David M. DORSEN, Plaintiff, v. UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Defendant.
Civil Action No. 13-00288 (BAH)
United States District Court, District of Columbia.
February 14, 2014
101 F. Supp. 3d 112
IV. CONCLUSION
For the reasons set forth above, EPA‘s motion for summary judgment [Dkt. 31] will be granted, and judgment will be entered in favor of EPA. A memorializing Order accompanies this Opinion.
Kevin Dean Solonsky, Securities & Exchange Commission, Washington, DC, for Defendant.
MEMORANDUM OPINION
BERYL A. HOWELL, United States District Judge
Pending before the Court is the plaintiff David M. Dorsen‘s motion for attorneys’ fees and costs, pursuant to the Freedom of Information Act (“FOIA“),
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Protracted SEC Litigation
For over a decade, Michael Lauer and the SEC have been parties to litigation that began in 2003, when the SEC authorized a formal investigation and the filing of a civil complaint against Lauer and two companies operating as hedge fund asset managers, alleging that Lauer overstated the value of the funds and manipulated the value of the funds’ securities in order to increase his fees. See Pl.‘s Mot. at 4-12; Def.‘s Opp‘n Mot. Att‘ys Fees (Def.‘s Opp‘n) at 2, ECF No. 8; see also SEC v. Lauer, No. 9:03-cv-80612, 2008 WL 4372896, at *2-13 (S.D.Fla. Sept. 24, 2008), aff‘d, 478 Fed.Appx. 550 (11th Cir.2012), cert. denied, ___ U.S. ___, 133 S.Ct. 545, 184 L.Ed.2d 341 (2012). During the course of the SEC civil action, Lauer‘s assets were frozen, and as a result Lauer defended himself pro se throughout the civil litigation. Pl.‘s Mot. at 5. On Sep
The Eleventh Circuit affirmed the district court‘s decision in all respects on April 19, 2012, and the Supreme Court denied his petition for certiorari on October 29, 2012. Id. at 11. Shortly thereafter, in early 2013, the plaintiff filed two motions on Lauer‘s behalf to vacate the judgment and dismiss the complaint on grounds, inter alia, that the SEC had not properly authorized the filing of the suit against Lauer. Id.; Def.‘s Opp‘n at 3-4.2 Both motions were denied.3
B. FOIA Lawsuit
Following the Eleventh Circuit‘s denial of Lauer‘s appeal and while his petition for writ of certiorari was pending, the plaintiff filed a FOIA request on his client‘s behalf with the SEC on August 27, 2012, seeking disclosure of any agency records:
(1) submitted by the SEC staff to the Commissioners in the matter; and (2) that indicate that by vote the Securities and Exchange Commission authorized a formal investigation of Michael Lauer and the filing of a civil complaint against him. In particular, we seek the dates and nature of the actions taken or authorized by the Commission as reflected in the available documents.
Def.‘s Opp‘n Ex. A (Letter, dated August 27, 2012). On November 5, 2012, the defendant advised the plaintiff that documents responsive to his request were being withheld under FOIA Exemption 5,
The plaintiff appealed this decision by letter to the defendant on November 13, 2012. Def.‘s Opp‘n Ex. C (Pl.‘s Appeal Letter); see also Def.‘s Opp‘n at 4-5. In his appeal, the plaintiff amended the scope of the request by “narrow[ing] and limit[ing]” the request to “any and all documents that describe or reflect the collective vote of the Commissioners of the Securities and Exchange Commission that authorized both a formal investigation of Michael Lauer and the commencement of a civil action against Michael Lauer,” including “just the date and the vote.” See Def.‘s Opp‘n Ex. C, at 1. The plaintiff explained that “[a]s narrowed, the appeal does not seek to learn the votes by the individual Commissioners” or “memoranda, letters, or instructions that may have accompanied the Commissioners’ votes.” Id.
II. LEGAL STANDARD
The FOIA authorizes the award of attorneys’ fees reasonably incurred by a plaintiff who is in litigation to obtain “the production of any agency records improperly withheld,”
To satisfy the first requirement regarding eligibility for attorneys’ fees, a claimant must show that he “substantially prevailed” in the underlying FOIA litigation. See
If the plaintiff has “substantially prevailed and thus may receive fees...
