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Bloomberg, L.P. v. Board of Governors of the Federal Reserve System

March 19, 2010

BLOOMBERG, L.P., PLAINTIFF-APPELLEE,
v.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, DEFENDANT-APPELLANT, AND THE CLEARING HOUSE ASSOCIATION L.L.C., INTERVENOR-APPELLANT.



SYLLABUS BY THE COURT

Defendant Board of Governors of the Federal Reserve System appeals from a judgment entered August 24, 2009 in favor of plaintiff Bloomberg, L.P., by the United States District Court for the Southern District of New York (Preska, Ch.J.) compelling disclosure under the Freedom of Information Act of information about loans made by the Federal Reserve Banks. We affirm, holding that the information sought does not fall within the Act's Exemption 4.

The opinion of the court was delivered by: Dennis Jacobs, Chief Judge

Argued: January 11, 2010

Before: JACOBS, Chief Judge, LEVAL and HALL, Circuit Judges.

The Federal Reserve System--the central bank of the United States--is composed of twelve regional Federal Reserve Banks and the defendant-appellant Board of Governors of the Federal Reserve System ("Board"), in Washington, D.C. The Board is a federal agency that (among other things) supervises the operations of the twelve Federal Reserve Banks.

Plaintiff Bloomberg, L.P., a news organization, submitted Freedom of Information Act ("FOIA") requests to the Board in April and May 2008. The requests sought (in relevant part) detail about loans that the twelve Federal Reserve Banks made to private banks in April and May 2008 at the Discount Window and pursuant to ad hoc emergency lending programs (described in the margin ).*fn1 Bloomberg asked, loan by loan, for the name of the borrowing bank, the amount of the loan, the origination and maturity dates, and the collateral given.

The Board denied these requests (in relevant part) in December 2008. The Board conceded possession of records showing the loan information Bloomberg sought, with the exception of the collateral; collateral information is held by the lending Federal Reserve Banks. But the Board advised that the responsive information in its possession--contained in "Remaining Term Reports"--was exempt from disclosure under FOIA Exemptions 4 and 5. The Board did not search the lending records of the twelve Federal Reserve Banks, explaining that a request to the Board does not constitute a request for information held by those institutions.

Bloomberg brought this action in November 2008 (before receiving the formal denial of both its requests) in the United States District Court for the Southern District of New York (Preska, Ch.J.) to compel disclosure of the responsive documents and to compel the Board to conduct a search of the records held at the Federal Reserve Bank of New York (which had granted many of the largest loans in the relevant period). Following cross-motions for summary judgment, the district court ruled that the Remaining Term Reports were not exempt from FOIA disclosure under FOIA Exemption 4 or 5, and that certain Federal Reserve Bank records must be searched to respond adequately to the FOIA request. See Bloomberg L.P. v. Bd. of Governors of the Fed. Reserve Sys., 649 F. Supp. 2d 262 (S.D.N.Y. 2009). After judgment was entered, the Clearing House Association (a group of banks) was granted leave to intervene as a defendant. The judgment was stayed pending this appeal. As the records of the Federal Reserve Bank of New York had not been searched, we need not decide here whether what may be found must be produced.

The Board and the Clearing House appeal only on the ground that a proper interpretation of FOIA Exemption 4 covers the requested material. No contest is made as to Exemption 5, or as to the scope of the Board's (disputed) obligation to conduct a search of records at the Federal Reserve Bank of New York. Any argument that the Board had as to Exemption 5, or either side had as to the scope of the ordered search at the Federal Reserve Bank of New York is therefore deemed waived. Norton v. Sam's Club, 145 F.3d 114, 117 (2d Cir. 1998). Whether certain records of the twelve Federal Reserve Banks are records of the Board is an issue that is decided in an opinion--filed simultaneously with this opinion--in the appeal (heard in tandem with this appeal) from the Southern District's decision in Fox News Network, LLC v. Board of Governors of the Fed. Reserve Sys., 639 F. Supp. 2d 384 (S.D.N.Y. 2009). See Fox News Network, LLC v. Bd. of Governors of the Fed. Reserve Sys, ____ F.3d ____, No. 09-3795 (2d Cir. March 19, 2010).

The only question decided in this opinion is whether the Board may withhold the responsive Remaining Term Reports under Exemption 4, which allows a federal agency (in this case, the Board) to refuse disclosure of "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4). "Exemption Four applies if a tripartite test is satisfied:

(1) The information for which exemption is sought must be a trade secret or commercial or financial in character; (2) it must be obtained from a person; and (3) it must be privileged or confidential." Nadler v. FDIC, 92 F.3d 93, 95 (2d Cir. 1996) (emphasis added) (internal citations, alterations, and quotation marks omitted). Bloomberg concedes that the information is financial in character: That is why it wants it. The parties dispute whether the second and third parts are satisfied.

We hold that the information at issue--the identity of the borrowing bank, the dollar amount of the loans, the loan origination and maturity dates, and the collateral securing the loan--was not "obtained from" the borrowing banks within the meaning of FOIA Exemption 4. We therefore do not reach the question whether such information is "privileged or confidential" as to the borrowing banks.

The Board's alternative argument is that the Board obtained information from the Federal Reserve Banks, and that the Federal Reserve Banks are "persons." Putting aside a fair question as to whether the Federal Reserve Banks are "persons" or agencies, we conclude that disclosure of the contested records would not cause the Federal Reserve Banks to suffer ...


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