SCOTT

v.

INTERNAL REVENUE SERVICE

THIS CAUSE is before the Court upon Plaintiff’s Motion for Costs [DE 45]. The Court has carefully considered the motion, the amended response, reply and is otherwise fully advised in the premises. Plaintiff, James E. Scott (“Scott”), moves for an award of costs pursuant to⁵ U.S.C. § 552(a)(4)(E)(ii) in the amount of $751.89.1 Defendant, Internal Revenue Service (“IRS”), opposes the motion. The parties agree regarding the law that applies to Scott’s request, but disagree whether Scott has met the requirement to be “entitled” to costs. Legal Standard Courts “may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred” in any FOIA case where “the complainant has substantially prevailed.”⁵ U.S.C. § 552(a)(4)(E)(i). For Scott to recover his costs in this case, he must be both (1) eligible for and (2) entitled to such an award. See

719 F. 3d 689, 690 (D.C. Cir. 2013); Dorsen v. S.E.C., 15 F. Supp. 3d 112, 120 (D.D.C. 2014) (“Dorsen”) (quoting Cotton v. Heyman, 63 F. 3d 1115, 1117 (D.C. Cir. 1995)). “In applying this test, ‘[n]o one factor is dispositive.’” EPIC I, 999 F. Supp. 2d at 67 (quoting Davy v. CIA, 550 F. 3d 1155, 1159 (D.C. Cir. 2008) (“Davy”). The sifting of those criteria over the facts of a case is a matter of district court discretion. See Church of Scientology v. Harris, 653 F. 2d 584, 590 (D.C. Cir. 1981). “Moreover, courts have explained that the various factors are merely tools to aid in the pursuit of the two separate and distinct overriding objectives of the FOIA: to encourage FOIA suits that benefit the public interest, and to compensate for enduring an agency's unreasonable obduracy in refusing to comply with the FOIA requirements.” Conservation Force v. Jewell, 160 F. Supp. 3d 194, 202 (D.D.C. 2016) (internal quotation marks omitted). “Thus, the touchstone is always whether an award of [costs] is necessary to implement the FOIA.” Id. at 202–03 (internal quotation marks omitted).

Finally, if a FOIA plaintiff is both eligible for and entitled to an award, courts assess the reasonableness of the requested fees. While precedent can be a helpful guide to a court in conducting its assessment, this analysis is “necessarily somewhat imprecise.” National Ass'n of Concerned Veterans v. Sec'y of Def., 675 F. 2d 1319, 1323 (D.C. Cir. 1982). Thus, courts should “exercise their discretion as conscientiously as possible, and state their reasons as clearly as possible.” Copeland v. Marshall, 641 F. 2d 880, 893 (D.C. Cir. 1980) (en banc). Analysis The IRS acknowledges that Scott is eligible for costs since the Court ordered it to turn over a number of records.² DE 51-1 at 3. See, e.g., Maydak v. D.O.J., 579 F. Supp. 2d 105, 108 (D.D.C. 2008) (explaining that even if the agency is compelled to release a “de minimis volume of records,” the fact the agency was compelled makes the plaintiff eligible for attorneys’ fees and costs); Judicial Watch, Inc. v. F.B.I., 522 F. 3d 364, 367–68 (D.C. Cir. 2008) (“A FOIA plaintiff substantially prevails when awarded some relief on the merits of [his] claim . . . ” (internal quotation omitted)). The question then turns to whether Scott is entitled to costs.

“whether the agency's opposition to disclosure had a reasonable basis in law, and whether the agency had not been recalcitrant in its opposition to a valid claim or otherwise engaged in obdurate behavior.” Dorsen, 15 F. Supp. 3d at 123 (citing McKinley v. Federal Housing Finance Agency, 739 F. 3d 707, 712 (D.C. Cir. 2014)). Public Benefit When determining the public benefit envisioned by Congress in enacting the FOIA, a court “evaluate[s] the specific documents at issue in the case at hand” and determines whether the plaintiff's lawsuit “is likely to add to the fund of information that citizens may use in making vital political choices.” Cotton v. Heyman, 63 F. 3d

