Highland Capital Management LP v. Internal Revenue Service
Filing
40
Memorandum Opinion and Order granting in part and denying in part 21 Motion for Summary Judgment. For the records on which summary judgment is denied the IRS shall, within fifteen days of this date, file those records under seal for in camera inspection by the court. (Ordered by Senior Judge A. Joe Fish on 9/30/2019) (ykp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
HIGHLAND CAPITAL
MANAGEMENT, LP,
Plaintiff,
VS.
INTERNAL REVENUE SERVICE,
Defendant.
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CIVIL ACTION NO.
3:18-CV-0181-G
MEMORANDUM OPINION AND ORDER
Before the court is the defendant Internal Revenue Service (“IRS”)’s motion
for summary judgment (docket entry 21). For the reasons stated below, the IRS’s
motion for summary judgment is granted in part and denied in part.
I. BACKGROUND
This case arises from a Freedom of Information Act (“FOIA”) request made by
the plaintiff Highland Capital Management, LP (“Highland”) to the IRS. Highland
is a Delaware limited partnership whose headquarters is in Dallas, Texas. Complaint
(docket entry 2) ¶ 1. The IRS is a government agency of the United States within
the meaning of FOIA, 5 U.S.C. § 552. Complaint ¶ 2; Answer (docket entry 14) ¶ 2.
A. FOIA Request
On October 19, 2016, Highland filed a FOIA request with the IRS seeking
[d]ocuments and emails sent to the Brattle Group by the
IRS in connection with the IRS’s audit of the 2008 tax
year of Highland Capital Management, LP, and documents
and emails sent by the Brattle Group to the IRS, including
documents relating to the IRS’s hiring of the Brattle
Group, the Brattle Group’s Reports dated October 23,
2015 and February 2, 2016, and its “Phase I Report,” in
connection with the IRS’s audit of the 2008 tax year of
Highland Capital Management, LP.
Appendix to Memorandum in Support for the Internal Revenue Service’s Motion for
Summary Judgment (“Appendix in Support”), Exhibit A (docket entry 23); see also
Complaint ¶ 12; Answer ¶ 12. The IRS hired The Brattle Group to provide expert
advice related to the examination of Highland’s tax returns for the taxable years 2008
and 2009. Appendix in Support, Exhibit 2 ¶ 6.
B. First Search Conducted by the IRS
To respond to Highland’s FOIA request, on November 1, 2016, the IRS
assigned IRS Disclosure Office caseworker Patricia Williams (“Williams”) to begin
searching for responsive documents. Appendix in Support, Exhibit 1 ¶ 8. Williams
located Highland’s examination case file using the IRS’s Integrated Data Retrieval
System (“IDRS”), a system consisting of computer databases and programs that
support IRS employees working active tax cases. Id. ¶ 11. The IDRS manages data
that has been retrieved from the Master File System, the IRS’s nation-wide
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information system containing most taxpayer account information. Id. Using the
IDRS allows employees to take specific actions on taxpayer accounts, track status,
and post transaction updates to the Master File. Id. Williams used a series of
command codes to retrieve summaries of information for the years requested by
Highland, as well as detailed information about Highland’s 2008 tax year, and the
examination case ongoing for tax year 2008. Id. ¶ 14.
As a result of her initial search, Williams spoke with an agent to obtain more
information about Highland’s request; this agent informed Williams that Revenue
Agent Marcia Vanterpool (“Vanterpool”) could provide her with additional
information about the examination records. Appendix in Support, Exhibit 1 ¶ 14.
Then, on November 8, 2016, Williams contacted Vanterpool, who informed
Williams that she would be able to locate the documents requested by Highland in
the examination case file, but that the team conducting Highland’s civil examination
would require additional time to review the responsive records for confidential
information. Id. ¶ 15. Accordingly, Williams mailed an extension letter to Highland
on November 14, 2016, extending the response date of the FOIA request to January
13, 2017. Id. ¶ 16.
After her conversation with Williams, Vanterpool brought the FOIA request to
the attention of the examination team. Appendix in Support, Exhibit 1 ¶ 17. Chief
Counsel Attorney Veronica Richards (“Richards”), who the IRS assigned to provide
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legal counsel to the agents conducting Highland’s examination, held a meeting with
several IRS employees who were conducting Highland’s examination to discuss
Highland’s FOIA request. Appendix in Support, Exhibit 2 ¶ 10. The employees at
the meeting were Revenue Agents Betty Wang (“Wang”), Vanterpool, Edward
“Buck” Townsend (“Townsend”), and Ronald “Mark” Degan (“Degan”). Appendix
to Reply in Support of the Internal Revenue Service’s Motion for Summary Judgment
(“Appendix to Reply”) (docket entry 38), Exhibit 1 ¶ 6. That same day, Townsend
emailed Financial Products Senior Advisor Mark Perwien (“Perwien”) and IRS
contract representative Nick Wynen (“Wynen”) to inform them that they would
need to search their records for responsive documents. Id. After the meeting,
Richards asked all employees who were working on Highland’s examination to
provide any responsive records they possessed. Appendix in Support, Exhibit 2 ¶ 10.
Richards and Wang determined that any copies of records involving The Brattle
Group would be maintained by Richards, Wang, or Wynen. Id. ¶¶ 10,11. For the
search for responsive records, Wang and Wynen would serve as the two main points
of contact with The Brattle Group, while Richards would serve as the examination
team’s primary point of contact with the Disclosure Office. Id. ¶¶ 10, 11.
Vanterpool, Townsend, Perwien, and Degan searched for records responsive to
Highland’s FOIA request in November 2016. Appendix to Reply, Exhibit 1 ¶ 7. The
records located during their searches were given to the IRS Disclosure Office and
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were included in the original release to Highland. Id. These four custodians,
however, were not able to provide facts describing their respective searches in the
November 2016 search. Id.
At the same time, Richards, Wang, and Wynen conducted separate searches
for responsive documents. As the primary point of contact with the disclosure office,
Richards reviewed the examination case file provided by Vanterpool. Appendix in
Support, Exhibit 1 ¶ 17. Additionally, Richards conducted a search of her emails and
paper files for any communications between herself and The Brattle Group which
related to Highland. Appendix in Support, Exhibit 2 ¶ 12.
As a main point of contact with The Brattle Group, Wang searched IRS
documents for records relating to The Brattle Group responsive to Highland’s
request. Wang kept a log of all electronic and paper documents received from, or
sent to, The Brattle Group. Id. ¶ 13. Wang used the log to determine where relevant
records responsive to Highland’s request were located in the examination case file,
and found the electronically stored files related to The Brattle Group. Id. In
addition, Wang conducted a search of her emails, using keyword searches of Brattle
Group employees who had worked with Wang. Id.
Wynen served as the contract representative of The Brattle Group and
searched his records from his work and relationship with The Brattle Group for
records responsive to Highland’s request. Wynen maintained a file on his IRS
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computer where he stored all emails and documents related to his work as the IRS
contract representative for The Brattle Group. Id. ¶ 14. To identify responsive
records, Wynen conducted a manual search of his file. Id.
All responsive records found by Wang, Vanterpool, Townsend, Degan,
Perwien, and Wynen were given to Richards for review. Richards reviewed all records
discovered in this search process and produced them to Williams for her own review.
Id.
This search process took several months to complete. Richards completed her
initial review of the responsive records on December 13, 2016. Id. Due to technical
issues in the electronic storing process of the files prepared and reviewed by Richards,
Williams was unable to begin her subsequent review of the responsive records
produced by Richards until March 3, 2017. Id. ¶ 18. Williams completed her
subsequent review of the records on May 30, 2017 and sent the records back to
Richards for additional review on June 7, 2017. Id. ¶ 19. On July 18, 2017,
Williams received notification that Richards had completed her additional review. Id.
During this review process, extension letters were mailed to Highland on January 12,
2017; February 8, 2017; March 29, 2017; April 26, 2017; and June 30, 2017. Id.
¶ 20.
On July 23, 2017, the Disclosure Office shipped all the responsive records
found in the search process and determined non-exempt by Richards and Williams to
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Highland along with the IRS’s determination letter. Appendix in Support, Exhibit 1
¶ 20. The determination letter reported that 13,409 pages of responsive records were
located in response to Highland’s request, with 132 pages withheld in part and 1,632
pages withheld in full. Appendix in Support, Exhibit B. Highland then submitted an
administrative appeal of the IRS’s determination on October 12, 2017. Appendix in
Support, Exhibit 1 ¶ 21. The IRS’s Appeals Office reviewed the July 23, 2017
response letter as well as the material and documents withheld, and on December 1,
2017 sustained the IRS’s determination, including its decision to withhold 132 pages
in part and 1,632 pages in full. Id. ¶¶ 22-23; Appendix in Support, Exhibit C.
C. Complaint Filed and Second Search
Shortly after unsuccessfully appealing the IRS determination, Highland filed
its complaint on January 24, 2018. See Complaint. After the complaint was filed,
IRS Office of Chief Counsel attorney Christopher Valvardi (“Valvardi”) was assigned
to assist the Department of Justice in the litigation. Appendix in Support, Exhibit 2
¶ 3. The IRS filed its answer on March 28, 2018. See Answer. Williams left the IRS
in January of 2018, leaving Valvardi unable to procure detailed explanations of the
bases for withholding the records that were not produced with the non-exempt
responsive records released to Highland on July 23, 2017. Appendix in Support,
Exhibit 2 ¶ 19. Accordingly, Valvardi conducted his own independent review of all
responsive records. Id.
