Summary
concluding that Exemption 7 applied where the agency stated "that the documents would reveal the identities of potential witnesses and defendants in the ongoing investigation, disclose what evidence the [agency] does or does not have of potential wrongdoing, specifically the topics, time periods, places, and persons in which the [agency] is interested in investigating," which "could result in potential witnesses or defendants thwarting ongoing investigations through shaping their own testimony or testimony of others, concealing facts, tampering with evidence based on what the records show, or decid[ing] not to cooperate in the investigation" (first citing Bagwell v. U.S. Dep't of Just. , 311 F. Supp. 3d 223 (D.D.C. 2018) ; and then quoting North v. Walsh , 881 F.2d 1088, 1097 (D.C. Cir. 1989) )
Summary of this case from Cui v. Fed. Bureau of InvestigationOpinion
No. 19-CV-933 (RER)
2019-12-30
ROBBINS GELLER RUDMAN & DOWD LLP, Plaintiff, v. UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Defendant.
Evan Jay Kaufman, Michael G. Capeci, Samuel H. Rudman, Robbins Geller Rudman & Dowd LLP, Melville, NY, for Plaintiff. Kathleen Anne Mahoney, United States Attorneys Office Eastern District of New York, Brooklyn, NY, Vincent Lipari, United States Attorneys Office Eastern District of New York, Central Islip, NY, for Defendant.
Evan Jay Kaufman, Michael G. Capeci, Samuel H. Rudman, Robbins Geller Rudman & Dowd LLP, Melville, NY, for Plaintiff.
Kathleen Anne Mahoney, United States Attorneys Office Eastern District of New York, Brooklyn, NY, Vincent Lipari, United States Attorneys Office Eastern District of New York, Central Islip, NY, for Defendant.
Memorandum & Order
RAMON E. REYES, JR., United States Magistrate Judge
The Securities and Exchange Commission (the "SEC" or "Defendant") moves this Court to issue an Order entering summary judgment against Robbins Geller Rudman & Dowd LLP ("Plaintiff") in this Freedom of Information Act ("FOIA") action. (See Dkt. No. 24 ("SEC Mem. of Law")). Plaintiff brought suit on February 15, 2019, seeking injunctive relief to enforce its right to obtain records in Defendant's possession pursuant to FOIA. (See Dkt. No. 1 ("Compl.") ¶ 39). Defendant opposed Plaintiff's request on the basis that the records are exempt from disclosure under 5 U.S.C. § 552(b)(7)(A) ("Exemption 7(A)"). (Id. ¶ 9). Defendant now moves this Court to grant summary judgment and dismiss this action on the basis that the SEC properly determined the requested records are exempt from FOIA disclosure and no portion of the records can be segregated. (See SEC Mem. of Law). For the reasons set forth herein, the SEC's motion is GRANTED and judgment is entered in favor of Defendant.
The Parties have consented to my jurisdiction pursuant to 28 U.S.C. § 636(c)(1). (Dkt. No. 18).
BACKGROUND
Plaintiff is a law firm that is currently representing clients in a securities law class action lawsuit (the "PLSRA litigation") against Hertz Global Holdings, Inc. ("Hertz"), which centers on allegations of accounting fraud perpetuated by former Chief Executive Officer, Mark P. Frissora, and former Chief Financial Officer, Elyse Douglas, during fiscal years 2011 to 2013. (Compl. ¶ 3; Dkt. No. 27 ("Pl. Opp. Mem.") at 10). The SEC began investigating Hertz during the pendency of the PSLRA litigation. (Pl. Opp. Mem. at 11).
In re Hertz Global Holdings, Inc. Sec. Litig. , No. 2:13-CV-7050 (MCA) (LDW) (D.N.J.).
In July 2015, Hertz admitted, among other things, that the company overstated its net income between 14.64% and 32.12% for the fiscal years in question, and its executives set an "inappropriate tone at the top" that may have resulted in improper accounting practices within the company. (Dkt. No. 29-2 at ¶ 2; In re Hertz Global Holdings, Inc. Sec. Litig. , No. 2:13-CV-7050 (MCA) (LDW), 2017 WL 1536223, at *6 (D.N.J. Apr. 27, 2017). Based on these admissions, Plaintiff's clients sought relief pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Securities Act"). (Pl. Opp. Mem. at 11). The district court of New Jersey, however, found the element of scienter insufficiently pleaded and dismissed the case. In re Hertz Global Holdings, Inc. Sec. Litig. , 2017 WL 1536223, at *18.
