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Fox News Network, LLC v. United States Dept. of Treasury

United States District Court, S.D. New York

November 26, 2012


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Paul Ostensen, Steven Glen Mintz, Terence William McCormick, Mintz & Gold LLP, NYC, NY, for Plaintiff.

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Carolina A. Fornos, John Dalton Clopper, U.S. Attorney's Office, New York, NY, for Defendant.


FRANK MAAS, United States Magistrate Judge.

Plaintiff Fox News Network, LLC (" Fox" ) brings this action (" Fox II " ) under the Freedom of Information Act (" FOIA" ), 5 U.S.C. §§ 552 et seq., in an effort to secure from the United States Department of the Treasury (" Treasury" ) records relating to the government's program of assistance to the American Insurance Group (" AIG" ). Fox's requests mainly concern a March 2009 transaction whereby Treasury and the Federal Reserve Board restructured their AIG assistance program. Fox also seeks records pertaining to AIG's payment of substantial bonuses to its employees after it had received Troubled Assets Relief Program (" TARP" ) funds from Treasury. After negotiations between the parties, only 62 documents, comprising some 438 pages of material, remain at issue. Treasury seeks to withhold these documents, in whole or in part, pursuant to FOIA Exemption 5, on the theory that they are subject to the deliberative process privilege, the attorney-client privilege, or both. Given the extensive record in Fox News Network v. U.S. Dep't of the Treasury, 739 F.Supp.2d 515 (S.D.N.Y.2010) (" Fox I " ), the parties have cross-moved for summary judgment in Fox II by means of letter-motions.[1] For the reasons set forth below, both letter-motions are granted in part and denied in part.

I. Procedural and Factual Background

This case arises out of Fox's third FOIA request for documents concerning the federal government's intervention to prevent the collapse of AIG and other financial companies. The first two requests, which I considered in Fox I , sought documents pertaining to a custodial agreement between Treasury and the Bank of New York, the government bailout of AIG and Citibank, and TARP's impact on the credit markets. Those requests, and the governmental actions that preceded them, are discussed at some length in Fox I .

The FOIA request in Fox II , which is dated March 13, 2009, was served only days after the 2009 restructuring and, insofar as relevant, focuses primarily on documents generated after November 25, 2008. ( See Decl. of Joseph J. Samarias, dated June 16, 2011 (" Samarias Decl." ), ¶ 5 & Ex. B). Among other items, Fox seeks records relating to any obligations that Treasury imposed on AIG in connection with the restructuring, AIG's use of public funds and any accountings therefor, Treasury-imposed restrictions or conditions on AIG's executive compensation and personnel benefits, and Treasury's oversight of AIG's financial activities. ( Id. Ex. B).[2] As with its prior requests, Fox requested expedited processing pursuant to 5 U.S.C. § 552(a)(6)(E). ( Id. ¶ 4 & Ex. B).

On May 29, 2009, Treasury began to release, on a rolling basis, the nonexempt records responsive to Fox's request. ( Id. ¶ 14). By July 31, 2009, Treasury had reviewed 10,280 records, and withheld certain pages in whole or in part pursuant to

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FOIA Exemptions 2 and 4 through 6. ( Id. ¶ 17 & Ex. Q). As required by its regulations, Treasury also had referred certain potentially responsive records created by other federal agencies to those agencies for their processing and response. ( Id. ¶ 17) (citing 31 C.F.R. § 1.5(c)(2)).

In August 2009, Treasury provided Fox with an initial 102-page Vaughn Index [3] of withheld documents and disgorged an additional 43 pages of documents that it previously had withheld. ( Id. ¶ 18). Following the issuance of Fox I on September 3, 2010, I directed Treasury to produce a revised Vaughn Index reflecting any changes required by that decision. (ECF No. 15). The government complied with that directive in February 2011, (Samarias Decl. ¶ 20), after which Fox annotated the Index with its objections ( Id. ¶ 22; letter to the Court from Steven G. Mintz, Esq., dated May 5, 2011 (" Mintz May 5 Letter" ), Attach. (" Annotated Vaughn Index" )).

In late March 2011, after securing AIG's consent, Treasury released an additional 3,513 pages of responsive records, most of which had been withheld under Exemption 4. (Samarias Decl. ¶ 23 & Exs. R-T). Treasury then provided Fox with a revised Vaughn Index that reflected the supplemental releases. ( Id. ¶ 24).

