Microsoft Corporation v. Internal Revenue Service

Filing 81

ORDER granting Defendant's 63 Motion for Summary Judgment. Plaintiffs remaining claims are DISMISSED. This case is CLOSED. Signed by Judge Ricardo S. Martinez. (SB)

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Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 1 of 27   1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 6 7 8 9 Case No. C15-369 RSM MICROSOFT CORPORATION, Case No. C15-850 RSM 10 Plaintiff, 11 v. 12 INTERNAL REVENUE SERVICE, 13 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT Defendant. 14 15 16 I. INTRODUCTION This Freedom of Information Act (“FOIA”) matter comes before the Court on 17 18 Defendant Internal Revenue Service (“IRS”)’s Motion for Summary Judgment. Dkt. #63. 19 Plaintiff Microsoft Corporation has filed an opposition. Dkt. #68. The Motion was fully 20 briefed on September 6, 2022. Neither party has requested oral argument. For the following 21 reasons, the Court GRANTS Defendant’s Motion and dismisses this case. 22 23 24 II. BACKGROUND Microsoft filed this case in 2015. Dkt. #1. The six FOIA requests at issue here were 25 made in 2014 and 2015. They concern an IRS audit that began in 2007 for the tax years of 26 2004 through 2006. The Court has already expressed its critical remarks regarding the length 27 of time this litigation has lingered in a related case and won’t repeat them here. 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 1 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 2 of 27   The IRS’s audit of Microsoft at issue here is “one of the largest in the Service’s 1 2 history.” Dkt. #63 at 2. Perhaps because of that, the IRS created special regulations to hire 3 attorneys from outside law firms (Boies Schiller and Quinn Emanuel, or “QE”) as contractors. 4 Id. 5 6 7 Microsoft’s six FOIA requests in this case were for records relating to these outside contractors. Dkt. #1 (Complaint) Exs. A, C, F & H; Case No. 2:15-cv-850-RSM Dkt. #1 8 (Complaint) Exs. A & D. The requests sought records relating to the IRS’s contracts with 9 Boies Schiller (requests one and six) and Quinn Emanuel (request five); the temporary and 10 11 12 proposed regulations on involving contractors in certain aspects of summons enforcement (requests two and three); and the designated summons issued to Microsoft (request four). 13 A. Search for the First FOIA Request 14 The first FOIA request was originally assigned to Information Specialist Corrina Smith. 15 Dkt. #63-7 (“Valvardi 2d Decl.”), ¶ 5. Later, Chief Counsel attorney Daniel Lavassar from the 16 office of the Large Business and International Division Counsel (“LB&I”), along with other 17 18 LB&I attorneys assisting in Plaintiff’s audit, began to search for records responsive to this 19 request. Id. at ¶ 7 and ¶ 16. Mr. Lavassar contacted IRS Procedure and Administration 20 (“P&A”) Branch 8 to search for electronically stored records. Id. at ¶ 28. 21 22 23 24 25 26 27 He also advised Ms. Smith to send the request to Cheryl Richardson, a contracting officer in the Procurement office which had worked on the Boies contract. Valvardi 2d Decl. at ¶ 7. Ms. Richardson stated that no work was performed under the contract with Boies, that the contract was cancelled, and that she did not have any responsive documents. In early March 2015, the first request was reassigned to Senior Disclosure Specialist Jean Pelzl. Id. at ¶ 11. Ms. Pelzl discussed the first request with Plaintiff’s counsel, who 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 2 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 3 of 27   1 provided several names of other IRS and Counsel employees who might have responsive 2 records, all of whom she asked to search for records. Id. at ¶¶ 11–12. Two weeks after 3 Plaintiff filed suit in March 2015, Ms. Pelzl forwarded the documents collected to the Office of 4 Chief Counsel. Id. 5 6 7 B. Search for the Second FOIA Request The IRS Disclosure office sent the second FOIA request to LB&I attorneys assisting in 8 Plaintiff’s audit, who began to search for records and contacted P&A Branch 8 to search for 9 electronically stored records. Id. at ¶ 16. The Disclosure office also contacted P&A Senior 10 11 12 Counsel A.M. Gulas was the lead attorney tasked with drafting the temporary regulations at issue in the request. Id. at ¶ 17. In early March 2015, Ms. Gulas provided Ms. Smith with a 13 copy of the official agency file created and maintained by Ms. Gulas during the drafting of the 14 Temporary Regulations, which she determined were all records responsive to this second 15 request. Id. at ¶¶ 15, 20–21. 16 C. Search for the Third FOIA Request 17 18 This request, seeking in part communications between the IRS and outside experts, was 19 also assigned to Ms. Smith, who determined that the records were maintained by various IRS 20 and Chief Counsel offices. Id. at ¶ 23. The Disclosure office and LB&I attorneys searched for 21 records and contacted P&A Branch 8 to search for electronically stored records. Id. at ¶ 24 and 22 23 24 25 26 27 ¶ 28. Ms. Smith coordinated with LB&I attorney Mr. Lavassar, and Eli Hoory, then Senior International Advisor in LB&I’s Washington, DC office. Id. at ¶ 27. They did not find any records responsive to the first category of records. Id. at ¶¶ 28–29. The Disclosure office also contacted Ms. Gulas, the lead attorney tasked with drafting the temporary regulations. Id. at ¶¶ 17, 25–26. The official agency file for the Temporary 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 3 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 4 of 27   1 2 Regulations was provided to Ms. Smith, and she determined that the file was responsive to the second and third categories of records sought by Plaintiff’s third FOIA request. Id. 3 After this litigation commenced, Chief Counsel attorney James Hartford, then Special 4 Counsel in P&A, instructed the attorney assigned to help defend the FOIA litigation, Scott 5 6 7 Hovey, to email specific custodians to say they needed to search for and provide copies of any paper documents for review. Dkt. #63-1 (“Hartford Decl.”), ¶ 22. Mr. Hovey instructed the 8 custodians to let him know if they did not have any paper files and that their electronically 9 stored information (“ESI”) would be collected through the Service’s electronic discovery 10 11 12 request (“EDR”) process. Id. D. Search for the Fourth FOIA Request 13 This request was assigned to Senior Disclosure Specialist Jean Pelzl. Valvardi 2d Decl. 14 at ¶¶ 31–32. Ms. Pelzl forwarded a copy of the request to LB&I attorney Shawn Barrett and 15 emailed Revenue Agent (“RA”) Douglas Odell, the international examiner in LB&I who issued 16 several of the summons in Plaintiff’s audit. Mr. Odell suggested that IRS employee Woo Jung 17 18 Choi and Chief Counsel attorneys Roy Wulf and Cathy Goodson might also know the 19 whereabouts of responsive records. P&A Branch 8 searched for electronic records. After 20 contacting Mr. Hoory to discuss whether employees outside LB&I might have responsive 21 records, LB&I attorney Lavassar determined that all responsive records would be found within 22 23 24 25 26 LB&I. Id. at ¶ 35. In February 2015, Mr. Odell informed Ms. Pelzl that the search for potentially responsive records was being coordinated by Chief Counsel attorney Cathy Goodson. Id. at ¶ 37. E. Search for the Fifth and Sixth FOIA Request 27 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 4 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 5 of 27   1 These requests were assigned to Senior Disclosure Specialist Jean Pelzl. Id. at ¶ 40. 