Subsequently, Plaintiff appealed the district court's decision and filed a FOIA request to the SEC for the following records (the "Hertz Documents"):
The Court of Appeals for the Third Circuit affirmed the district court's ruling, finding a lack of scienter in the pleadings. In re Hertz Global Holdings, Inc. , 905 F.3d 106, 115–16 (3d Cir. 2018).
(1) all records pertaining to the SEC's investigation into Hertz's restatement of its financial results for fiscal years 2011 through 2013, as reported in Hertz's Form 10-k for fiscal year 2014, filed on July 16, 2015 (the "Restatement");
(2) all records pertaining to any accounting or internal control deficiencies at Hertz during the time period of January 1, 2013 to the present; and
(3) all records previously released by the SEC pertaining to Hertz for the time period of January 1, 2013 to the present.
(Compl. ¶¶ 3, 8). The SEC denied this request eight days later, citing Exemption (7)(A) as the basis for its denial. (Id . ¶ 9).
Then on December 31, 2018, Hertz settled with the SEC for its Securities Act violations, resulting in the publicly available "Order Instituting Cease-and-Desist Procedures Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities and Exchange Act of 1934, Making Findings, and Imposing a Cease and Desist Order" ("Cease-and-Desist Order"). (Compl. ¶ 11; Dkt. No. 1-2). Plaintiff claims that this Cease-and-Desist Order allegedly refers to the Hertz Documents previously sought in its FOIA request. (Pl. Opp. Mem. at 12). These Documents are of interest to Plaintiff because it believes information contain within these Documents led the SEC to make "numerous factual findings [in its investigation] that undermine the scienter arguments made by Hertz and the Hertz Executives in the PSLRA [Hertz] Litigation." (Id .).
Plaintiff additionally points to the "Clawback Litigation" initiated by the Compensation Committee of Hertz's board of directors pursuant to Hertz's clawback policy. (Id. at 16–19). Plaintiff finds this litigation further undermines Hertz's scienter arguments because it found Executive "misconduct" which resulted in Hertz demanding certain Executives pay damages for causing the accounting errors and return incentive-based compensation awarded during the relevant fiscal years. (Id. at 16).
Plaintiff then renewed its FOIA request for categories (1) and (2) of the Hertz Documents. (Compl. ¶ 15). On February 1, 2019, the SEC's FOIA Branch Chief denied the request on the basis of Exemption 7(A), except for twelve pages of potentially responsive records. (Id. ¶ 16; Pl. Opp. Mem. at 15). Plaintiff appealed this determination on two grounds: (1) the Hertz documents were compiled by Hertz for business purposes, not law enforcement purposes, as required by Exemption 7(A); and (2) the SEC cannot maintain the position that its investigation is ongoing because the Cease-and-Desist Order establishes that it has concluded. (Compl. ¶¶ 21–22). The SEC denied Plaintiff's appeal, concluding that the SEC "had confirmed with staff that releasing the documents responsive to Items 1 and 2 ... could reasonably be expected to cause harm to ongoing law enforcement proceedings." (Dkt. No. 1-6 at 2–3). This denial forms the basis of the instant litigation requesting injunctive relief against Defendant for violations of 5 U.S.C. § 552. (Dkt. No. 1-1 at 1).
Plaintiff also requests a determination that the SEC cannot assert any other Exemption once Exemption 7(A) expires. (Compl. ¶ 33).
Plaintiff has clarified that it seeks "documents produced to the Commission by third parties," and not "records reflecting Defendant's internal or interagency practices or communications" or other privileged or confidential information." (Pl. Opp. Mem. at 19 (citing Dkt. No. 17 at 2)). The SEC identified approximately 160,000 documents that Hertz produced during the investigation but assert that these documents could still interfere with an on-going investigation (Dkt. No. 29 ¶ 12; Dkt. No. 1-6 at 4). Accordingly, the SEC has moved for summary judgment dismissing this action based on its valid withholding of documents pursuant to Exemption 7(A), or alternatively, the inapplicability of the public domain doctrine to these documents.
Prior to the filing of this motion, Plaintiff submitted a proposed case management plan indicating a deadline for discovery. (Dkt. No. 13). Defendant opposed this proposed plan, arguing that discovery is not necessary given that Defendant intends to move for summary judgment. (See ECF Minute Entry dated 4/17/2019). I denied Plaintiff's discovery request pending Defendant's motion for summary judgment. (Id. ). Shortly thereafter, Defendant filed its motion and Plaintiff filed its Opposition.
