CUBAN v. SECURITIES AND EXCHANGE COMMISSION

Filing 52

Renewed MOTION for Partial Summary Judgment Pursuant to Court Order of July 1, 2011 by SECURITIES AND EXCHANGE COMMISSION (Attachments: # 1 Memorandum in Support Brief in Support of Def's Renewed Motion for Partial Summary Judgment Pursuant to Order of July 1, 2011, # 2 Exhibit Defendant's Third Revised Index, # 3 Declaration Third Suppl Declaration of N. Maloney)(Hernandez, Juanita) Modified on 10/14/2011 (td, ).

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
MARK CUBAN,
Plaintiff,
v.
SECURITIES AND EXCHANGE
COMMISSION,
Defendant.

)
)
)
) Case: 1:09-cv-00996
) Assigned: Walton, Reggie B.
) Description: FOIA/Privacy Act
)
)

BRIEF IN SUPPORT OF DEFENDANT’S RENEWED MOTION FOR PARTIAL
SUMMARY JUDGMENT PURSUANT TO JULY 1, 2011 COURT ORDER
Defendant, the Securities and Exchange Commission (“Commission” or “SEC”),
respectfully files this brief in support of its Renewed Motion for Partial Summary
Judgment pursuant to this Court’s Order of July 1, 2011.
BACKGROUND AND PROCEDURAL DEVELOPMENTS 1
Plaintiff, Mark Cuban, brought this action seeking the release of certain
information pursuant to the Freedom of Information Act (“FOIA”), 5 U.S.C §552 and the
Privacy Act, 5 U.S.C §552a. On the parties’ cross-motions for summary judgment, on
September 22, 2010, this Court granted in part and denied in part the parties’ motions
(Dkt. Nos. 26 & 27).
On November 5, 2010, the Commission filed a Motion for Reconsideration of the
September 2010 Order and filed a second Vaughn Index (Dkt. No. 34). On July 1, 2011,
this Court issued a second opinion and granted in part and denied in part the SEC’s
Motion for Reconsideration (Dkt. Nos. 49 & 50).

The Court further ordered the

Commission to file a new motion for partial summary judgment and a new or

1

The SEC incorporates by reference the underlying facts provided in its prior filings in this case. See also
attached Exhibit List.

supplemental Vaughn Index.
The Commission is submitting this renewed motion for partial summary
judgment, its Third Revised Vaughn Index (Exhibit 22), and the Third Supplemental
Declaration of Noelle L. Maloney (Exhibit 23) to provide information the Court found
was required in the July 1, 2011 Opinion.
The Third Revised Vaughn Index reflects the documents that still remain at issue
in this case. 2 The Index notes which documents are no longer at issue in light of this
Court’s September 22, 2010 and July 1, 2011 Orders. In addition, since the July 1, 2011
Order, the Commission has determined that portions of many of the documents that
remain at issue can be released.

Thus, the Commission is producing portions of

Document Nos. 1-3, 5-9, 12, 14-19, 22, 30, 38, 40, 46-49, 52, 56, 64, 65 and 67-76 to
Plaintiff. The Third Revised Vaughn Index describes what is still being withheld.
ARGUMENT 3
I.

The SEC Properly Withheld Documents Pursuant to Exemption 5
Exemption 5 of FOIA protects those documents that are covered by the

deliberative process privilege, work-product doctrine, and the attorney-client privilege. 5
U.S.C. §552(b)(5). This Court has recognized that these “three traditional evidentiary
and discovery privileges” are contained within Exemption 5.

(Dkt. No. 50 at 11).

Among the documents still at issue in this case are documents – or portions thereof –

2

All documents referred to herein are identified in the Third Revised Vaughn Index, attached hereto as
Exhibit 22. For ease of reference, the documents are referenced by the number assigned in the Third
Revised Vaughn Index. The document numbers are the same as in the original and second Vaughn Indexes.

3

The SEC incorporates by reference also the legal arguments it raised in its previous motions partial
summary judgment and reconsideration.

2

protected by the deliberative process privilege and the work-product doctrine. 4
A.