1115, 1120 (D.C. Cir. 1995) (“Cotton”); Blue v. Bureau of Prisons, 570 F. 2d 529, 534 (5th Cir.1978) (“Blue”); Electronic Privacy Info. Center v. U.S. Dep’t of Homeland Sec., 811 F. Supp. 2d 216, 234 (D.D.C. 2011). “The test ... is whether the disclosure will assist the citizenry generally in making an informed judgment as to governmental operations.” Aviation Data Service v. F.A.A., 687 F. 2d 1319, 1323 (10th Cir. 1982). Under the public benefit criterion, “a court would ordinarily award fees, for example, where a newsman was seeking information to be used in a publication.” Solone v. I.R.S., 830 F.Supp. 1141, 1143 (N.D. Ill. 1993) (citing “Senate Report at 19”). “FOIA was enacted to provide information to the public, . . . not to benefit private litigants.” Id. Generally, courts are disinclined to award fees and costs under FOIA where the benefit to the public is minimal, incidental or speculative. Whalen v. I.R.S., Case No. 92 C 4841, 1993 WL 532506, at *5 (N.D. Ill. Dec. 20, 1993). It has been held that when determining the public benefit, a court must assess “the potential public value” of the information sought, and not the “public value of the information received.” Morley v. Central Intelligence Agency, 810 F. 3d 841, 844 (D.C. Cir. 2016) (“Morley I”) (stating that the “public-benefit factor requires an ex ante³ assessment of the potential public value of the information requested . . .”) (emphasis added). The Court of Appeals reasoned that “shifting to the plaintiff the risk that the disclosures would be unilluminating” would defeat the purpose of FOIA's fee-shifting scheme. Id. “To have ‘potential public value,’ the request must have at least a modest probability of generating useful new information about a matter of public concern.” Id. (internal citations omitted) (emphasis added). A classic discussion of the public benefit in FOIA cases is in Blue v. Bureau of

Prisons, 570 F. 2d 529 (5th Cir. 1978) where the Court stated: With respect to the first of these considerations - “the benefit to the public deriving from the case” - it is doubtless true, as the D.C. Circuit has suggested, that the successful FOIA plaintiff always acts in some degree for the benefit of the public, both by bringing government into compliance with the FOIA disclosure policy and by securing for the public at large “the benefits assumed to flow from the public disclosure of government information.” [Aviation Data Service v. F.A.A., 687 F. 2d 1319, 1323 (10th Cir. 1982).] Yet the Senate Report's discussion of this criterion referred repeatedly to disclosure to the press and to public interest organizations, thus strongly suggesting that in weighing this factor a court should take into account the degree of dissemination and likely public impact that might be expected from a particular disclosure. S. Rep. No. 854, 93d Cong., 2d Sess. 19 (1974). This goes to the central purpose of the disclosure act: to assist our citizenry in making the informed choices so vital to “the maintenance of a popular form of government.” Id. at 2.

Blue, 570 F. 2d at 533 (emphasis added). Under the standard elaborated upon above, there is no apparent public benefit in the disclosure of documents pursuant to Scott’s FOIA request for certain records within the IRS Office of Chief Counsel (“OCC”). The request listed three specific categories of records: (a) Any OCC Code and Subject Matter Directory in effect between 8/1/2013 and 11/19/2013; (b) Emails between any of: Timothy L. Jones, Helen M. Hubbard, and/or Lewis Bell regarding a pre-submission conference of any Private Letter Ruling request, between 6/1/2013 and 11/18/2013; and (c) Files regarding PLR 201502008: CASE MIS information, including all subsystems (e.g., TECHMIS); Form 9718, Case History; Check sheet for Processing Private Letter Rulings; Form 9818, Case Processing; Bibliography; Any Requests for Assistance; Any responses to Requests for Assistance; and Any communications with other areas of the IRS. Scott claims the following significant public benefits have been generated by his efforts: (1) “the documents obtained “substantiate allegations of malfeasance in the proper administration of the tax code by ‘senior IRS officials’ as that term is defined in the Operations Manual (“OM”) of the Treasury Inspector General for Tax Administration (“TIGTA”). OM § 340.2.1.” DE 45 at 6 (emphasis added). “Causing malfeasance to be investigated and substantiated, and bringing that to the attention of Congress, certainly aids in making a vital political choice.” DE 45 at 6 (emphasis added).