By letter dated May 5, 2011, Fox moved for summary judgment with respect to 65 documents withheld by Treasury pursuant to FOIA Exemptions 4 and 5, 5 U.S.C. §§ 552(b)(4), (5). (Mintz May 5 Letter at 3). Thereafter, on June 16, 2011, Treasury released three records that it previously had withheld, in whole or in part, under Exemption 4. (Samarias Decl. ¶ 27 & Ex. U). Treasury then cross-moved for summary judgment with respect to the remaining 62 documents that it sought to withhold under Exemption 5. Of those documents, 321 pages have been withheld in part, and 117 pages have been withheld in full. ( See letter to the Court from Ass't U.S. Att'y John D. Clopper, dated June 16, 2011 (" Clopper June 16 Letter" ), at 1; Samarias Decl. ¶ 28 & Ex. A (" Revised Vaughn Index" )). Treasury claims that the deliberative process privilege applies to each of these records. ( See Revised Vaughn Index). In addition, Treasury maintains that three of the records are properly withheld on the basis of attorney-client privilege. ( Id. )

On September 23, 2011, I directed Treasury to provide me with unredacted copies of the documents listed on its Revised Vaughn Index for in camera review. (ECF No. 20). In response, Treasury initially failed to produce the three documents for which attorney-client privilege had been claimed, reasoning that Fox had not challenged Treasury's assertion of privilege with respect to those documents. ( See letter from Mr. Clopper to the Court, dated September 26, 2011 (" Clopper Sept. 26 Letter" ) at 1). At Fox's request, ( see letter from Mr. Mintz to the Court, dated September 30, 2011 (" Mintz Sept. 30 Letter" )), I instructed Treasury to submit the additional documents to me for in camera review. Treasury complied promptly, but submitted a letter further contending that Fox had waived the right to challenge Treasury's attorney-client privilege assertion by failing to raise the issue in a timely manner. ( See letter from Mr. Clopper to the Court, dated October 3, 2011 (" Clopper Oct. 3 Letter" ), at 1).

II. Discussion

A. Applicable Law


" [FOIA] seeks to permit access to official information long shielded unnecessarily

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from public view and attempts to create a judicially enforceable public right to secure such information from possibly unwilling official hands." Envt'l Prot. Agency v. Mink, 410 U.S. 73, 80, 93 S.Ct. 827, 35 L.Ed.2d 119 (1973). Under the statute, agencies must disclose their records upon request, unless they can show that the requested records fall within nine enumerated exemptions. See 5 U.S.C. § 552(b) (listing exemptions); Mink, 410 U.S. at 79, 93 S.Ct. 827. These exemptions are " explicitly made exclusive." Mink, 410 U.S. at 79, 93 S.Ct. 827. Citizens may file a challenge to an agency's response to a FOIA request in a district court, which " shall determine the matter de novo [with] the burden ... on the agency to sustain its action." 5 U.S.C. § 552(a)(4)(B).

As noted in Fox I, " summary judgment is the preferred vehicle for resolving FOIA cases." 739 F.Supp.2d at 532. " In order to prevail on a motion for summary judgment in a FOIA case, the defending agency has the burden of showing that its search was adequate and that any withheld documents fall within an exemption to the FOIA." Carney v. U.S. Dep't of Justice, 19 F.3d 807, 812 (2d Cir.1994). The agency can meet this burden through affidavits and declarations " giving reasonably detailed explanations why any withheld documents fall within an exemption." Id. Typically, the agency will submit a Vaughn index containing descriptions of the withheld documents, along with affidavits or declarations from relevant officials. If the agency's submissions are adequate on their face, the district court may " forgo discovery and award summary judgment" to the agency, unless the plaintiff makes a showing of bad faith sufficient to impugn the agency's declarations, provides tangible evidence that an exemption claimed should not apply, or establishes that summary judgment is otherwise inappropriate. Id. (quoting Goland v. CIA, 607 F.2d 339, 352 (D.C.Cir.1978)).

In resolving a summary judgment motion in a FOIA case, a court must interpret the statute broadly in favor of public disclosure and construe any exemptions narrowly. See U.S. Dep't of Justice v. Julian, 486 U.S. 1, 8, 108 S.Ct. 1606, 100 L.Ed.2d 1 (1988); Grand Cent. P'ship, Inc. v. Cuomo, 166 F.3d 473, 478 (2d Cir.1999). All doubts should be resolved in favor of disclosure. See Grand Cent. P'ship, 166 F.3d at 478.

2. Exemption 5

Exemption 5 protects " inter-agency or intra-agency memorandums or letters which would not be available by law to a party ... in litigation with the agency." 5 U.S.C. § 552(b)(5). " The exemption incorporates all normal civil discovery privileges, including the deliberative process privilege, the attorney-client privilege, and the attorney work product privilege." Nat'l Day Laborer Org. Network v. U.S. Immigr. and Customs Enforcement Agency, 827 F.Supp.2d 242, 250 (S.D.N.Y.2011) (internal citations and quotation marks omitted). To qualify for protection under Exemption 5, a document must " satisfy two conditions: its source must be a Government agency, and it must fall within the ambit of a privilege against discovery under judicial standards that would govern litigation against the agency that holds it." 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). In this case, the government relies on the attorney client and deliberative process privileges.

a. Attorney-Client Privilege

Since this is a FOIA case, Treasury's attorney-client privilege claims are governed by federal law. See Fed.R.Evid. 501 ...

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