2 She emailed all the custodians listed in the requests, except for two employees, Michael 3 Danilack and Robert Ratchford, who had both retired. Id. at ¶ 42. The emails included copies 4 of the fifth and sixth request and asked the recipients to begin searching for responsive hard 5 6 7 copy and electronic records. Id. In April 2015, Senior Level Special Trial Attorney Cathy Goodson, who was then an 8 Associate Area Counsel in Chief Counsel LB&I, emailed the employees named in, or otherwise 9 likely to have records responsive to, these FOIA requests. Id. at ¶ 43. Ms. Goodson asked if 10 11 12 they maintained any potentially responsive hard copy records. She also said they should provide information about where and how their potentially responsive ESI was maintained 13 because this information would be needed for IRS IT to collect their ESI through the EDR 14 process. 15 responsive electronic records was unnecessary, as all of their ESI would be collected by IRS IT 16 Id. Ms. Goodson also advised the custodians that a self-search for potentially and moved to a database where it could be searched using specific parameters. Id. at ¶ 44. 17 18 19 20 21 22 23 24 Some custodians found potentially responsive hard-copy documents, which were scanned and added to the database containing ESI collect by IRS IT to be reviewed. Id. ¶ 47. Some responsive documents were found in the Chief Counsel’s Concordance document review and processing system. Id. at ¶ 50. After the filing of this suit, Mr. Hartford asked John Gordon, a partner at Quinn Emanuel, requesting that he provide all of the material that the agency had provided to QE 25 under and in connection with the contract. Hartford Decl. at ¶ 51. Mr. Hartford also emailed 26 Carroll O’Connor, a QE paralegal working on the contract, directing her to send him the CDs 27 and thumb drives that the Service had provided to her firm so that the Service could copy that 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 5 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 6 of 27   1 data to be searched in connection with this litigation. Id. at ¶ 52. In October 2015, Mr. Harford 2 received the CDs and thumb drives and the data was copied by P&A in November 2015. Id. ¶¶ 3 54–55. 4 5 6 7 8 9 10 11 12 F. Search for ESI Responsive to all Six Requests The IRS details in its Motion the general process by which IRS IT and others conducted its search and review of ESI. Dkt. #63 at 9–12. This does not appear to be at issue in this Motion. The laptop computers of custodians who had left the IRS before the collection of their information had to be located for the ESI from their hard drives to be copied. Valvardi 2d Decl. at ¶ 64. However, IRS IT discovered that the ESI on the laptop computers of some separated 13 custodians had been erased before the EDR, under IRS equipment retention practice at the time, 14 so that the computer could be re-used by another employee without disclosing sensitive 15 information stored on the laptop by the prior user. Id. The hard drives of laptop computers that 16 could be located, and whose ESI still had not been erased, were copied just like the other ESI 17 18 storage locations. Id. at ¶ 65. For the separated custodians whose laptops had been erased, ESI 19 from their laptop hard drives was copied from preserved ESI collected under previous EDRs. 20 Id. at ¶ 66. ESI of those separated custodians was also copied from the Microsoft Exchange 21 enterprise email server and from each custodian’s assigned network file storage location. Id. 22 23 24 For every custodian, including those who had separated from the Service or Chief Counsel, ESI was collected from their Microsoft Exchange email accounts and from the 25 network data file servers used by each custodian. Id. at ¶ 67. Some amount of email ESI, 26 ranging from 65 megabytes to 31.7 gigabytes, was collected for every custodian, including 27 those whose laptop hard drives had been erased. Id. ¶¶ 67–68. 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 6 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 7 of 27   1 The IRS states that it decided not to search “disaster recovery backup magnetic media” 2 for records responsive to FOIA requests due to the cost involved and the low chance of finding 3 new information. Dkt. #63 at 11. 4 5 6 7 8 9 10 11 12 The IRS details cost-savings approaches to applying different search terms to different custodians it believed were most likely to have relevant documents to the three distinct subject matters in these FOIAs—the regulations and communications about them; the designated summons; and the contracting with Boies and Quinn Emanuel. Id. at 11–12. G. Sam Maruca’s Hard Drive The IRS spends a couple pages detailing the unusual circumstances of recovering the hard drive for Samuel Maruca, former director of the Service’s Transfer Pricing Office, who 13 left the IRS on August 1, 2014. Id. at 12–13. His hard drive should have been erased when he 14 retired. The IRS so informed the Court. Later, the IRS found his hard drive. The IRS also 15 searched the magnetic backup tapes, which was apparently an “extremely time-consuming, 16 burdensome, and labor-intensive process.” Id. at 13. 17 18 H. This Action 19 Ultimately, the IRS released more than 337,000 pages in full. It withheld about 7,200 20 pages in part and 38,200 pages in full. Dkt. #63-5 (“Valvardi Decl.”), ¶ 5. Over the last seven 21 years, the parties have apparently engaged in good faith back and forth efforts to review and 22 23 24 release these documents, as evidenced by countless joint status reports and unopposed motions to extend deadlines. See Docket. The IRS now moves for summary judgment dismissal. III. 25 26 DISCUSSION A. Legal Standard 27 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 7 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 8 of 27   1 In FOIA cases, the usual summary judgment standards apply and “if there are genuine 2 issues of material fact in a FOIA case, the district court should proceed to a bench trial or 3 adversary hearing” and issue findings of fact and conclusions of law. Animal Legal Def. Fund, 4 836 F.3d at 990 (citing Fed. R. Civ. P. 52(a)(1)); see also Cameranesi v. United States DOD, 5 6 7 856 F.3d 626, 636 (9th Cir. 2017) (“We have now overruled this FOIA-specific summary judgment standard, and instead apply our usual summary judgment standard.”). 