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Center for Public Integrity v. U.S. Department of Energy

United States District Court, District of Columbia

January 12, 2018

CENTER FOR PUBLIC INTEGRITY, Plaintiff,
v.
U.S. DEPARTMENT OF ENERGY, Defendant.

          MEMORANDUM OPINION

          Amit P. Mehta United States District Judge.

         I. INTRODUCTION

         This case concerns a Freedom of Information Act (“FOIA”) request for records relating to a Defendant Department of Energy (“DOE”) investigation into lobbying activities of Sandia Corporation (“Sandia”), a contractor hired by DOE to operate Sandia National Laboratory, a government-owned nuclear facility. In 2009, certain officials of Sandia and its parent company, Lockheed Martin Corporation, devised a plan to lobby Congress and other federal officials to renew Sandia's contract with DOE without competitive bidding. An investigation by DOE's Office of Inspector General later revealed that the plan was developed and carried out with taxpayer funds, in violation of federal law. Sandia eventually reached a civil settlement with the U.S. Department of Justice.

         Plaintiff Center for Public Integrity brought this FOIA action against DOE, seeking to compel the disclosure of records concerning the agency's investigation of Sandia. In response to Plaintiff's FOIA request, DOE produced some records in full, some in part, and withheld others in their entirety under certain statutory exemptions. Plaintiff challenges Defendant's reliance on these exemptions. This court resolved some of Plaintiff's challenges when it ruled upon the parties' initial cross-motions for summary judgment. See Ctr. for Pub. Integrity v. U.S. Dep't of Energy, 234 F.Supp.3d 65 (D.D.C. 2017). In its previous Opinion, the court held that Defendant properly withheld information under FOIA Exemptions 3, 7(E), and 7(F), as well as certain information under Exemptions 4, 6, and 7(C). Id. at 71. The court also found, however, that Defendant did not provide sufficient justification with respect to certain other information withheld under FOIA Exemptions 4, 6, and 7(C). See Id. Similarly, the court held that Defendant did not adequately justify its efforts to segregate and release all non-exempt records. Id. at 84. The court gave the agency an opportunity to supplement its declarations to address these deficiencies. Id. at 71, 84.

         Now before the court are the parties' renewed cross-motions for summary judgment. Upon consideration of the parties' submissions and the present record, the court finds Defendant may rely on Exemption 4 to withhold the e-mail communications between Sandia and its legal counsel, except those portions that the agency has officially disclosed through public releases. The court also concludes that Defendant has now provided sufficient justification for its redaction of names and other identifying information pursuant to Exemption 7(C), except as to those names that the agency has officially acknowledged through FOIA disclosures. The court therefore grants the parties' motions in part and denies them in part.

         II. BACKGROUND

         A. Factual Background

         Sandia National Laboratory (“SNL”) is one of three nuclear laboratories falling under the auspices of Defendant Department of Energy (“DOE”) and its sub-component, the National Nuclear Security Administration (“NNSA”). See NNSA's Mot. for Partial Summ. J., ECF No. 26 [hereinafter Def.'s Second Mot. for Partial Summ. J.], at 7;[1] Def.'s Second Mot. for Partial Summ. J., Decl. of James Eanes, ECF No. 26-1 [hereinafter Initial Eanes Decl.], ¶ 2; Def.'s Mot. for Extension of Time to File NNSA's Mot. for Partial Summ. J., ECF No. 23 [hereinafter Def.'s Mot. for Ext. of Time], at 1; Compl., ECF No. 1, ¶ 5; Answer, ECF No. 8, ¶ 5. SNL is owned by the federal government and forms a part of NNSA's nuclear weapons complex. DOE's Mot. for Partial Summ. J., ECF No. 22 [hereinafter Def.'s First Mot. for Partial Summ. J.], Exs. to Decl. of Adrienne Martin, ECF No. 22-2 [hereinafter OIG Report[2], at 8. SNL is not run, however, by federal employees; rather, its operations are outsourced to a government contractor. In 1993, following a competitive bidding process, DOE awarded the contract to operate SNL to Sandia Corporation (“Sandia”), a wholly owned subsidiary of Lockheed Martin Corporation (“Lockheed Martin”). Id.

         Beginning in 2009, Lockheed Martin and Sandia officials grew concerned about renewing the contract to operate SNL, which was set to expire in 2012. Pl.'s Renewed Cross-Mot. for Summ. J. & Opp'n to Def.'s Mot. for Summ. J., ECF No. 42 [hereinafter Pl.'s Cross-Mot. & Opp'n], at 2. Under the contract, DOE paid Sandia approximately $2 billion annually to run the nuclear lab. Id.; cf. OIG Report at 8. Lockheed Martin and Sandia officials hoped to renew the contract without competitive bidding, so they devised a lobbying strategy to secure a contract renewal on a no-bid basis, which included hiring outside consultants. Pl.'s Cross-Mot. & Opp'n at 2; cf. OIG Report at 9-11.