III. DISCUSSION
At the outset, the Court makes clear that any evaluation of the eligibility and entitlement prerequisites for attorneys’ fees in this case must be focused on the circumstances of Michael Lauer. Although Lauer‘s attorney made the underlying FOIA request, is named as the plaintiff in the complaint, and filed the pending motion for attorneys’ fees, these actions were taken on behalf of Lauer. See Compl. ¶ 3 (“Plaintiff David M. Dorsen is an attorney at law who is the attorney for Michael Lauer [and] ... is pursuing this action on behalf of Mr. Lauer“); Pl.‘s Mot. at 1 (noting that “[p]etitioner filed a FOIA request ... on behalf of Michael Lauer“).5 Indeed, if this motion were successful, any attorneys’ fees would be awarded to Lauer, not to the plaintiff. See Astrue v. Ratliff, 560 U.S. 586, 130 S.Ct. 2521, 2526, 177 L.Ed.2d 91 (2010) (attorneys’ fees are awarded to the prevailing party on whose behalf the litigation was initiated). Thus, the Court will first examine whether Lauer is eligible for attorneys’ fees as a “prevailing party” before turning to an analysis of the factors relevant to consideration of his entitlement to attorneys’ fees. For the reasons set out below, even if Lauer were eligible for attorneys’ fees, he is not entitled to this award and, consequently, the motion brought on his behalf by the plaintiff is denied.
A. LAUER IS ELIGIBLE FOR ATTORNEYS’ FEES
The plaintiff addresses the eligibility requirement in an abbreviated manner, relying entirely on the timing sequence of his FOIA request and subsequent litigation. The plaintiff argues summarily that Lauer‘s eligibility for attorneys’ fees “is clear” because the defendant initially withheld responsive documents and only produced them shortly after the plaintiff filed suit. See Pl.‘s Mot. at 2. He is nonethe
In assessing whether a claimant is a “prevailing party” under the FOIA statute, “[i]t is well established in this circuit that this inquiry is largely a question of causation.” See Weisberg, 745 F.2d at 1496. The D.C. Circuit has long employed a “catalyst theory,” which evaluates whether a plaintiff has substantially prevailed based on whether he or she “substantially caused the government to release the requested documents before the final judgment.” Brayton, 641 F.3d at 524-25.6 Thus, a plaintiff substantially prevails when he or she can demonstrate that “the institution and prosecution of the litigation cause[d] the agency to release the documents obtained during the pendency of the litigation.” Church of Scientology, 653 F.2d at 587; see also Davis v. U.S. Dep‘t of Justice, 610 F.3d 750, 752 (D.C.Cir.2010) (under the catalyst theory “plaintiffs [are] eligible for a fee award if the lawsuit substantially caused the agency to release the requested records“); Burka, 142 F.3d at 1288 (to be eligible the plaintiff must show that the “litigation substantially caused the requested records to be released“); Brayton, 641 F.3d at 524-25 (finding that defendant substantially prevailed under FOIA where lawsuit was catalyst for government releasing the requested documents). The plaintiff “must show that the prosecution of the action could reasonably be regarded as necessary to obtain the information.” See Weisberg, 745 F.2d at 1496 (quoting Cox v. U.S. Dep‘t of Justice, 601 F.2d 1, 6 (D.C.Cir.1979)).
Causation requires more than correlation and, consequently, the D.C. Circuit has made clear that, in the FOIA attorneys’ fees context, “the mere filing of the complaint and the subsequent release of the documents is insufficient to establish causation.” Id. Even if not dispositive, the timing of a release of responsive records after the filing of a FOIA lawsuit “is certainly a salient factor in the analysis.” Elec. Privacy Info. Ctr., 811 F.Supp.2d at 232 (quoting Judicial Watch, Inc. v. U.S. Dep‘t of Homeland Sec., 2009 WL 1743757, at *3 (D.D.C.2009)) (quotation marks omitted). Something “more than post hoc, ergo propter hoc must be shown.” Public Law Educ. Inst. v. U.S. Dep‘t of Justice, 744 F.2d 181, 183 (D.C.Cir.1984). For example, an agency‘s delay in response until after a lawsuit is filed may be due to
In the instant case, the defendant withheld all documents responsive to the plaintiff‘s request based solely on the agency‘s assertion that the documents were exempt from disclosure. Approximately three months after the plaintiff filed an administrative appeal, eight days after this lawsuit was filed, and “one day after it received the Complaint,” Def.‘s Opp‘n at 8, the defendant made the first of two releases of responsive documents to plaintiff as an “exercise [of] discretion” and without “a waiver of any applicable exemption.” Pl.‘s Mot. Ex. B. Notwithstanding the close proximity in timing between the filing of the lawsuit and the release of responsive records, the defendant argues that a causal nexus between the suit and the release of the documents is missing since there is “no evidence that, in light of [the plaintiffs] narrowed and clarified request on appeal, the SEC would have denied his appeal.” See Def.