8 Accordingly, summary judgment is appropriate where “the movant shows that there is 9 no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of 10 11 12 law.” Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Material facts are those which might affect the outcome of the suit under governing law. 13 Anderson, 477 U.S. at 248. In ruling on summary judgment, a court does not weigh evidence 14 to determine the truth of the matter, but “only determine[s] whether there is a genuine issue for 15 trial.” Crane v. Conoco, Inc., 41 F.3d 547, 549 (9th Cir. 1994) (citing Federal Deposit Ins. 16 Corp. v. O’Melveny & Meyers, 969 F.2d 744, 747 (9th Cir. 1992)). 17 18 On a motion for summary judgment, the court views the evidence and draws inferences 19 in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255; Sullivan v. 20 U.S. Dep't of the Navy, 365 F.3d 827, 832 (9th Cir. 2004). The Court must draw all reasonable 21 inferences in favor of the non-moving party. See O’Melveny & Meyers, 969 F.2d at 747, rev’d 22 23 24 25 26 27 on other grounds, 512 U.S. 79 (1994). However, the nonmoving party must make a “sufficient showing on an essential element of her case with respect to which she has the burden of proof” to survive summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). FOIA establishes “a judicially enforceable right to secure [government] information from possibly unwilling official hands.” Dep’t of Air Force v. Rose, 425 U.S. 352, 361, 96 S. 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 8 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 9 of 27   1 Ct. 1592, 48 L. Ed. 2d 11 (1976) (citing S. Rep. No. 813, 89th Cong. (1st Sess. 1965)); see also 2 Lahr v. NTSB, 569 F.3d 964, 973 (9th Cir. 2009). The aim of these disclosure requirements is 3 to “ensure an informed citizenry, vital to the functioning of democratic society, needed to check 4 against corruption and to hold the governors accountable to the governed.” NLRB v. Robbins 5 6 7 8 9 10 11 12 Tire & Rubber Co., 437 U.S. 214, 242, 98 S. Ct. 2311, 57 L. Ed. 2d 159 (1978); see also Hamdan v. United States DOJ, 797 F.3d 759, 770 (9th Cir. 2015); Shannahan v. I.R.S., 672 F.3d 1142, 1148 (9th Cir. 2012). Federal agencies have a duty to construe FOIA requests liberally. Yagman v. Pompeo, 868 F.3d 1075, 1080 (9th Cir. 2017). Upon receipt of a FOIA request, a federal agency “shall make the records promptly available,” 5 U.S.C. § 552(a)(3)(A), and “shall make reasonable 13 efforts to search for the records” responsive to a request. Id. § 552(a)(3)(C)–(D). The agency 14 must establish that it conducted a search “reasonably calculated to uncover all relevant 15 documents.” Silbaugh v. Pizzella, No. C18- 1182-JCC, 2019 WL 4392502, at *3 (W.D. Wash. 16 Sept. 13, 2019) (citing Zemansky v. E.P.A., 767 F.2d 569, 571 (9th Cir. 1985)). Agencies must 17 18 respond to FOIA requests within twenty business days of receipt, id. § 552(a)(6)(A)(i), and 19 disclose responsive documents unless one or more of FOIA’s exemptions apply. 20 exemptions are “narrowly construed.” Shannahan, 672 F.3d at 1149. An agency bears the 21 burden of establishing that an exemption applies. Lahr, 569 F.3d at 973. “Any reasonably 22 23 24 25 26 27 These segregable portion of a record shall be provided” to the FOIA requester. 5 U.S.C. § 552(b). B. Analysis 1. Adequacy of the Search FOIA requires the responding agency to demonstrate that it has conducted a search reasonably calculated to uncover all relevant documents. This showing may be made by 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 9 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 10 of 27   1 “reasonably detailed, nonconclusory affidavits submitted in good faith.” Lahr, 569 F.3d at 986 2 (9th Cir. 2009) (quoting Zemansky, 767 F.2d at 571 (9th Cir. 1985)). Affidavits submitted by 3 an agency to demonstrate the adequacy of its response are presumed to be in good faith. Grand 4 Saucer Watch, Inc. v. CIA, 692 F.2d 770, 771, 224 U.S. App. D.C. 1 (D.C.C. 1981). However, 5 6 7 FOIA places the burden “expressly . . . ‘on the agency to sustain its action.’” U.S. Dep’t of Justice v. Reporters Comm. For Freedom of Press, 489 U.S. 749, 755 (1989). In evaluating the 8 adequacy of the search, the issue “is not whether there might exist any other documents 9 possibly responsive to the request, but rather whether the search for those documents was 10 11 12 adequate.” Lahr, 569 F.3d at 987. “[T]he failure to produce or identify a few isolated documents cannot by itself prove the searches inadequate.” Id. at 988. 13 Lahr makes clear that a search is not inadequate for failure to turn up a single 14 document, see id. at 987 (citing Iturralde v. Comptroller of Currency, 315 F.3d 311, 315, 354 15 U.S. App. D.C. 230 (D.C. Cir. 2003)). However, “it may be the case that ‘if a review of the 16 record raises substantial doubt, particularly in view of well-defined requests and positive 17 18 19 indications of overlooked materials, summary judgment is inappropriate.” Hamdan v. United States DOJ, 797 F.3d 759, 771, 2015 (quoting Iturralde, 315 F.3d at 314). 20 The IRS maintains that its search efforts were reasonable and adequate under law. Dkt. 21 #63 at 14–18. The IRS argues that the reasonableness of the search “is judged by the process, 22 23 24 and not the fruits of the search,” citing Zaldivar v. United States Dep’t of Veterans Affairs, No. CV1401493PHXDGCDMF, 2016 WL 4429657, at *3 (D. Ariz. Aug. 22, 2016), aff’d, 695 F. 25 App’x 319 (9th Cir. 2017). Id. at 14. Anticipating Microsoft’s arguments, the IRS cites 26 SafeCard Servs., Inc. v S.E.C., 926 F.2d 1197, 1200 (D.C. Cir. 1991) for the proposition that a 27 requester cannot challenge the adequacy of a search by “purely speculative claims about the 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 10 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 11 of 27   1 existence and discoverability of other documents.” Id. at 14–15. The IRS relies on its attached 2 declarations and contends that “once the agency submits declarations in support of its search, 3 the burden shifts to the requester to introduce evidence of bad faith to rebut the presumption.” 4 Id. at 15 (citing SafeCard, 926 F.2d at 1200). 