PAULINE DALE STONEHILL, Cо-Executor, Estate of Harry Stonehill, Plaintiff, v. U.S. DEPARTMENT OF JUSTICE CRIMINAL DIVISION, Defendant.
Civil Action No. 22-311 (JEB)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
July 21, 2023
JAMES E. BOASBERG, United States District Judge
For more than six decades, Harry Stonehill and his estate have been attempting to get to the bottom of alleged U.S. Government involvement in a 1962 raid on his businesses in the Philippines. As relevant here, on September 19, 2018, Plaintiff Pauline Stonehill — executrix of Stonehill‘s estate — filed a Freedom of Information Act request with the Criminal Division of the Department of Justice. After wаiting unsuccessfully for more than three years, she brought this suit, which seeks to compel production of documents relating to the transfer of certain files relating to the Stonehill investigation. She now moves to amend the Complaint to include documents that were the subject of prior litigation. As the Court believes amendment is not futile at this stage, it will grant the Motion.
I. Background
In 1962, local police raided several businesses across the Philippines that belonged to American citizen Harry Stonehill. See ECF No. 1 (Compl.), ¶ 10. The officers seized over a million documents. Id., ¶ 11. The Philippine government handed many of the documents over to the United States, which began civil tax proceedings against Stonehill using those documents
Our saga was just beginning. Fast-forward to August 20, 2000, whеn, upon discovering through FOIA requests to several government agencies that a witness had lied during the 1967 hearing on the motion to suppress, Stonehill filed a Rule 60(b)(6) motion to vacate the 1976 judgment. See Estate of Stonehill, 660 F.3d at 430. His motion maintained that the 1967 motion to suppress was improperly denied. Id. at 420. In litigating that Rule 60 motion, lawyers at DOJ‘s Tax Division submitted as evidence several documents held by DOJ‘s Criminal Division, which was conducting its own investigation into Stonehill. Seе Compl., ¶ 1. Those documents were pulled from what the National Archives and Records Administration (NARA) had labeled Accession Number 60-90-467, which for ease of reference the Court will call “Box 1.” Id., Exh. 3(j) (Statement from Lеslie Rowe). On February 8, 2001, Stonehill emailed the Tax Division to request all the documents in Box 1, but the Tax Division told him that such requests would have to be made through the Criminal Division. Id., Exh. 3(b) (Letter from David Hubbert). Stonehill then filed a FOIA request for Bоx 1 with the Criminal Division on February 12, 2001. Id., Exh. 3(c) (February 12, 2001, FOIA Request). He followed up with a FOIA suit on January 8, 2002. Id., ¶ 45.
After discovering more information in the intervening years, on Sеptember 19, 2018, Stonehill submitted the FOIA request at issue in this case. That request was for Stonehill documents related to those she was barred from requesting by the settlement. Without significant movement on the request from the Criminal Divisiоn for over three years, she filed the current suit on February 4, 2022. On May 22, 2023, Plaintiff filed the present Motion to Amend to ask for the documents that were barred in the 2002 stipulated dismissal.
In so moving, Plaintiff argues that the 2002 stipulated dismissal was obtained through fraud on the court. See ECF No. 20 (Corr. Reply) at 2–3. She bases this assertion on information she received in NARA‘s April 23, 2023, response to a separate FOIA request. There are two key pieces of information revealed in the NARA letter. The first is that Box 1 has reappeared and is currently stored at NARA. See Corr. Reply, Exh. L (April 23, 2023, NARA letter). In fact, it moved between the Criminal Division and NARA four times in the past thirty years. Sеe Corr. Reply, Exhs. 1(c)-(i) and 4 (NARA Records and Criminal Division Records).
