Lewis v. U.S. Dep't of the Treasury

ERIC L. LEWIS, Plaintiff, v. U.S. DEPARTMENT OF THE TREASURY, et al., Defendants.

No. 17-cv-0943 (DLF)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

April 3, 2020

MEMORANDUM OPINION

Eric L. Lewis brings this action against the U.S. Department of Treasury and Financial Crimes Enforcement Network (FinCEN), a bureau within the Department of Treasury, under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. Before the Court are the defendants' second Motion for Summary Judgment, Dkt. 36, and Lewis's second Cross Motion for Summary Judgment, Dkt. 37. For the reasons that follow, the Court will grant FinCEN's motion and deny Lewis's cross motion.

I. BACKGROUND

The plaintiff, Eric L. Lewis, is an attorney who previously represented shareholders of Banca Privada d'Andorra S.A. (BPA), an Andorran bank, in a lawsuit against the defendant, FinCEN. See Defs.' Statement of Material Facts As to Which There is No Genuine Dispute ¶ 3 (Defs.' Statement of Facts), Dkt. 36-3; Pl.'s Statement of Material Facts As to Which There is No Genuine Dispute ¶ 3 (Pl.'s Statement of Facts), Dkt. 37-2; Compl. ¶ 12, Dkt. 1. In that suit, the BPA shareholders sued FinCEN over a rulemaking action in which it imposed an anti-money laundering measure against the bank. Defs.' Statement of Facts ¶ 3. On July 19, 2016, Lewis submitted a FOIA request to FinCEN, seeking documents related to the rulemaking. See id. ¶ 4; Compl. ¶ 12. Specifically, Lewis sought "[a]ny and all forms of communication, including but not limited to emails, letters, and facsimiles, between FinCEN and any department or division of the Government of Andorra and/or communications within FinCEN or with any other U.S. agency or with any department or division of the Government of Spain," regarding fifteen named individuals. Defs.' Statement of Facts at ¶ 2.

FinCEN initially identified 528 pages of responsive documents, releasing six of those pages in redacted form and withholding in full the remaining 522 pages. See First El-Hindi Decl. ¶¶ 3, Dkt. 16-5; Pl.'s Statement of Facts ¶ 31-32. In September 2017, FinCEN filed a motion for summary judgment, and Lewis filed a cross motion for summary judgment that challenged the adequacy of FinCEN's search and its invocation of Exemptions 3, 5, 7(A), 7(D) and 7(E). See Dkts. 16, 17. The Court denied both motions, holding that FinCEN had not supplied enough information to allow the Court to determine whether the search was adequate or whether FinCEN properly invoked the two exemptions. See Mem. Op. & Order at 2, Dkt. 23.

FinCEN then conducted two new searches for the requested records and ultimately identified 1,399 potentially responsive records. See Third El-Hindi Decl. ¶¶ 3, 9, Dkt. 36-2. It withheld 902 pages in full and 61 pages in part. Id. ¶ 98. FinCEN filed a renewed motion for summary judgment on April 18, 2019 and Lewis filed a renewed cross motion for summary judgment on May 20, 2019. In support of its motion, FinCEN submitted: two declarations from FinCEN's Deputy Director Jamal El-Hindi, see Third El-Hindi Decl.; Fourth El-Hindi Decl., Dkt. 39-1; a Vaughn Index, see Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973); Third El-Hindi Decl. Ex. 1, Dkt. 36-2, and (3) an Amended Vaughn Index, see Fourth El-Hindi Decl. Ex. 1, Dkt.39-1.¹ In his renewed cross motion, Lewis no longer challenges the adequacy of the search, and instead contests FinCEN's invocation of Exemptions 5, 7(A) and 7(D).² See Pl.'s Br. at 9, 31.

II. LEGAL STANDARD

Rule 56 of the Federal Rules of Civil Procedure mandates that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). When a federal agency moves for summary judgment in a FOIA case, all facts and inferences must be viewed in the light most favorable to the requester, and the agency bears the burden of showing that it complied with FOIA. Chambers v. Dep't of Interior, 568 F.3d 998, 1003 (D.C. Cir. 2009).

To prevail under Rule 56, a federal agency "must prove that each document that falls within the class requested either has been produced, is unidentifiable, or is wholly exempt from [FOIA's] inspection requirements." Perry v. Block, 684 F.2d 121, 126 (D.C. Cir. 1982) (per curiam) (internal quotation marks omitted). "The system of disclosure established by the FOIA is simple in theory[:] [a] federal agency must disclose agency records unless they may bewithheld pursuant to one of the nine enumerated exemptions listed in [5 U.S.C.] § 552(b)." DOJ v. Julian, 486 U.S. 1, 8 (1988). The agency bears the burden of justifying the application of any exemptions, "which are exclusive and must be narrowly construed." Mobley v. CIA, 806 F.3d 568, 580 (D.C. Cir. 2015).