The SEC Properly Withheld Documents Protected by the Deliberative
Process Privilege.

The Commission maintains that the following documents – or portions thereof –
are protected by the deliberative process privilege: Document Nos. 1, 40, 46, 48, 49, 52,
71, 73, and 75. The purpose of the deliberative process exemption is to “prevent injury to
the quality of agency decisions.” NLRB v. Sears, 421 U.S. 132, 151 (1975). To this end,
documents withheld under this privilege must satisfy two fundamental requirements.
First, the communication must be predecisional, that is before the adoption of an agency
policy or decision. Jordan v. Dep’t of Justice, 591 F.2d 773, 774 (D.C. Cir. 1978) (en
banc). Second, it must be deliberative, that is, part of a recommendation or opinion.
Vaughn v. Rosen, 523 F. 2d 1136, 1143-44 (D.C. Cir. 1975).
The portions of documents withheld under the deliberative process privilege are
described individually on the Third Revised Vaughn Index, but they come generally
within three categories. First, Document Nos. 40, 48, 52, and 75 contain hand-written
notes from conversations between staff in the SEC’s Office of Human Resources (“HR”)
and SEC managers and reveal opinions and recommendations expressed in the course of
deciding what discipline to impose on an SEC employee. Those portions of the notes that
are factual or procedural in nature are being produced. The information being withheld
would reveal the deliberations of the persons involved in the process. See, e.g., Warren
v. Soc. Sec. Admin., 2000 WL 1209383, at *2 (W.D.N.Y. Aug. 22, 2000) (protecting
score sheets used to rank applicants for a government position because decisions as to
4

Where this Court has ruled that one exemption fully protects a particular document from production, the
Commission has deemed that document as being no longer at issue. Thus, it has not provided additional
information relevant to other exemptions that it originally raised. The Commission, however, is not waiving
any of its original arguments.

3

how many points to award for particular qualifications are deliberative).
Second, Document Nos. 71 and 73 contain draft documents that HR staff and
Commission supervisors exchanged in the process of recommending a decision on
employee discipline. Some of those drafts contain handwritten edits and commentary.
Courts have recognized that draft documents are part of a predecisional deliberative
process. See. e.g., Pub. Employees for Envt’l Responsibility v. Bloch, 532 F. Supp. 2d 19,
22 (D.D.C. 2008) (privilege protected draft position descriptions).
The third category contains two documents (Document Nos. 1 & 49), both of
which are being produced except for small portions that contain employee considerations
about future potential actions. Such considerations are predecisional and deliberative.
B.

The SEC Properly Withheld Documents Protected by the Work-Product
Doctrine

The Commission is withholding Documents Nos. 49, 65 and 72 under the attorney
work-product doctrine. FED. R. CIV. P. 26(b)(3). These three documents include work
product from civil enforcement actions brought by the Commission as they reflect
attorney communications discussing litigation strategy and the handling of the
enforcement actions, including attorney thought processes and attorney opinions. These
three documents include commentary by an SEC trial attorney to his supervisors, SEC
staff and/or state securities regulators handling a related enforcement proceeding. These
are precisely the types of communications that are protected by the attorney work-product
doctrine. See Slater v. EOUSA, No. 98-1663, 1999 U.S. Dist. LEXIS 8399 at *9 (D.D.C.
May 24, 1999) (protects discussion in letter from Assistant United States Attorney to FBI
discussing investigative strategy in case); see also SafeCard Servs v. SEC., 926 F. 2d
1197, 1202 (D.C. Cir. 1991) (protecting SEC records of law enforcement investigations);
4

Gavin v. SEC, No. 04-4522, 2007 WL 2454156, at *9 (D.Minn. Aug. 23, 2007) (work
product protected documents created as part of investigation into possible violations of
securities laws).
The Court previously found that the Commission had not provided enough
information to establish that these emails were protected by the attorney work-product
doctrine. The Commission has included additional information in the Third Revised
Vaughn Index to make clear that the emails were prepared in anticipation of litigation.
Indeed, they were prepared in the midst of litigation. However, as the connection of
these documents to litigation is apparent on their face, the Commission requests that the
Court review these three documents in camera if it believes additional support is
necessary.
II.

