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Edelman v. Securities And Exchange Commission

United States District Court, District of Columbia

February 12, 2019

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

          MEMORANDUM OPINION AND ORDER

          Randolph D. Moss, United States District Judge.

         This matter is before the Court on Plaintiff Richard Edelman's motion for attorneys' fees. Dkt. 46. In 2014, Edelman submitted six requests for agency records to Defendant the Securities and Exchange Commission (“SEC”) pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552. Among other things, he sought records relating to the SEC's review of filings and “consumer complaint[s]” regarding the consolidation of several properties, including the Empire State Building, into the Empire State Realty Trust (“ESRT”), a real estate investment trust. Edelman v. SEC, 302 F.Supp.3d 421, 423 (D.D.C 2018) (Edelman III). Edelman maintains a website that disseminates information about the creation of the ESRT. See Edelman v. SEC, 172 F.Supp.3d 133, 138 (D.D.C. 2016) (Edelman I). After the SEC failed to respond to his requests, he filed this action, Dkt. 1, which the Court resolved on the merits in three memorandum opinions. See Edelman III, 302 F.Supp.3d at 421; Edelman v. SEC, 239 F.Supp.3d 45, 48 (D.D.C. 2017) (Edelman II); Edelman I, 172 F.Supp.3d at 138. Edelman has now moved for an award of attorneys' fees pursuant to 5 U.S.C. § 552(a)(4)(E). See Dkt. 46. For the reasons explained below, the Court will DENY that motion.

         I. BACKGROUND

         The Court has set forth the factual background and procedural history of this case in its previous memorandum opinions, see Edelman I, 172 F.Supp.3d at 138; Edelman II, 239 F.Supp.3d at 48-50; Edelman III, 302 F.Supp.3d at 423-24, and will repeat only those facts relevant to the pending motion.

         Edelman submitted six FOIA requests to the SEC in 2014. Among other things, he sought various filings submitted by the ESRT to the SEC, the SEC's comments on any potential disclosure deficiencies, any responses from the ESRT to those comments, meeting notes and emails to and from the SEC attorneys working on the matter, exhibits submitted by the ESRT or its predecessor that referenced the sublease for the Empire State Building, any materials submitted by the ESRT that sought confidential treatment by the SEC, any “consumer complaints” submitted by Empire State Building investors to the SEC relating to its review of the proposed transaction, correspondence between the SEC and Malkin Holdings (the company advocating for the conversion of the Empire State Building's ownership structure into a real estate investment trust), records relating to Edelman's FOIA requests, and records reflecting communications between the SEC and any government official not employed by the SEC regarding the ESRT. See Edelman I, 172 F.Supp.3d at 138-141 (describing FOIA requests).

         Before Edelman brought suit, the SEC responded to one of his six requests, and, shortly after he brought suit, it responded to the remaining five requests and released more than 2, 000 pages of responsive records. Id. at 137, 141. The parties then filed their first set of motions for summary judgment. Dkt. 15; Dkt. 16. After considering those submissions, the Court ruled in favor of the SEC on some issues and in favor of Edelman on others. The Court agreed with the SEC that Edelman had failed to exhaust his administrative remedies with respect to one of his six requests. Edelman I, 172 F.Supp.3d at 142-44. It also agreed with the SEC that most of the SEC's searches were reasonable and adequate, id. at 144-58, and that the SEC had lawfully withheld all or portions of six documents pursuant to FOIA Exemption 5, id. at 158-61. The Court ruled in Edelman's favor, however, on three issues. The Court first held that the SEC should have broadly construed one of Edelman's FOIA requests to seek “consumer complaints, ” and not simply records reflecting the SEC's responses to those complaints. Id. at 155-56. Second, the Court held that the SEC erred in treating attorneys' notes as categorically beyond the scope of FOIA and, instead, should have determined on a case-by-case basis whether the notes were exempt from disclosure. Id. at 147-54. Finally, the Court held that it could not determine whether one document was properly redacted pursuant to Exemption 5 and, accordingly, ordered that the SEC produce an unredacted version of the document to the Court for in camera review. Id. at 159.

         Following Edelman I, the SEC released 1, 446 pages of consumer complaints, 71 pages of attorney notes, and (without the need for further judicial intervention) an unredacted version of the document that the Court had directed the SEC to submit for in camera review. Edelman II, 239 F.Supp.3d at 50 n.3. The parties then renewed their cross-motions for summary judgment. See Dkt. 26; Dkt. 28. This time, the Court rejected Edelman's contentions that the SEC had conducted an inadequate search for “consumer complaints” and that it had improperly invoked the deliberative process privilege. Edelman II, 239 F.Supp.3d at 51-54. The Court, however, was unable to resolve the question whether the SEC had permissibly redacted the names of seventy individuals who had filed consumer complaints with the agency because the existing record lacked “sufficient information for the Court to conduct the required balancing, and because the SEC . . . should conduct the relevant balancing in the first instance.” Id. at 57. The Court, accordingly, denied both parties' motions for summary judgment with respect to that one issue. Id.

         The SEC subsequently disclosed the identities of thirty-four of the seventy complainants and withheld the names of the remaining thirty-six complainants. Edelman III, 302 F.Supp.3d at 424. As the SEC explained, the thirty-four complainants whose identities were disclosed had, elsewhere, engaged in public activity relating to the ESRT transaction. Id. But the remaining thirty-six complainants had not publicly associated themselves with the issue. Id. The parties once again moved for summary judgment. See Dkt. 37; Dkt. 39. The third time around, the Court ruled in the SEC's favor, holding that the unidentified complainants had a substantial privacy interest in nondisclosure and that the public's interest in disclosure was de minimis. Edelman III, 302 F.Supp.3d at 429. With that decision, Edelman's case was finally resolved on the merits.

