United States District Court, District of Columbia
E. BOASBERG UNITED STATES DISTRICT JUDGE.
decade ago, Defendant Internal Revenue Service determined
that Plaintiffs Thomas and Beth Montgomery were involved in a
multi-billion-dollar tax-shelter scheme. Suspecting that an
insider had blown the whistle on their sham partnerships, the
couple requested several categories of IRS records under the
Freedom of Information Act. After coming up short, Plaintiffs
filed this action asserting causes of action under FOIA and
the Administrative Procedure Act. In this second round of
briefing, each party seeks summary judgment on both counts.
Finding merit on each side, the Court will grant in part and
deny in part both Motions.
some FOIA cases, this dispute stretches back much farther
than the records requests at issue. The Court detailed the
underlying saga between these two parties in a prior Opinion,
see Montgomery v. IRS, 292 F.Supp.3d 391, 393-94
(D.D.C. 2018), but provides a brief recap here. In the early
aughts, Thomas Montgomery formed several partnerships, from
which he and his wife as joint-filer recorded losses on their
individual tax returns. A few years later, the IRS became
suspicious of these entities because they were reporting tax
losses without experiencing any real economic loss. After an
investigation, they were eventually deemed shams, meaning
that the Montgomerys were retroactively disallowed from
taking the losses from the partnerships on their individual
returns and owed payments for tax, penalties, and interest.
Id. In thirteen separate federal suits in Texas,
Plaintiffs and the partnerships petitioned the Government
for, respectively, tax refunds and readjustment of
partnership income. Before all of these actions could be
judicially resolved, the Montgomerys and the IRS entered into
a global settlement agreement, promising to “fully and
finally resolve all ongoing disputes between [them] related
to” the partnerships. Id. at 394 (citation
one might believe that would have ended the matter,
Plaintiffs were not yet finished. Having settled the tax
issues, they then turned their attention to figuring out how
they had crossed the IRS's path to begin with. To that
end, they each submitted FOIA requests for twelve types of
records. Requests 1 through 5 solicited various IRS forms
used in connection with a whistleblower, and 6 through 12
requested lists, documents, or correspondence between the IRS
and any third party regarding Plaintiffs' potential tax
liability or partnership transactions. See
Complaint, ¶ 16. The Service rejoined that it had
“found no documents specifically responsive to [the]
request[s] in response to the items 6 through 12” and
claimed that FOIA Exemption 7(D) “exempts the
disclosure of records” sought in items 1 through 5.
Id., Exh. E at 3. After Plaintiffs'
administrative appeal was denied for the same reasons,
id., Exh. H, they filed the instant action on May
16, 2017, seeking relief under FOIA and the APA.
months later, the Service moved for summary judgment on
procedural grounds. It argued that the global settlement
agreement barred further litigation or, alternatively, that
the Montgomerys were precluded from bringing their claims
based on the resolution of the prior district court cases.
The Court rejected both strands of that argument, clearing
the way for this merits briefing.
judgment may be granted 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 genuine issue of material fact is one
that would change the outcome of the litigation. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986) (“Only disputes over facts that might affect the
outcome of the suit under the governing law will properly
preclude the entry of summary judgment.”). In the event
of conflicting evidence on a material issue, the Court is to
construe the conflicting evidence in the light most favorable
to the non-moving party. See Sample v. Bureau of
Prisons, 466 F.3d 1086, 1087 (D.C. Cir. 2006).
cases typically and appropriately are decided on motions for
summary judgment, and the agency bears the ultimate burden of
proof. See Defenders of Wildlife v. Border Patrol
623 F.Supp.2d 83, 87 (D.D.C. 2009); Bigwood v. U.S.
Agency for Int'l Dev., 484 F.Supp.2d 68, 73 (D.D.C.
2007); DOJ v. Tax Analysts, 492 U.S. 136, 142 n.3
(1989). The Court may grant summary judgment based solely on
information provided in an agency's affidavits or
declarations when they describe “the documents and the
justifications 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.” Military Audit Project v.
Casey, 656 F.2d 724, 738 (D.C. Cir. 1981).
considering the competing Motions, the Court first evaluates
Plaintiffs' FOIA claims before turning to their APA
Montgomerys' first count is based on their requests for
twelve types of records, which can be divided into two
groups: agency forms related to a confidential informant
(requests 1 through 5) and documents and correspondence
between a third party and the Service about the Plaintiffs or
their partnerships (requests 6 through 12). Although it did
not plainly do so in the administrative proceedings, the IRS
has now asserted a so-called Glomar response, in
which it refuses to confirm or deny whether the first
collection of records exists. It also contends that it
conducted an adequate search for the second group. The Court
takes each in turn.