The SEC Properly Withheld Documents Pursuant to Exemptions 6 and 7(c).
As stated above, the Commission has produced to Mr. Cuban portions of

documents it previously withheld in full. The produced documents were no longer
protected by Exemption 6 because the Commission released a report by its Office of
Inspector General (“OIG”) that provides information that is in the documents responsive
to Mr. Cuban’s FOIA requests. In addition, the discipline has resulted in litigation in
federal court, and briefs filed in that case contain details about the employee discipline
that was not previously available to the public.
The information that the Commission continues to withhold comes within two
general categories: (1) names and other personal identifying information; and (2) details
relating to the discipline that is not already public and in which the privacy interest is
significantly greater than any public interest in seeing how the Commission operates.

5

The vast majority of Exemption 6 redactions are of names and personal
identifying information from the documents. See Document Nos. 1-3, 5-9, 12, 14-19, 22,
30, 38, 40, 46-49, 52, 56, 64, 65 and 67-76. Most of the persons whose identity is
protected are Commission staff members who were involved in the process of imposing
discipline on an employee. The name of the employee who was disciplined has not been
redacted. 5 In addition, the names of Senior Officers (SO), the SEC equivalent of the
Senior Executive Series (SES) at other federal agencies, have not been redacted. Non-SO
SEC staff members have a reasonable expectation of privacy in their identities, and that
privacy interest is greater than any public interest in knowing exactly which low and
middle level civil servants carried out their agency duties. See, e.g., Smith v. Dep’t of
Labor, No. 10-1253, 2011 WL 3099703, at *5-7 (D.D.C. July 26, 2011) (protecting from
disclosure under Exemption 6 names of low level agency employees, their identifying
information, opinions of job performance, personal phone numbers, home addresses and
personal email addresses); Wood v. FBI, 432 F.3d 78, 87-89 (2d Cir. 2005) (protecting
names of investigative personnel of FBI); Judicial Watch, Inc. v. United States, 84 F.
App’x 335, 338-39 (4th Cir. 2004) (protecting names of IRS nonsupervisory staff).
The names and personal identifying information, including contact information,
for persons outside the Commission has also been redacted to protect their privacy
interests. These persons include: (1) a witness in a civil enforcement action brought by
the SEC and the witness’s counsel, see e.g., Doc Nos. 15, 72, 73, and 76; (2) and staff of
a state securities regulatory agency, see, e.g., Document Nos. 71 & 72. To the extent
5

That employee’s social security number and birth date have been redacted in Document No. 30 in light of
the heightened privacy interest all persons have in that information. Prison Legal News v. Lappin, No. 051812, 2011 U.S. Dist. LEXIS 18671, at *2-3 (D.D.C. Feb. 25, 2011) (social security numbers have “a
specific relationship to [an] individual and “the privacy interest in one’s social security number is selfevident”).

6

those names occur in documents directly related to law enforcement proceedings,
Exemption 7(C) also protects the names.
The second category consists of approximately nine documents that contain
information in which individuals have a strong privacy interest.

The information

protected includes: (1) medical information concerning the family of the disciplined
attorney (Document Nos. 7 & 8); (2) sensitive details about the conduct that resulted in
discipline that is not already public, none of which has any direct connection to emails
the employee sent to Mr. Cuban (Document Nos. 30, 47, 68, 71, 72, and 73); and (3) an
email chain (the only document withheld in full) that contains emails between the
disciplined employee and a person from whom he was seeking assistance and which
contains personal information about both persons (Document No. 77). None of these
documents will reveal significant information about Commission actions or decisions, but
their release would interfere with the privacy interests of the persons involved.
III.

