Tax Analysts v. Irby

900 S.E.2d 37

TAX ANALYSTS, Petitioner,

v.Matthew IRBY, West Virginia State Tax Commissioner, Respondent.

No. 22-0491

Supreme Court of Appeals of West Virginia.

Submitted: February 6, 2024

Filed: March 15, 2024

Syllabus by the Court

1. "Appellate review of a circuit court’s order granting a motion to dismiss a complaint is de novo." Syllabus Point 2, State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W. Va. 770, 461 S.E.2d 516 (1995).

2. " ‘ "Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review." Syllabus Point 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995).’ Syllabus Point 1, State v. Paynter, 206 W.Va. 521, 526 S.E.2d 43 (1999)." Syllabus Point 1, In re Charleston Gazette FOIA Request, 222 W. Va. 771, 671 S.E.2d 776 (2008).

3. " ‘The disclosure provisions of this State’s Freedom of Information Act, W. Va. Code, 29B-1-1 et seq., as amended, are to be liberally construed, and the exemptions to such Act are to be strictly construed. W. Va. Code, 29B-1-1 [1977].’ Syl. Pt. 4, Hechler v. Casey, 175 W.Va. 434, 333 S.E.2d 799 (1985)." Syllabus Point 3, Charleston Gazette v. Smithers, 232 W. Va. 449, 752 S.E.2d 603, 607 (2013).

4. " ‘The party claiming the exemption from the general disclosure requirement under West Virginia Code § 29B-1-4 has the burden of showing the express applicability of such exemption to the material requested.’ Syllabus Point 7, Queen v. W. Va. Univ. Hosps., Inc., 179 W.Va. 95, 365 S.E.2d 375 (1987)." Syllabus Point 4, Charleston Gazette v. Smithers, 232 W. Va. 449, 752 S.E.2d 603 (2013).

5. "When a public body asserts that certain documents or portions of documents in its possession are exempt from disclosure under any of the exemptions contained in W. Va.[ ]Code, 29B-1-4 (2002 Repl. Vol.) (2003 Supp.), the public body must produce a Vaughn index named for Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973), cert. denied, 415 U.S. 977, 94 S.Ct. 1564, 39 L.Ed.2d 873 (1974). The Vaughn index must provide a relatively detailed justification as to why each document is exempt, specifically identifying the reason(s) why an exemption under W. Va.[ ]Code, 29B-1-4 is relevant and correlating the claimed exemption with the particular part of the withheld document to which the claimed exemption applies. The Vaughn index need not be so detailed that it compromises the privilege claimed. The public body must also submit an affidavit, indicating why disclosure of the documents would be harmful and why such documents should be exempt. Syllabus point 3 of Daily Gazette Co., Inc. v. West Virginia Development Office, 198 W.Va. 563, 482 S.E.2d 180 (1996), is hereby expressly modified." Syllabus Point 6, Farley v. Worley, 215 W. Va. 412, 599 S.E.2d 835 (2004).

Appeal from the Circuit Court of Kanawha County, The Honorable Tera Salango, Judge, Civil Action No. 22-P-80

Zachary J. Rosencrance, Esq., Bowles Rice, LLP, Charleston, West Virginia, Cornish F. Hitchcock, Esq., Hitchcock Law Firm, PLLC, Washington, D.C., Counsel for Petitioner

Patrick Morrissey, Esq., Attorney General, Katherine A. Schultz, Esq., Senior Deputy Attorney General, Sean M. Whelan, Esq., Deputy Attorney General, Charleston, West Virginia, Counsel for Respondent

ARMSTEAD, Chief Justice:

Petitioner, Tax Analysts ("Tax Analysts"), is a nonprofit organization that publishes periodicals throughout the country, including in West Virginia, to provide updates on developments affecting the tax laws and policies in various states. Tax Analysts requested copies of field audit and audit training manuals from the Respondent, West Virginia State Tax Department ("Department"), pursuant to the West Virginia Freedom of Information Act ("FOIA"). See W. Va. Code §§ 29B-1-1 through 7. The Department denied the request, citing a statutory exemption to disclosure under FOIA outlined in West Virginia Code § ll-10-5d(b)(5)(B) (2018).

Tax Analysts filed a declaratory judgment action in the Circuit Court of Kanawha County seeking to enjoin the Department from withholding the requested documents. Without requiring the Department to justify or establish the applicability of the statutory exemption as it relates to the documents or information contained within them, the circuit court accepted the Department’s position that disclosure was not required. Accordingly, the circuit court granted the Department’s motion to dismiss pursuant to Rule 12(b)(6) of the West Virginia Rules of Civil Procedure on the basis that the documents were statutorily protected by the asserted FOIA disclosure exemption.