LEGAL STANDARD
A court may force an agency to disclose records pursuant to a FOIA request only where the plaintiff demonstrates that the agency has "(1) improperly, (2) withheld, (3) agency records." Grand Cent. P'ship v. Cuomo , 166 F.3d 473, 478 (2d Cir. 1999) (quoting U.S. Dep't of Justice v. Tax Analysts , 492 U.S. 136, 142, 109 S.Ct. 2841, 106 L.Ed.2d 112 (1989) ) (quotation marks omitted). The agency may contest this allegation by demonstrating that its search for documents "was adequate and that any withheld documents fall within an exemption to FOIA." Carney v. U.S. Dep't of Justice , 19 F.3d 807, 812 (2d Cir. 1994). If an agency meets its burden without any issues of material facts, it is entitled to summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
I. Summary Judgment Standard
In deciding a motion for summary judgment, the Court will "draw all reasonable inferences and resolve all ambiguities in favor of the non-moving part." Garza v. Marine Transp. Lines, Inc. , 861 F.2d 23, 26 (2d Cir. 1988). The Court then determines whether the movant has presented sufficient evidence to demonstrate that the factfinder could reasonably find for the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In FOIA actions an agency may use affidavits or declarations, which are given a presumption of good faith, to present evidence supporting its motion. Carney, 19 F.3d at 812 (2d Cir. 1994). The Court deems the agency's justification for withholding documents sufficient if the justification "appears logical and plausible." Am. Civil Liberties Union v. U.S. Dep't of Def. , 901 F.3d 125, 133 (2d Cir. 2018), as amended (Aug. 22, 2018).
With a valid justification summary judgment is warranted unless the plaintiff can present evidence of "bad faith on the part of the agency sufficient to impugn the agency's affidavits or declarations" or "that an exemption claimed by the agency should not apply or summary judgment is otherwise inappropriate." Carney , 19 F.3d at 812 (citing Goland v. CIA , 607 F.2d 339, 355 (D.C. Cir. 1978) ); see also Schwartz, 2016 WL 154089, at *8 (citing Grand Cent. P'ship 166 F.3d at 478 ). "FOIA cases are generally and most appropriately resolved on motions for summary judgment." Platsky v. Food & Drug Admin. , No. 13-CV-6250 (SLT) (RLM), 2014 WL 7391611, at *3 (E.D.N.Y. Dec. 24, 2014) (citation omitted), aff'd 642 Fed. Appx. 63 (2d Cir. 2016), as amended (Jun. 21, 2016); see also Kaminsky v. Nat'l Aeronautics and Space Admin. , No. 08-CV-3313 (ARR) (LB), 2010 WL 276184, at *5 (E.D.N.Y. Jan. 19, 2010) (citation omitted), aff'd 402 Fed. Appx. 617 (2d Cir. 2010).
A plaintiff is entitled to summary judgment "when an agency seeks to protect material which, even on the agency's version of the facts, falls outside the proffered exemption." New York Times Co. v. U.S. Dep't of Defense , 499 F.Supp.2d 501, 509 (S.D.N.Y. 2007) (quoting Petroleum Info. Corp. v. U.S. Dep't of Interior , 976 F.2d 1429, 1433 (D.C. Cir. 1992) ).
II. Exemption 7(A) Standard
Exemption 7(A) permits agencies to withhold "records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information could reasonably be expected to interfere with enforcement proceedings." 5 U.S.C. § 552(b)(7). Where the validity of an Exemption 7(A) withholding is challenged, the SEC must show "(1) a law enforcement proceeding is pending or prospective and (2) release of the information could reasonably be expected to cause some articulable harm." New York Times Co. v. U.S. Dep't of Justice , 390 F. Supp. 3d 499, 513 (S.D.N.Y. 2019) (quoting New York Times Co. v. U.S. Dep't of Justice , No. 14-CV-03776 (AT) (SN), 2016 WL 5946711, at *7 (S.D.N.Y. Aug. 18, 2016) ) (internal quotation marks omitted). The agency need not justify the withholding of each document with specific facts, but rather allow the court to be able to "trace a rational link between the nature of the document and the alleged likely interference." New York Times Co., 2016 WL 5946711, at *7 (quoting Ctr. For Nat'l Sec. Studies v. U.S. Dep't of Justice , 331 F.3d 918, 940 (D.C. Cir. 2003) ).