The Search for Responsive Documents was Adequate for Categories 11, 12 &
13.
In addition to requiring more information about withheld documents, this Court’s

July 1, 2011 Order and Opinion required the SEC to provide additional information about
its search for documents responsive to Categories 11, 12 and 13 of the FOIA Request.
The Third Supplemental Declaration of Noelle Maloney addresses the issues raised by
the Court and describes in detail the steps staff in the SEC’s Office of the Inspector
General (“OIG”) took to search for documents responsive to Categories 11, 12, and 13.
Those steps initially included talking to relevant staff about past and current
investigations, reviewing in full the reading indexes listing the principal subject matters
of those investigations, and examining all potentially relevant files. Third Maloney
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Declaration ¶¶ 6-12. In addition, to verify that its manual review of the indexes was
accurate, the OIG staff has recently conducted an electronic search of its indexes using
terms from the FOIA Request; that search did not reveal any additional potentially
responsive investigations. Id. at ¶ 13.
V.

In camera review of Remaining Documents
Of the responsive documents still at issue here, the Commission recently

produced 37 documents with some redactions and withheld only one document in full
(No. 77). These documents can be made available for the Court for an in camera review.
CONCLUSION
Accordingly, the SEC respectfully asks the Court to grant its Renewed Motion for
Partial Summary Judgment. A proposed order is attached to the Motion pursuant to Loc.
Rule 7(h).

Respectfully submitted,
/s/ Juanita C. Hernandez
__________
Juanita C. Hernández (D.C. Bar No.449797)
Melinda Hardy (D.C. Bar No. 431906)
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-9612
[e-mail]
202-551-5152 (telephone) (Hernández)
202-772-9263 (facsimile)
Dated: October 13, 2011

Attorneys for Defendant

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Cuban v. SEC, Civ. Action No. 1:09-cv-00996 (RWB)
Defendant's Supplemental Exhibit List in Support of its Renewed Motion for Partial
*
Summary Judgment

Exhibit 1 = Declaration of Margaret Celia Winter
Exhibit 2 = Vaughn Index
Exhibit 3 = Declaration of Kenneth H. Hall
Exhibit 4 = Declaration of David M. Pinansky
Exhibit 5 = Declaration of Nancy Ellen Tyler
Exhibit 6 = Declaration of Julie M. Riewe
Exhibit 7 = Declaration of Noelle L. Frangipane
Exhibit 8 = Supplemental Declaration of Margaret Celia Winter
Exhibit 9= Revised Vaughn Index
Exhibit 10= Supplemental Declaration of David M. Pinansky
Exhibit 11= Supplemental Declaration of Nancy Ellen Tyler
Exhibit 12= Pl. SEC’s Mem. of Law in Opp’n to Def. Mark Cuban’s Mot. for Attorneys’
Fees and Expenses, Civ. Action No. 3-08-cv-2050-D (SAF), United States District Court,
Northern District of Dallas, filed Sept. 30, 2009. Attached thereto at Document 47-2
(page 33 of the attached adobe acrobat file) is the Declaration of Robert B. Kaplan.
Exhibit 13= Supplemental Declaration of Noelle Frangipane
Exhibit 14= Declaration of William Lenox
Exhibit 15= Second Revised Vaughn Index
Exhibit 16= Declaration of Shira Minton
Exhibit 17= Declaration of David Cunningham
Exhibit 18= Second Supplemental Declaration of Noelle Maloney (formerly Frangipane)
Exhibit 19= Second Supplemental Declaration of Nancy Ellen Tyler
Exhibit 20= Second Supplemental Declaration of David Pinanksy
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Exhibit 21= Declaration of Leslie Wharton
Exhibit 22= Third Revised Vaughn Index
Exhibit 23 = Third Supplemental Declaration of Noelle L. Maloney

* Exhibits 1–7 were filed on January 15, 2010, with Docket Doc. No. 10. (Def.’s Mot. for Partial
Summ. J.)
Exhibits 8–14 were filed on March 16, 2010, with Docket Doc. No. 22 (Def.’s Reply to Pl.’s
Opp’n to Def.’s Partial Mot. for Summ. J.)
Exhibits 15–21 were filed on November 5, 2010, with Docket Doc. No. 34 (Def.’s Motion for
Reconsideration)

Exhibits 22-23 are being filed on October 13, 2011 in connection with Def’s Renewed
Motion for Partial Summary Judgment

10