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Shaw v. The United States Department of Justice

United States District Court, District of Columbia

November 19, 2019

SUMMER SHAW, Plaintiff,



         Timothy Blixseth went bankrupt but believes his financial troubles are due to the malfeasance of others. In pursuit of this theory, his attorney, Plaintiff Summer Shaw, wields the Freedom of Information Act in an attempt to obtain evidence of “years of potential corruption by numerous individuals” relating to bankruptcy proceedings involving Yellowstone Mountain Club (YMC), Blixseth's private ski and recreational property in Montana. See ECF No. 32-1 (Declaration of Timothy Blixseth), ¶ 3. To this end, Shaw sent a FOIA request to Defendant, the Department of Justice, seeking all emails between former Assistant Attorney General Lanny Breuer and employees at Covington & Burling, LLP, alleging that such records would reveal collusion between DOJ and adverse parties in the bankruptcy action. Dissatisfied with DOJ's response, Plaintiff brought this suit to compel the disclosure of hundreds of emails, asserting that they were improperly withheld as non-agency records or without a valid FOIA exemption. Assessing dueling Cross-Motions for Summary Judgment, the Court ultimately concludes that the Government has correctly discharged its obligations here.

         I. Background

         Because Blixseth and YMC's history is relevant to the public interest involved, the Court will offer a simplified summary here. Blixseth and his then-wife, Edra, developed YMC with Blixseth operating as sole owner through his business entity BGI Group, Inc., which subsequently became BLX Group, Inc. See Kirschner v. Blixseth, No. 11-08283, 2012 WL 12885076, at *2 (C.D. Cal. Nov. 1, 2012); In re BLX Group, Inc., 419 B.R. 457, 460-61 (Bankr. D. Mont. 2009). On September 30, 2005, Blixseth borrowed $375 million from Credit Suisse to secure funding for developing the property. See In re BLX Group, Inc., 419 B.R. at 461. That same day, $209 million of the $375 million wired to BLX was disbursed by Blixseth into various personal accounts to pay off personal debts. Id.

         In 2008, as part of a marital settlement agreement, Edra took ownership of the YMC entities. Id. According to Blixseth, “She then partnered with . . . Sam Byrne, Ron Burkle, [ who has ties to Breuer, ] and Mike Meldman . . . in placing [YMC] into bankruptcy” just months after taking ownership. See Blixseth Decl., ¶ 4. During the bankruptcy proceedings, the circumstances surrounding the $375 million loan came to light. Id., ¶ 5. What followed is summarized best by the United States Court of Appeals for the Ninth Circuit in a separate but related case:

Blixseth objected to the proposed bankruptcy settlement plan (the Plan), arguing that his ex-wife and others were the cause of Yellowstone's financial problems. The bankruptcy court disagreed, [finding] that Blixseth had misappropriated Yellowstone's cash and property for his personal use and that his fraudulent intent in doing so could not be more clear. The bankruptcy court entered a $40 million judgment against Blixseth - the amount the court determined was necessary to pay off certain classes of creditors.

Blixseth v. Yellowstone Mountain Club, LLC, 742 F.3d 1215, 1218 (9th Cir. 2014) (internal citations and quotation marks omitted). Credit Suisse, Burkle, and Byrne then bought the property and became the new owners. See Blixseth Decl., ¶ 21. The bankruptcy judgment was ultimately appealed to the United States District Court for the District of Montana and then to the Ninth Circuit, which affirmed it in 2016. See In re Yellowstone Mountain Club, LLC, 656 Fed.Appx. 307, 312 (9th Cir. 2016); In re Yellowstone Mountain Club, LLC, No. 12-83, 2014 WL 1369363, at *2-3 (D. Mont. Apr. 7, 2014).

         Blixseth contends that during these bankruptcy proceedings, a separate criminal investigation into his ex-wife was abruptly and improperly terminated. See Blixseth Decl., ¶ 8. He also avers that Government officials attempted to “intimidate [him] by enlisting numerous federal agencies[, such as Immigration and Customs Enforcement Agents, the United States Coast Guard in California, the Internal Revenue Service, and DOJ, ] to harass and cause damage to [him and]. . . to try and send a message to [him] that [he] was not only up against dozens of lawyers in the bankruptcy process, but also up against the full force of the U.S. Government.” Id., ¶¶ 9-10.