ANALYSIS
The SEC asks the Court to find that it has established a proper withholding of the Hertz Documents pursuant to Exemption 7(A). (Dkt. No. 23 ("Def. Rule 56.1 Stmt.")). The Court reviews an agency's determination of the applicability of an exemption de novo . 5 U.S.C. § 552(a)(4)(B) ; Schwartz v. U.S. DEA , No. 13-CV-5004 (CBA) (RML), 2016 WL 154089, at *9 (E.D.N.Y. Jan. 12, 2016), aff'd, 692 F. App'x 73 (2d Cir. 2017).
a. The Responsive Records Were Compiled for Law Enforcement Purposes
To meet the threshold requirement for a valid application of Exemption 7(A) an agency must demonstrate that the records sought were compiled for law enforcement purposes. John Doe Agency v. John Doe Corp. , 493 U.S. 146, 148, 110 S.Ct. 471, 107 L.Ed.2d 462 (1989) ; see also Brennan Ctr. For Justice at New York Univ. Sch. of Law v. Dep't of Homeland Sec. , 331 F.Supp.3d 74, 97 (S.D.N.Y. 2018). "An agency must establish a rational nexus between the agency's activity in compiling the documents and its law enforcement duties." New York Times Co. , 390 F. Supp. 3d. at 513 (citing Brennan Ctr. , 331 F.Supp.3d at 97 ).
Courts construe the terms "law enforcement" and "compiled" broadly. Law enforcement purposes may consist of either civil or criminal matters, or an agency's "proactive steps designed to prevent criminal activity and maintain security." Human Rights Watch v. Dep't of Justice Fed. Bureau of Prisons , No. 13 Civ. 7360 (JPO), 2015 WL 5459713, at *5 (S.D.N.Y. Sept. 16, 2015) (quoting Milner v. Dep't of the Navy , 562 U.S. 562, 582, 131 S.Ct. 1259, 179 L.Ed.2d 268 (2011) (Alito, J., concurring)); see New York Times Co. , 390 F. Supp. 3d at 513 (citing Tax Analysts v. I.R.S. , 294 F.3d 71, 76 (D.C. Cir. 2002) ) (citations omitted). The act of compiling records for law enforcement purposes "requires only ‘that a document be created, gathered, or used by an agency for law enforcement purposes at some time before the agency invokes the exemption.’ " Schwartz v. Department of Defense , 2017 WL 78482, at *12 (E.D.N.Y. Jan. 6, 2017) (quoting Pub. Emps. for Envtl. Responsibility (PEER) v. U.S. Section, Int'l Boundary and Water Comm'n , 740 F.3d 195, 203 (D.C. Cir. 2014) ). This means that a document not originally compiled for a law enforcement purpose may later be "compiled" for purposes of Exemption 7(A). See John Doe Agency , 493 U.S. at 154, 110 S.Ct. 471 (reversing Court of Appeals' strict interpretation of "compiled" as meaning "originally compiled").
An agency's statement that records were compiled as a part of an investigation suffices to establish that records were compiled for law enforcement purposes without further factual findings. Am. Civil Liberties Union Found. v. U.S. Dep't of Justice , 833 F. Supp. 399, 406 (S.D.N.Y. 1993). This Circuit adheres to the rule that "once the government has demonstrated that the records were compiled in the course of an investigation conducted by a law enforcement agency, the purpose or legitimacy of such executive action are not proper subjects for judicial review." Halpern v. Fed. Bureau of Investigation , 181 F.3d 279, 296 (2d Cir. 1999).
In considering the SEC's sworn statements and submissions, the Court finds that the SEC has established the Hertz Documents were compiled for law enforcement purposes, namely the investigation into the company's potential violations of federal securities laws, which Plaintiff acknowledges in its Complaint. (Compl. ¶ 7; Dkt. No. 26 ("Byrne Decl.") ¶ 3). As such, the records Plaintiff seeks were compiled by the SEC for law enforcement purposes.
b. The SEC Has Established That a Law Enforcement Proceeding is Pending or Prospective
Next, the SEC must demonstrate that "(1) a law enforcement proceeding is pending or prospective and (2) release of the information could reasonably be expected to cause some articulable harm." New York Times Co. , 390 F. Supp. 3d at 513 (citation omitted). Plaintiff argues that the SEC has not established the pendency or prospect of a law enforcement proceeding, as required under Exemption 7(A) because not only has the statute of limitations in 28 U.S.C. § 2462 expired, but the Cease-and-Desist Order ended the investigation. (Compl. ¶ 32; Pl. Opp. Mem. at 15–16). However, the evidence does not support either of these arguments. The SEC entered into tolling agreements with individuals related to the investigation, which the Court has reviewed in camera . (See ECF Order dated 12/16/2019; Dkt. No. 35). These tolling agreements establish that the SEC is continuing its investigation into individuals connected to the Hertz Fraud. (See Dkt. No. 35 naming one individual, Jatindar Kapur, CPA, that the SEC pursued as part of the ongoing Hertz Investigation after original Cease-and-Desist Order).
