Frank LLP v. Consumer Fin. Prot. Bureau
288 F. Supp. 3d 46
D.C. Cir.2017Background
- CFPB issued a consent order against Encore Capital Group for misleading affidavits and identified ~35,600 consumers; Frank LLP (requester) sought the documents the Bureau used to identify those lawsuits (First FOIA request).
- CFPB's FOIA Office located responsive documents but originally withheld them under Exemption 4; on appeal the Bureau relied on Exemption 7(E) and also withheld attorney notes under Exemption 5; Frank sued.
- Frank filed a Second FOIA request seeking supporting records and compliance-related records from the Encore matter; the FOIA Office denied the request under Exemptions 4, 7(E), and 8; an administrative appeal remanded the request for a segregability review.
- On remand the Bureau estimated >48,000 responsive documents and assessed a large processing fee; Frank has not paid the fee or narrowed the request and has not exhausted administrative remedies for the remanded request.
- Frank also sued to invalidate two CFPB FOIA policies: (1) treating documents produced in response to civil investigative demands (CIDs) as "voluntarily" submitted for Exemption 4 purposes; and (2) treating large debt buyers/collectors as "financial institutions" under Exemption 8.
- The Court resolved: (a) CFPB properly withheld documents from the First FOIA request under Exemptions 5 and 7(E); (b) Frank has not exhausted administrative remedies for the Second FOIA request; (c) Frank has standing to challenge the two policies; (d) CFPB's CID-as-"voluntary" Exemption 4 policy is inconsistent with FOIA and invalid; (e) CFPB's Exemption 8 interpretation treating debt collectors as financial institutions is lawful.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Withholding of First-request investigatory records (Exemption 7(E)) | Bureau's techniques are obvious; disclosure would not risk circumvention | Records were compiled for law enforcement and disclosure would risk circumvention of enforcement methods | Withholding under Exemption 7(E) proper; documents may reveal techniques that risk circumvention |
| Withholding of attorney handwritten notes (Exemption 5) | Notes were settlement-related and not prepared in anticipation of litigation; not protected | Notes are attorney work product prepared in anticipation of litigation; protected by Exemption 5 | Withheld properly under Exemption 5 as attorney work product |
| Second FOIA request processing (exhaustion & fees) | Administrative appeal partially favorable and contained language about judicial review; bureau waived fees or is estopped from collecting fees | Request was remanded for segregability; remand restarts administrative processing; requester must pay fees or narrow scope before judicial review | Frank has not exhausted administrative remedies; must pay fees or narrow request before seeking judicial review |
| CFPB policy treating CID responses as "voluntary" for Exemption 4 | CID-produced documents should be treated as voluntary, giving broader protection | CFPB argues protections appropriate; treats CID responses as voluntary | Court: CID responses are effectively mandatory (agency has statutory subpoena/CID power and can enforce via court). CFPB policy treating CID responses as voluntary violates FOIA; policy invalid |
| CFPB policy treating debt buyers/collectors as "financial institutions" under Exemption 8 | Debt collectors are not "financial institutions" and Exemption 8 should not shield their exam-related records | Term "financial institution" is broad; debt collectors fit within regulatory scope and other statutes include collectors | Court: CFPB's interpretation is reasonable and consistent with Exemption 8; policy upheld |
Key Cases Cited
- United Techs. Corp. v. DOD, 601 F.3d 557 (D.C. Cir.) (FOIA exemptions balance disclosure and legitimate interests)
- Critical Mass Energy Project v. Nuclear Regulatory Comm'n, 975 F.2d 871 (D.C. Cir.) (voluntary-submission standard for Exemption 4)
- Dep't of Air Force v. Rose, 425 U.S. 352 (U.S.) (FOIA's pro-disclosure objective)
- Am. Civil Liberties Union v. DOD, 628 F.3d 612 (D.C. Cir.) (agency burden to justify withholding)
- Mayer Brown LLP v. IRS, 562 F.3d 1190 (D.C. Cir.) (Exemption 7(E) standard on risk of circumvention)
- Blackwell v. FBI, 646 F.3d 37 (D.C. Cir.) (Exemption 7(E) low bar for showing risk of circumvention)
- FTC v. Grolier Inc., 462 U.S. 19 (U.S.) (attorney work product protection under FOIA)
- Ctr. for Auto Safety v. Nat'l Hwy. Traffic Safety Admin., 244 F.3d 144 (D.C. Cir.) (objective test for voluntary vs. mandatory submissions under Exemption 4)
- Pub. Investors Arbitration Bar Ass'n v. SEC, 771 F.3d 1 (D.C. Cir.) (Exemption 8 interpreted broadly)