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First, Valvardi processed the documents provided to Highland by the
Disclosure Office to apply and index the redaction markings for the exempt portions
of the records. Appendix in Support, Exhibit 2 ¶ 20. During his review, Valvardi
compared the processed copies of the documents with the records originally sent to
the Disclosure Office by the examination team and observed that some pages
originally provided by the examination team were missing from the copies provided
to Highland. Id. Ultimately, the reason for the missing pages is unclear, but appears
to have been a result of difficulties encountered by the IRS’s computer systems in
processing the documents for production to Highland. Id. In August of 2018, the
IRS included the previously missing pages in the released records, increasing the total
number of pages determined to be responsive from 13,409 to 15,349. Id.; Highland
Capital Management, L.P.’s Response to Internal Revenue Service’s Motion for
Summary Judgment (“Response”) (docket entry 26) at 3. From this amount,
Valvardi reviewed and determined that 14,937 pages could be released in full, 52
pages should be withheld in part, and 360 pages should be withheld in full.
Appendix in Support, Exhibit 2 ¶ 21.
D. Motion for Summary Judgment Filed and Third Search
On August 10, 2018, the IRS filed the instant motion for summary judgment,
as well as an accompanying memorandum in support. See Motion for Summary
Judgment; Memorandum in Support of the Internal Revenue Service’s Motion for
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Summary Judgment (“Memorandum in Support”) (docket entry 22). In its
memorandum in support, the IRS argues that the evidence establishes that the IRS
conducted a reasonable search for records responsive to Highland’s FOIA request and
that the IRS is properly withholding information from Highland because it is exempt
from disclosure. See id. at 18-35. On October 1, 2018, Highland filed its response.
See Response. In its response, Highland argues that there exists a genuine dispute of
fact as to whether the IRS conducted an adequate search as required by FOIA. Id. at
5-7. Highland also argues that portions of both Thompkins’s and Valvardi’s
affidavits should be stricken on grounds of inadmissible hearsay. Id. at 14-15.
In December 2018, Valvardi and the IRS undertook a new search and review
of records to supplement the Disclosure Office’s July 2017 production to Highland.
Appendix to Reply, Exhibit 1 at 2-7. The new search included the potentially
responsive records held by Vanterpool, Townsend, Perwien, and Degan, none of
whom kept contemporaneous accounts of the steps they took while assisting in the
original November 2016 search. Id. at 2-6. In November 2018, Valvardi provided
Degan with detailed instructions to conduct a new search, including a list of search
terms. Appendix to Reply, Exhibit A. Degan used the provided search terms to
search for responsive documents in his email and on the hard drive of his IRS
computer. Appendix to Reply, Exhibit 1 ¶ 11-12. The search yielded one email,
which The Brattle Group did not send or receive, so the email itself is not responsive
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to the FOIA request. Id. ¶ 13. The email did, however, include an attachment of 5
pages of potentially responsive material, with one page having already been produced
to Highland in the original July 2017 production. Id. ¶ 14. Valvardi and the IRS
withheld the remaining four pages as exempt. Id.
Valvardi was unable to follow the same procedure for Vanterpool and
Townsend, as they had both separated from the IRS by the time of the December
2018 search. Appendix to Reply, Exhibit 1 at 4-6. Additionally, neither Vanterpool,
Townsend, nor Perwien created contemporaneous accounts of the steps they took
while assisting with the original 2016 search. Id. Thus, to conduct a more thorough
search of Vanterpool’s, Townsend’s, and Perwien’s records, the IRS’s Information
Technology (“IT”) personnel collected all the electronic records maintained by
Vanterpool and Townsend and provided the records to Valvardi. Id. ¶¶ 22-23. The
IRS IT personnel also provided Valvardi with all the electronic records maintained by
Perwien which had been collected for other cases. Id. Valvardi subsequently used
the keywords he provided to Degan to search Vanterpool’s, Townsend’s, and
Perwien’s records. Id. ¶ 25. The search returned 467 email files, containing 2118
total pages, and 124 non-email files, containing approximately 7120 total pages. Id.
¶ 26. Upon manual review of the electronic files found through the search, Valvardi
determined that only 45 of the email records were communications with The Brattle
Group that were not duplicates of records already produced from other sources, and
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that all the non-email files were duplicates of records already produced from other
sources. Id. ¶ 27. In total, Valvardi’s search of Vanterpool, Townsend, and Perwien’s
electronic files produced 105 pages of responsive records, labeled with Bates page
numbers 15350 through 15455. Id. ¶ 28.
Additionally, during the new December 2018 search, Valvardi discovered that
some documents that Wang and Richards had provided to the Disclosure Office
during the original FOIA search in 2016 contained embedded electronic attachments
that were not visible when Valvardi first reviewed the original batch of documents.
Id. ¶ 29. Valvardi reviewed the records from the original July 2017 production to
find all hidden attachments and discovered that many were duplicate copies of
records already reviewed and either produced to Highland or withheld as exempt. Id.
¶ 31. An additional 403 pages of attachments, however, were not previously
produced to Highland, and were accordingly produced to Highland under Bates page
numbers 15456 through 15858. Id. ¶ 32. In total, as the result of the new December
2018 search, on February 8, 2019, the IRS produced to Highland 508 additional
documents (403 pages of attachments and 105 pages of electronic files) numbered
15350 through 15858. Id. ¶ 33.
On March 4, 2019, the IRS filed its reply in support of its motion for
summary judgment. See Internal Revenue Service’s Reply in Support of its Motion
for Summary Judgment (“Reply”) (docket entry 37). In its reply, IRS first details the
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new December 2018 search and then argues that both the original 2016 search and
its subsequent reviews and searches led by Valvardi were adequate and reasonable
under FOIA. Id. at 1-6. Moreover, the IRS contends that it exceeded requirements
to demonstrate proper withholding of information under FOIA by providing both
Vaughn declarations as exhibits to the original motion and the reply, and by providing
a Vaughn index as an exhibit to its reply. Id. at 6-9; see Appendix to Reply, Exhibit B;
see generally Appendix in Support; Appendix to Reply.
Highland filed its surreply on March 18, 2019. See Highland Capital
Management, L.P.’s Surreply to Internal Revenue Service’s Reply in Support of
Motion for Summary Judgment and Request for Hearing (“Surreply”) (docket entry
39). In its surreply, Highland argues that the exemptions claimed by the IRS are a
pretext to prevent Highland from obtaining the “Phase I Report” created by The
Brattle Group regarding the IRS’s ongoing examination into Highland’s tax year
2008. Id. at 2-5. Highland additionally requests a hearing with the court in order to
present its evidence and prove to the court that the IRS is wrongfully withholding
from Highland information that is properly disclosable. Id. The IRS’s motion for
summary judgment is now ripe for decision.
II. ANALYSIS
A. Legal Standard
In general, summary judgment is proper only if “there is no genuine dispute as
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to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a), (c)(1). “In the FOIA context, however, the traditional [summary
judgment] standard is modified because ‘the threshold question in any FOIA suit is
whether the requester can even see the documents the character of which determines
whether they can be released.’” Batton v. Evers, 598 F.3d 169, 175 (5th Cir. 2010)
(quoting Cooper Cameron Corp. v. U.S. Department of Labor, Occupational Safety and
Health Administration, 280 F.3d 539, 543 (5th Cir. 2002)) (emphasis in original).
“The FOIA expressly places the burden on the defending agency to sustain its action
and show that it acted in accordance with the statute.” Driggers v. United States, No.
3:11-CV-0229-N, 2011 WL 5525337, at *3 (N.D. Tex. Oct. 26, 2011) (Ramirez,
M.J.) (citing Batton, 598 F.3d at 175; Cooper Cameron, 280 F.3d at 543); see also 5
U.S.C. § 552(a)(4)(B) (“. . . and the burden is on the agency to sustain its action.”).
To meet its summary judgment burden, the agency must establish that: (1) its search
for the requested material is adequate; and (2) that each responsive document is
either produced, unidentifiable, or exempt from production. Driggers, 2011 WL
5525337, at *3; Cooper Cameron, 280 F.3d at 543.
In applying this standard, the court is mindful of FOIA’s purpose. The FOIA
“embodies a philosophy of full disclosure by government agencies and requires them
to make their records available to the public.” Driggers, 2011 WL 5525337, at *2
(citing 5 U.S.C. § 552). Moreover, “[t]he FOIA was enacted to ‘pierce the veil of
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administrative secrecy and to open agency action to the light of public scrutiny.’”
Batton, 598 F.3d at 175 (quoting Department of the Air Force v. Rose, 425 U.S. 352, 361
(1976)). Accordingly, the exemptions to disclosure an agency may claim “are
explicitly limited by statute and should be construed narrowly.” Id. Furthermore, in
a FOIA case a court should grant an agency’s motion for summary judgment only if
the agency identifies the documents at issue and explains why they fall under the
claimed exemptions. Id.; Cooper Cameron, 280 F.3d at 543. If there is contradictory
evidence or evidence of agency bad faith, a court should not grant summary judgment
for an agency. Gahagan v. United States Citizenship and Immigration Services, 147 F.
Supp. 3d 613, 621 (E.D. La. 2015) (citing Gallant v. National Labor Relations Board,
26 F.3d 168, 171 (D.C. Cir. 1994)).
An agency generally submits affidavits or declarations to satisfy its burden on a
summary judgment motion under FOIA. Driggers, 2011 WL 5525337, at *3;
Gahagan, 147 F. Supp. 3d at 620. “These affidavits must be clear, specific, and
reasonably detailed while describing the withheld information in a factual and
nonconclusory manner.” Gahagan, 147 F. Supp. 3d at 621. In addition, affidavits
and declarations submitted by an agency are entitled to a “presumption of
legitimacy” unless there is evidence of bad faith in handling the FOIA request.
Batton, 598 F.3d at 176 (citing United States Department of State v. Ray, 502 U.S. 164,
179 (1991)). “The presumption of legitimacy, however, does not relieve the
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withholding agency of its burden of proving that the factual information sought falls
within the statutory exemption asserted.” Id. In fact, even if an agency submits
affidavits, a district court has the discretion to inspect the content of agency
documents in camera to determine whether they fall under any of the FOIA
exemptions. Gahagan, 147 F. Supp. 3d at 621. Importantly, the Fifth Circuit has
cautioned that in instances where it is determined that records do exist, the legislative
intent behind the FOIA requires that a district court do something more than rely
solely upon an affidavit, be it by inspecting the records in camera or by requesting a
Vaughn index.1 See Batton, 598 F.3d at 175-76.