         In 2013, NNSA conducted a preliminary review of documentation regarding consultant activities between SNL and Heather Wilson, LLC. OIG Report at 8. Based on that review, NNSA alleged that “SNL impermissibly attempted to influence an extension to the Sandia Corporation contract and engaged Ms. Wilson, ” a former member of the U.S. House of Representatives, “in these activities.” Id. This allegation, in turn, launched a special inquiry by DOE's Office of Inspector General (“OIG”). Id. During the OIG inquiry, Sandia took the position that its activities did not violate federal law. See Id. at 12.

         OIG published the results of its investigation in November 2014. In its Report, OIG concluded that “SNL used Federal contract funds to engage in activities that were intended to influence the extension of Sandia Corporation's contract with [DOE], ” in violation of federal law. Id. at 8-9; see also Id. at 9 (citing 31 U.S.C. § 1352(a)(1), and 48 C.F.R. § 31.205-22(6)). Specifically, OIG found that (1) “SNL formed an in-house Contract Strategy Team and utilized consultants” to develop “a plan to secure a non-competitive bid extension” of Sandia's contract with DOE, “an essential element of [which] was to influence members of Congress and Federal officials”; (2) “SNL employees, funded directly or indirectly with Federal resources, were actively engaged in implementing the plan of the Contract Strategy Team and closely coordinated with [Lockheed Martin] officials during this effort”; and (3) in addition to its contract extension efforts, SNL disregarded concerns that its provision of certain information to the New Mexico Congressional Delegation could be construed as lobbying, and continued to make suggestions to Congress. See Id. at 9-12. OIG offered a series of recommendations in its Report, including that DOE management take steps to ensure SNL contractors would not interface with government customers or legislators in order to obtain Sandia business and to recover any costs determined to be unallowable. Id. at 13. DOE management concurred with the Report's findings and identified actions to address OIG's recommendations. See generally id.[3]

         Sandia's lobbying activities also drew the attention of the U.S. Department of Justice (“DOJ”). Following an investigation, DOJ announced in August 2015 that Sandia had agreed to pay $4, 790, 042 to settle alleged violations of the Byrd Amendment and False Claims Act for its use of federal funds to lobby Congress and federal agencies. Pl.'s Cross-Mot. & Opp'n at 6; Sandia Corporation Agrees to Pay $4.7 Million to Resolve Allegations Related to Lobbying Activities, U.S. Dep't of Justice (Aug. 21, 2015), https://www.justice.gov/opa/pr/sandia-corporation-agrees-pay-47-million-resolve-allegations-related-lobbying-activities. Sandia did not make any admission of liability as part of the settlement. Id.

         B. Procedural History

         In November 2014, Plaintiff Center for Public Integrity submitted a FOIA request to DOE to produce, in sum and substance, all records relating to OIG's investigation of Sandia. The history of Plaintiff's FOIA request is fully set forth in the court's earlier Opinion, so the court does not repeat it here. See generally Ctr. for Pub. Integrity, 234 F.Supp.3d at 72. For present purposes, it suffices to say that DOE withheld certain material, described in greater detail below, on the basis of FOIA Exemptions 4 and 7(C). Those withholdings are the subject of the parties' renewed cross-motions for summary judgment.

         III. STANDARD OF REVIEW

         Most FOIA cases are appropriately resolved on motions for summary judgment. Brayton v. Office of the U.S. Trade Representative, 641 F.3d 521, 527 (D.C. Cir. 2011). A court must grant summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute is “genuine” only if a reasonable fact-finder could find for the nonmoving party, and a fact is “material” only if it is capable of affecting the outcome of litigation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “Unlike the review of other agency action that must be upheld if supported by substantial evidence and not arbitrary or capricious, the FOIA expressly places the burden ‘on the agency to sustain its action' and directs the district courts to ‘determine the matter de novo.'” U.S. Dep't of Justice v. Reporters Comm. for Freedom of Press, 489 U.S. 749, 755 (1989) (quoting 5 U.S.C. § 552(a)(4)(B)).