Federal courts rely on agency affidavits to determine whether an agency complied with FOIA. Perry, 684 F.2d. at 126. Agency affidavits are entitled to a presumption of good faith, SafeCard Servs. v. SEC, 926 F.2d 1197, 1200 (D.C. Cir. 1991), and a court may grant summary judgment based on an affidavit if it contains reasonably specific detail and is not called into question by contradictory record evidence or evidence of bad faith, Judicial Watch v. U.S. Secret Serv., 726 F.3d 208, 215 (D.C. Cir. 2013). It is well established that "the vast majority of FOIA cases can be resolved on summary judgment." Brayton v. Office of the U.S. Trade Representative, 641 F.3d 521, 527 (D.C. Cir. 2011).

III. ANALYSIS

A. Exemption 7

Exemption 7 permits an agency to withhold "records or information compiled for law enforcement purposes" if disclosure could reasonably be expected to cause a certain set of harms. 5 U.S.C. § 552(b)(7). An agency must therefore "as a preliminary matter make a threshold showing demonstrating that the records were compiled for a law enforcement purpose." Pinson v. DOJ, 245 F. Supp. 3d 225, 249 (D.D.C. 2017) (internal quotation marks omitted).

1. Exemption 7 Threshold Inquiry

Documents are compiled for "law enforcement purposes" if "the investigatory activity that gave rise to the documents is related to the enforcement of federal laws, and there is arational nexus between the investigation at issue and the agency's law enforcement duties." Judicial Watch, Inc. v. Rossotti, 285 F. Supp. 2d 17, 24 (D.C. Cir. 2003) (internal quotation marks omitted). This depends on "how and under what circumstances the requested files were compiled" and "whether the files sought relate to anything that can fairly be characterized as an enforcement proceeding." Jefferson v. DOJ, 284 F.3d 172, 176-77 (D.C. Cir. 2002) (internal quotation marks omitted). "Law enforcement purposes" can concern both civil and criminal matters. Tax Analysts v. IRS, 294 F.3d 71, 77 (D.C. Cir. 2002). While agencies whose primary function involves law enforcement may be afforded deference, the exemption also applies to agencies "with both law enforcement and administrative functions," such as the IRS. Id. The ordinary understanding of "law enforcement" includes the "proactive steps designed to prevent criminal activity and to maintain security." Public Emps. for Envtl. Responsibility (PEER) v. U.S. Section, Int'l Boundary & Water Comm'n, 740 F.3d 195, 203 (D.C. Cir. 2014) (quoting Milner v. Dep't of the Navy, 562 U.S. 562, 582 (2011) (Alito, J., concurring)).

FinCEN has established that the withheld documents were compiled for law enforcement purposes because all of the documents relate to investigations into BPA's alleged money laundering by FinCEN and other government agencies. FinCEN's role includes "support[ing] government initiatives against money laundering," 31 U.S.C. § 310(b)(2)(C), and it has the authority to enforce the Bank Secrecy Act and Section 311 of the USA PATRIOT Act, see Treasury Order 180-01 (July 1, 2014). FinCEN's statutory duties also involve facilitating investigations conducted by foreign governments through mandates such as "[c]oordinat[ing] with financial intelligence units in other countries on anti-terrorism and anti-money laundering initiatives, and similar efforts," id. § 310(b)(2)(H), and "[f]urnish[ing] research, analytical and information services to . . . foreign law enforcement authorities . . . in the interest of detection,prevention, and prosecution of terrorism, organized crime, money laundering, and other financial crimes," id. § 310(b)(2)(E).

According to El-Hindi, FinCEN generated the records at issue to "(1) support FinCEN's own investigations and actions to enforce statutes that FinCEN administers, (2) facilitate law enforcement agencies' investigation of financial or other crimes, and (3) cooperate with foreign government agencies in furtherance of foreign or domestic law enforcement investigations or actions." Third El-Hindi Decl. ¶ 15. FinCEN's assertion that the records were created for various investigations—either its own enforcement actions or criminal actions in other jurisdictions—establishes a "rational nexus" between its basis for compiling the records and its statutory law enforcement duties. FinCEN's own Section 311 action against BPA involved an anti-money laundering measure, making it a "proactive step[] designed to prevent criminal activity and to maintain security," and therefore a law enforcement proceeding. See PEER, 740 F.3d at 203. Further, Exemption 7 applies not only to domestic law enforcement purposes, but also to foreign law enforcement purposes. See Bevis v. Dep't of State, 801 F.2d 1386, 1388 (D.C. Cir. 1986). Information that FinCEN gathered to aid foreign law enforcement therefore still falls under the threshold inquiry because a connection exists between this information and FinCEN's statutory law enforcement duties.

While FinCEN is indeed a "mixed function agency," see Pl.'s Br. 10-11, agencies that have both civil and criminal enforcement duties still can invoke Exemption 7 as long as they compiled the records for law enforcement purposes. PEER, 740 F.3d at...