Frank LLP v. Consumer Financial Protection Bureau, Civil Action No. 2016-0670

Background

Frank LLP submitted two FOIA requests to the CFPB seeking records underlying a consent order against debt buyer Encore Capital Group and related compliance materials.
For the first request (documents identifying ~35,600 suits), the CFPB located responsive records but withheld them; the FOIA Office cited Exemption 4, and on appeal the Bureau relied on Exemption 7(E). Frank sued.
The first-request withholdings also included attorney handwritten notes from settlement discussions, which the Bureau withheld under Exemption 5.
For the second request (materials supporting the consent order and compliance requirements), the CFPB initially invoked Exemptions 4, 7(E), and 8; an internal appeal remanded the request for a segregability analysis and the FOIA Office on remand assessed substantial processing fees that Frank has not paid or narrowed.
Frank additionally challenged two CFPB FOIA policies: (1) treating CID-produced materials as "voluntarily" submitted for Exemption 4 purposes; and (2) treating large debt collectors as "financial institutions" under Exemption 8; he sought declaratory and injunctive relief under FOIA and the APA.
The district court resolved the motions on summary judgment and dismissal: it upheld the CFPB’s withholdings for the first request, found the second request unexhausted, held Frank had standing to challenge the two policies, invalidated the CFPB’s Exemption 4 CID policy, upheld its Exemption 8 policy, and dismissed the APA claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether documents identifying the ~35,600 suits may be withheld under FOIA Exemption 7(E)	Techniques are obvious and thus not protected; disclosure is appropriate	Records were compiled for law enforcement and disclosure would risk circumvention of enforcement techniques	Withholding proper under Exemption 7(E); disclosure would create a reasonable risk of circumvention
Whether attorney handwritten settlement notes are exempt under FOIA Exemption 5 (work product)	Notes are factual or settlement-related and not protected opinion work product	Notes were prepared in anticipation of litigation/settlement and reflect attorney mental processes; thus work product	Withholding proper under Exemption 5 as attorney work product (prepared during active enforcement)
Whether Frank exhausted administrative remedies for the second FOIA request (fee/remand issue)	Bureau’s appellate remand partially favorable and included boilerplate that judicial review is available; fee waiver language in initial denial; estoppel	Remand requires further FOIA Office action (segregability) and assessment of processing fees—Frank has not paid or narrowed; boilerplate did not exhaust remedies	Frank failed to exhaust; must pay fees or narrow request and then pursue appeal before judicial review
Whether CFPB’s policy treating CID-produced information as "voluntary" for Exemption 4 is lawful	CFPB may treat CID submissions as voluntary; alternative enforcement mechanisms and practicalities justify approach	CID power is statutory, equivalent to an administrative subpoena; disclosures in response to CID are mandatory for Exemption 4 analysis	CFPB policy unlawful: disclosures made in response to statutory CIDs are "mandatory," not "voluntary," for Exemption 4 purposes
Whether CFPB’s policy treating debt collectors as "financial institutions" under Exemption 8 is lawful	Exemption 8 should not extend to debt buyers/collectors	Term "financial institution" is broad; debt collectors fall within agencies' regulatory scope and Exemption 8's purposes	CFPB policy lawful; debt buyers/collectors may be treated as "financial institutions" for Exemption 8

Key Cases Cited

Mayer Brown LLP v. IRS, 562 F.3d 1190 (D.C. Cir. 2009) (standard for Exemption 7(E) risk-of-circumvention analysis)
Center for Auto Safety v. Nat’l Hwy. Traffic Safety Admin., 244 F.3d 144 (D.C. Cir. 2001) (voluntary vs. mandatory submission test under Exemption 4)
Critical Mass Energy Project v. Nuclear Regulatory Comm’n, 975 F.2d 871 (D.C. Cir. 1992) (standards for confidential commercial information under Exemption 4)
FTC v. Grolier Inc., 462 U.S. 19 (U.S. 1983) (attorney work-product protection for documents prepared in anticipation of litigation)
Pub. Investors Arbitration Bar Ass’n v. SEC, 771 F.3d 1 (D.C. Cir. 2014) (broad scope of Exemption 8 and its application in the securities context)
Dep’t of Air Force v. Rose, 425 U.S. 352 (U.S. 1976) (FOIA disclosure as dominant objective)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (Article III standing requirements)