5 6 7 The IRS points out that it searched for only its own “agency records,” i.e. searching only for “records in the agency’s possession at the time of the requests or materials originating 8 from the agency.” Id. at 17. Put another way, the IRS is asserting that it was not required to 9 search for records outside its possession that were originated by the contractors at Boies 10 11 12 Schiller or Quinn Emanuel. Microsoft argues that “Defendant, QE, and Boies, however, contractually expanded the 13 scope of Defendant’s agency records, defining Defendant’s property as including all records 14 provided by Defendant to QE and Boies, and all records QE and Boies created or assembled as 15 part of their respective engagements.” Dkt. #68 at 6 (citing Rosen Decl., Ex. 10 (QE Contract 16 at 10-11), Ex. 9 (Boies Contract at 9)). Microsoft contends that the IRS “constructively” 17 18 19 obtained and controlled certain unproduced records created by QE and Boies. Id. at 8 (citing Burka v. United States HHS. 87 F.3d 508, 515 (D.C. Cir. 1996)). 20 The remainder of Microsoft’s Response on this issue leans heavily on vague, 21 conclusory accusations of an inadequate search without supporting detail. Microsoft states that 22 23 24 the IRS “applied inconsistent search conventions” and implemented “disparate search standards for similarly situated custodians without reasonable explanation.” Dkt. #68 at 6. Microsoft 25 points to any and all irregularities in this search process, including the issues with Sam 26 Maruca’s hard drive and that the IRS failed to review any ESI from Gary Gray, an Office of 27 Chief Counsel executive. Id. at 14–16. 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 11 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 12 of 27   1 On Reply, the IRS points out that “this Court has never adopted the Burka test” and it 2 argues that it “should decline to do so here because Burka conflicts with the possession 3 prerequisite for an agency record set forth in the Supreme Court (Tax Analysts, Forsham) and 4 Ninth Circuit (Rojas) precedent cited above.” Dkt. #78 at 4. The IRS adequately explains that 5 6 7 Gary Gray’s records were searched and argues that its efforts related to Sam Maruca’s hard drives were “reasonably calculated to uncover all responsive records.” Id. at 7–8. 8 The Court has thoroughly reviewed the steps taken by the IRS to conduct the FOIA 9 searches at issue here. The Court agrees with the IRS that they were reasonable and adequate 10 11 12 under the circumstances of this case and the above controlling law. Microsoft has failed to introduce evidence of bad faith or to otherwise demonstrate that the IRS’s actions were 13 unreasonable. The search efforts, as described above, meet the standard of being “reasonably 14 calculated to uncover all relevant records” and were made in good faith. The Court has no 15 reason to conclude otherwise. 16 Any irregularities are adequately explained, and might be expected given the size and scope of the requests. 17 18 The IRS was not required to search records outside its possession or those originating 19 from Boies Schiller or Quinn Emanuel under controlling case law. Those records are not 20 “agency records” for purposes of the FOIA. An agency’s contractual “right of access” to 21 materials held by a private party is not dispositive as to whether such materials are “agency 22 23 24 records.” See Forsham v. Harris, 445 U.S. 169, 171, 177-78 (1980). The FOIA excludes “government contractor” from the definition of “agency.” See 5 U.S.C. § 552(f)(1); see also 25 Forsham v. Harris, 445 U.S. at 179 (“Congress excluded private grantees from FOIA 26 disclosure obligations by excluding them from the definition of ‘agency.’”). For contractor- 27 created materials to be transformed into “agency records,” they must have been received by the 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 12 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 13 of 27   1 agency. Id. at 183-86; Rojas v. Fed. Aviation Admin., 989 F.3d 666, 677 (9th Cir. 2021) (en 2 banc) (“Documents that are not in an agency’s possession do not constitute ‘agency records’ 3 even if the agency could have obtained them by asking a third party to produce them”), cert. 4 denied, 142 S. Ct. 753, 211 (2022); see also Am. Small Bus. League v. U.S. Small Bus. Admin, 5 6 7 623 F.3d 1052, 1053 (9th Cir. 2010). The Court declines to apply the test from Burka, supra to find that the IRS constructively controlled these records. This is not a basis to deny summary judgment. 8 9 2. Adequacy of the Vaughn Index 10 Anticipating this issue, the instant Motion argues, in a footnote: 11 “The adequacy of a Vaughn Index is not defined by its form, but rather its substance.” People for the Am. Way Found. v. Nat'l Park Serv., 503 F. Supp. 2d 284, 294–95 (D.D.C. 2007) (citation omitted). A Vaughn Index is not expected to be “a work of literature,” and “agencies are not graded on the richness or evocativeness of their vocabularies,” Landmark Legal Found. v. IRS, 267 F.3d 1132, 1138 (D.C. Cir. 2001), nor on the length of their document descriptions, Judicial Watch, Inc. v. FDA, 449 F.3d 141, 146 (D.C. Cir. 2006). The relevant inquiry in analyzing the adequacy of a Vaughn Index is “whether the index provide[s] a relatively detailed justification, specifically identif [ies] the reasons why a particular exemption is relevant and correlat[es] those claims with the particular part of a withheld document to which they apply.” People for the Am. Way Found., 503 F. Supp. 2d at 295 (internal quotation marks and quotation omitted). 12 13 14 15 16 17 18 19 20 21 Dkt. #63 at 19 n.2. 22 Microsoft argues that the Vaughn index is inadequate, “repeatedly reciting as the bases 23 24 for exemptions claimed the same generalized, substance-free entries, failing to include requisite 25 data for each document withheld, and improperly identifying document families.” Dkt. #68 at 26 16. 27 The specific data that is withheld for some documents includes the “date, author, recipient(s) and subject.” Id. at 17. Microsoft criticizes the IRS for relying on the documents 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 13 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 14 of 27   1 themselves to provide justification for redacted data, which it calls a “two-source convention.” 2 Id. at 18. Microsoft states that the IRS has separated attachments from emails and thus 3 destroyed “document family data.” Id. 4 5 6 7 The IRS replies that “categorization and repetition provide efficient vehicles by which a court can review withholdings that implicate the same exemption for similar reasons,” “[e]specially where the agency has disclosed and withheld a large number of documents,” 8 citing Jud. Watch, Inc. v. FDA, 449 F.3d 141, 147 (D.C. Cir. 2006) (“No rule of law precludes 9 [an agency] from treating common documents commonly.”). Dkt. #78 at 10. The IRS also 10 11 12 cites to Landmark Legal Found. v. IRS, 267 F.3d 1132, 1138 (D.C. Cir. 2001) for the proposition that “[i]t is not the agency's fault that thousands of documents belonged in the same 13 category, thus leading to exhaustive repetition.” Id. The IRS asserts that when not otherwise 14 apparent on the face of a document, the Vaughn index includes date, author, recipient, and 15 subject, and argues that Microsoft fails to identify a specific list of offending entries. Id. at 11. 