B. Application
1. Adequacy of Search
As a threshold matter, the court must determine whether the IRS’s search for
responsive documents was adequate. Batton, 598 F.3d at 176 (citing Santos v. Drug
Enforcement Administration, 357 F. Supp. 2d 33, 37 (D.D.C. 2004)). “An agency may
demonstrate that it conducted an adequate search by showing that it used ‘methods
which can be reasonably expected to produce the information requested.’” Id. (citing
1
“The vaughn index is named after the case of Vaughn v. Rosen, 484 F.2d 820
(D.C. Cir. 1973), and is “a routine device through which the agency describes
the document responsive to a FOIA request and indicates the reasons for
redactions or withholdings in sufficient detail to allow a court to make an
independent assessment of the claims for exemptions.” Driggers, 2011 WL
5525337, at *3 n.1 (citing Rugiero v. United States Department of Justice, 257
F.3d 534, 544 (6th Cir. 2001)).
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Oglesby v. United States Department of Army, 920 F.2d 57, 68 (D.C. Cir. 1990)). “The
issue ‘is not whether there might exist any other documents possibly responsive to
the request, but rather whether the search for those documents was adequate.’”
Gahagan, 147 F. Supp. 3d at 622 (quoting Weisberg v. United States Department of
Justice, 745 F.2d 1476, 1485 (D.C. Cir. 1984)) (emphasis in original). As mentioned
previously, to establish the adequacy of its search, an agency may submit affidavits or
declarations, which are afforded a presumption of good faith, and which explain the
scope of method of the search used by the agency. Id.
Here, the IRS relies on the declarations of Thompkins and Valvardi to explain
the IRS’s search methodology.2 These declarations, taken together, explain that in
2
Highland, in its response, argues that certain portions of Valvardi’s and
Thompkins’s affidavits should be stricken and not considered by this this court.
Response at 7, 14-15. Specifically, Highland asserts that paragraphs 9, 13 through
15, and 17 through 20 of Thompkins’s affidavit, as well as paragraphs 10 through 15
and 28 of Valvardi’s affidavit contain hearsay and are thus inadmissible for the
purpose of deciding the IRS’s summary judgment motion. Id. at 14-15. The court
disagrees with Highland. “Generally, declarations accounting for searches of
documents that contain hearsay are acceptable.” Kay v. Federal Communications
Commission, 976 F. Supp. 23, 34 n.29 (D.D.C. 1997) (citing SafeCard Services, Inc. v.
Securities and Exchange Commission, 926 F.2d 1197, 1201 (D.C. Cir. 1991)), aff’d, 172
F.3d 919 (D.C. Cir. 1998); see also Barnard v. Department of Homeland Security, 531 F.
Supp. 2d 131, 138 (D.D.C. 2008) (“Consistent with these requirements, hearsay in
FOIA declarations is often permissible.”); Brophy v. United States Department of Defense,
No. Civ. A. 05-360 (RMC), 2006 WL 571901, at *4 (D.D.C. Mar. 8, 2006)
(“Declarations that contain hearsay in recounting searches for documents are
generally acceptable.”). Here, Thompkins was the Disclosure Manager for the
Disclosure Office and the direct supervisor of Williams as she conducted the search,
and Valvardi was assigned to assist the Department of Justice in the instant litigation.
Appendix in Support, Exhibit 1 ¶¶ 2,4; Appendix in Support, Exhibit 2 ¶ 3.
(continued...)
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response to Highland’s original request and to this litigation, the IRS and its agents
conducted three searches for responsive documents. Thompkins’s declaration
establishes that the first search in response to Highland’s request was led by Williams
and Richards. Appendix in Support, Exhibit 1 at 1-5. The IRS Disclosure Office
assigned Williams to the case regarding Highland’s request. Id. ¶ 3. Williams began
the search for responsive documents by accessing the IDRS to locate the examination
case file of Highland’s tax year 2008. Id. ¶ 11. After using a series of command
codes to search the IDRS for the examination case file, Williams learned that
Vanterpool would be able to provide information and documents to the Disclosure
Office to respond to Highland’s request. Id. at 4. Williams contacted Vanterpool to
request the responsive information from the examination case team, but Vanterpool
advised Williams that providing all responsive records would take additional time to
review the records for exempt material. Id. ¶ 15. Accordingly, Williams mailed an
extension letter to Highland extending the response date of the request. Id. ¶ 16.
After receiving Highland’s request, Richards called a meeting of the
examination case team of Wang, Vanterpool, Townsend, and Degan to inform them
about the request, and asked them to conduct searches of their respective records for
responsive records. Appendix to Reply, Exhibit 1 ¶ 6; Appendix in Support, Exhibit 2
2
(...continued)
Accordingly, Thompkins and Valvardi were the most appropriate people to provide a
comprehensive affidavit.
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¶ 10. Townsend emailed Perwien and Wynen to inform them that they would need
to search their records for responsive documents as well. Appendix to Reply, Exhibit
1 ¶ 6. Richards and Wang determined that the records produced in the search would
be maintained by Richards, Wang, or Wynen. Appendix in Support, Exhibit 2 ¶¶ 10,
11. Vanterpool, Townsend, Perwien, and Degan each searched their emails and
paper files for records responsive to Highland’s request, and their searches produced
records that were given to the Disclosure Office and included in the original release to
Highland. Appendix to Reply, Exhibit 1¶ 7. Vanterpool, Townsend, Perwien, and
Degan, however, all failed to keep contemporaneous accounts describing their search
methods. Id.
Simultaneously, Richards, Wang, and Wynen searched their emails, paper
files, and other relevant material for records responsive to Highland’s request.
Richards reviewed the examination case file provided by Vanterpool, as well as her
emails and paper files for any material responsive to Highland’s request. Appendix in
Support, Exhibit 1 ¶ 17; Appendix in Support, Exhibit 2 ¶ 12. Wang kept a log of all
electronic and paper documents received from and sent to The Brattle Group, and
used the log to find files related to The Brattle Group responsive to Highland’s
request. Id. ¶ 13. Additionally, Wang searched her personal emails using keywords
of employees of The Brattle Group who had worked with Wang on the examination
of Highland’s tax year 2008. Id. Wynen maintained a file of all emails and
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documents related to his work with The Brattle Group and conducted a manual
search of the file for documents responsive to Highland’s request. Id. ¶ 14. Richards
reviewed all records discovered in this search process and produced them to Williams
for review by the Disclosure Office. Appendix in Support, Exhibit 1 ¶ 17. After
additional review by both Richards and Williams, on July 23, 2017, the Disclosure
Office shipped all responsive records found in the search to Highland, which was
comprised of 13,409 total responsive pages, with 132 pages withheld in part and
1,632 pages withheld in full. Appendix in Support, Exhibit B.
In January of 2018, Williams left the IRS and shortly after her departure
Valvardi was assigned to assist the Department of Justice in the instant litigation.
Appendix in Support, Exhibit 2 ¶¶ 3, 19. Williams’s departure left Valvardi unable
to procure detailed explanations of the bases for withholding the records not
produced with the non-exempt responsive records from the original search. Id. ¶ 19.
Accordingly, Valvardi conducted his own independent review of all responsive records
found in the search. Id. Valvardi compared the copies of the processed records
produced to Highland in July 2017 with the records originally produced to the
Disclosure Office by the examination team and discovered that some pages originally
produced by the examination team were missing from the copies produced to
Highland. Id. ¶ 20. Valvardi then reviewed all responsive records from the search,
including the previously missing pages, and determined that some pages withheld in
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the July 2017 production were non-exempt and could properly be produced to
Highland. Id. The IRS released the new pages to Highland, as well as the pages
newly determined to be non-exempt from the July 2017 production. Id. Ultimately,
Valvardi’s review increased the number of responsive pages from 13,409 to 15,349,
with 14,937 pages released in full, 52 pages withheld in part, and 360 pages withheld
in full. Id. ¶ 21.
In late 2018, Valvardi directed a new search and review to supplement the
Disclosure Office’s July 2017 production to Highland. Appendix to Reply, Exhibit 1
at 2-7. The new search focused on the records maintained by Vanterpool, Townsend,
Perwien, and Degan, who did not keep contemporaneous accounts of the steps they
took while assisting in the original November 2016 search. Id. at 2-6. In November
of 2018, Valvardi provided Degan with detailed instructions to conduct a new search
of his records, including a list of search terms. Appendix to Reply, Exhibit A. Degan
searched his emails and the hard drive of his computer which yielded one email that
was not responsive to Highland’s request. Appendix to Reply, Exhibit 1 ¶¶ 11-13,
15. The email, however, included an attachment of 5 pages of potentially responsive
material. Id. ¶ 14. One page had already been produced to Highland in the July
2017 production, and the other four were withheld by the IRS as exempt. Id.
Valvardi was unable to follow the same procedure to search the records of Vanterpool
and Townsend, as both had separated from the IRS by the time of the December
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2018 search. Appendix to Reply, Exhibit 1 at 4-6. Accordingly, the IRS’s IT
personnel collected all electronic records maintained by Vanterpool and Townsend
and provided the records to Valvardi. Id. ¶¶ 22-23. The IT personnel also provided
Valvardi with the electronic records maintained by Perwien, which had been collected
for other ongoing cases. Id. Valvardi used the procedure he provided to Degan to
search the records of Vanterpool, Townsend, and Perwien, including the use of the
search terms provided to Degan. Id. ¶ 25. The search resulted in the discovery of
467 email files, containing 2118 total pages, and 124 non-email files, containing
approximately 7120 total pages. Id. ¶ 26. Valvardi manually reviewed the records
and determined that only 45 of the email records were not duplicates of records
already produced in the July 2017 production to Highland and that all non-email
files discovered had already been produced. Id. ¶ 27. The new search produced 106
pages of new responsive records. Id. ¶ 28.