II. Legal Standard
A plaintiff may amend her complaint once as a matter of course within 21 days of serving it or within 21 days of the filing of a rеsponsive pleading. See
It is clear, however, that amendment should not be permitted if it would be futile. In other words, if the amendment is facially infirm, courts need not grant leave. See In re Interbank Funding Corp. Sec. Litig., 629 F.3d 213, 218 (D.C. Cir. 2010) (“[A] district court may properly deny a motion to amend if the amended pleading would not survive a motion to dismiss.“) (citing
III. Analysis
In opposing Plaintiff‘s Motion, Defendant argues that the proposed amendment is futile, offering two explanations. First, the Government asserts that res judicata precludes the amendment because Harry Stonehill agreed to a stipulated dismissal with prejudice of his original FOIA action in April 2002. See Opp. at 2–6. Second, the Government maintains that the Amended Complaint is time barred given the six-year statute of limitations established in
A. Res Judicata
The Government initially contends that Plaintiff‘s proposed amendment would be futile because it is precluded by res judicata. See Opp. at 3. “Under the doctrine of res judicata, or claim preclusion, a subsequent lawsuit will be barred if there has been prior litigation (1) involving the same claims or cause of action, (2) between the same parties or their privies, and (3) there has been a final, valid judgment on the merits[] (4) by a court of competent jurisdiction.” Smalls v. United States, 471 F.3d 186, 192 (D.C. Cir. 2006) (formatting altered) (citing Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 323–24 (1971)).
Although Plaintiff did not directly respond to the Government‘s res judicata argument, at this stage, the Court does not find “sufficient reason” to conclude that the third factor has been satisfied here. See Firestone, 76 F.3d at 1208. This is because there is some evidence that there
There are also several equitable reasons for reaching such result. First, Plaintiff levies serious allegations against Defendant, and the Court wonders why — if the Governmеnt indeed has the documents — it has not produced them. Second, Stonehill‘s Reply contemplates full briefing on the res judicata issue once the Government files a motion to dismiss. Id. at 4. Although it can be risky to keep your powder dry like this, the Court believes that it would benefit from full briеfing on the issue.
Finally, because Interbank Funding Corp. says only that a court “may” deny leave to amend if the resulting complaint would not survive a motion to dismiss, the Court is not required to deny the Motion. See 629 F.3d at 218. In fact, a court in this district previously grappled with the balance between futility arguments and motions to dismiss. In Farouki v. Petra Int‘l Banking Corp., No. 08-2137, 2013 WL 12309520, at *3 (D.D.C. June 12, 2013), Judge Royce Lamberth wrote that “[c]ourts should be careful not to use the futility of amendment standard as a shortcut for a properly filed and fully briefed motion to dismiss.” Id. at *3 (internal quotation marks omitted).
In line with the reasoning in Farouki, the equitable considerations discussed above, and the presumption toward freely granting leave to amend, the Court reserves judgment on the res judicata arguments and will not preclude Plaintiff from аmending on that ground.
B. Statute of Limitations
The Government next argues — albeit briefly — that Plaintiff‘s Motion is time barred. See Opp. at 6. Title
Plaintiff maintains that the alleged fraud should toll the statute of limitations, arguing that “the Supreme Court has clearly rejected any notion that diligence or timeliness [is] relevant” when “extraordinary circumstances” such as fraud are present. See Corr. Reply at 13 (citing Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 247 (1944)). In this Circuit, “[e]quitable tolling permits a рlaintiff to avoid the bar of the limitations period if despite all due diligence she is unable to obtain vital information bearing on the existence of her claim.” Smith-Haynie v. District of Columbia, 155 F.3d 575, 579 (D.C. Cir. 1998). This power, though, should “be exercised only in еxtraordinary and carefully circumscribed instances.” Mondy v. Sec‘y of the Army, 845 F.2d 1051, 1057 (D.C. Cir. 1988). Fraud is one such instance. See Quick v. EduCap, Inc., 318 F. Supp. 3d 121, 143 (D.D.C. 2018) (“Fraudulent concealment is an equitable doctrine that is read into every federal statute of limitations, which equitably tolls the statute of limitations.“) (formatting altered); Amobi v. D.C. Dept. of Corr., 755 F.3d 980, 988 (D.C. Cir. 2014) (“[T]he fraudulent concealment must actually succeed in precluding the plaintiff from acquiring knowledge of the material facts” to justify tolling the statute of limitations).
Although Plaintiff did not develop this line of argument in her Reply, the Court finds enough support in the caselaw to reserve judgment on whether
C. Rule 60(b)
Plaintiff warns that she plans to file in this case a
IV. Conclusion
For these reasons, the Court will grant Plaintiff‘s Motion to Amend. A separate Order so stating will issue this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: July 21, 2023