(2) “The admission by [the IRS] that PLR files do not necessarily contain all communications pertaining to the PLR from all employees,” (DE 27-5 ¶ 11) affects all future FOIA requests for these types of records, as well as requests under § 6110, and the reasonableness of any search that does not extend beyond the case file itself. The initial search by Disclosure and Litigation Support Branch in this case was admittedly deficient. Plaintiff has already taken steps to communicate this admission to various not-for-profit organizations (The FOIA Project, Tax Analysts) involved in FOIA cases generally, as well as one specifically targeted at records likely to be under the domain of OCC. DE 48 at 2 (emphasis added).

(3) “Courts have also found a public benefit outweighing any private interest by establishing a pattern and practice of an agency not complying with FOIA. Here, the rebutting the over-reaching claim of (b)(3) due to § 6103 is especially important, as that is arguably the most difficult exclusion to overcome because perforce the records at issue are substantially unknown.” DE 45 at 7 (emphasis added).

(4) that the “additional pages voluntarily re-released by Defendant by letter dated June⁵, 20204 confirmed an important precedent, namely that once records have been released under § 6110 they are ‘public records’ now subject to FOIA.” DE 48 at 2 (emphasis added) (5) The re-released pages on June⁵, 2020 show a contradiction between a conclusion of the OCC attorney processing the PLR request (that the Total Return Swap in the transaction at issue caused a “reissuance”), and the published PLR itself which states, “we specifically express no opinion about whether the extension of the TRS causes a reissuance under § 1001.” Scott asserts this “is clear evidence of the OCC’s misstatements with respect to this PLR,” and that such misstatements warrant referrals to the congressional committees entrusted to oversee the IRS, and other administrative and possibly criminal referrals. DE 48 at 2 (emphasis added).

(6) “the additional pages already released as a result of the Court’s Order shows that OCC received a written attachment from Allyson Belsome . . . on August⁵, 2013, and in turn sent it to two other branches dealing with specific issues (TRS, and reissuance under § 1001) for analysis. This directly contradicts information provided by the IRS during the FOIA process for Case No. 18-81742. No responses to those requests have been included in the responsive records identified in this case.” DE 48 at 3 (emphasis added).

(7) “The records at issue have clear public benefit from being publicly available, and Plaintiff has already taken actions to ensure that the information is broadly available to various not-for-profit organizations with ongoing interests in FOIA litigation, as it may benefit that litigation.” DE 48 at 3 (emphasis added).

the public benefit, if any, is de minimis. Lovell v. Alderete, 630 F. 2d 428, 433 (5th Cir. 1980). Scott’s asserted public benefits deal with (1) the information he may or may not have received as a result of the FOIA request, and (2) exposing the IRS’s improper handling of his FOIA requests generally. Because neither of these asserted public benefits have to do with “the potential value of the information sought,” they are not relevant to the public benefit analysis. Even if this were not the case, Scott’s asserted public benefits would still fail. For example, the first asserted public benefit – “[b]ringing to light malfeasance” – is based on conjecture that “malfeasance” occurred in the first place. Scott fails to identify what “malfeasance” he is referring to, and fails to produce any evidence of “malfeasance.” Further, the second asserted public benefit – establishing a pattern and practice of an agency not complying with FOIA – makes no sense. This is a single case where the Court determined that the IRS performed an adequate search, but had improperly withheld one sentence on the top of page 68, two paragraphs spanning pages 72-73, and pages 8-12, 15, 24, 33, 34, 42, 51 and 59-64 in part. It is pure unsubstantiated conjecture that this case demonstrates a pattern or practice of noncompliance.

at *7. Thus, courts “have routinely found that the use of FOIA as a substitute for discovery constitutes a private, non-compensable interest.” Ellis v. United States, 941 F. Supp. 1068, 1079 (D. Utah 1996); see also Maryland Dep’t of Human Res. v. Sullivan, 738 F. Supp. 555, 563 (D.D.C. 1990) (“This district has found that the use of FOIA as a substitute for civil discovery is not proper and should not be encouraged by a fees and costs award.”); Muffoletto v. Sessions, 760 F. Supp. 268, 275-76 (E.D. N.Y. 1991) (same).⁶ Scott asserts that he has used documents previously obtained through FOIA requests to substantiate allegations of malfeasance in the proper administration of the tax code by senior IRS officials and that “[a]cquiring information that substantiates allegations of administrative misconduct is not . . . connected to litigation that benefits Plaintiff.” DE 45 at 6; DE 48 at 3. He asserts that his interest