Additionally, during the new search in 2018, Valvardi discovered that
documents produced during the original search in 2016 contained embedded
electronic attachments that were not visible during Valvardi’s first review of the
documents. Appendix to Reply, Exhibit 1 ¶ 29. Valvardi manually reviewed the
records produced in the original July 2017 production and found an additional 403
pages of attachments, and accordingly produced them to Highland. Id. ¶¶ 32-33. In
total, as a result of the 2018 search, on February 8, 2019, Valvardi and the IRS
- 21 -
produced 508 additional documents to Highland. Id. ¶ 33.
Based on the multiple searches described in the IRS’s affidavits, the court
concludes that the IRS has satisfied its burden of conducting an adequate search.
The IRS uncovered a total of 15,858 pages of responsive documents by using varying
search methods designed to accurately respond to Highland’s request. Nevertheless,
Highland raises arguments as to why the IRS’s search was inadequate. See Response
at 5-7.
First, Highland argues that the IRS’s response to its FOIA request was
“obstructionist, time-consuming, and expensive.” Response at 5. In particular,
Highland asserts that because subsequent searches and reviews resulted in the
production of documents originally withheld, and because an error resulted in the
withholding of 2,000 documents in the original July 2017 production, that there
exists a genuine dispute as to the adequacy of the search. Id. Highland alleges that
the subsequent searches and reviews and the production of additional documents
therefrom is evidence that the IRS “did not take Highland’s Request seriously.” Id.
at 6. Highland thus argues that the IRS should not benefit from the presumption of
legitimacy afforded to agency affidavits in FOIA litigation. Id. The court finds these
arguments unpersuasive. The fact that the IRS conducted multiple searches and
reviews indicates that the IRS was complying with FOIA obligations in good faith.
See Corbeil v. United States Department of Justice, No. 04-2265, 2005 WL 3275910, at
- 22 -
*3 (D.D.C. Sept. 26, 2005) (“[A]n agency’s prompt report of the discovery of
additional responsive materials may be viewed as evidence of its good faith efforts to
comply with its obligations under FOIA”); Landmark Legal Foundation v. Environmental
Protection Agency, 272 F. Supp. 2d 59, 63 (D.D.C. 2003) (“[C]ontinuing discovery
and release of documents does not prove that the original search was inadequate, but
rather shows good faith on the part of the agency that it continues to search for
responsive documents.”).
Second, Highland contends that the original search undertaken by the
examination case team was an effort by the IRS to “cherry-pick custodians.”
Response at 6. Highland argues that the search method detailed in the IRS’s
declaration, specifically the manual searching of email boxes and case folders for
responsive records by the examination team, is inadequate under FOIA. Id. The
court disagrees. Both Thompkins’s and Valvardi’s declarations assert that there
would be no other potential source of records within the IRS that would likely
contain additional records responsive to Highland’s request. Appendix in Support,
Exhibit 1 ¶ 10; Appendix in Support, Exhibit 2 ¶ 18. Additionally, Valvardi, in his
first declaration, asserts that “a proper search for responsive records was conducted”
after reviewing the methods and results of the search. Appendix in Support, Exhibit
2 ¶ 17. Highland offers no theory or supporting evidence that additional sources of
responsive records exist or that the IRS acted in bad faith in conducting its search.
- 23 -
See generally Response. Because “[p]erfection is not the standard by which the
reasonableness of a FOIA search is measured[]”, Judicial Watch, Inc. v. Rossotti, 285 F.
Supp. 2d 17, 26 (D.D.C. 2003), the court cannot conclude that the IRS’s search was
inadequate because of its methods or which employees were a part of the process.3
Furthermore, Highland argues that the IRS’s production revealed other
employees who could have potentially responsive documents, specifically Townsend
and Perwien, but that the IRS did not conduct a search of their records. Id. at 6-7.
Valvardi’s second declaration, however, directly refutes Highland’s assertions.
Valvardi’s declaration clearly contends that as a part of the original search, both
Townsend and Perwien searched their files for records responsive to Highland’s
request and provided them to the Disclosure Office for production in the original July
2017 production. Appendix to Reply, Exhibit 1 ¶ 7. Furthermore, because Valvardi
was unable to procure detailed explanations of the search procedures used by
Townsend and Perwien, Valvardi conducted a subsequent search of their records and
produced the responsive documents discovered therein to Highland. Id. ¶¶ 25-28.
Ultimately, because the court concludes that the IRS’s declarations show that it used
reasonable search methodology, and because the court is unconvinced by Highland’s
3
For the same reasons, the court cannot conclude that the IRS’s search was
inadequate because it did not “have a computer or information specialist run a simple
keyword search against all potential custodians who interacted with The Brattle
Group.” Response at 6.
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arguments to the contrary, the court concludes that the IRS has satisfied its burden
of showing it conducted an adequate search.
2. Records Withheld Under Exemption 3
in Conjunction With § 6103(a)
The IRS argues that it may partially withhold page 14943 under the third
FOIA exemption in conjunction with I.R.C. § 6103(a) (2018) because the portion of
the record that is withheld contains the taxpayer information of The Brattle Group.
Memorandum in Support at 21-22; Appendix in Support, Exhibit 2 at 8. The court
agrees.
“FOIA Exemption 3, 5 U.S.C. § 552(b)(3) (2006), states that an agency need
not disclose any documents ‘specifically exempted from disclosure by statute’ if the
statute ‘requires that the matters be withheld from the public in such a manner as to
leave no discretion on the issue’ or ‘establishes particular criteria for withholding or
refers to particular types of matters to be withheld.’” Batton, 598 F.3d at 177
(quoting 5 U.S.C. § 552(b)(3) (2006)). “Section 6103 of the Internal Revenue Code,
in turn, provides that tax returns, as well as return information, are confidential and
shall not be disclosed to anyone other than the taxpayer.” Id. (citing I.R.C. § 6103(a)
(2006)). Accordingly, section 6103 of the Internal Revenue Code is a qualifying
statute under the third FOIA exemption. Id. Section 6103(a) of the Internal
Revenue Code states that no officer or person with access to return information “shall
disclose any return or return information obtained by him in any manner in
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connection with his service as such an officer or an employee or otherwise or under
the provisions of this section.” I.R.C. § 6103(a). The definition of return
information protected by section 6103 includes “a taxpayer’s identity.” I.R.C.
§ 6103(b)(2)(A). Taxpayer identity includes the taxpayer’s “identifying number.”
I.R.C. § 6103(b)(6).
To support its claim that exemption three applies to page 14943, the IRS relies
on Valvardi’s declaration. See Memorandum in Support at 22. In particular,
Valvardi’s first declaration provides that “[p]age 14943 is a tax compliance
questionnaire. It is withheld in part because it contains the Employer Identification
Number (“EIN”) of The Brattle Group. The EIN is the return information of third
party Brattle Group.” Appendix in Support, Exhibit 2 ¶ 26. Valvardi’s first
declaration further provides that the IRS can only disclose return information with
written consent or demonstrated material interest in the information, but that
“[Highland] did not provide with its request either the written consent from The
Brattle Group or information showing it had a material interest in the return
information of The Brattle Group.” Id. Highland does not address this particular
exemption in its response or in its surreply. See generally Response; Surreply. A
taxpayer’s EIN, pursuant to Internal Revenue Code sections 6103(b)(2)(A) and
6103(b)(6), is protected from disclosure absent an explicit exception. I.R.C.
§§ 6103(a), 6103(b)(2)(A), 6103(b)(6). Therefore, the information as described in
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Valvardi’s declaration is confidential under the Internal Revenue Code and is exempt
from disclosure by the IRS absent an exception under section 6103.
Two exceptions to the general bar of non-disclosure are potentially applicable
in this case. The first potential exception to the general rule, I.R.C. § 6103(c),
requires that the taxpayer give consent of disclosure to the third party to the IRS;
Highland offers no evidence that it obtained consent from The Brattle Group for the
disclosure of the information withheld in page 14943. Second, I.R.C. § 6103(e)
allows for the disclosure of confidential information to third parties if they can
demonstrate “material interest” in the information that is not disclosed, but
Highland does not argue material interest in its briefing, nor has Highland presented
evidence in the summary judgment record that it has a material interest in the
information as defined in section 6103(e). Accordingly, Highland has not satisfied
either the exception found in sections 6103(c) or 6103(e), and the IRS cannot
disclose The Brattle Group’s EIN to Highland on grounds of material interest.
Therefore, because the court concludes that the information withheld in part
by the IRS is exempt from disclosure under I.R.C. § 6103(a), and because the
potentially applicable exceptions to the general rule of nondisclosure found in I.R.C.
§§ 6103(c) and 6103(e) have not been satisfied by Highland, the court concludes
that summary judgment should be granted in favor of the IRS as to page 14943. The
IRS may withhold page 14943 in part.
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3. Records Withheld Under Exemption 3 in Conjunction
with 26 U.S.C. § 6103(e)(7) and Exemption 7(A)
The IRS also seeks to withhold a number of pages in whole and in part under
FOIA exemption three, 5 U.S.C. § 552(b)(3) in conjunction with 26 U.S.C.
§ 6103(e)(7), as well as FOIA exemption seven, 5 U.S.C. § 552(b)(7)(A).
Memorandum in Support at 11-14. Specifically, the IRS argues that it is withholding
in part pages 4, 407, 413-414, 420, 446, 454-456, 458-459, 470-471, 474-475, 503,
506-507, 532, 535, 538, 545, 547, 550, 567-568, 576, 580-581, 588, 613-614,
14752, and 14841 pursuant to FOIA exemptions 3 and 7(A) because “these pages
contain copies of email or e-fax communications” between IRS employees and Brattle
Group contractors that discuss Highland’s return information. Memorandum in
Support at 13. The IRS contends that if the discussions contained in these pages
were released to Highland, the scope and strategy of the IRS’s investigation into
Highland would be revealed, which would interfere with the IRS’s enforcement
proceedings and impair the IRS’s ability to ensure the collection of proper tax and
penalties from Highland. Id.
