2:15-cv-00369
W.D. Wash.Jan 18, 2023Background
- Microsoft filed six FOIA requests (2014–2015) seeking records about an extensive IRS audit of Microsoft (tax years 2004–2006), IRS contracts with outside law firms (Boies Schiller and Quinn Emanuel), temporary/proposed regulations on contractor involvement, and a designated summons.
- The IRS conducted multi-office searches (Disclosure, LB&I, Chief Counsel, Procurement, P&A Branch 8), coordinated ESI collections from Exchange and network servers, and attempted to recover separated custodians’ laptop drives and backup media.
- The IRS produced >337,000 pages in full, redacted ~7,200 pages in part, and withheld ~38,200 pages in full; it invoked multiple FOIA exemptions and submitted declarations and a Vaughn index.
- Microsoft challenged the adequacy of the searches, the sufficiency of the Vaughn index, and the application of several FOIA exemptions (arguing, inter alia, that contractor-created materials were constructively agency records and that many withheld items were nonprivileged factual workpapers).
- The IRS moved for summary judgment; the Court reviewed search procedures, privilege claims, and exemptions and granted the IRS’s motion, dismissing Microsoft’s FOIA claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequacy of search | IRS search was inconsistent and missed responsive materials; IRS constructively controlled contractor records so should have produced them | Searches were reasonably calculated, documented by declarations; IRS not required to search contractor-originated records outside agency possession | Search adequate; no showing of bad faith; IRS not required to obtain or search contractor-held materials (possession required for "agency records") |
| Vaughn index adequacy | Index is vague, repeats generalized entries, omits metadata and destroys document-family context | Repetitive entries acceptable for large productions; index plus declarations supply sufficient justification and metadata procedures | Vaughn index adequate when read with declarations; repetition not fatal given volume and explanations |
| Privilege/exemption 5 (deliberative process, attorney-client, work product) | Many withheld items are factual audit workpapers or contractor support (not legal advice) and thus not privileged | Documents are predecisional/deliberative or privileged attorney communications; contractors provided legal analysis; work-product claims narrowed to non-audit litigation materials | Court upholds Exemption 5 with respect to deliberative process and attorney-client where supported; IRS withdrew some work-product claims and remaining assertions sustained as limited |
| Other exemptions (2,3,4,6,7A) | Challenges to particular applications (e.g., §6103, personal privacy, commercial info, interference with enforcement) | Exemptions apply to personnel placement details, tax/return info, commercial billing data, personal identifiers, and materials that would interfere with enforcement | Court upheld IRS withholdings under Exemptions 2, 3 (§6103 and §6103(e)(7)), 4, 6, and 7(A) as adequately justified |
| Surreply / new-declaration objections | IRS raised new arguments and declarations on reply without personal knowledge | New material was responsive to Microsoft’s brief and not prejudicial; declarants had adequate knowledge | Court declined to strike surreply material or declarations; no prejudice shown |
Key Cases Cited
- Forsham v. Harris, 445 U.S. 169 (agency possession is required for contractor materials to be "agency records")
- Rojas v. Fed. Aviation Admin., 989 F.3d 666 (9th Cir. en banc) (documents not in agency possession are not agency records)
- Lahr v. Nat'l Transp. Safety Bd., 569 F.3d 964 (9th Cir. 2009) (affidavits may show adequacy of search; standard for search declarations)
- Zemansky v. EPA, 767 F.2d 569 (9th Cir. 1985) (search must be reasonably calculated to uncover responsive documents)
- Tax Analysts v. IRS, 294 F.3d 71 (D.C. Cir. 2002) (scope of Exemption 5 privileges in FOIA context)
- NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214 (1978) (release that would give earlier/greater access can interfere with enforcement; Exemption 7(A))
- Milner v. Dep't of Navy, 562 U.S. 562 (2011) (limits of Exemption 2)
- SafeCard Servs. v. SEC, 926 F.2d 1197 (D.C. Cir. 1991) (requester cannot rely on pure speculation to rebut adequacy)
- Burka v. U.S. Dep't of Health & Human Servs., 87 F.3d 508 (D.C. Cir. 1996) (constructive control test for contractor materials; court here declined to adopt it)
- DOJ v. Reporters Comm. for Freedom of the Press, 489 U.S. 749 (1989) (agency bears burden to sustain FOIA withholdings)