Plaintiff raises the statute of limitations argument for the first time in its Opposition to Defendant's Motion for Summary Judgment. (Pl. Opp. Mem. at 16). Plaintiff asks the Court to overlook any counter-argument by Defendant that it entered into tolling agreements since the SEC had not previously submitted any such agreement in support of its motion. (Id. at n.10). However, because "it is inappropriate to raise new claims for the first time in submissions in opposition to summary judgment" without allowing the moving party to respond, the Court will consider Defendant's response. See Beckman v. U.S. Postal Serv. , 79 F. Supp. 2d 394, 407 (S.D.N.Y. 2000) (quoting Bonnie & Co. Fashions, Inc. v. Bankers Trust Co. , 170 F.R.D. 111, 119 (S.D.N.Y. 1997) ).
The Court is not convinced by Plaintiff's argument that by issuing an announcement that the investigation was continuing one month after Plaintiff's FOIA request indicates that no investigation was occurring prior to the SEC's announcement. (See Pl. Opp. Mem. at 12).
The Court has taken Plaintiff's December 23, 2019, response to the SEC's submission of the tolling agreements for in camera review into consideration. (See Dkt. No. 36). Its arguments do not change this Court's decision.
Moreover, the SEC has established that release of the information "could reasonably be expected to interfere" with the enforcement proceeding. 5 U.S.C. § 552(b)(7)(A). The SEC may demonstrate this risk of interference by using a "categorical approach," instead of proceeding document-by-document, where the litigation process "threatens to reveal [the very information the agency hopes to protect.’ " Citizens for Responsibility and Ethics in Wash. v. U.S. Dep't of Justice , 746 F.3d 1082, 1098 (D.C. Cir. 2014) (quoting ACLU v. CIA , 710 F.3d 422, 432 (D.C. Cir. 2013) ; citing N.L.R.B. v. Robbins Tire & Rubber Co. , 437 U.S. 214, 224, 98 S.Ct. 2311, 57 L.Ed.2d 159 (1978) ); Maydak v. U.S. Dep't of Justice , 218 F.3d 760, 766 (D.C. Cir. 2000). "An agency adopting the categorical approach ‘has a three-fold task. First it must define its categories functionally. Second, it must conduct a document-by-document review in order to assign documents to the proper category. Finally, it must explain to the court how the release of each category would interfere with enforcement proceedings.’ " Judicial Watch, Inc. v. C.I.A. , No. 17-CV-397 (TSC), 2019 WL 4750245, at *4 (D.D.C. Sept. 29, 2019) (quoting CREW v. Dep't of Justice , 746 F.3d 1082, 1096 (D.C. Cir. 2014) ; citations and internal quotation marks omitted).
The SEC categorized the documents responsive to Plaintiff's FOIA request as follows:
1) documents produced to the Commission by third parties;
2) privilege logs;
3) correspondence between the Commission and third parties and voicemails from third parties;
4) internal Commission documents and communications; and
5) Commission communications with other agencies and regulators.
Byrne Decl. ¶¶ 11–15.
Plaintiff challenges the withholding of documents that fall within category one only. (Pl. Opp. Mem. at 19 (citing Dkt. No. 17 at 2)). Plaintiff contends that this category is not functional because "the SEC lumps all the Hertz Documents into one category ... and does not even attempt to sub-categorize them, as is required." (Id . at 28). The SEC responds that it did sub-categorize the documents into "e-mails, financial records, company analysis, meeting minutes, board minutes, memoranda, audit work papers, and other documents," all of which pose the same harm to the investigation: they could reveal "the nature, scope, direction, focus, and strategy of the Commission's ongoing investigation." (Dkt. No. 30 at 8; Dkt. No. 26 ¶¶ 19, 20).
The fact that there are multiple types of documents within a category does not render the category non-functional. Although present in a variety of forms, the SEC attests that each type of document in this category served the same purpose: it contains information that the SEC believes is related to the Hertz Investigation. See Robbins, Geller, Rudman & Dowd, LLP v. U.S. S.E.C. , No. 3:14-CV-2197 (TJC), 2016 WL 950995, at *5 (M.D. Tenn. Mar. 12, 2016) (citing Solar Sources, Inc. v. United States , 142 F.3d 1033, 1036, 1039 (7th Cir. 1998) ; Dickerson v. Dep't of Justice , 992 F.2d 1426, 1433–34 (6th Cir. 1993) ; Dillon v. Dep't of Justice , 102 F. Supp. 3d 272, 291–92 (D.D.C. 2015) (additional citations omitted)). These documents may reveal which individuals are potential witnesses or defendants in the investigation, or what evidence the Commission does or does not have of potential wrongdoing. (Byrne Decl. ¶¶ 19–20). Disclosure of this information could result in potential witnesses or defendants thwarting ongoing investigations. (Id. ¶ 21). The Court concludes that category one, and categories two through five, are sufficiently defined.