Additionally, the IRS argues that it is withholding in full pages 247-300 and
348 properly under FOIA exemptions 3 and 7(A) because they “contain portions of a
confidential report prepared for the [IRS] by The Brattle Group.” Id. The IRS
alleges that the disclosure of the information contained within the report would
reveal the scope, direction, and strategy of the IRS’s civil examination of Highland,
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which would both interfere with the IRS’s enforcement proceedings and seriously
impair the ability of the IRS to ensure the collection of proper tax and penalties from
Highland. Id.
The IRS also contends that it is properly withholding in part page 369
pursuant to FOIA exemption 3 and 7(A) because it contains an email between Ms.
Wang and Ms. Richards that discusses Highland’s return information. Id. Much like
the other documents withheld under FOIA exemptions 3 and 7(A), the IRS avers that
disclosing page 369 would be expected to interfere with its enforcement proceedings
and would seriously impair the ability of the government to ensure the collection of
the proper tax and penalties from Highland. Id.
Moreover, the IRS alleges that it is properly withholding pages 15046-15151
and 15160-15349 in full pursuant to exemptions 3 and 7(A) because they contain
The Brattle Group’s “Phase I Report,” which contains Highland’s return
information.4 Id. at 13-14. Highland again avers that if this report were disclosed, it
would reveal the scope, direction, and strategy of its examination, which would
reasonably be expected to interfere with its enforcement proceedings and would
impair its ability to ensure the collection of the proper tax and penalties from
Highland. Id. at 14.
4
The IRS initially sought to withhold pages 15152-15159; however, the IRS no
longer claims any exemption for these pages. Appendix to Reply, Exhibit B at 25;
Appendix to Reply, Exhibit 2 ¶ 5.
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Finally, by way of its reply and the declaration of Roy R. Metcalf, the IRS
contends that it is also properly withholding under FOIA exemption 3 and exemption
7(a): (1) pages 15352, 15371, 15373, 15377, 15381, and 15424 in part because
they contain copies of emails between Ms. Wang and contractors for The Brattle
Group that discuss Highland’s return information; (2) pages 15458-15505 and
15507-15560 in full because they consist of faxed messages containing copies of The
Brattle Group’s Phase III Report; (3) pages 15617-15621, 15623-15624, 1562615627, 15662-15665, 15667-15669, and 15844-15845 in part because they consist
of “faxed messages containing memoranda from The Brattle Group to the [IRS]
which ask questions, or provide answers to questions, intended to inform the analysis
provided by The Brattle Group in their reports[;]” (4) pages 15629-15660 in full
because they consist of faxed messages containing The Brattle Group’s Phase I
Memorandum; and (5) pages 15671-15680, 15682-15691, 15693-15701, 1570315713, 15715-15725, 15727-15737, and 15739-15747 in full because they consist
of faxed messages containing a draft copy of The Brattle Group’s Phase II Report. See
Appendix to Reply at 22-24, 31-34.
Highland argues in its response, however, that the IRS has not satisfied its
summary judgment burden with respect to the documents withheld under FOIA
exemptions 3 and 7(A). Response at 9-11. In particular, Highland avers that the IRS
has not properly claimed these exemptions because the IRS has “failed to identify the
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scope and nature of the Unidentified Report and Phase 1 Report. . . .” Id. at 9.
Moreover, Highland argues that the IRS’s stated rationale behind withholding the
reports under FOIA exemptions 3 and 7(A) is not only too vague, but that it makes
little sense considering “the IRS has produced to Highland other, more recent reports
– including a Phase II report – completed by The Brattle Group.” Id. at 10-11.
Accordingly, Highland contends that summary judgment as to the documents
withheld under FOIA exemptions 3 and 7(A) is improper.
As noted earlier by the court, section 6103 of the Internal Revenue Code is a
qualifying statute under FOIA exemption 3, 5 U.S.C. § 552(b)(3). Section
6103(e)(7) of the Internal Revenue Code provides that “[r]eturn information with
respect to any taxpayer may be open to inspection by or disclosure to any person
authorized by this subsection to inspect any return of such taxpayer if the Secretary
determines that disclosure would not seriously impair Federal tax administration.”
See 26 U.S.C. § 6103(e)(7). Section 6103(e)(7) thus protects from disclosure return
information that the Secretary determines would seriously impair federal tax
administration. See Linsteadt v. Internal Revenue Service, 729 F.2d 998, 1000-01 (5th
Cir. 1984). “The [c]ourt’s review of the Secretary’s determination that a disclosure
would seriously impair Federal tax administration is de novo, and the IRS bears the
burden of proof to justify nondisclosure.” Sea Shepherd Conservation Society v. Internal
Revenue Service, 89 F. Supp. 3d 81, 100 (D.D.C. 2015) (internal quotations and
- 31 -
citations omitted).
Additionally, exemption 7(a) provides that “records or information compiled
for law enforcement purposes” may be withheld by an agency in response to a FOIA
request, “but only to the extent that the production of such law enforcement records
or information (A) could reasonably be expected to interfere with enforcement
proceedings.” 5 U.S.C. § 552(b)(7)(A). To satisfy its burden and withhold records
under exemption 7(a), the agency must establish “that (1) the documents were
investigatory records compiled for law enforcement purposes and (2) production of
the documents would interfere with pending enforcement proceedings.” Pruitt Electric
Co. v. United States Department of Labor, 587 F. Supp. 893, 895 (N.D. Tex. 1984)
(Fish, J.).
Having reviewed the parties’ arguments and appendices, the court concludes
that the IRS’s motion for summary judgment should be denied with respect to all
documents withheld under FOIA exemption 3 in conjunction with 26 U.S.C.
§ 6103(e)(7). After reviewing the IRS’s appendices and its Vaughn index, the court is
unpersuaded that the IRS has properly claimed this exemption. Although the IRS
has stated in its appendices and Vaughn index the nature and types of documents
withheld under FOIA exemption 3 in conjunction with 26 U.S.C. § 6103(e)(7), see
Appendix in Support; Appendix to Reply, the IRS has done very little to explain to
the court just exactly how disclosing any of these documents would seriously impair
- 32 -
federal tax administration. Instead, in the IRS’s appendices and its Vaughn index, the
IRS simply repeats the conclusory assertions that disclosing these pages “would
reasonably be expected to interfere with IRS enforcement proceedings, thereby
seriously impairing the ability of the government to ensure the collection of the
proper tax and penalties from [the] plaintiff.” See Appendix to Reply at 17-24,
Appendix in Support 39-40. Such conclusory allegations are not enough to withhold
documents under FOIA, however. See Sea Shepherd Conservation Society, 89 F. Supp.
3d at 101.
Despite this, however, the court concludes that summary judgment should be
granted in part with respect to the documents withheld under FOIA exemption 7(a).
First, the court concludes that the IRS has not met its summary judgment burden to
withhold in part pages 4, 407, 420, 446, 454-456, 458-459, 470-471, 474-475, 503,
506-507, 532, 535, 538, 547, 550, 567-568, 576, 580-581, 588, and 14841 under
FOIA 7(a). Though the IRS provided a Vaughn index, the descriptions of these pages
contained within said index do not show the court how the release of these records
would interfere with the IRS’s current enforcement proceedings.5 In addition, the
“basis for exemptions” section of the Vaughn index with respect to these pages
5
The Vaughn index entries for these pages describe these documents as
containing “discussions” that either relate to the drafting of The Brattle Group’s
reports or The Brattle Group’s requests for information to be used in the reports. See
Appendix to Reply, Exhibit B at 17-20. Without more explanation, the court is
unable to determine how a “discussion” would interfere with the IRS’s examination
of Highland.
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contains nothing more than conclusory assertions. As other courts have noted, FOIA
requires more than conclusory assertions. See Sea Shepherd Conservation Society, 89 F.
Supp. at 101. Consequently, the court concludes that the IRS must submit to the
court for in camera review pages 4, 407, 420, 446, 454-456, 458-459, 470-471, 474475, 503, 506-507, 532, 535, 538, 547, 550, 567-568, 576, 580-581, 588, and
14841.6
Nevertheless, the court concludes that the IRS has satisfied its summary
judgment burden to withhold in part pages 413-414, 545, 613-614, and 14752 under
FOIA exemption 7(a). In contrast to the pages discussed in the preceding paragraph,
the Vaughn index entries for pages 413-414, 545, 613-614, and 14752 are specific
and show to the court why disclosing these pages would compromise the IRS’s
enforcement proceedings against Highland. See Appendix to Reply at 17-20. More
specifically, the Vaughn index entries for pages 413-414, 545, 613-614, and 14752,
show the court that these pages contain the IRS’s analysis of certain facts to be used
in The Brattle Group’s report in conjunction with the IRS’s examination of Highland,
discussions of the IRS’s examination strategy, and discussions of facts to be used by
the IRS’s experts. Id. The court is thus satisfied that revealing the IRS’s analysis of
certain facts, as well as its examination strategy would clearly reveal the scope,
6
Because the court has concluded that the IRS must submit page 576 for
in camera review, the same ruling applies to pages 15352, 15371, 15373, 15377 and
15381, as these pages are admitted to be duplicates of page 576. See Appendix to
Reply at 22.
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direction, and strategy of the IRS’s enforcement proceedings against Highland.
Accordingly, the court concludes that pages 413-414, 545, 613-614, and 14752 may
be withheld by the IRS under FOIA exemption 7(a).