“[A]lthough ... no particular factor should be given disproportionate weight, in some circumstances the final factor may be dispositive.” Dorsen, 15 F. Supp. 3d at 121. This fourth factor is meant to “incentiviz[e] the government to promptly turn over - before litigation is required - any documents that it ought not withhold.” Davy, 550 F. 3d at 1166. To determine the reasonableness of the agency's withholding, the Court considers two factors. The first factor is whether the agency's opposition to disclosure “had a reasonable basis in law.” Davy, 550 F. 3d at 1162 (citations omitted). “If the

Reasonableness of Withholdings Some of the IRS’s withholdings were found to be unreasonable. The Court determined that the IRS had improperly withheld one sentence on the top of page 68, two paragraphs spanning pages 72-73, and pages 8-12, 15, 24, 33, 34, 42, 51 and 59- 64 in part. DE 42 at 42 54, 55. In addition, the IRS reversed itself when it came to some claims of exemption. For instance, the IRS withheld a document in full and parts of a few other pages that had already been released in response to a request under § 6110.8 DE 36,

DE 64-1.

¶ 86. After Scott raised this fact in his submissions, the IRS rereleased the page which should have been released initially. DE 48 at 8; DE 42, ¶ 83. In another instance, the

IRS released page 66 to Scott but redacted the handwritten entry for 3/24/14 under the deliberative process privilege. However, a few days earlier, the entry dated 3/24/14 on page 66 was released in full in response to a § 6110 request. The IRS acknowledged that it made an official and documented disclosure as to the 3/24/14 entry on page 66, and as a result, it could no longer claim a FOIA exemption as to that portion of the record. Accordingly, the IRS re-released that page to Scott with the 3/24/14 entry unredacted. DE 42 at 59. As far as the few pages that the IRS both withheld or redacted in this case and also disclosed in response to § 6110 requests, the Court found in its Order and Opinion that the redactions in this case were not done in bad faith. DE 45 at 60 citing Military Audit Project v. Casey, 656 F. 2d 724, 754 (D.C. Cir. 1981) (explaining that if courts were to make an inference of bad faith when an agency reviews its position, it would “work mischief in the future by creating a disincentive for an agency to reappraise its position, and when appropriate, release documents previously withheld.”). While the IRS may not have performed its duties under FOIA perfectly in this instance, errorfree performance is not required. The particular lapses in the IRS's production of Scott's requested records do not rise to the level of rebutting the presumption of good faith that attaches to statements made by agency officials under penalty of perjury. Fischer v. U.S. Dep't of Justice, 723 F. Supp. 2d 104, 108-09 (D.D.C. 2010) (explaining that error-free performance is not required). As far as the pages improperly withheld, there is no evidence that the IRS withheld those pages to prevent embarrassment or to thwart Scott. Blue, 570 F. 2d at 534 (fees would be favored if an agency's nondisclosure was designed to avoid embarrassment or thwart the requester). As far as the pages the Court determined were improperly withheld (pages 8-

12, 15, 24, 33, 34, 42, 51 and 59-64), the IRS asserts that its withholdings had a reasonable basis in law because it prevailed on its claims of exemption for a significant portion of the records withheld. DE 51-1 at 11. In this case the IRS withheld 91 pages in full and 12 pages in part. DE 42, ¶ 61. Of these 103 pages, the Court determined that less than 20 percent were improperly withheld. DE 42 at 42, 54-55. For the proposition that its withholdings had a reasonable basis in law because it prevailed on its claims of exemption for more than 80 percent of the records, the