The SEC has also satisfied its second task of reviewing the documents individually to assign them to an appropriate category. Kenneth V. Byrne ("Mr. Byrne"), an attorney in the Division of Enforcement of the SEC, submits an affidavit attesting to the completion of a document-by-document review. (Byrne Decl. ¶¶ 10, 16). Mr. Byrne's declaration details the agency's process of searching for the documents and the sources of the documents contained within each category. (Id. ¶ 9, 16, 19-33). Mr. Byrne worked with other Division of Enforcement staff to verify that each document fit within one of the five categories identified supra . (Id. ¶ 16).
Finally, the SEC has satisfied the Court that release of the documents in each category is likely to interfere with future enforcement proceedings. The Court is able to "trace a rational link between the nature of the document and the alleged likely interference." New York Times Co. , 390 F.Supp.3d at 513 (citations and internal quotation marks omitted). As explained above, the contested category of documents, category one, contains information related to the Hertz Investigation that third parties provided to the SEC. The SEC does more than state in merely conclusory terms that disclosure of these documents would interfere with the law enforcement proceeding; the SEC articulates how disclosure of this specific category of documents would do so. See Bagwell v. U.S. Dep't of Justice , 311 F. Supp. 3d 223 (D.D.C. 2018) (citing Sussman v. U.S. Marshals Serv. , 494 F.3d 1106, 1114 (D.D.C. 2007) ). The SEC states that these documents would reveal the identities of potential witnesses and defendants in the ongoing investigation, disclose what evidence the SEC does or does not have of potential wrongdoing, specifically the topics, time periods, places, and persons in which the SEC is interested in investigating. (SEC Mem. of Law at 16; Byrne Decl. ¶¶ 19–20). The SEC fears that disclosure of this information could result in potential witnesses or defendants thwarting ongoing investigations through shaping their own testimony or testimony of others, concealing facts, tampering with evidence based on what the records show, or decide not to cooperate in the investigation. (SEC Mem. of Law at 16; Dkt. No. 26 ¶ 21). This is "the type of ‘interference’ at which section 7(A) is directed." North v. Walsh , 881 F.2d 1088, 1097 (D.C. Cir. 1989) (collecting cases exempting disclosure where documents would reveal scope of case against defendants and information within documents might lead to tampering with evidence).
The Court finds the SEC's arguments distinguishable from the cases Plaintiff relies on because the SEC provides specific reasons for an ascertainable category of documents. Cf. Bagwell , 311 F. Supp. 3d at 223 (denying summary judgment where agency said release of grand jury proceedings would interfere with investigation without describing how, and trial following grand jury proceedings had concluded); Gray v. U.S. Army Criminal Investigation Command , 742 F. Supp. 2d 68, 75 (D.D.C. 2010) (finding generalized statements insufficient to support utilization of Exemption 7(A) where agency did not refer to which categories of documents posed the risk described). "Such predictive judgments of harm are entitled to deference" Manning v. U.S. Dep't of Justice , 234 F. Supp. 3d 26, 36 (D.D.C. 2017) (citing Citizens for Responsibility and Ethics in Wash. v. U.S. Dep't of Justice , 746 F.3d 1082, 1098 (D.D.C. 2014) ), and the Court is satisfied that any further specificity in the SEC's explanation would pose a risk to the investigation. Defendant has met its burden of showing an adequate search for documents and that the documents withheld fall within Exemption 7(A).
c. Plaintiff Fails to Demonstrate Why Exemption 7(A) Should Not Apply
Next the burden shifts to Plaintiff to show bad faith on the part of the SEC sufficient to impugn the affidavits or declarations, provide tangible evidence that Exemption 7(A) should not apply, or that summary judgment is otherwise inappropriate. Carney , 19 F.3d at 812 (citing Goland v. C.I.A. , 607 F.2d 339, 355 (D.C. Cir. 1978) ). Plaintiff asserts several reasons to support its position that the SEC should not be able to invoke Exemption 7(A). First, it argues that the Hertz Documents contain "an abundance of benign documents" since they relate to the publicly disclosed Restatement. (See Pl. Opp. Mem. at 26). However, this argument does not address the harm that may result if potential witnesses and defendants knew exactly which documents the SEC has or has not obtained. Also, the Hertz Documents include those provided by third parties, which may very well include documents not in the possession of subjects of the investigation. See Radcliffe v. I.R.S. , 536 F. Supp. 2d 423, 439 (S.D.N.Y. 2008) (distinguishing cases where documents at issue were provided solely by plaintiff or already disclosed by government from situation where information was obtained pursuant to summonses from third parties).