‘s Opp‘n at 8. The defendant makes no effort to argue that any administrative processing delays caused the delay in production of responsive records; indeed, the number of responsive documents totaling five pages is clearly not a voluminous amount. See Pl.‘s Reply at 3; cf. Elec. Privacy Info., 811 F.Supp.2d at 232 (finding eligibility where production of “hundreds of pages” of documents seven months after initial FOIA request could reasonably be attributed to plaintiff filing suit one month prior to disclosure). Instead, the defendant‘s argument boils down to the assertion that if the plaintiff had patiently waited until resolution of the administrative appeal, he might have prevailed administratively on the narrowed scope of his request and, thus, the filing of the lawsuit did not “affect[] anything more than the timing of the release.” Def.‘s Opp‘n at 8. In other words, even if the lawsuit expedited the release of the requested information, the defendant contends this falls short of showing that the lawsuit caused the defendant to release the documents.7
The defendant overlooks the significant flaw in this argument, namely, that it is predicated on the notion that the administrative appeal would have resulted in the release of responsive records. Given the SEC‘s assertion of proper withholding under Exemption 5 both in its original response to the plaintiff‘s FOIA request, by letter, dated November 5, 2012, and in its subsequent letter, dated March 13, 2013, making a “discretionary release,” the prediction that the plaintiff would have been successful on appeal appears purely speculative. See Def.‘s Opp‘n Ex. B; Pl‘s Mot. Ex. B; see also Judicial Watch, Inc., 878 F.Supp.2d at 232 (“[I]t was reasonable for [the plaintiff] to believe that the records would not be unconditionally released absent a lawsuit, given the [agency‘s] initial invocation of Exemptions“). Moreover, this prediction about the plaintiff‘s potential success on administrative appeal implicitly suggests that the released records were not properly subject to withholding under Exemption 5. The defendant cannot simultaneously argue that the documents would have been released in response to the plaintiff‘s appeal, and assert that the records were exempt from disclosure and, thus, were reasonably withheld. See Def.‘s Opp‘n at 8, 11-12. The defendant cannot have it both ways. Thus, the Court finds that the lawsuit did, in fact, prompt a speedier release of responsive records before the resolution of the appeal, as amply confirmed by the timing of the releases shortly after the initiation of this lawsuit.
Accordingly, the Court finds that the plaintiff has demonstrated that Lauer substantially prevailed in this case and is therefore eligible for an award of attorneys’ fees.
B. LAUER IS NOT ENTITLED TO ATTORNEYS’ FEES
Even if the plaintiff demonstrates that Lauer is eligible for an award of attorneys’ fees, he must also show that Lauer is entitled to an award. See Weisberg, 745 F.2d at 1495. As noted, entitlement is determined under a balancing of four factors: “(1) the public benefit derived from the case; (2) the commercial benefit to the plaintiff; (3) the nature of the plaintiff‘s interest in the records; and (4) whether the government has a reasonable basis for withholding the requested information.” Cotton, 63 F.3d at 1117.8
In practice, the D.C. Circuit has “combined the second and third factors into a single factor assessing whether a plaintiff has sufficient private incentive to seek disclosure of the documents without expecting to be compensated for it.” See McKinley, 739 F.3d at 711 (quoting Davy v. CIA, 550 F.3d 1155, 1160 (D.C.Cir.2008)) (internal quotation marks omitted). Moreover, although the Circuit has instructed that no particular factor should be given disproportionate weight, in some circumstances the final factor may be dispositive. Specifically, the D.C. Circuit has made clear that “[ i] f the Government‘s position is correct as a matter of law, that will be dispositive. If the Government‘s position is founded on a colorable basis in law, that will be weighed along with other relevant considerations in the entitlement calculus.” Davy, 550 F.3d at 1162 (quoting Chesapeake Bay Found., Inc. v. U.S. Dep‘t of Agric., 11 F.3d 211, 216 (D.C.Cir.1993)); see also Chesapeake Bay Found., Inc., 11 F.3d at 216 (“[T]here can be no doubt that a party is not entitled to fees if the Government‘s legal basis for withholding requested records is correct.“), abrogation on other grounds recognized by Davy, 550 F.3d at 1159. Indeed, the Circuit recently confirmed the “long-established rule of never granting a fee award to a plaintiff whose FOIA claim was incorrect as a matter of law.” Brayton, 641 F.3d at 526.