16 The IRS calls the alleged destruction of document family data “cursory and context-free.” Id. 17 18 The IRS asserts that it is entitled to treat emails and attachments as separate records, and 19 explains its process for when it concluded that an attachment was not responsive to the FOIA 20 requests. Id. at 11–12. 21 22 23 24 Considering the Vaughn index and the declarations filed in this case together, the Court finds that the information provided in that index was not inadequate for the general reasons argued by Microsoft. The use of repetitive entries does not reflect a lack of substantive 25 information but rather the large number of documents at issue and, perhaps, the repetitive 26 nature of work at the IRS. While the IRS’s Vaughn index might be monotonous, or even less- 27 than-helpful from the perspective of Microsoft, courts have found that repetitive entries are 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 14 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 15 of 27   1 efficient for the Court and certainly the producing agency. Microsoft’s “cursory and context- 2 free” criticism of the Vaughn index is adequately rebuffed by the IRS’s explanation of its 3 procedure, perhaps more complicated than it needed to be, for reporting date, author, recipient, 4 and subject information and document family data. Cutting out nonresponsive records appears 5 6 7 to be an appropriate use of agency discretion. Microsoft’s frustrations with the Vaughn index do not preclude summary judgment dismissal of this case. 3. Exemptions 8 9 10 11 12 13 The IRS has withheld or redacted documents based on FOIA exemptions 552(b)(2), (b)(3), (b)(4), (b)(5), (b)(6), (b)(7)(A), (b)(7)(C), and (b)(7)(E) (Exemptions 2, 3, 4, 5, 6, 7A, 7C, and 7E). Microsoft does not challenge the IRS’s use of exemptions 7(C) and 7(E). Dkt. #68 at 29 n.25. The remaining exemptions are addressed individually below. i. 14 15 16 Exemption 2 Exemption 2 protects from disclosure matters “related solely to the internal personnel rules and practices of an agency.” 5 U.S.C. § 552(b)(2). Exemption 2 thus “applies to internal 17 18 rules and practices exclusively connected with ‘the selection, placement, and training of 19 employees,’ including ‘hiring and firing.’” Rojas v. Fed. Aviation Admin., 941 F.3d 392, 402 20 (9th Cir. 2019 (citing Milner v. Dep’t of Navy, 562 U.S. 562, 569–70 (2011)). 21 22 23 24 25 26 27 The IRS points to the declaration of Christopher Valvardi to support the use of this exemption for withholding “information relates solely to agency personnel matters, such as the placement of employees for certain assignments.” Dkt. #63 at 19–20 (citing Valvardi Decl. ¶ 11). Microsoft disagrees with the use of this exemption for four documents, but cites in briefing to no examples, stating only “certain withheld documents address decisions regarding 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 15 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 16 of 27   1 Plaintiff’s audit and the assignment of Defendant’s personnel to the examination.” Dkt. #68 at 2 31. Microsoft compares these to a document where the exemption 2 claim was rejected in 3 Schwaner v. Dep’t of the Air Force, 898 F.2d 793 (D.C. Cir. 1990), a “roster including the 4 names and military duty addresses of Air Force personnel.” Id. 5 6 7 Microsoft provides no evidence or argument to support the assertion that these documents relate to decisions regarding Plaintiff’s audit. They are not comparable to a roster 8 including names and addresses. These documents appear to be exclusively “connected with” 9 the placement of employees and with personnel practices. The IRS has met its burden of 10 11 12 establishing that this exemption applies. ii. Exemption 3 13 FOIA exemption 3 permits an agency to withhold information that is specifically 14 exempted from disclosure by statute. 5 U.S.C. § 552(b)(3). At issue in this Motion are 15 documents withheld under Sections 6103 of Title 26. 16 Section 6103(a) provides that tax “returns” and “return information” are to be kept 17 18 confidential, unless disclosure is permitted by Title 26. Church of Scientology of California v. 19 IRS, 484 U.S. 9 (1987). “Return information” is defined and construed broadly, and includes 20 practically any data “received by, recorded by, prepared by, furnished to, or collected by the 21 Secretary with respect to a return or with respect to the determination of the existence of, or 22 23 24 possible existence of liability (or the amount thereof) of any person[.]” 26 U.S.C. § 6103(b)(2)(A). Third parties may not obtain such “return information” of another person 25 without that person’s written authorization. See 26 U.S.C. § 6103(c), 26 C.F.R. § 26 601.702(c)(4)(i)(E) & (c)(5)(iii). 27 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 16 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 17 of 27   1 Section 6103(e)(7) provides that “[r]eturn information with respect to any taxpayer may 2 be open to inspection or by disclosure . . . if the Secretary [of the Treasury] determines that 3 such disclosure would not seriously impair Federal tax administration.” 4 5 6 7 The IRS claims exemption 3 protection for 2,512 records. The records withheld under § 6103(a) contain “the tax information of third parties, including: names, taxpayer identification numbers, or other identifying information; the fact of whether a particular taxpayer’s return is 8 being examined; and descriptions of examination or collection activity.” Dkt. #63 at 21 (citing 9 Valvardi Decl. ¶ 15). The records withheld under § 6103(e)(7) contain “communications and 10 11 12 activities involved in the Service’s examination of Plaintiff, or, communications and activities related to its examinations or other enforcement activities pertaining to other taxpayers.” Id. at 13 22 (citing Dkt. #63-9 (“Choi Decl.”), ¶¶ 10-13; Dkt. #63-3 (“Hartford 2d Decl.”), ¶¶ 7-11). 14 The Second Declaration or James Hartford states that releasing these records to Microsoft now 15 could provide it “with much earlier and greater access to information about the Service’s 16 examination than plaintiff would otherwise be entitled to receive in administrative or litigation 17 18 19 proceedings, whereas the Government is not entitled to a corresponding degree of discovery in these proceedings’ current posture.” Hartford 2d Decl. at ¶ 11. 