         The agency bears the burden of proving that it withheld certain materials responsive to a plaintiff's FOIA request pursuant to a statutory exemption. Citizens for Pub. Responsibility & Ethics in Wash. v. U.S. Dep't of Justice, 746 F.3d 1082, 1088 (D.C. Cir. 2014) [hereinafter CREW I]. “The agency may carry that burden by submitting affidavits that ‘describe the justification for nondisclosure with reasonably specific detail, demonstrate that the information withheld logically falls within the claimed exemption, and are not controverted by either contrary evidence in the record nor by evidence of agency bad faith.'” Id. (quoting Larson v. Dep't of State, 565 F.3d 857, 862 (D.C. Cir. 2009)). “To successfully challenge an agency's showing that it complied with the FOIA, the plaintiff must come forward with specific facts demonstrating that there is a genuine issue with respect to whether the agency has improperly withheld extant agency records.” Span v. U.S. Dep't of Justice, 696 F.Supp.2d 113, 119 (D.D.C. 2010) (internal quotation marks omitted).

         IV. DISCUSSION

         The parties' renewed cross-motions for summary judgment present three issues for resolution: (1) whether Defendant properly withheld e-mails between Sandia officials and the company's legal counsel pursuant to Exemption 4; (2) whether Defendant properly redacted the names and other identifying information of certain individuals pursuant to Exemption 7(C); and (3) whether Defendant satisfied its obligation to produce all reasonably segregable material. The court will address each of these issues in turn, starting with the parties' dispute over the applicability of Exemption 4.

         A. Exemption 4

         In this case, large portions of two e-mail strings between Sandia managers and Sandia legal counsel remain at issue under Exemption 4. Def.'s Renewed Mot. for Summ. J., ECF No. 41 [hereinafter Def.'s Mot.], at 6-7; Def.'s Mot., Def.'s Statement of Material Facts Not in Dispute, ECF No. 41-4 [hereinafter Def.'s Stmt. of Facts], ¶ 8. See generally Notice of Filing of Exs. in Supp. of Def.'s Mot. for Partial Summ. J., ECF No. 27, Ex. H, ECF No. 27-7. Exemption 4 permits an agency to withhold “trade secrets and commercial or financial information [that is] obtained from a person and [is] privileged or confidential.” 5 U.S.C. § 552(b)(4). As written, the exemption contains two threshold requirements-“the information must be (1) ‘obtained from a person' and (2) ‘commercial or financial.'” Wash. Post Co. v. U.S. Dep't of Health & Human Servs., 690 F.2d 252, 266 (D.C. Cir. 1982) [hereinafter Wash. Post I]. If these threshold requirements are met, then the court must determine if the information is “privileged or confidential.” Id.

         Exemption 4's threshold elements are not at issue. Plaintiff does not question whether the material withheld pursuant to Exemption 4 was “obtained from a person.” See Pl.'s Cross-Mot. for Summ. J. & Opp'n to Def.'s Mots. for Summ. J., ECF No. 30 [hereinafter Pl.'s Initial Cross- Mot.], at 8; see also 5 U.S.C. § 551(2) (defining “person” to include a “corporation”). Similarly, Plaintiff agrees with Defendant that the e-mails withheld contain “commercial” information. See Pl.'s Initial Cross-Mot. at 8; see also Def.'s Second Mot. for Partial Summ. J. at 17 (“The documents include . . . emails regarding commercial information.”); cf. Pl.'s Cross-Mot & Opp'n at 4-5 (solely addressing privilege); Pl.'s Reply to Def.'s Opp'n to Pl.'s Renewed Cross-Mot. for Summ. J., ECF No. 46 [hereinafter Pl.'s Reply], at 1-3 (same). Thus, the sole dispute pertains to the redacted material's privileged or confidential character. As to the former ground, Defendant specifically claims that the redactions to the e-mails are protected from disclosure by the attorney-client privilege. Def.'s Mot. at 6-8.

         1. Privilege

         The court previously held that Defendant's declarations fell “well short of establishing attorney-client privilege” because they lacked the necessary factual detail to decide certain key issues, including (1) whether Sandia's counsel was providing legal, as opposed to business, advice to Sandia managers, and (2) whether Sandia waived the privilege through third-party disclosure. Ctr. for Pub. Integrity, 234 F.Supp.3d at 77. Defendant's supplemental declaration responds to these shortcomings. First, Defendant's declarant, James Eanes, a Sandia employee responsible for managing Sandia's interactions with NNSA, see Initial Eanes Decl. ¶¶ 1, 3, explains that the purpose of the e-mails was to secure legal advice of Sandia's counsel regarding the interpretation of applicable law and contractual requirements. See Def.'s Mot. at 7; Def.'s Mot., Decl. of James Eanes in Supp. of Def.'s Mot. for Summ. J., ECF No. 41-2 [hereinafter Suppl. Eanes Decl.], ¶ 3. Specifically, he states that “[t]he email thread relates to Sandia management's request for legal advice regarding the permissible extent to which it could undertake certain contract completion strategies, to include funds available for those strategies.” Suppl. Eanes Decl. ¶ 5. Additionally, Eanes notes that the e-mail threads contain “two privilege notifications consistent with the assertion of the Attorney-Client Privilege and/or Attorney Work Product Immunity.” Id. ¶ 4.

