Gonzales & Gonzales Bonds & Ins. Agency, Inc. v. United States Dep't of Homeland Sec.

GONZALES AND GONZALES BONDS ANDINSURANCE AGENCY INC, Plaintiff(s),

v. UNITED STATES DEPARTMENT OFHOMELAND SECURITY, Defendant(s).

No. C-11-02267 DMR

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Dated: May 17, 2012

ORDER GRANTING IN PART AND

DENYING IN PART DEFENDANT'S

MOTION TO DISMISS

Plaintiff Gonzales & Gonzales Bonds and Insurance Agency, Inc. brings suit under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, against Defendant United States Department of Homeland Security ("DHS") for allegedly failing and/or refusing to respond properly to Plaintiff's requests for approximately 571 alien files ("A-files"). Defendant moves to dismiss Plaintiff's complaint for failure to exhaust administrative remedies or, in the alternative, pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted. (See generally Def.'s Notice of Mot. & Mot. to Dismiss ("Def.'s Mot.").) The court has determined that this matter may be decided without oral argument, and therefore vacates the May 24, 2012 hearing. For the reasons below, the court grants in part and denies in part Defendant's motion.

I. Background and Procedural History

Plaintiff is an authorized agent and underwriter of bonds. It posts immigration bonds on behalf of American Surety Company ("ASC"), a federally approved surety company, with DHS for the release of aliens from detention pending determination of the alien's immigration status. (Am. Compl. ¶¶ 6, 16.) Since June 23, 2009, Plaintiff has filed approximately 571 alien file ("A-file")¹ FOIA requests with DHS. (Am. Compl. ¶¶ 1, 30.) According to Plaintiff, DHS has failed to respond to many of these FOIA requests; with respect to those requests to which DHS has replied, Plaintiff alleges that the responses were untimely² and that DHS "improperly withheld A-file documents."³ (Am. Compl. ¶ 30.) Plaintiff attributes many of these allegedly improper withholdings to DHS's reliance on the consent provision in 6 C.F.R. § 5.3, which mandates that if a party makes a FOIA request about another individual, "either a written authorization signed by that individual permitting disclosure of those records . . . or proof that that individual is deceased . . . must be submitted," § 5.3(a). (Am. Compl. ¶ 31.)

On May 9, 2011, Plaintiff filed this FOIA action, bringing three causes of action against DHS stemming from the agency's alleged failure and/or refusal to provide Plaintiff with the A-files. (See generally Compl.) In Count I, Plaintiff claimed that DHS improperly responded to 183 A-filerequests by providing Plaintiff only with so-called "Record of Proceedings" documents ("ROPs") or a letter giving a brief description of the alien's status as removed, in removal proceedings, or apprehended and in custody. (Compl. ¶¶ 29-32; see Compl. Exs. 9-13.) Plaintiff filed administrative appeals for each request between October 30, 2009 and April 7, 2010. (Compl. ¶ 33.) However, as of May 6, 2011, with the exception of the acknowledgment of one appeal, DHS had failed to timely respond to these appeals.⁴ (Compl. ¶ 33.) In Count II, Plaintiff claimed that when it filed an additional 240 A-file requests, DHS again insufficiently and untimely responded with more ROPs. (Compl. ¶¶ 35-37; see Compl. Ex. 14.) Plaintiff did not appeal these requests, because it believed from its experience in Count I that doing so would have been futile. (Compl. ¶ 38.) In Count III, Plaintiff claimed that as of May 6, 2011, DHS had failed to timely acknowledge, let alone properly respond to, 148 other requests that it had submitted between August 6, 2009 and April 4, 2011. (Compl. ¶ 40; see Compl. Ex. 16.) Plaintiff did not appeal these requests, as it believed that it would have proven futile in light of its experiences in Count I. (Compl. ¶ 40.)

Defendant moved to dismiss Plaintiff's complaint for lack of subject matter jurisdiction or, in the alternative, for Plaintiff's failure to exhaust its administrative remedies. [Docket No. 28.] In the latter argument, DHS asserted that Plaintiff failed to perfect its administrative appeals and that, when seeking information about third-parties, Plaintiff failed to submit the consent authorization required by 6 C.F.R. § 5.3(a). After conducting a hearing, the court granted Defendant's motion on the grounds that Plaintiff had failed to exhaust his administrative remedies by not adhering to the requirements of § 5.3 and dismissed Plaintiff's complaint with leave to amend. Gonzales & Gonzales Bonds & Ins. Agency, Inc. v. U.S. Dep't of Homeland Sec., No. 11-2267 DMR, 2012 WL 424852, at *6 (N.D. Cal. Feb. 9, 2012). In the interest of conserving the court's and parties' resources, the court also held that Plaintiff's failure to exhaust its administrative remedies withrespect to the FOIA applications in Counts II and III did not preclude the court from entertaining Plaintiff's claims. Id. In light of DHS's treatment of Plaintiff's applications in Count I, to have required Plaintiff to exhaust its administrative remedies would have proven futile. Id.