20 Microsoft criticizes the Vaughn index for only providing general descriptions of these 21 documents but fails to talk about any specifics. Microsoft say the IRS’s declarations “simply 22 23 24 25 26 27 parrot the 26 U.S.C. § 6103(e)(7) standard” without proving that the disclosure of the information would prematurely aid Microsoft’s legal strategy in subsequent administrative or litigation proceedings. Dkt. #68 at 28. Given the limited argument above, the Court will not deny summary judgment based on this exemption or order the production of any documents. The IRS’s cited declarations provide 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 17 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 18 of 27   1 adequate detail justifying the IRS’s withholdings under § 6103(e)(7) and the IRS’s Vaughn 2 index details the tax return information records withheld under these exemptions. Given the 3 length and nature of these proceedings, it is clear to the Court without further argument from 4 the IRS that Microsoft would very likely benefit from the withheld information in future 5 6 7 8 9 10 11 12 administrative or litigation proceedings. The IRS has met its burden of establishing that this exemption applies. iii. Exemption 4 Exemption 4 protects “trade secrets and commercial or financial information obtained from a person” that is “privileged or confidential.” 5 U.S.C. § 552(b)(4). The redacted information here includes information provided by various contractors before, during, or after 13 the contract such as contractors’ proposed, prospective, or actual billing schedules, as well as 14 information on invoice documents reflecting amounts billed, hours worked, and bank account 15 numbers. Valvardi Decl. at ¶¶ 18–19. 16 Microsoft takes issue with 34 documents withheld under this exemption. The Court 17 18 finds that the withheld information is “commercial or financial information” under the ordinary 19 meaning of that phrase. See Pub. Citizen Health Res. Group v. FDA, 704 F.2d 1280, 1290 20 (D.C. Cir. 1983) (“Records that actually reveal basic commercial operations, . . . or relate to the 21 income-producing aspects of a business,” fall within the scope of “commercial” information). 22 23 24 This is the type of information that would typically be confidential. See Rocky Mountain Wild, Inc. v. United States Forest Serv., No. 18-CV-03065-MEH, 2021 WL 825985, at *19 (D. Colo. 25 Mar. 4, 2021) (regarding “corporate bank account numbers, estimated insurance premiums, and 26 information provided in connection with billing statements from Plaintiff's counsel”); Calderon 27 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 18 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 19 of 27   1 2 v. U.S. Dep’t of Agriculture, 236 F. Supp. 3d 96, 119 (D.D.C. 2017). The IRS has met its burden. 3 4 5 6 7 iv. Exemption 5 FOIA exemption 5 protects from disclosure “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.” 5 U.S.C. § 552(b)(5). As the language suggests, exemption 5 8 incorporates those privileges which the government enjoys in pretrial discovery under relevant 9 statutes and case law. See United States v. Weber Aircraft Corp., 465 U.S. 792, 799 (1984). 10 11 12 13 14 15 16 This exemption incorporates the governmental deliberative process privilege, the attorneyclient privilege and the work-product doctrine. See Tax Analysts v. IRS, 294 F.3d 71, 76 (D.C. Cir. 2002). The Vaughn index cites exemption 5 as the basis for withholding approximately 6,242 documents or parts thereof. Deliberative process privilege 17 18 Defendant bears the burden of establishing the deliberative process involved and the 19 role played by the documents at issue in that process. See Senate of Puerto Rico v. DOJ, 823 20 F.2d 574, 585 (D.C. Cir. 1987). Documents qualify as predecisional and deliberative only if 21 they “reflect[] advisory opinions, recommendations, and deliberations comprising part of a 22 23 24 process by which governmental decisions and policies are formulated.” Tax’n With Representation Fund v. IRS, 646 F.2d 666, 677 (D.C. Cir. 1981). Microsoft cites to Safeway, 25 Inc. v. IRS, No. C 05-3182 SBA, 2006 U.S. Dist. LEXIS 81078, at *26 (N.D. Cal. Oct. 24, 26 2006) as a case on point. In Safeway, the court found that “the IRS’[s] decisionmaking about 27 the extent of [p]laintiff’s tax liability is not the sort of deliberative process meant to be 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 19 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 20 of 27   1 addressed by the privilege.” 2006 U.S. Dist. LEXIS 81078, at *26. The court found that 2 characterizing documents as “predecisional simply because they play into an ongoing audit 3 process would be a serious warping of the meaning of the word.” Id., at *26 (quoting Coastal 4 States Gas Corp. v. Dept. of Energy, 617 F.2d 854, 868 (D.C. Cir. 1980)). 5 6 7 The IRS distinguishes Safeway by arguing that court “assumed that the documents at issue lacked the subjective, personal thoughts of IRS employees in the absence of a sufficient 8 description of the documents’ contents, which is not the situation here.” Dkt. #78 at 14 n.16. 9 The IRS counters by citing to some cases of its own where the deliberative process privilege 10 11 12 was upheld for workpapers and other audit documents. Id. (citing Highland Cap. Mgmt., LP v. Internal Revenue Serv., 408 F. Supp. 3d 789, 815 (N.D. Tex. 2019) (finding documents to be 13 clearly “pre-decisional, since they were generated prior to the IRS’s final decision to adjust 14 Plaintiff’s tax liability”) and Moye, O'Brien, O'Rourke, Hogan, & Pickert v. Nat'l R.R. 15 Passenger Corp., 376 F.3d 1270, 1280 (11th Cir. 2004)). 16 Further, the IRS points to the Valvardi declaration as containing “much of the 17 18 19 information that Plaintiff complains is lacking, including the function and role of the documents, many of which are drafts…” Id. at 15 (citing Valvardi Decl. at ¶¶28–43). 20 The Court’s decision here does not seem to be bound to controlling law. Each party 21 cites to district court cases coming to different conclusions. The Court finds that, given the 22 23 24 scope and unusual nature of this case, the documents at issue are not related to a run-of-the-mill assessment of a company’s tax liability, but closer to a process by which governmental 25 decisions and policies are formulated. The explanation for the use of this privilege is sufficient 26 and seems better than what was available to the court in Safeway. Microsoft’s other criticisms 27 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 20 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 21 of 27   1 2 about vagueness in Vaughn index entries have been dealt with above. The IRS has met its burden. 3 Attorney client privilege 4 The attorney-client privilege, as incorporated into exemption 5, protects from disclosure 5 6 7 8 9 10 11 12 “confidential communications between an attorney and his client relating to a legal matter for which the client has sought professional advice.” Mead Data Central, Inc. v. Dep’t of the Air Force, 566 F.2d 242, 252 (D.C. Cir. 1977). Based on the information in the Valvardi declaration and the Vaughn index, the IRS argues that the documents withheld under this privilege were communications “(1) among government attorneys reflecting the facts provided by the Service in order to obtain advice, or 13 reflect the advice being developed by government attorneys to benefit the agency; (2) among 14 Chief Counsel attorneys relating to legal advice requested on behalf of the Service; and (3) 15 among Service employees and examiners and Chief Counsel for legal advice on Plaintiff’s 16 examination. Dkt. #63 at 27–36 (citing Valvardi Decl. at ¶¶ 21–26). 