In applying the multi-factor test, as required by binding precedent in this Circuit, the Court finds that the plaintiff is not entitled to attorneys’ fees because the plaintiff had a commercial and personal interest for bringing suit even without reimbursement of fees, and the defendant‘s initial withholding was reasonable.
1. Public Benefit
The public benefit entitlement factor “requires consideration of both the effect of the litigation for which fees are requested and the potential public value of the information sought.” Davy, 550 F.3d at 1159; see also McKinley, 739 F.3d at 711 (“The first factor considers the significance of the contribution that the released information makes to the fund of public knowledge.“). There is public benefit where release of the requested information “is likely to add to the fund of information that citizens may use in making vital political choices.” Cotton, 63 F.3d at 1120 (quoting Fenster v. Brown, 617 F.2d 740, 744 (D.C.Cir.1979)). Generally, released documents have an insufficient public benefit when they pertain to such highly particularized interactions with an agency that non-participants would have only a limited interest in the records as a means of learning what the agency was doing. In other words, a mere increase in general public knowledge of governmental actions is generally not enough to show a public benefit. Id.; see also Fenster, 617 F.2d at 744 (“The release of any government document benefits the public by increasing citizens’ knowledge of their government. Congress did not have this sort of broadly defined benefit in mind” under FOIA). For example, in Cotton, the D.C. Circuit found that the release of two Smithsonian museum shop documents did not provide a public benefit where the “sole purpose” for requesting the information was to “facilitat[e the plaintiffs] employment discrimination suit.” See Cotton, 63 F.3d at 1120. Similarly, in Fenster there was “little” public benefit in disclosure of a government manual to help contractors handle performance audits, since only contractors, and not the general public, would be interested in such documents. See Fenster, 617 F.2d at 744-45. By contrast, in Davy v. CIA, the court found a great public benefit to a claimant‘s request for information relating to the assassination of President John F. Kennedy. Davy, 550 F.3d at 1159.
The public knowledge gained by learning the date and result of SEC Commissioners’ votes to investigate and sue Lauer is not a matter of significant or widespread public concern, such as the assassination of a former President, and is primarily relevant to Lauer in his attempt to vacate the civil judgment against him. While in this respect the released information has limited public benefit, it is also the case that such information about the SEC‘s exercise of its enforcement powers will virtually always be limited to particular targets. Although scrutiny of this agency activity through FOIA requests by individual targets may, therefore, fall short of the general public benefit factor, some value attaches to the disclosure of the SEC‘s discrete decisions by shedding light on this enforcement activity and, in the aggregate, such information may provide significant public benefit. See Morley, 719 F.3d at 691 (Kavanaugh, J., concurring) (noting deficiencies in application of public benefit factor since “information sometimes becomes meaningful only when later pieced together with other information.“).9 In sum, the public benefit factor neither favors nor disfavors an award of attorneys’ fees to Lauer.
2. Commercial Benefit and Nature of Interest
Since the second and third entitlement factors—the commercial benefit of the request and the nature of the plaintiff‘s interest—both pertain to Lauer‘s stakes in the litigation, they are more easily evaluated together. See Tax Analysts, 965 F.2d at 1095. Where a plaintiff has a commercial benefit or a personal interest in pursuing litigation, “an award of fees is generally inappropriate” because there is already sufficient motivation for the claimant to
The defendant argues that Lauer has a commercial interest in the FOIA litigation because his ultimate goal is to “obtain relief from a $63 million judgment against him.” See Def.‘s Opp‘n at 10. The defendant further contends that Lauer has a personal interest because he is seeking the records to defend himself in his litigation against the defendant. See id. at 11. The plaintiff does not substantively contest the defendant‘s contentions, confirming that the defendant had “refus[ed] to produce in discovery” the requested documents during prior litigation, Pl.‘s Mot. at 12, and that Lauer sought these documents to “vindicate himself,” id. and “rehabilitate” his image “in the eyes of the community,” which he admits is “a personal, but not commercial, aspect of his efforts.” Pl.‘s Reply at 4. Moreover, the plaintiff concedes that his aim was to use the FOIA request to develop his arguments in support of his efforts to vacate the civil judgment against Lauer. See Pl.‘s Mot. at 11–12. The plaintiff‘s stated motives are primarily commercial and personal interests, thus this factor weighs against an award of attorneys’ fees.