Second, Plaintiff argues, disclosure cannot cause interference because the targets of the investigation likely created the Hertz Documents and have access to them anyways. (Id. at 27). Again, this does not foreclose the risk of potential subjects ascertaining the scope, nature, or direction of the investigation if they had knowledge of which documents the SEC has collected. Moreover, although Hertz employees may have access or knowledge of all documents that Hertz provided to the SEC, the SEC claims that it is investigating entities and individuals that do not have such access, such as former Hertz employees and individuals unaffiliated with Hertz. (Byrne Decl. ¶ 7). Mr. Byrne attests that no one has access to all of the approximately 160,000 documents within category one. Having personal knowledge of the Hertz Documents and the scope of the investigation, his declaration is entitled to deference.
Plaintiff has not established any reason to impugn Mr. Byrne's declaration.
Third, the Order allegedly reveals the identities of the subjects being investigated, so the SEC cannot reasonably argue that it fears disclosure of the documents will notify potential witnesses and defendants. (Id. at 26–27). However, the fact that these individuals are on notice of the investigation and the Cease-and-Desist Order may cover the same accounting misconduct does not necessarily mean that targets of future enforcement proceedings know the exact nature, scope, and direction of the SEC's investigation into separate entities and individuals, which the SEC alleges the Hertz Documents would reveal.
Fourth, Plaintiff argues it is without a doubt that the targets of the investigation have access to the information contained within the Hertz Documents by virtue of discovery taking place in the Clawback Litigation. (Id . at 27). However, the SEC is not a party to the Litigation and "has not produced documents from the Hertz Investigation to anyone in connection with that litigation." (Dkt. No. 31 ("Byrne Supp. Decl.") ¶ 5). Plaintiff does not persuade the Court otherwise.
d. Public Domain Doctrine Does Not Necessitate Disclosure
Plaintiff also argues that references to certain Hertz Documents in the Order and Clawback Litigation necessitates disclosure pursuant to the public domain doctrine. (Pl. Opp. Mem. at 28). Exemptions to FOIA do not apply "if identical information is otherwise in the public domain." Inner City Press/Cmty. On the Move v. Bd. of Governors of Fed. Reserve Sys. , 463 F.3d 239, 244 (2d Cir. 2006) (citations omitted). "The rationale behind the public domain doctrine is clear: ‘if identical information is truly public, then enforcement of an exemption cannot fulfill its purposes.’ " Id. (quoting Niagara Mohawk Power Corp. v. U.S. Dep't of Energy , 169 F.3d 16, 19 (D.C. Cir. 1999) ). The party asserting the public availability of the information bears the burden of production because " ‘[i]t is far more efficient, and obviously fairer’ ... [and] [t]o hold otherwise would require the opponent of disclosure to prove a negative." Id. (quoting Occidental Petroleum Corp. v. SEC , 873 F.2d 325, 342 (D.C. Cir. 1989) ). To satisfy this burden, the party "must ... point[ ] to specific information in the public domain that appears to duplicate that being withheld." Id. (quoting Afshar v. U.S. Dep't of State , 702 F.2d 1125, 1130 (D.C. Cir. 1983) ).
Plaintiff points to the Order and Clawback Complaint as support for the applicability of the public domain doctrine. Specifically, Plaintiff surmises that the Order's following statements unquestionably rely on the Hertz Documents:
certain internal analysis indicating that the revised guidance had been based in part on inaccurate information ... certain recent internal estimates [that] fell below the low end of that guidance range ... [c]ontemporaneous internal analysis project[ing] the company's 2013 results at $1.72 per share ... certain new internal analysis and data forecast[ing] Hertz's performance to be below the low end of the revised guidance range ... [and] Hertz had analysis done to determine why internal estimates had changed so quickly
(Pl. Opp. at 29; Dkt. No. 1-2 ("Order") ¶¶ 4, 27–29). However, reference to documents that may inevitably be contained within the requested records does not automatically place the specific information within those documents in the public domain. See Students Against Genocide v. Dep't of State , 257 F.3d 828, 836 (D.C. Cir. 2001) ("For the public domain doctrine to apply, the specific information sought must have already been ‘disclosed and preserved in a permanent public record.’ ") (citations omitted); Span v. U.S. Dep't of Justice, 696 F.Supp.2d 113, 122 (D.D.C.2010) ("Because Span has not identified any specific information or ... ‘the exact portions’ of a specific document that is in fact ‘preserved in a permanent public domain,’ his public domain challenge fails.") (quoting Cottone v. Reno, 193 F.3d 550, 554 (D.C. Cir.1999) ; emphasis in original). "The Supreme Court has limited the public domain exception to information that is ‘freely available.’ " Inner City Press , 463 F.3d at 244 (citing U.S. Dep't of Justice v. Reporters Comm. For Freedom of the Press , 489 U.S. 749, 764, 109 S.Ct. 1468, 103 L.Ed.2d 774 (1989). Plaintiff has not met this burden. See Muslim Advocates v. Dep't of Justice , 833 F. Supp. 2d 92, 101–02 (D.D.C. 2011) ("While the D.C. Circuit has not established ‘a uniform, inflexible rule requiring every public-domain claim to be substantiated with a hard copy simulacrum of the sought-after material[,]’ it has recognized that ‘it will very often be the case that some type of hard copy facsimile will be the only practicable way for a FOIA requester to demonstrate that the specific information he has solicited has indeed circulated into the public domain.’ No such evidence has been provided in this case .. .. The Court, therefore, finds that plaintiff has failed to meet its ‘initial burden of pointing to specific information in the public domain that appears to duplicate that being withheld.’ ") (citations omitted).