17 18 The IRS claims attorney-client privilege for 4,821 records or parts thereof. Microsoft’s 19 first states that “in many cases” this privilege is invoked for documents “with purely factual 20 information…. including audit workpapers.” Dkt. #68 at 20–21. Again, Microsoft does not 21 provide any specifics or further detail. Microsoft then argues that this privilege cannot apply to 22 23 24 documents created by QE and Boies contractors because the record shows that these attorneys “provided audit support, not legal counsel.” Id. at 21 (citing several sources in the record). 25 Finally, Microsoft maintains that “[t]he attorney-client privilege also does not apply to 26 communications regarding the proposed and temporary regulations.” Id. (citing Coastal States 27 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 21 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 22 of 27   1 2 Gas Corp. v. Dep’t of Energy, 617 F.2d 854, 862-63 (D.C. Cir. 1980)). Microsoft points to no specific documents. 3 On Reply, the IRS states: 4 Contrary to Plaintiff’s unfounded contentions based on its warped reading of the agency’s representations in the prior summons enforcement action, the IRS’s evidence, testimony, and briefing has been consistent: QE was to provide the services of an expert in commercial litigation and assist the IRS in “preparing, organizing and presenting the factual record and legal analysis of the case.” (Dkt. No. 15-cv-00102-PSM [sic] doc. 36-4 (Contract) at 7, 10 (emphasis added).) Eli Hoory further testified that QE was hired to provide the “kind of legal consultation and advice . . . that a complex commercial litigator would have.” (Rosen Decl. Ex. 7 (Tr.) at 52–53); see also Dkt. No. 15-cv-00102-PSM [sic] doc. 92 at pdf [sic] 15–16 (“The goal was to obtain an independent evaluation of the Microsoft audit and also to obtain assistance with development of facts and legal theories”). Indeed, government counsel even raised an objection, consistent with the above, based on attorney client privilege regarding IRS discussions with QE, and that objection was sustained. (Tr. at 119–20.) Despite Plaintiff’s cherry picking, the IRS thus properly asserts attorney client privilege with respect to records exchanged with QE. See United States v. Chen, 99 F.3d 1495 (9th Cir. 1996) (rebuttable presumption that a lawyer is hired to give legal advice) cert. denied, 520 U.S. 1167 (1998). 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Dkt. #78 at 13–14 (emphasis in original). 19 While facts alone are not protected by this privilege, communications between an 20 21 attorney and a client are, even if those communications contain facts, if the purpose of the 22 communication is to enable the attorney to provide legal advice. The documents Microsoft 23 objects to for being just facts are apparently workpapers provided to IRS Chief Counsel 24 attorneys as part of a request for advice on a particular issue, while others are workpapers 25 26 containing handwritten notes or analysis that were sent to an attorney to solicit or inform legal 27 advice. Microsoft’s problem with attorney client documents related to the temporary 28 regulations fail to point to specific documents or deal with the evidence submitted by the IRS in ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 22 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 23 of 27   1 2 declarations related to the use of attorneys to craft those regulations. Microsoft’s first and third points are insufficiently argued and will not serve as a basis for denying summary judgment. 3 Microsoft’s second argument certainly gives the Court pause. At times the IRS has 4 portrayed its use of QE and Boies contractors differently. However, the Court is convinced that 5 6 7 a careful, close reading of the record demonstrates that these attorney contractors were hired in part for legal analysis and that a rebuttable presumption applies here. This was not a routine 8 examination where contractors could be assumed to be doing routine auditing work rather than 9 providing legal advice. Microsoft has not successfully rebutted that presumption. 10 11 12 Work product privilege Work product protection under exemption 5 protects materials prepared by an attorney 13 or others in anticipation of litigation. The IRS initially claimed work product privilege for 635 14 documents. Microsoft points out that, although this audit process has been lengthy, it was not 15 clear when these documents were created that there would be litigation, and that the IRS has 16 said as much previously. Dkt. #68 at 22–24. In its Reply brief, the IRS concedes that point and 17 18 withdraws its work-product claims for any materials pertaining solely to Microsoft’s audit. 19 Dkt. #78 at 16. 20 supplemental declaration (Dkt. #78-1) to support the continued withholding of documents that 21 relate to: “(1) tax cases involving taxpayers other than Plaintiff which were anticipated or 22 23 24 The IRS has amended its Vaughn index (Dkt. #78-2) and submitted a currently being litigated; or (2) the enforcement/anticipated litigation of a summons enforcement matter involving Plaintiff.” Id. The record demonstrates that these remaining 25 documents were prepared by attorneys or by an IRS employee at the supervision of an attorney. 26 The Court is satisfied that this issue has been resolved and does not serve as a basis for 27 precluding summary judgment. 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 23 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 24 of 27   1 v. Exemption 6 2 Personnel, medical, and similar files where the disclosure of such information would 3 constitute a “clearly unwarranted invasion of personal privacy” are exempt from disclosure. 5 4 U.S.C. § 552(b)(6). In determining whether exemption 6 applies, the court considers two 5 6 7 factors: (1) whether the information is in a personnel, medical, or “similar” agency file; and (2) whether a countervailing public interest in the record outweighs in the individual’s privacy 8 interest. Multi Ag Media LLC v. U.S.D.A., 515 F.3d 1224, 1228 (D.C. Cir. 2008). The Supreme 9 Court has broadly interpreted “similar files” as any information that “applies to a particular 10 11 12 person.” U.S. Dep’t of State v. Washington Post Co., 456 U.S. 595, 602 (1982). Courts have found that individuals have a sufficient interest in the privacy of their names, addresses, 13 finances, and so on, to justify withholding under exemption 6. See Multi Ag Media, 515 F.3d at 14 1230. Meanwhile, the public’s interest is limited to the statutory purpose of FOIA — to “shed 15 light on an agency’s performance of its statutory duties.” See DOJ v. Reporters Comm. for 16 Freedom of the Press, 489 U.S. 749, 773 (1989). 