         Meanwhile, as the bankruptcy judgment was on appeal to the Ninth Circuit, the Yellowstone Club Liquidating Trust (YCLT) also filed suit against Blixseth in California seeking to recover approximately $220 million on two promissory notes he had executed for YMC. Id., ¶ 13; see also Kirschner v. Blixseth, 2014 WL 12573851, at *1 (C.D. Cal. June 18, 2014) (granting YCLT's motion for summary judgment). Of particular note here, Blixseth claims that his ex-wife's former business partner told him in advance that summary judgment in favor of YCLT would be granted because of an alleged back-room meeting between Edra's camp and former top DOJ officials, who were then working for YCLT's law firm, Covington & Burling, and were connected to the judge presiding over the case. See Blixseth Decl., ¶¶ 14-16. Alleged attendees included Steven Fagell, former DOJ Criminal Division Deputy Chief of Staff and Counselor and key advisor to Breuer; Edra and her attorney; and Ron Burkle and his attorney. Id., ¶¶ 15-16. It is not clear what influence these former officials from DOJ's criminal division were purportedly wielding in this civil case. At the time of the meeting, for example, Breuer had already resigned from DOJ to rejoin Covington. Id., ¶ 15. Blixseth, moreover, admits that he cannot confirm that this meeting actually occurred. Id., ¶ 17. On June 18, 2014, summary judgment was indeed granted against Blixseth by the United States District Court for the Central District of California. Id.; see Kirschner, 2014 WL 12573851, at *10.

         Blixseth claims that this meeting and the alleged intimidation efforts of ICE, IRS, the U.S. Coast Guard, and DOJ were the result of YMC's “new owners enlist[ing] friends in the highest levels of the Government to intimidate [him] as well as to cause [him] financial harm” so that he would cease challenging the bankruptcy action. See Blixseth Decl., ¶ 22. He thus believes that DOJ possesses records that provide evidence of this “potential corruption and misconduct.” ECF No. 32 (Plaintiff Opp. & Reply) at 3. So, on December 22, 2016, his lawyer Shaw submitted a FOIA request to DOJ's Criminal Division. Specifically, she sought emails between Breuer and individuals with email addresses ending in “, ” the domain name for Covington, between January 1, 2009, and December 31, 2013. See ECF No. 25 (Pl. MSJ) at 1- 2. After reviewing approximately 2, 760 pages of records, Defendant produced 228 pages in full and 435 in part, withheld 61 pages under certain FOIA exemptions, determined that 1, 714 pages were duplicates, and classified 307 pages as non-agency records. Id. at 2. (While the stated number of pages produced, withheld under certain FOIA exemptions, determined as duplicates, and classified as non-agency records is inconsistent between the Motions, the parties only actively dispute the number of pages classified as non-agency records. See ECF No. 36 (Defendant Reply) at 1 n.1.)

         Plaintiff now moves for partial summary judgement seeking the production of all pages “improperly” withheld as non-agency records. See Pl. MSJ at 4. Further, she seeks the full production of the agency records DOJ withheld and redacted pursuant to Exemption 6 (46 pages in their entirety and 439 redacted pages). See Pl. Reply at 10. Although she also initially attacked Defendant's use of Exemptions 5 and 7(C), see Pl. MSJ at 2, she now contests only the invocation of Exemption 6. See Pl. Opp. at 10. In the alternative, she requests in camera review of the pages if the Court denies either of her first two requests. Id. at 14-15. Defendant, in turn, cross-moves for partial summary judgment, contending that all pages were properly withheld either as non-agency records or under Exemption 6 and that in camera review is unnecessary. See Def. Reply at 1-2.

         II. Legal Standard

         Summary 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). Factual assertions in the moving party's affidavits or declarations may be accepted as true unless the opposing party submits his own affidavits, declarations, or documentary evidence to the contrary. Neal v. Kelly, 963 F.2d 453, 456-57 (D.C. Cir. 1992).

         “FOIA cases typically and appropriately are decided on motions for summary judgment.” Defs. of Wildlife v. U.S. Border Patrol, 623 F.Supp.2d 83, 87 (D.D.C. 2009); see Bigwood v. U.S. Agency for Int'l Dev., 484 F.Supp.2d 68, 73 (D.D.C. 2007). In FOIA cases, the agency bears the ultimate burden of proof to demonstrate the adequacy of its search and that it properly withheld any records. See Defs. of Wildlife, 623 F.Supp.2d at 88, 91. 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). Such affidavits or declarations are “accorded a presumption of good faith, which cannot be rebutted by ‘purely ...

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