In addition, the court concludes that the IRS has met its summary judgment
burden to withhold pages 247-300 in full under FOIA exemption 7(a). As stated in
the IRS’s Vaughn index, pages 247-300 contain a “Revenue Agent’s copy of the Phase
III Report, ‘Evaluation of the Analysis and Opinions in the August 2, 2013 Culp
Presentation,’ which was provided to [the] IRS by [The] Brattle Group at completion
of third phase of work.” Appendix to Reply at 17. Moreover, these pages contain
“highlighted text indicating issues identified by [the] Revenue Agent for additional
scrutiny.” Id. Despite Highland’s arguments otherwise, the court agrees with the IRS
that disclosing these pages, as well as the issues highlighted by the IRS for extra
scrutiny in connection with Highland’s investigation, would reveal the scope,
direction, and strategy of the IRS’s investigation of Highland. Consequently, the IRS
may withhold pages 247-300 pursuant to FOIA exemption 7(a).
With respect to pages 348 and 369, however, the court finds that the IRS has
not satisfied its summary judgment burden to withhold these pages under FOIA
exemption 7(a). First, although the Vaughn index entries for pages 348 and 369
adequately describe the nature of each document, the index fails to explain to the
court why their disclosure would either interfere with federal tax administration or
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compromise the IRS’s investigation of Highland. See Appendix to Reply at 17.
Moreover, the court is unable to find a sufficient explanation for these exemptions in
either the “basis for exemption” section of the IRS’s Vaughn index, see id., or the first
declaration of Melissa Avrutine. See Appendix in Support at 39-40. Without such an
explanation, the IRS’s statements that the disclosure of these pages would
“reasonably be expected to interfere with IRS enforcement proceedings, thereby
seriously impairing the ability of the government to ensure the collection of the
proper tax and penalties from [Highland]” are simply insufficient conclusory
assertions. See Appendix to Reply at 17. Accordingly, the court concludes that the
IRS must submit pages 348 and 369 to the court for an in camera review.
The court also concludes that the IRS has satisfied its summary judgment
burden to withhold in full pages 15046-15151 and 15160-15349 under FOIA
exemption 7(a). Despite Highland’s arguments that the IRS has not satisfied its
summary judgment burden because its description of pages 15046-15151 and 1516015349 are “too vague” and conclusory, see Response at 9-11, the court is convinced
otherwise. The IRS’s Vaughn index, as well as the second declaration of Melissa
Avrutine, describe the nature and contents of these documents in sufficient detail to
show the court that disclosing these pages7 — which were compiled for use in the
7
As stated in the IRS’s Vaughn index: (1) pages 15046-15077 consist of The
Brattle Group’s Phase I memorandum, which provides a “preliminary review and
evaluation of information provided by [the] IRS to The Brattle Group related to the
(continued...)
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IRS’s examination of Highland—would interfere with said examination by revealing
to Highland the nature and strategy of the IRS’s investigation, as well as key facts
relied upon by the IRS in its examination. In short, the IRS has convinced the court
that disclosing pages 15046-15151 and 15160-15349 would compromise its
investigation of Highland and consequently the court concludes that the IRS may
withhold pages 15046-15151 and 15160-15349 pursuant to FOIA exemption 7(a).
Finally, the court concludes that the IRS has satisfied its summary judgment
burden under FOIA exemption 7(a) to withhold pages: (1) 15424 in part; (2) 154587
(...continued)
taxpayer’s examination, in order to assess the data and analytical options available; to
identify additional data that may be required; to access the likely cost of the various
possible analyses; and to identify the most important issues for the expert’s report[;]”
(2) pages 15078-15148 consist of preliminary draft copies of The Brattle Group’s
Phase II Report, entitled “Evaluation of the Economic Motivation for HCMLP’s
Purchase of the CDS Interests[;]” (3) pages 151149-15151 consist of a “Revenue
Agent’s preliminary notes from the [IRS’s] review of a draft of the Phase III report[;]
(4) pages 15160-15237 consist of a “Revenue Agent’s copy of the Phase III report,
entitled ‘Evaluation of the Economic Motivation for HCMLP’s Purchase of the CDS
Interests,” which was provided to the [IRS] by The Brattle Group[;]” (5) pages
15238-15291 consist of Revenue Agent’s copy of the Phase III Report, entitled
“Evaluation of the Analysis and Opinions in the August 2, 2013 Culp Presentation”
provided to the IRS by The Brattle Group, which “includes highlighted text
indicating issues identified . . . for additional scrutiny [;]” (6) pages 15292-15293
consist of a message pertaining to Highland, for use by The Brattle Group in drafting
reports; (7) pages 15294-15341 consist of a preliminary copy of the Phase III Report
which also includes highlighted text indicating issues for additional scrutiny; (8) page
15342 consists of a Revenue Agent’s preliminary notes discussing that agent’s review
of the Phase II Report; (9) page 15343 consists of an online news article that was
considered for inclusion in the IRS’s expert’s reports; and (10) pages 15344-15349
consist of “[r]esponses to requests for additional information pertaining to
[Highland] for use by The Brattle Group in drafting reports.” Appendix to Reply at
21-22.
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15505 in full; (3) 15507-15560 in full; (4) 15617-15621, 15623-15624, 1562615627, 15662-15665, 15667-15669, and 15844-15845 in part; (5) pages 1562915660 in full; (6) and pages 15671-15680, 15682-15691, 15693-15701, 1570315713, 15715-15725, 15727-15737, and 15739-15747 in full. The Vaughn index
provided by the IRS and the declaration of Roy Metcalf describe these documents in
sufficient detail to show the court that their disclosure would interfere with the IRS’s
investigation of Highland. See Appendix to Reply at 23-24, 31-34. As noted in both
the Vaughn index and Metcalf’s declaration, these pages contain discussions of the
analysis used in The Brattle Group’s reports, copies of said reports, and memoranda
that specifically mention information needed from Highland for the completion of
the reports. Appendix to Reply at 23-24, 31-34. The court agrees with the IRS that
if this information, including the specific factual analyses contained within these
reports and requests for additional information about Highland, were disclosed to
Highland, the nature, scope, and strategy of the IRS’s investigation into Highland
would be revealed, thereby interfering with the IRS’s examination. Accordingly, the
court concludes that the IRS has satisfied its summary judgment burden under FOIA
exemption 7(a) to withhold these pages.
To summarize, based on the descriptions and information contained within
the IRS’s Vaughn index and its various appendices, the court concludes that the IRS
has not satisfied its summary judgment burden for any document withheld pursuant
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to FOIA exemption 3 in conjunction with 26 U.S.C. § 6103(e)(7). Nevertheless, the
court concludes that the IRS satisfied its summary judgment burden to withhold all
of the documents it claimed under FOIA exemption 7(a), except for pages 4, 348,
369, 407, 420, 446, 454-456, 458-459, 470-471, 474-475, 503, 506-507, 532, 535,
538, 547, 550, 567-568, 576, 580-581, 588, 14841, 15352, 15371, 15373, 15377
and 15381. Accordingly, the IRS shall therefore file under seal, for an in camera
inspection by the court, pages 4, 348, 369, 407, 420, 446, 454-456, 458-459, 470471, 474-475, 503, 506-507, 532, 535, 538, 547, 550, 567-568, 576, 580-581, 588,
14841, 15352, 15371, 15373, 15377 and 15381.
4. Records Withheld Under Exemption 5 for Attorney-Client Privilege
The IRS also seeks to withhold records in part under FOIA exemption five, 5
U.S.C. § 552(b)(5), because the IRS contends these records are protected by the
attorney-client privilege. Memorandum in Support at 30-31; Appendix in Support,
Exhibit 2 at 9-10. In particular, the IRS contends that it is withholding pages 369
and 545 in part because they “are email messages between Ms. Wang and Ms.
Richards discussing legal advice.” Appendix in Support, Exhibit 2 at 10. Highland
does not address this particular exemption or the withheld information it purports to
cover in its response or surreply. See generally Response; Surreply.
The fifth FOIA exemption protects from disclosure “inter-agency or intraagency memorandums or letters that would not be available by law to a party other
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than an agency in litigation with the agency.” 5 U.S.C. § 552(b)(5). “To qualify, a
document must thus satisfy two conditions: its source must be a [g]overnment
agency, and it must fall within the ambit of a privilege against discovery under
judicial standards that would govern litigation against the agency that holds it.”
Department of the Interior v. Klamath Water Users Protective Association, 532 U.S. 1, 8
(2001). “The Fifth Circuit has interpreted exemption five to encompass the attorneyclient privilege, the attorney work product privilege, and the deliberative process
privilege.” Gahagan v. United States Citizenship and Immigration Services, 147 F. Supp.
3d 613, 629 (E.D. La. 2015) (citing Shermco Industries, Inc. v. Secretary of the Air Force,
613 F.2d 1314, 1318 (5th Cir. 1980)).
“In the context of a FOIA request, ‘the agency is the ‘client’ and the agency’s
lawyers are the ‘attorneys’ for purposes of attorney-client privilege.’” Id. (quoting
Judicial Watch, Inc. v. United States Department of Treasury, 796 F. Supp. 2d 13, 33
(D.D.C. 2011)). “To invoke the privilege, the agency must show that the withheld
document (1) involves confidential communications between an attorney and the
agency and (2) relates to a legal matter for which the agency has sought professional
advice.” Id. (internal brackets and citations omitted).
The court concludes that the IRS has failed to satisfy its burden on summary
judgment for the pages withheld in full and in part under the fifth FOIA exemption
for attorney-client privilege. This is because it is clear to the court that the
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declarations offered by the IRS are similar to, and therefore share the same
deficiencies as, the declarations at issue in Gahagan.
Here, the IRS relies on Valvardi’s declaration to satisfy its summary judgment
burden. Memorandum in Support at 30-31. Valvardi’s first declaration contends
that the IRS should withhold pages 369 and 545 in part because they “contain facts
or analysis relating to a legal matter for which the Service has sought professional
advice from Chief Counsel. . . . The exempt records or portions of records include
communications among Chief Counsel attorneys relating to legal advice requested by
Chief Counsel on behalf of the Service.” Appendix in Support, Exhibit 2 ¶ 30.