Plaintiff filed its Amended Complaint on March 20, 2012 and brings four causes of action against DHS. [Docket No. 36.] Counts I, II, and III in the Amended Complaint trace their respective counterparts in the original complaint, as described above. (Am. Compl.¶ 34-51; see Am. Compl. Exs. 10-17.) Plaintiff brings Count IV pursuant to FOIA or, in the alternative, 5 U.S.C. § 706(2) of the Administrative Procedures Act ("APA"). (Am. Compl. ¶ 55.) Plaintiff contests, "generally and as applied to [its] requests" (Am. Compl. ¶ 61), the validity of 6 C.F.R. § 5.3, which requires a party seeking records about another individual under FOIA to provide the agency with "either a written authorization signed by that individual permitting disclosure of those records . . . or proof that that individual is deceased," § 5.3(a). (Am. Compl. ¶¶ 53-70.) According to DHS, this provision "amounts to a substantive 'tenth' exemption to disclosure under the guise of a procedural requirement for making a FOIA request." (Am. Compl. ¶ 54.) "If a party does not have the consent . . . , then DHS takes the position that it can withhold every single document requested without the need to determine whether any of the specific nine withholding exemptions specified in the FOIA apply." (Am. Compl. ¶ 54.) DHS now moves the court to dismiss Plaintiff's FOIA claims for failure to exhaust administrative remedies and its APA claim for failing to state a claim upon which relief can be granted.

II. Dismissal for Failure to Exhaust Administrative Remedies

A. The Parties' Arguments

DHS asks the court to dismiss Plaintiff's FOIA claims because Plaintiff failed to exhaust his administrative remedies when it refused to submit § 5.3 consent forms with its FOIA applications. (Def.'s Mot. 6-8.)

Plaintiff does not contest that it did not submit consent forms to DHS. Rather, it disputes the agency's claim that the consent requirement embodied in § 5.3 lawfully applies to FOIA applications. (Pl.'s Opp'n 3-6.) Plaintiff maintains that the regulation "impermissibly conflicts with the FOIA and case law interpreting the FOIA" because it "effectively prevent[s] disclosure of anyinformation 'about an individual' unless the individual's consent is obtained and provided to DHS." (Pl.'s Opp'n 3-4 (footnote omitted).) According to Plaintiff, DHS's consent requirement erects an impermissible obstacle between FOIA applicants and the information they seek by establishing a "tenth, substantive exemption under the FOIA under the auspices of 'privacy.'" (Pl.'s Opp'n 4; see Pl.'s Opp'n 6 ("The consent regulation does not carry out the FOIA provisions. On the contrary, it creates a wholesale barrier to the implementation of the FOIA.").) Furthermore, Plaintiff asserts that the regulation impermissibly makes the agency's FOIA determinations dependent on the identity of the requester, rather than on the nature of the information sought, and therefore should be struck down. (Pl.'s Opp'n 7-8.) To seek judicial review of the regulations' validity, Plaintiff insists that it had to submit its FOIA applications to DHS in violation of the regulation. (Pl.'s Opp'n 10-12.)

B. Administrative Exhaustion

A party bringing a FOIA claim generally must exhaust its administrative remedies before seeking judicial review. In re Steele, 799 F.2d 461, 465 (9th Cir. 1986) (citations omitted); Flaherty v. President of the U.S., 796 F. Supp. 2d 201, 207 (D.D.C. 2011); Antonelli v. Fed. Bureau of Prisons, 591 F. Supp. 2d 15, 25 (D.D.C. 2008) (citation omitted).⁵ This rule aims to provide an agency with an opportunity to "exercise its discretion and expertise" and "make a record for the district court to review." In re Steele, 799 F.2d at 466 (citations omitted); accord Vest v. Dep't of the Air Force, 793 F. Supp 2d 103, 112 (D.D.C. 2011). In cases where a party has made "no attempt to comply fully with agency procedures," a court will assert its lack of jurisdiction under the doctrine. In re Steele, 799 F.2d at 466 (citation omitted); accord Vest, 793 F. Supp. 2d at 112. Nevertheless, in circumstances where failure to exhaust would not undermine the "purposes and policies" behind the requirement, courts have recognized exceptions to the administrative exhaustion doctrine. Antonelli, 591 F. Supp. 2d at 25 (citations omitted). For example, a court will waive therequirement when the dispute before it relates to statutory interpretation or a constitutional question - areas where the judiciary has greater expertise than agencies. I.A.M. Nat'l Pension Fund Benefit Plan C v. Stockton Tri Indus., 727 F.2d 1204, 1209-10 & n.16 (D.C. Cir. 1984); see Marine Mammal Conservancy, Inc. v. Dep't of Agric., 134 F.3d 409, 411 (D.C. Cir. 1998).

C. Analysis

In its Amended Complaint, Plaintiff challenges the lawfulness of DHS's procedural consent requirements, embodied in § 5.3, in the context of FOIA's statutory scheme. Under these circumstances, Plain...