The Clawback Complaint also allegedly contains claims that "by definition arise from the Hertz Documents." (Pl. Opp. Mem. at 29). The Complaint quotes from emails and statements by Hertz employees regarding the former Hertz Executive Defendants in the Clawback Litigation. (See generally Dkt. No. 29-4). However, as noted supra , the SEC is not a party to the Clawback Litigation and did not disclose any of the Hertz Documents as a part of that action. Moreover, these emails may not even be contained within the Hertz Documents. The SEC has not shared the investigation records with "anyone outside the SEC, except another regulator or government agency, or in connection with witness interviews," and Plaintiff has not convinced the Court otherwise. (Dkt. No. 30 at 9).
e. The SEC Performed a Legally Sufficient Segregability Review
Even if a FOIA exemption applies, "[a]ny reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt under this subsection." 5 U.S.C. § 552(b). Plaintiff asserts that the SEC did not conduct the required segregability analysis. (Pl. Opp. Mem. at 27). The SEC disagrees; the Byrne Declaration states that after a document by document review the SEC determined that no portion of the file could be segregated because disclosure of all the Hertz Documents would reveal the "focus, scope, direction and strategy" of the ongoing investigation. (Byrne Decl. ¶ 18; Dkt. No. 30 at 9–10).
The SEC does not need to conduct a document by document analysis to determine segregability. "Requiring the government to provide a Vaughn index for purposes of its segregability analysis would eviscerate the policy considerations that have led courts to conclude that the government need not provide such an index to show that its withholding of responsive FOIA documents is justified under Exemption 7(A)." Robbins, Geller, Rudman & Dowd, LLP , 2016 WL 950995, at *9 (citing Curran v. Dep't of Justice , 813 F.2d 473, 475 (1st Cir. 1987) (holding that, if the government were required to supply a Vaughn index "the harm which the exemption was crafted to prevent would be brought about in the course of obtaining the exemption's shelter")). Further, "release of any document or portion of a document, in response to the Plaintiff's request in this case, clearly identifies the document as one that the SEC itself believes to be important to its investigation, which, as a result, reveals the SEC investigation's focus, scope, direction, and strategy." Id. (citing Curran , 813 F.2d at 476 (approving the DOJ's segregability efforts where "the agency [had] certified that there was ‘no reasonably segregable portion of any of the withheld material’ suitable for release, and that any attempt to describe the records in greater detail ‘would lead to disclosure of the very information sought to be protected.’ "); Dillon v. Department of Justice , 102 F. Supp. 3d 272, 298 (D.D.C. 2015) (approving the FBI's segregability efforts where the Plaintiff requested the FBI's entire file on an al Qaeda operative and the FBI's affidavit stated that segregability was not possible because certain records were exempt from disclosure in their entirety pursuant to Exemption 7(A)); Kidder v. F.B.I. , 517 F. Supp. 2d 17, 32 (D.D.C. 2007) (holding as follows in case in which the FBI's affidavit stated that responsive documents were exempt in their entirety because of Exemption 7(A): "[D]efendant is obliged merely to establish that categories of documents, not individual documents, are exempt from disclosure. Defendant has satisfied its burden, and its failure to make a document-by-document segregability determination is of no moment.")). Thus, the Court finds the SEC's segregability review legally sufficient.
CONCLUSION
Having construed the evidence in the light most favorable to Plaintiff, the Court concludes that under Exemption 7(A) the SEC has properly withheld the records responsive to Plaintiff's FOIA request. Accordingly, the Court hereby GRANTS the SEC's motion for summary judgment.
The SEC does not claim any other FOIA exemptions in its Motion for Summary Judgment. As such, at this time the Court will not address whether the SEC has the right to assert other exemptions in the future when Exemption 7(A) is no longer applicable.
SO ORDERED .