After review, we find that the circuit court erred by granting the Department’s motion to dismiss without requiring the Department to follow the established procedure to determine whether the documents, or portions of the documents, were subject to disclosure.

[1, 2] Therefore, we reverse the circuit court’s order granting the Department’s mo- tion to dismiss and remand with instructions for the circuit court to enter an order requiring the Department to file a Vaughn index and an affidavit indicating why disclosure of the documents would be harmful and why they should be exempt.¹

I. FACTUAL AND PROCEDURAL BACKGROUND

On July 29, 2021, Tax Analysts sent a letter to the Department requesting that the Department produce, pursuant to its obligations under FOIA, current field audit manuals, audit training manuals, training materials, and continuing education materials. The Department denied the request in its entirety, citing West Virginia Code § 11-10-5d(b)(5)(B), which exempts documents that disclose the standards used "for the selection of [tax] returns for examination or data used or to be used for determining such standards." The Department asserted that disclosure of the information contained in the requested documents could educate potential tax evaders on how to violate state tax laws.

Tax Analysts filed a complaint in the Circuit Court of Kanawha County on March 3, 2022, seeking a declaration that the Department improperly withheld the requested information, and a permanent injunction to prevent the Department from continuing to withhold the requested information. The Department filed a motion to dismiss, arguing that the requested information was exempt from FOIA disclosure under W. Va. Code § 11-10-5d(b)(5)(B). The circuit court agreed with the Department and granted the motion to dismiss. Thereafter, Tax Analysts filed the instant appeal.

II. STANDARD OF REVIEW

[3, 4] "Appellate review of a circuit court’s order granting a motion to dismiss a complaint is de novo." Syl. Pt. 2, State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W. Va. 770, 461 S.E.2d 516 (1995). Similarly,

" '[w]here the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review.’ Syllabus Point 1, Chrystal R.M. v. Charlie A. L., 194 W.Va. 138, 459 S.E.2d 415 (1995)." Syllabus Point 1, State v. Paynter, 206 W.Va. 521, 526 S.E.2d 43 (1999).

Syl. Pt. 1, In re Charleston Gazette FOIA Request, 222 W. Va. 771, 671 S.E.2d 776 (2008).

III. ANALYSIS

[5] The question before this Court is whether the circuit court erred when it determined that West Virginia Code § 11-10-5d(b)(5)(B) permitted the Department to deny Tax Analysts’s FOIA request, thereby preventing Tax Analysts from establishing any set of facts that would entitle it to the relief requested. See John W. Lodge Distrib. Co. v. Texaco, Inc., 161 W. Va. 603, 245 S.E.2d 157 (1978) ("Because a Rule 12(b)(6) motion is designed to weed out unfounded suits, the ultimate test under Rule 12(b)(6) is whether the plaintiff can prove any set of facts that would entitle him or her to the relief requested.").

For the reasons detailed below, we find that dismissal of Tax Analysts’s complaint was in error and the circuit court should have required the Department to produce an index and affidavit to demonstrate to the court its basis for withholding the requested information.²

At the initial pleadings stage of a FOIA dispute, the disputed materials are generally unknown to both the court and the opposing party. This fact renders dismissal of an action challenging refusal to disclose requested documents pursuant to Rule 12(b) disfavored except in limited circumstances. Indeed, except where it is clear from the complaint that the requested documents fall within a specific exemption, a FOIA challenge is more appropriately considered at the summary judgment stage, after the parties have conducted discovery, to ensure fair resolution. See Farley, 215 W. Va. at 418, 599 S.E.2d at 841 (quoting Evans v. Office of Personnel Mgt., 276 F.Supp.2d 34, 37 (D.D.C. 2003)). Although this Court has previously affirmed an order granting a motion to dismiss a FOIA action, in that case the documents requested fell "squarely within" the exemption to justify withholding the documents without further inquiry into their contents. Appalachian Mountain Advocs. v. W. Va. Univ., No. 19-0266, 2020 WL 3407760 (W. Va. June 18, 2020) (memorandum decision). Here, where the requested documents were not disclosed, it is impossible to determine if the manuals and other materials requested by Tax Analysts fall squarely within the West Virginia Code § 11-10-5d(b)(5)(B) exemption provision. The exemption is limited to "standards used or to be used for the selection of returns for examination or data used or to be used for determining such standards." Absent additional information, the circuit court could not determine whether disclosure of the requested documents would reveal exempted information.

[6] When a requesting party challenges a decision by an agency to withhold requested documents, such challenge must be evaluated by first looking to the text of the West Virginia FOIA statute. Both the express text of the FOIA statute, as well as this Court’s interpretation of...