In Gahagan, the district court denied the United States Citizenship and
Immigration Service’s motion for summary judgment because the agency’s
declaration did “not contain enough information to permit the [c]ourt to determine
whether [the] privilege applies.” Gahagan, 147 F. Supp. 3d at 629. The declaration
provided by the agency explained the assertion of attorney-client privilege by stating
“[t]his email provides internal discussion between USCIS counsel to USCIS
personnel on litigation against the agency.” Id. Here, the Valvardi declaration
similarly explains the agency’s assertion of attorney-client privilege by stating that the
withheld documents are “intra-agency communications between [the] Service and
Chief Counsel employees” containing “facts or analysis relating to a legal matter for
which the Service has sought professional advice from Chief Counsel.” Appendix in
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Support, Exhibit 2 ¶ 30. Put simply, both the declaration at issue in Gahagan and the
declaration at issue here fail to support summary judgment because they are too
vague to allow a court to determine if the attorney-client privilege applies.
Valvardi’s second declaration includes a Vaughn index which does specify the
source and the recipient of both records withheld by the IRS. Appendix to Reply in
Support, Exhibit B at 1, 3. The Vaughn index, however, still fails to provide the court
with a description of the matters discussed in the withheld documents. The
description offered of page 369 simply reads: “Request for IRS Chief Counsel
attorney’s advice regarding the preparation of a report by The Brattle Group.” Id. at
1. Page 545’s description is equally vague, stating that the document is a
“[d]iscussion of examination strategy, including a request by a Revenue Agent for
legal advice from Counsel, and advice provided by Counsel in response, with regard
to Brattle Group requests for information to be used in drafting reports.” Id. at 3.
While giving the names of sources and recipients is unnecessary, without a more
detailed description of the matters discussed, it is impossible for the court to properly
determine if the attorney-client privilege applies. See Gahagan v. United States
Citizenship and Immigration Services, No. 15-2540, 2017 WL 3393993 at *2 (E.D. La.
Aug. 8, 2017) (concluding that the agency had finally satisfied summary judgment
burden of establishing that certain emails were properly withheld under the fifth
FOIA exemption for attorney client privilege only after the agency had submitted a
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supplemental Vaughn index that provided the specific source and recipient of the
records in question, as well as a detailed description of the matters discussed).
Accordingly, the court denies summary judgment in favor of the IRS as to the
partial withholding of pages 369 and 545 under FOIA exemption five for attorneyclient privilege. Nevertheless, because the court has already determined that the IRS
may withhold page 545 pursuant to FOIA exemption 7(a), the court only requires
that the IRS file page 369 under seal for in camera inspection.
5. Records Withheld Under Exemption 5
for Deliberative Process Privilege
In addition to withholding records under FOIA exemption 5 for attorney-client
privilege, the IRS also claims that it may withhold a number of records under FOIA
exemption 5 for the deliberative process privilege. See Memorandum in Support at
28-30; Reply at 10-12. In particular, the IRS seeks to withhold: (1) pages 247-300,
348, 15046-15077, 15078-15148, 15149-15151, 15160-15237, 15238-15291,
15292-15293, 15294-15341, 15342, 15343, 15344-15349, 15458-15505, 1550715560, 15629-15660, 15671-15680, 15682-15691, 15693-15701, 15703-15713,
15715-15725, 15727-15737, 15739-15747 in full; and (2) pages 4, 25, 28, 37, 47,
49, 55, 79, 369, 407, 413, 414, 420, 446, 454, 455, 456, 458-459, 470-471, 474475, 503, 506-507, 532, 535, 538, 545, 547, 550, 567-568, 576, 580-581, 588, 613614, 14752, 14841, 15352, 15371, 15373, 15377, 15381, 15424, 15617-15621,
15623-15624, 15626-15627, 15662-15665, 15667-15669, and 15844-15845 in
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part.8 The IRS argues that these pages may be withheld under the deliberative
process privilege since they include communications between IRS employees and
contractors for The Brattle Group that contain pre-decisional thoughts and
deliberations about The Brattle Group’s reports. See Memorandum in Support at 2930; Reply at 11.
In response, Highland contends that the IRS has not satisfied its summary
judgment burden with respect to the documents withheld under FOIA exemption 5
for the deliberative process privilege. Response at 13-14. More specifically, Highland
contends that the IRS’s descriptions of the documents withheld under the
deliberative process privilege do not “afford the [c]ourt with enough information to
verify the accuracy of the redactions” and that “neither Highland nor the [c]ourt can
determine whether certain redactions relate to facts (which are not exempt) as
opposed to analysis of the IRS or The Brattle Group.” Id. Consequently, Highland
asks that this court conduct an in camera review of the pages withheld under the
deliberative process privilege pursuant to FOIA exemption 5. Id. at 14.
Exemption 5 allows an agency to withhold “inter-agency or intra-agency
8
Since the court has previously determined that the IRS may withhold: (1)
pages 413-414, 545, 613-614, 14752, 15424, 15617-15621, 15623-15624, 1562615627, 15662-15665, 15667-15669, and 15844-15845 in part; and (2) pages 247300, 15046-15151, 15160-15349, 15458-15505, 15507-15560, 15629-15660,
15671-15680, 15682-15691, 15693-15701, 15703-15713, 15715-15725, 1572715737, and 15739-15747 in full, the court will not analyze whether the deliberative
process privilege applies to these pages.
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memorandums or letters that would not be available by law.” 5 U.S.C. § 552(b)(5).
“The purpose of the deliberative process privilege is to enhance the quality of agency
decisions by assuring individuals ‘who offer information and opinions to the
[g]overnment that their communications will be kept in confidence.’” Gahagan v.
United States Citizenship and Immigration Services, No. 15-2540, 2017 WL 3393993 at
*3 (E.D. La. Aug. 8, 2017) (quoting Shermco Industries, Inc., 613 F.2d at 1318). For
the deliberative process privilege to apply, “a document must be both ‘predecisional’
and ‘deliberative.’” Id. (citing Vaughn v. Rosen, 523 F.2d 1136, 1144 (D.C. Cir.
1975)). A document is predecisional if it was generated before the adoption of an
agency policy. Id. (citing Coastal States Gas Corp. v. Department of Energy, 617 F.2d
854, 866 (D.C. Cir. 1980)). A document is deliberative if “it reflects the give-andtake of the consultative process.” Id. (citing Judicial Watch, Inc. v. Food and Drug
Administration, 449 F.3d 141, 151 (D.C. Cir. 2006)). “In other words, the document
must be such that public disclosure ‘would expose an agency’s decisionmaking
process in such a way as to discourage candid discussion within the agency and
thereby undermine the agency’s ability to perform its functions.’” Id. (quoting
Dudman Communications Corp. v. Department of the Air Force, 815 F.2d 1565, 1568
(D.C. Cir. 1987)). The agency bears the burden of establishing the deliberative
process involved and the role played by the documents at issue in the course of that
process. Id. “Conclusory allegations that merely parrot the legal test do not suffice.”
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Id. (citing Senate of the Commonwealth of Puerto Rico on behalf of the Judiciary Committee v.
United States Department of Justice, 823 F.2d 574, 585 (D.C. Cir. 1987)).
Here, the court concludes that summary judgment should only be partially
granted in favor of the IRS with respect to the records it withholds under the
deliberative process privilege as codified in the fifth FOIA exemption. In particular,
the court concludes that the IRS has, in fact, satisfied its summary judgment burden
under FOIA exemption five to withhold page 348 in full and pages 446, 503, 506507, 547, 550, and 14841 in part. As noted in the IRS’s Vaughn index, these pages
are intra-agency communications that qualify for withholding under the deliberative
process privilege, since they consist of communications between IRS employees or
communications between IRS employees and contractors employed by The Brattle
Group. Appendix to Reply at 17-20; see also Department of the Interior v. Klamath
Water Users Protective Association, 532 U.S. 1, 10-11 (2001) (holding that
communications between agencies and non-government contractors may be afforded
protection under the deliberative process privilege); Hoover v. United States Department
of the Interior, 611 F.2d 1132, 1138 (5th Cir. 1980) (granting protection under the
deliberative process privilege to an appraisal report that was prepared by a nongovernment contractor because the appraisal “plays an integral function in the
government’s decision whether to seek purchase or condemnation of the land.”). In
addition, it is clear to the court that these pages are all pre-decisional, since they were
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generated prior to the IRS’s final decision to adjust Highland’s tax liability. See
Memorandum in Support at 16; Appendix in Support ¶ 45; see also Gahagan, 2017
WL 3393993 at *3. Moreover, the court is satisfied that these documents are
deliberative because the IRS’s Vaughn index sufficiently describes the function and
significance of the role these documents plays in the “give-and-take of the
consultative process.”9 Gahagan, 147 F.Supp. 3d at 629. In fact, the descriptions of
these documents, both in the IRS’s Vaughn index and its appendices, are like those at
issue in Competitive Enterprise Institute, where the court held that the description
“discussion among multiple staff . . . concerning a request from [another agency]” was
a sufficient description to establish that the deliberative process privilege applied.
Competitive Enterprise Institute v. Environmental Protection Agency, 232 F. Supp.3d 172,
186 (D.D.C. 2017).
9
For example, consider the Vaughn index entry for page 446. See Appendix to
Reply at 18. The description of this document shows that it consists of “[r]esponses
to requests for additional information pertaining to [Highland], for use by The
Brattle Group in drafting reports.” Id. This description reveals that page 446, if
disclosed, would not only reveal the author’s opinion on the type of information that
would be material to the IRS’s examination and final adjustment of Highland’s tax
liability, but it would also demonstrate the opinions of the employees and contractors
because the document “reflect[s] the personal opinions of the writer rather than the
policy of the agency.” See Batton, 598 F.3d at 183. Another example is the Vaughn
index entry for page 14841. See Appendix to Reply at 20. The description of the
document shows that it contains a “[d]iscussion of language to be used in draft
report,” which indicates the document functions as part of the editing process of the
report, which itself contributes to the IRS’s final decision in its examination of
Highland. Id.
