process without success, Edelman filed this action, and on September 30, 2014, the SEC “produced 2, 034 pages of records responsive to” this request and another of Edelman's requests, “but withheld some material on the basis of FOIA Exemptions 5 and 6.” Edelman I, 172 F.Supp.3d at 140. The SEC also withheld “notes from SEC meetings” and from “calls between the SEC and investors” created by the three SEC lawyers, asserting that, because the notes were for the attorneys' “personal use and convenience, ” they “were not subject to FOIA.” Id. at 138-39; see also Id. at 147. Having made this production, the SEC then moved for summary judgment. Dkt. 15.

         In his initial opposition and cross-motion for summary judgment, Edelman challenged the adequacy of the SEC's production of records responsive to his Consumer Complaints request. Dkt. 16. He argued that “the SEC construed his request too narrowly by searching only for documents about consumer complaints, rather than for the complaints themselves” and that “the SEC erred in concluding that notes taken by SEC attorneys were not records subject to FOIA.” Edelman I, 172 F.Supp.3d at 147. The Court agreed with Edelman on both counts. First, it concluded that the SEC unduly restricted the scope of Edelman's FOIA request, and it thus “direct[ed] [the SEC to] conduct an additional search in response to [Edelman's Consumer Complaints] request, on the understanding that . . . the request encompasse[d] not just documents about the complaints but the complaints themselves.” Id. at 156. Second, the Court held that the attorney notes were “not categorically exempt from FOIA, ” and it ordered “the SEC to search the 11[2] pages”[2] of previously identified attorney notes; to “file a supplemental Vaughn index responsive to the considerations set out in” the Court's opinion; and to produce any responsive pages to Edelman, subject to any appropriate FOIA exemptions. Id. at 154-55.

         In response to the Court's order, the SEC now represents that it has “searched its record systems for the complaints that were the subject of Edelman's [Consumer Complaints] FOIA request, ” Dkt. 26 at 12, and has “produced to Edelman 1, 446 pages of consumer complaint documents that were unredacted or partially redacted, and [one] page that was redacted in full, ” id. at 2. In addition, the SEC asserts that it “gathered and reviewed the 112 pages of attorney notes” and “produced [seventy-one] pages of attorney notes to Edelman, which were unredacted or partially redacted, and withheld [forty-one] pages of attorney notes in their entirety.” Id. Finally, the SEC explains that it has complied with the Court's prior direction that it “produce[] an unredacted version of [one document] to the Court for an in camera review” and has, additionally, provided Edelman with a “partially-redacted version” of that same document, withholding only the “names of two [SEC] staff members under FOIA Exemption 6.” Id. As a result, the SEC asserts that it has complied in full with the Court's prior ruling, and now renews its motion for summary judgment. Dkt. 26. Edelman disagrees and renews his cross-motion for summary judgment, arguing that the SEC's search was inadequate and that its redactions are not appropriate under Exemptions 5 and 6. Dkt. 28-1.

         II. ANALYSIS

         In its renewed motion for summary judgment, the SEC asserts that its most recent search for and production of responsive documents has now remedied the deficiencies identified in the Court's first summary judgment decision and order. See Dkt. 26. In his opposition and renewed cross-motion, however, Edelman challenges three aspects of the SEC's search and production: First, he alleges that the SEC's search for consumer complaints was inadequate, as evidenced by the fact that it failed to uncover several responsive documents, Dkt. 28-1 at 2-4; second, he argues that the SEC has not properly invoked the deliberative process privilege pursuant to Exemption 5, id. at 4-5; and, third, he claims that the SEC has failed to establish that it properly “with[e]ld[] the identities of those making complaints to it about the proposed [ESRT] transaction” pursuant to Exemption 6, id. at 5-7. The Court will address each contention in turn.[3]

         A. Adequacy of the SEC's Search for Consumer Complaints

         In the order accompanying its prior decision, the Court instructed the SEC to “conduct [an] additional . . . search for any records . . . responsive to Edelman's [Consumer Complaints] request” and to “release any records that it determine[d] [we]re responsive” to that request. Dkt. 25 at 1-2. This task fell to the SEC's Office of Freedom of Information Act Services, which is supervised by John Livornese. Dkt. 26-1 at 1 (Second Livornese Decl. ¶ 1). According to Livornese, he “determined that any [responsive] ‘consumer complaints' would be located in the databases maintained by staff in the SEC's Division of Corporation Finance (‘CF'), ” and he was informed by CF staff that “any and all records of communications the CF staff received from any outside source that commented upon, ‘complained' about, or criticized any aspect of . . . the proposed ESRT transaction were uploaded, by CF staff, to the Sharepoint database.” Id. at 2 (Second Livornese Decl. ¶ 4). Livornese further attests that the “Sharepoint database allows a staff member to create a site on the server, store sensitive information at that site[, ] and grant access to that information [to] other staff or staff teams within the SEC.” Id. A search of the Sharepoint database, according to Livornese, located “1, 447 pages of documents . . . that reflected [the] external consumer complaints” requested by Edelman, of which 1, 446 pages were produced in unredacted or partially redacted form. Id. at 2-5 (Second Livornese Decl. ¶¶ 4-8).

         Edelman contends that this search must have been “inadequate” because it failed to uncover consumer complaints from eight individuals, who have submitted declarations stating that they have “reviewed the consumer complaints sent to . . . Edelman” and “d[id] not see [their] complaint[s]” in the SEC's production. See, e.g., Dkt. 28-2 at 2 (Gaskill Aff., Ex. A); Dkt. 28-1 at 2-3. In addition, Edelman argues that, by searching only the Sharepoint database, the SEC failed to search for responsive documents in the “paper files” or email records of the SEC staff members “who worked on the transaction.” Dkt. 28-1 at 3. Both arguments are unavailing.

         As to the first, the mere fact that Edelman has located complainants who assert that they made complaints that do not appear in the SEC's production does not, on its own, cast doubt on the efficacy of the SEC's search. It “is long settled that the failure of an agency to turn up one specific document in its search does not alone render a search inadequate.” Iturralde v. Comptroller of Currency, 315 F.3d 311, 315 (D.C. Cir. 2003). “After all, particular documents may have been accidentally lost or destroyed, or a reasonable and thorough search may have missed them.” Id. But, more importantly, it is far from clear that the SEC's production omits responsive records. In response to the eight declarations submitted in support of Edelman's opposition and cross-motion, the SEC asked a paralegal in its Office of General Counsel to review unredacted copies of all of the consumer complaints that the SEC released to Edelman in response to his FOIA request. Dkt. 30-1 at 1 (Barss Decl. ¶ 3). According to the SEC's paralegal, she “found [written] complaints about the ESRT transaction by many of the individuals who provided” the declarations. Id. Of equal significance, moreover, the SEC notes that most of the eight declarations do not indicate whether the declarants submitted written complaints or, instead, lodged oral objections with SEC staff, Dkt. 30 at 3, and Edelman appears to concede in his reply brief that some of the complaints were made orally, Dkt. 32 at 2. That distinction would appear to explain any discrepancy between the SEC's recent production of the written complaints-which is what the Court ordered-and the declarants' recollections. And, indeed, the SEC paralegal reports that she “found references to communications from and about all of the” ...

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