         For its part, Plaintiff does not challenge the applicability of the attorney-client privilege in the Exemption 4 context or the agency's insistence that the e-mails qualify as attorney-client communications. See Pl.'s Cross-Mot. & Opp'n at 4-5. Instead, Plaintiff focuses solely on the issue of waiver.[4] It argues that Sandia waived the attorney-client privilege by voluntarily producing the e-mails in full to OIG. Cf. Id. at 5. Thus, according to Plaintiff, Exemption 4 cannot shield e-mails that lost their privileged character years ago. The court agrees.

         The D.C. Circuit adheres to a “strict rule on waiver” of the attorney-client privilege. SEC v. Lavin, 111 F.3d 921, 929 (D.C. Cir. 1997). That rule requires the holder of the privilege to “zealously protect the privileged materials, taking all reasonable steps to prevent their disclosure.” Id. “[A]ny voluntary disclosure by the holder of such a privilege is inconsistent with the confidential relationship and thus waives the privilege.” In re Subpoenas Duces Tecum, 738 F.2d 1367, 1369 (D.C. Cir. 1984) (quoting Permian Corp. v. United States, 665 F.2d 1214, 1219 (D.C. Cir. 1981)). “Voluntary disclosure, ” in turn, “means the documents were not judicially compelled.” Jordan v. U.S. Dep't of Labor, No. 16-1868, 2017 WL 3382057, at *11 (D.D.C. Aug. 4, 2017) (quoting Chubb Integrated Sys. v. Nat'l Bank of Wash., 103 F.R.D. 52, 63 n.2 (D.D.C. 1984)).

         The strict rule on waiver applies with equal force when the voluntary disclosure is made to a federal agency. In Permian, the D.C. Circuit held that the subject of a Securities and Exchange Commission (“SEC”) investigation had “destroyed the confidential status” of privileged communications by voluntarily disclosing them to the SEC. 665 F.2d at 1219. The subject of the investigation tried to block the SEC from sharing the communications with another agency, asserting that it had disclosed the privileged records to the SEC for a limited purpose, but the Circuit rejected that argument. See Id. at 1220-21. The court explained:

The client cannot be permitted to pick and choose among his opponents, waiving the privilege for some and resurrecting the claim of confidentiality to obstruct others, or to invoke the privilege as to communications whose confidentiality he has already compromised for his own benefit. . . . The attorney-client privilege is not designed for such tactical employment.

Id. at 1221. Since Permian, the Circuit has consistently held parties to have waived privileged communications that are voluntarily disclosed to government agencies. See United States v. White, 887 F.2d 267, 271 (D.C. Cir. 1989) (“Under the law of this circuit, a defendant can waive his attorney-client privilege by releasing documents to . . . an investigative body at the pretrial stage.”); In re Subpoenas Duces Tecum, 738 F.2d at 1370 (holding that party had “willingly sacrificed its attorney-client confidentiality by voluntarily disclosing” privileged material to the SEC); see also In re Grand Jury Investigation, Misc. Action No. 17-2336 (BAH), 2017 WL 4898143, at *11 (D.D.C. Oct. 2, 2017) (citing cases).

         Here, Defendant admits that Sandia produced the e-mails to OIG “without any legal compulsion on behalf of the OIG.” Def.'s Second Mot. for Partial Summ. J. at 17-18. At oral argument, Defendant further admitted that, at the time Sandia disclosed the e-mails to OIG, it did so without redacting any communication deemed confidential, and that Sandia did not attempt to claw back the e-mails at the time of disclosure or upon the completion of the OIG's investigation. See Hr'g Tr. (draft), Dec. 15, 2017 [hereinafter Tr.], at 8-11. To compound matters, OIG directly quoted from portions of both e-mails in the publicly disclosed “Memorandum for the Secretary, ” see OIG Report at 12; supra note 3, but Sandia never objected to OIG's public release of its attorney-client communications, cf. Tr. at 67. And there is more. In its official Report, OIG described and quoted from the e-mails to an even greater extent than done in the Memorandum for the Secretary. OIG Report at 27. Although not publicly disclosed at first, see Tr. at 68-69, Defendant produced the ...


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