17 18 The IRS claims exemption 6 protection for 252 documents at issue. The parties agree 19 that the information withheld under this exemption includes personal phone numbers, personal 20 email addresses, home addresses, credit card information, and details of personal matters 21 pertaining to agency employees such as travel plans. Microsoft argues, without further analysis 22 23 24 25 26 and in a single sentence, that “employee vacation time, phone numbers, mealtime plans, last name, address, and leave plans,” are not intimate personal details. Dkt. #68 at 32. The Court disagrees and finds that exemption 6 was properly applied by the IRS. vi. Exemption 7A 27 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 24 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 25 of 27   1 FOIA exemption 7 exempts from disclosure “records or information compiled for law 2 enforcement purposes.” 5 U.S.C. § 552(b)(7). The threshold determination under exemption 7 3 is whether the documents at issue were (a) compiled by a law enforcement agency; and (b) 4 compiled for a law enforcement purpose(s). Abramson v. FBI, 456 U.S. 615, 622 (1982). The 5 6 7 IRS is a law enforcement agency for purposes of exemption 7. Church of Scientology v. IRS, 995 F.2d 916, 919 (9th Cir. 1993); Keys v. DOJ, 830 F.2d 337, 340 (D.C. Cir. 1987). Courts 8 have consistently held that records compiled for civil or criminal investigations by the IRS are 9 “records or information compiled for law enforcement purposes.” Tax Analysts, 294 F.3d at 77. 10 11 12 FOIA exemption 7(A) applies to information whose disclosure “could reasonably be expected to interfere with enforcement proceedings.” 5 U.S.C. § 552(b)(7)(A). It is properly 13 invoked when release of a document would hinder an agency’s ability to control or shape an 14 investigation. Swan v. SEC, 96 F.3d 498, 500 (D.C. Cir. 1996). 15 16 The IRS claims exemption 7(A) protection for 2,365 records. Given the nature of the audit against Microsoft and the obvious intent of Microsoft to inquire about that audit via these 17 18 19 20 21 22 23 24 25 26 27 FOIA requests, it would appear that some use of this exemption is to be expected. The IRS cites several cases to support this exemption under these circumstances: Under exemption 7(A), the Service must show that records could reasonably be expected to interfere with enforcement proceedings by showing that (1) law enforcement proceeding is pending or prospective, and (2) release of information about it could reasonably be expected to cause articulable harm. See, e.g., NLRB v. Robins Tire & Rubber Co., 437 U.S. 214, 224 (1978) (holding that government must show how records “would interfere with a pending enforcement proceeding”); Sussman v. U.S. Marshals Serv., 494 F.3d 1106, 1113–14 (D.C. Cir. 2007) (discussing dual elements necessary to invoke exemption 7(A): reasonably anticipated law enforcement proceeding and harm if information released). 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 25 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 26 of 27   1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 A court may make generic determinations that disclosure of certain types of investigatory records would generally interfere with certain kinds of enforcement proceedings. Robbins Tire & Rubber, 437 U.S. at 223–24; see also Spannaus v. DOJ, 813 F.2d 1285, 1288 (4th Cir. 1987). Records may be withheld categorically or individually from disclosure under FOIA exemption 7(A). DOJ v. Reporters’ Comm. for Freedom of the Press, 489 U.S. 749 (1989) (where the Court found that records could be categorically withheld under FOIA exemption 7(C), it relied in part on cases in which records were categorically withheld under 7(A)). In determining whether disclosure of a category of records would “interfere” with enforcement proceedings, Courts have also interpreted “interference” broadly. For example, in Robbins Tire, the Supreme Court found that permitting a plaintiff earlier and greater access to documents or other information collected by the agency than it would normally be entitled, constitutes the type of interference exemption 7(A) was enacted to prevent. Robbins Tire & Rubber, 437 U.S. at 236. Other courts have found that interference with enforcement proceedings occurs by revealing the identities of potential witnesses, the nature, scope, direction, and limits of the investigation, the transactions being investigated, information on third-party contacts, the evidence obtained to date, the reliance the agency places on the evidence, and the Government’s strategies and theories. Curran v. DOJ, 813 F.2d 473, 474 (1st Cir. 1987); Barney v. IRS, 618 F.2d 1268, 1273 (8th Cir. 1980). In upholding this exemption, the cases add that FOIA was not intended to be used as a discovery tool. See United States v. Murdock, 548 F.2d 599, 602 (5th Cir. 1977). 19 Dkt. #63 at 30–31. This case law supports the IRS’s use of boilerplate language applying this 20 exemption to categories of documents. Microsoft fails to argue, in a nonconclusory way, how 21 the so-called boilerplate language fails to satisfy the above standards. 22 23 24 The Court gives credence to the IRS that the material withheld here includes “information on the agency’s focus or interest in specific facts, transactions, individuals, evidence, or claims which would 25 prematurely disclose the nature, scope, direction, and strategy of the audit” and that this would 26 naturally harm the IRS’s enforcement activities. See id. at 31 (citing Valvardi Decl. at ¶ 56). 27 The use of this exemption does not preclude summary judgment. 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 26 Case 2:15-cv-00369-RSM Document 81 Filed 01/18/23 Page 27 of 27   1 C. Microsoft’s Surreply 2 Microsoft has filed a Surreply arguing that the IRS improperly added new arguments 3 and facts on Reply, and that newly attached declarations are made by a declarant without 4 personal knowledge. Dkt. #80. The Court finds that any new arguments or facts are responsive 5 6 7 to Microsoft’s brief and that Microsoft has no legitimate claim of prejudice. The Court declines to strike anything in the declarations for lack of personal knowledge given the nature 8 of the declarant’s work on this complex case and the Court’s own ability to parse the weight of 9 any evidence in resolving this Motion. 10 11 12 IV. CONCLUSION Having reviewed the relevant briefing and the remainder of the record, the Court hereby 13 finds and ORDERS that the IRS’s Motion for Summary Judgment. Dkt. #63, is GRANTED. 14 Plaintiff’s remaining claims are DISMISSED. This case is CLOSED. 15 DATED this 18th day of January, 2023. 16 17 18 19 A RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 ORDER GRANTING MOTION FOR SUMMARY JUDGMENT - 27

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