3. Reasonable Basis for Withholding Information
Even if the plaintiff is otherwise eligible, attorneys’ fees may not be awarded if the government “had a reasonable basis in law” for withholding the requested documents. See Tax Analysts, 965 F.2d at 1096. This final entitlement factor evaluates “whether the agency‘s opposition to disclosure had a reasonable basis in law, and whether the agency had not been recalcitrant in its opposition to a valid claim or otherwise engaged in obdurate behavior.” McKinley, 739 F.3d at 712 (quoting Davy, 550 F.3d at 1162) (internal quotation marks omitted); see also Judicial Watch, Inc. v. U.S. Dep‘t of Justice, 878 F.Supp.2d 225, 237 (D.D.C.2012).10 As noted, “[i]f the Government‘s position is correct as a matter of law, that will be dispositive. If the Government‘s position is founded on a colorable basis in law, that will be weighed along with other relevant considerations in the entitlement calculus.” Davy, 550 F.3d at 1162 (citation omitted). In response to the criticism that “evalu-
The defendant claims that this factor does not weigh in the plaintiff‘s favor because the SEC “acted reasonably in initially withholding the records because the produced records contain, in part, attorney-client communications from Staff to the Commission.” Def.‘s Opp‘n at 11-12.11 The plaintiff counters that the defendant had no legal basis for withholding the records because, first, the documents were eventually disclosed and, second, at least part of the records were “covered by FOIA” because, as the defendant concedes, they only contained attorney-client communications “in part.” Pl.‘s Reply at 3.12
Contrary to the plaintiff‘s assertion, the fact that the SEC exercised its discretion to release requested records does not demonstrate Lauer‘s entitlement to attorneys’ fees. The D.C. Circuit fully addressed this circumstance in Brayton. There, as here, the agency initially withheld the requested document but, subsequently, after initiation of the lawsuit, agreed to declassify and release the document. See 641 F.3d at 523-24. The plaintiff sought attorneys’ fees, arguing that “fee awards should not be foreclosed despite the fact that the government was correct as a matter of law to withhold the documents he requested,” because “this effectively nullifies the statute‘s lenient ‘not insubstantial’ standard, replacing it with the stricter requirement that a plaintiff‘s claim be correct on the merits to qualify for an award.” Id. at 526. The Circuit rejected this argument, noting “the irony that awarding fees to plaintiffs in [plaintiff]‘s situation might prod government agencies to be less rather than more transparent.” Id. at 528. Instead, the rule applied in this Circuit avoids penalizing agencies that “choose to relent for the sake of transparency and release requested documents without exposing themselves to monetary penalties: the fact that their initial nondisclosure decision rested on a solid legal basis creates a safe harbor against the assessment of
In this case, the defendant has established a colorable basis in law for denying the plaintiff‘s FOIA request under the belief that Exemption 5 applied since the requested records contain “attorney-client communications from Staff to the Commission” and include details of internal meetings and deliberations. See Def.‘s Opp‘n at 11-12; Pl.‘s Mot. Exs. B, C; see also Dep‘t of Interior v. Klamath Water Users Protective Ass‘n, 532 U.S. 1, 8, 121 S.Ct. 1060, 149 L.Ed.2d 87 (2001) (noting that the “deliberative process covers ‘documents reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated.‘“) (quoting NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150, 95 S.Ct. 1504, 44 L.Ed.2d 29 (1975)) (internal quotation marks omitted); Checkosky v. SEC (In Re Checkosky), 23 F.3d 452, 489 (D.C.Cir.1994), superseded on other grounds by rule,
Thus, the fourth and final factor weighs strongly, if not dispositively, against awarding the plaintiff attorneys’ fees. Since the last three factors strongly weigh against Lauer, the plaintiff has not demonstrated that he is entitled to an attorneys’ fees award.14
For the foregoing reasons, the Court concludes that, although the plaintiff‘s client, Michael Lauer, is eligible for attorneys’ fees, he is not entitled to this award of attorneys’ fees because the plaintiff acknowledges Lauer‘s commercial and personal interests in obtaining the requested documents, and the defendant‘s initial withholding was reasonable.15 Accordingly, the plaintiff‘s motion for an attorneys’ fees award is DENIED. An appropriate Order accompanies this memorandum opinion.
UNITED STATES of America, v. George WILSON, Defendant.
Criminal No. 04-128-18(RMC)
United States District Court, District of Columbia.
February 19, 2014