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Accordingly, the court concludes that the IRS may withhold page 348 in full
and pages 446, 503, 506-507, 547, 550, and 14841 in part under the deliberative
process privilege. At the same time, however, the court concludes that the IRS has
not satisfied its summary judgment burden to withhold in part pages 4, 25, 28, 37,
47, 49, 55, 79, 369, 407, 413, 414, 420, 454, 455, 456, 458-459, 470-471, 474-475,
532, 535, 538, 567-568, 576, 580-581, 588, 15352, 15321, 15373, 15377, and
15381 under the deliberative process privilege. In short, the court finds that the
IRS’s descriptions of these pages, both in its Vaughn index and in its appendices, are
far too vague to show that these documents reflect the give-and-take of the
consultative process. While it is true that the IRS may take a categorical approach in
its Vaughn index, the IRS must still “identify the particular type of document being
withheld.” Batton, 598 F.3d at 177. Without more, the IRS’s description of these
documents does not inform the court of the type of information withheld or how
such information contributes to the IRS’s examination of Highland or the adjustment
of Highland’s tax liability. Accordingly, the court concludes that the IRS has not
satisfied its summary judgment burden with respect to these pages and thus the IRS
must submit to the court for in camera review pages 4, 25, 28, 37, 47, 49, 55, 79,
369, 407, 413, 414, 420, 454, 455, 456, 458-459, 470-471, 474-475, 532, 535, 538,
567-568, 576, 580-581, 588, 15352, 15321, 15373, 15377, and 15381.
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6. Records Withheld Under Exemption 6 and Exemption 7(c)
The IRS also argues that it may withhold pages 14931, 14943, and 15043 in
part pursuant to FOIA exemptions 6 and 7(c).10 More specifically, the IRS contends
that it may withhold these pages under FOIA exemptions 6 and 7(c) to protect the
privacy interests of contractors employed by The Brattle Group, as these pages
“contain information about private individuals, including partial Social Security
Numbers and signatures, the disclosure of which would constitute a clearly
unwarranted invasion of personal privacy.” Memorandum in Support at 17. In both
its response and surreply, however, Highland made no mention of the documents the
IRS seeks to withhold under FOIA exemptions 6 and 7(c). Nevertheless, the IRS still
bears the burden with respect to FOIA exemptions 6 and 7(c).
Furthermore, with respect to FOIA exemption 6, the court concludes that the
IRS has satisfied its summary judgment burden to withhold pages 14941 and 15043
in part. The sixth FOIA exemption protects “personnel and medical files and similar
files the disclosure of which would constitute a clearly unwarranted invasion of
personal privacy.” 5 U.S.C. § 552(b)(6). To determine whether a document may be
withheld under the sixth FOIA exemption, the court must determine whether the
records at issue constitute “files” within the meaning of 5 U.S.C. § 552(b)(6). United
10
Since the court has already concluded that the IRS may withhold in part page
14943 under the third FOIA exemption in conjunction with 26 U.S.C.
§ 6103(a), the court will not discuss the applicability of FOIA exemptions 6 or 7(c)
to this page.
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States Department of State v. Washington Post Company, 456 U.S. 595, 602 (1982).
Following this, the “court must balance the public interest in disclosure against the
interest Congress intended the [e]xemption to protect.” Batton, 598 F.3d at 180
(citing Avondale Industries, Inc. v. NLRB, 90 F.3d 955, 960 (5th Cir. 1996)). Where
there is no countervailing public interest, however, courts regularly allow the
identifying information of individuals to be withheld under FOIA exemption six. See
e.g., United States Department of State v. Ray, 502 U.S. 164, 179 (1991) (disclosing the
names of immigrants who returned to their home country would be a clearly
unwarranted invasion of privacy because the proposed public benefit was
hypothetical).
Here, it is clear that the records the IRS seeks to withhold under FOIA
exemption 6 constitute files within the meaning 5 U.S.C. § 552(b)(6) and that the
public interest in disclosure is heavily outweighed by the privacy interest protected by
the sixth FOIA exemption. The court is persuaded that the information contained
within the pages withheld under exemption 6 constitutes a “similar file” within the
meaning of 5 U.S.C. § 552(b)(6). The Supreme Court has broadly interpreted
“similar files” to include any “information which applies to a particular individual.”
United States Department of State v. Washington Post Co., 456 U.S. 595, 602 (1982).
The information contained within the pages withheld under the sixth FOIA
exemption include the social security numbers of contractors employed by The
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Brattle Group, their signatures, and the personal telephone number of one of the
contractor’s supervisors. Appendix to Reply at 20. Accordingly, there is no question
that this information “applies to a particular individual” and would thus constitute a
similar file under 5 U.S.C. § 552(b)(6).
Furthermore, it is clear to the court that the privacy interests in keeping this
information from being disclosed are more substantive than, and readily outweigh,
the public interest in releasing this information. The Fifth Circuit has previously
recognized that an individual’s informational privacy interest in his or her social
security number is substantial, as “simultaneous disclosure of an individual’s name
and confidential [social security number] exposes that individual to a heightened risk
of identity theft and other forms of fraud.” Sherman v. United States Department of
Army, 244 F.3d 357, 365-66 (5th Cir. 2001). Furthermore, other courts have found
that individuals have substantial privacy interests in their personal information, such
as their names and telephone numbers. See, e.g., Roseberry-Andrews v. Department of
Homeland Security, 299 F. Supp. 3d 9, 30 (D.D.C. 2018). Based on the substantial
weight of the privacy interest individuals have in their personal information, and
because Highland has failed to clearly articulate a compelling public interest that
warrants disclosure of said information, see generally Response; Surreply, the court
concludes that the IRS’s withholdings under FOIA exemption 6 are proper. The IRS
has satisfied its summary judgment burden with respect to the pages withheld under
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FOIA exemption 6 and the court thus need not address whether FOIA exemption
7(c) applies to these pages.
7. Records Withheld Pursuant to Exemption 7(e)
The final exemption claimed by the IRS to withhold certain records is FOIA
exemption 7(e). Although not mentioned in the IRS’s memorandum in support or its
reply, in its Vaughn index, the IRS claims that pages 15358, 15393, 15400, 15406,
15407, and 15423 should be withheld in part under FOIA exemption 7(e) because
these pages contain an “[i]nvitation to participate in a conference call, containing
[the] conference line access number.” Appendix to Reply at 22. More specifically,
the IRS contends that conference line access number may be properly withheld
because the “[c]onference line access number is a component of a communication
technique used by the [IRS] to confidentially discuss law enforcement matters [and]
[d]isclosure would allow taxpayers to eavesdrop on confidential law enforcement
discussions.” Id. Highland has made no arguments in response to the IRS as to the
documents withheld in part under FOIA exemption 7(e). See generally Response;
Surreply.
FOIA exemption 7(e) exempts from disclosure “records or information
compiled for law enforcement purposes, but only to the extent that the production of
such law enforcement records or information . . . would disclose techniques and
procedures for law enforcement investigations or prosecutions, or would disclose
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guidelines for law enforcement investigations or prosecutions if such disclosure could
reasonably be expected to risk circumvention of the law.” 5 U.S.C. § 552(b)(7)(e).
Because the text of FOIA exemption 7(e) exempts from disclosure records that “could
reasonably be expected to risk circumvention of the law,” the IRS “does not have to
prove that circumvention is a necessary result.” Mayer Brown Limited Liability
Partnership v. Internal Revenue Service, 562 F.3d 1190, 1193 (D.C. Cir. 2009). Instead,
the IRS need only show that there is a chance of a reasonably expected risk that the
law would be circumvented if the information withheld is disclosed. Id. Here, the
IRS has shown that to the court, as there is a chance of a reasonably expected risk
that taxpayers would eavesdrop on law enforcement discussions, and use what is
learned to circumvent the law, if the confidential conference line access number is
disclosed. See Appendix to Reply at 22. The court thus concludes that the IRS may
withhold in part pages 15358, 15393, 15400, 15406, 15407, and 15423.
8. Segregability
Finally, although only briefly addressed in the IRS’s memorandum in support,
the court agrees with the IRS as to the segregability of the records the IRS is properly
withholding pursuant to 5 U.S.C. § 552(b). “Section 522(b) of the FOIA states that
‘[a]ny reasonably segregable portion of a record shall be provided to any person
requesting such record after deletion of the portions which are exempt under this
subsection.’” Batton, 598 F.3d at 178 (quoting 5 U.S.C. § 552(b)). Furthermore, the
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court recognizes that “[i]t is error for a district court to simply approve the
withholding of an entire document without entering a finding on segregability, or the
lack thereof.” Schiller v. National Labor Relations Board, 964 F.2d 1205, 1210 (D.C.
Cir. 1992). Based on the detailed descriptions contained within the IRS’s Vaughn
index, the court concludes that the records the IRS withholds in full under FOIA
exemption 5 for deliberative process and exemption 7(a) are not segregable, as the
pages in question either fully fall within exemptions 5 or 7(a), or they contain
nonexempt portions that are so intertwined with exempt material as to be
nonsegregable. See Appendix to Reply at 17-24.
III. CONCLUSION
For the reasons stated above, the court GRANTS IN PART and DENIES IN
PART the IRS’s motion for summary judgment. For the records on which summary
judgment is denied (i.e., pages 4, 25, 28, 37, 47, 49, 55, 79, 348, 369, 407, 413-414,
420, 446, 454-456, 458-459, 470-471, 474-475, 503, 506-507, 532, 535, 538, 547,
550, 567-568, 576, 580-581, 588, 14841, 15352, 15371, 15373, 15377, and 15381)
the IRS shall, within fifteen days of this date, file those records under seal for in
camera inspection by the court.
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SO ORDERED.
September 30, 2019.
___________________________________
A. JOE FISH
Senior United States District Judge
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