         Edelman now invokes 5 U.S.C. § 552(a)(4)(E) and requests that the Court award him $99, 843.75 in attorneys' fees and $559.22 in costs. Dkt. 49 at 9.

         II. ANALYSIS

         Under 5 U.S.C. § 552(a)(4)(E)(i), the Court may “assess . . . reasonable attorney fees and other litigation costs reasonably incurred” by a FOIA plaintiff who “has substantially prevailed.” The test for an award of fees “has two components: eligibility and entitlement.” Gerhard v. Fed. Bureau of Prisons, 258 F.Supp.3d 159, 165 (D.D.C. 2017). “The eligibility prong asks whether a plaintiff has ‘substantially prevailed' and thus ‘may' receive fees.” Brayton v. Office of the U.S. Trade Representative, 641 F.3d 521, 524 (D.C. Cir. 2011) (citation omitted). “If so, the [C]ourt proceeds to the entitlement prong and considers a variety of factors to determine whether the plaintiff should receive fees.” Id. “To obtain attorneys' fees under FOIA, a plaintiff must satisfy” both prongs of the test. See McKinley v. Fed. Hous. Fin. Agency, 739 F.3d 707, 710 (D.C. Cir. 2014). Moreover, if the plaintiff is eligible for and entitled to fees, he must demonstrate that the award he seeks is “reasonable.” 5 U.S.C. § 522(a)(4)(E)(i); see also Elec. Privacy Info. Ctr. v. Dep't of Homeland Sec., 197 F.Supp.3d 290, 293-94 (D.D.C. 2016).

         A. Eligibility

         As relevant here, Edelman may establish that he “has substantially prevailed” by showing that he “obtained relief through either . . . a judicial order. . . [or] a voluntary or unilateral change in position by the agency.” 5 U.S.C. § 552(a)(4)(E)(ii). The second approach-a voluntary change in position-codifies the so-called “catalyst theory, ” which asks whether the “litigation substantially caused the requested records to be released.”[1] N.Y.C. Apparel F.Z.E. v. U.S. Customs and Border Prot. Bureau, 563 F.Supp.2d 217, 221 (D.D.C. 2008) (citations omitted); see also Brayton, 641 F.3d at 524-25. Under the catalyst theory, a plaintiff must show that “the action could reasonably be regarded as necessary to obtain the information” and that “a causal nexus exists between [the] action and the agency's surrender of the information.” Harvey v. Lynch, 178 F.Supp.3d 5, 7 (D.D.C. 2016) (quoting Church of Scientology of Cal. v. Harris, 653 F.2d 584, 588 (D.C. Cir. 1981)). Eligibility is “largely a question of causation, ” Church of Scientology, 653 F.2d at 587, and causation “is missing when disclosure results not from the suit but from delayed administrative processing, ” Short v. U.S. Army Corps of Eng'rs, 613 F.Supp.2d 103, 106 (D.D.C. 2009).

         Edelman claims that he is “[u]nquestionably . . . eligible for a fee award” because he has substantially prevailed in two ways. Dkt. 46-1 at 4. He asserts, first, that he obtained a judicial decision holding that the SEC had “failed to properly search 113 pages of attorney notes, ” that the SEC “failed to properly construe [his] request and search for documents about complaints themselves, ” and that the SEC “failed to adequately justify a document withheld pursuant to FOIA Exemption 5.” Id. at 2. Due to the Court's order, Edelman contends, the SEC “located and released more than a thousand additional pages of responsive material to plaintiff.” Id. Following a subsequent decision, moreover, the SEC “released identifying information about 34 of 70 complainants it had previously withheld.” Id. at 2-3. Second, he contends that, even before the Court intervened, his lawsuit served as the catalyst for the SEC's initial production of more than 2, 000 pages of records. Id. at 4.

         The SEC does not dispute Edelman's first argument and, instead, contends that, because “he did not prevail on most of [the] issues he briefed, ” Dkt. 48 at 8, he is “not eligible to receive most of the fees he seeks, ” id. at 9. According to the SEC, the filing of the lawsuit was not a “catalyst” for its initial production; it asserts, to the contrary, that it had already begun “processing Edelman's requests” when he filed suit. Id. at 8. The delay in processing Edelman's requests, the SEC explains, stemmed from the nature of the requests, which “were complex and required consultation with several other offices, ” and not from any intransigence on the part of the SEC. Id.

         The Court agrees that Edelman is eligible for attorneys' fees. In Edelman I, the Court held that the SEC had construed his request concerning consumer complaints too narrowly and ordered the SEC to renew its search for responsive documents “on the understanding that . . . the request encompasse[d] not just documents about the complaints but the complaints themselves.” 172 F.Supp.3d at 156. The Court also held that attorney notes were not categorically exempt from disclosure and, accordingly, directed the SEC to review the attorney notes it had previously withheld and to produce any responsive, non-exempt records. Id. at 154-55. As a result, the SEC released more than 1, 500 pages of previously withheld records. Edelman II, 239 F.Supp.3d at 50. A FOIA plaintiff “may be considered [a] prevailing part[y]” for purposes of attorneys' fees “if they succeed on any significant issue in litigation [that] achieves some of the benefit [he] sought in bringing the suit.” Edmonds v. FBI, 417 F.3d 1319, 1326-27 (D.C. Cir. 2005) (quoting Farrar v. Hobby, 506 U.S. 103, 109 (1992)). The Court's “judicial order” in Edelman I afforded Edelman tangible “relief” in the form of agency records that he would not have obtained without filing suit, and Edelman, accordingly, “has substantially ...


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