IRS relies on Chamberlain v. Alexander, Case No. 7742-73, 1976 WL 1110, at *2 (S.D. Ala. Aug. 23, 1976) (“the fact the Government prevailed in their claim of nondisclosure on 150 of the 200 documents indicates the assertion of non-disclosure had ‘a reasonable basis in law.’”) and People for the Ethical Treatment of Animals v. U.S. Dep’t of Agriculture, Case No. 03-CV-195, 2006 WL 508332, at *5 (D.D.C. Mar.³, 2006) (“[b]ecause USDA prevailed on the majority of its claims, its overall position was reasonable.”). These two cases, however, are clearly outliers. In EPIC II, 218 F. Supp. 3d at 46, the Government argued that it was “correct as a matter of law” because the Court granted in part the agency's Motion for Summary Judgment. The EPIC II Court found this argument to be squarely foreclosed by Davy. Id. In Davy, just as in EPIC II, the agency failed to respond substantively to a FOIA request, was subsequently sued and then ordered to produce responsive documents. Davy, 550 F. 3d at 1158. In both cases, the agency completed court-ordered production and then moved for summary judgment, arguing that the scope of its search was sufficient, and it prevailed. Id. Despite the fact that the Government prevailed at summary judgment, the Court of Appeals still held that the plaintiff was entitled to attorneys' fees. Id. at 1163. “If the government could defeat an award of fees by citing a lack of resistance after the requester files a lawsuit to obtain requested documents, then it could force plaintiffs to bear the costs of litigation.” Id. Consequently, the IRS's argument that Scott is ineligible for costs simply because it prevailed on more than 80 percent of the pages it withheld or partially withheld is rejected. The IRS has the burden of justifying its withholding of a document under a FOIA exemption. EPIC II, 218 F. Supp. 3d at 34 citing Defenders of Wildlife v. U.S. Border

Patrol, 623 F. Supp. 2d 83, 91 (D.D.C. 2009). To enable the Court to determine whether the agency has met its burden, the Court may require the agency to submit a “Vaughn Index” consisting of affidavits or declarations that “identify the reasons why a particular exemption is relevant and correlate those claims with the particular part of a withheld document to which they apply.” Judicial Watch, Inc. v. Food & Drug Admin., 449 F. 3d 141, 146 (D.C. Cir. 2006) quoting Mead Data Cent., Inc. v. U.S. Dep't of Air Force, 566 F. 2d 242, 251 (D.C. Cir. 1977); see also Vaughn v. Rosen, 523 F. 2d 1136 (D.C. Cir. 1975). Obdurate Behavior? Looking back at the history of this FOIA action, it is not surprising this case ended up in court. This case began with a very long delay in processing Scott’s FOIA request and providing him a response. By letter dated May 22, 2018, Scott initiated a

FOIA request for certain records. DE¹ at 6. The IRS determined that 104 pages were responsive to Scott’s FOIA request. It was not until almost 15 months⁹ later when on September 12, 2019, one page was released in full, 12 pages were released in part, and 91 pages were withheld in full. Third Declaration of Andrew Keaton, DE 27-5, ¶

20.

As to actual production, FOIA requires that the agency make the records “promptly available,” which depending on the circumstances typically would mean within days or a few weeks of a “determination,” not months or years. Citizens for Responsibility & Ethics in Wash. v. Fed. Election Comm'n, 711 F. 3d 180, 189 (D.C. Cir. 2013) citing⁵ U.S.C. § 552(a)(3)(A), (a)(6)(C)(i). So, within 20 working days (or 30 working days in “unusual circumstances”), an agency must process a FOIA request and make a “determination.” Id. At that point, the agency may still need some additional time to physically redact, duplicate, or assemble for production the documents that it has already gathered and decided to produce. Id. If the agency does not adhere to FOIA's explicit timelines, the “penalty” is that the agency cannot rely on the administrative exhaustion requirement to keep cases from getting into court. Id. at 189-90.

which motion was addressed and denied in its entirety. DE 50. The IRS’s position seemed unreasonable given the content of the pages that were determined to be improperly withheld. Nevertheless, while the Court finds the IRS’s withholding of certain pages to have been unreasonable, when considering the four factors discussed above, the Court finds that any recalcitrance by the IRS does not outweigh the lack of support for the other factors that must be established to warrant an award of costs. Accordingly, the Court, in its discretion, finds that the Motion for Costs should be denied. Conservation Force v. Jewell, 160 F. Supp. 3d 194, 202-03 (D.D.C. 2016). Accordingly, it is hereby ORDERED AND ADJUDGED that Plaintiff’s Motion for Costs [DE 45] is denied. DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County, Florida, this 9th day of July, 2021.

fe on

KENNETH A. MARRA

United States District Judge