Bioscience Advisors, Inc. v. United States Securities and Exchange Commission et al, No. 4:2021cv00866 - Document 72 (N.D. Cal. 2023)
Court Description: ORDER GRANTING 60 MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS 62 RULE 56(D) MOTION. ***Civil Case Terminated.*** Signed by Judge Haywood S. Gilliam, Jr. on 1/11/2023. (ndr, COURT STAFF) (Filed on 1/11/2023)
Download PDF
<![CDATA[
Bioscience Advisors, Inc. v. United States Securities and Exchange Commission et al Doc. 72 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 1 of 15 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 BIOSCIENCE ADVISORS, INC., 7 Plaintiff, 8 v. 9 UNITED STATES SECURITIES AND EXCHANGE COMMISSION, et al., 10 11 United States District Court Northern District of California Case No. 21-cv-00866-HSG Defendants. ORDER GRANTING MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF’S RULE 56(D) MOTION Re: Dkt. No. 60, 62 12 Pending before the Court are Defendants United States Securities and Exchange 13 14 Commission (“SEC”), Gary Gensler, National Archives and Records Administration (“NARA”), 15 and Debra Steidel Wall’s (collectively, “Defendants”)1 Motion for Summary Judgment (see Dkt. 16 No. 60 (“Mot.”)) and Plaintiff Bioscience Advisors, Inc.’s (“Bioscience” or “Plaintiff”) Rule 56(d) 17 Motion. See Dkt. No. 62 (“R. 56(d) Mot.”). For the reasons articulated below, the Court 18 GRANTS Defendant’s motion for summary judgment and DENIES Plaintiff’s Rule 56(d) 19 Motion.2 20 I. BACKGROUND This case involves two Administrative Procedure Act (“APA”) claims challenging the 21 22 National Archives and Records Administration’s (“NARA”) approval and the Securities and 23 Exchange Commission’s (“SEC”) adoption of a records disposition schedule providing for the 24 disposition of certain temporary records three years after the entry of a confidential treatment 25 26 27 28 1 Defendants Gary Gensler and Debra Steidel Wall are sued in their official capacities as Chair of the SEC and Archivist of the United States, respectively. Under Federal Rule of Civil Procedure 25(d), any ambiguity regarding public officers sued in their official capacity who are then replaced is resolved in favor of automatically substituting the new public officer. 2 The Court has carefully considered the arguments of the parties in the papers submitted, and finds this matter suitable for resolution without oral argument under Civil Local Rule 7-1(b). Dockets.Justia.com Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 2 of 15 1 order. The remaining two causes of action allege the destruction of records in violation of the 2 Federal Records Act (“FRA”) and the denial of requested documents under the Freedom of 3 Information Act (“FOIA”). 4 5 United States District Court Northern District of California 6 A. Statutory Background 1. The Federal Records Act “The Federal Records Act is a collection of statutes governing the creation, management, 7 and disposal of records by federal agencies.” Pub. Citizen v. Carlin, 184 F.3d 900, 902 (D.C. Cir. 8 1999) (internal citations omitted). The Act requires that federal agencies “make and preserve 9 records containing adequate and proper documentation of the organization, functions, policies, 10 decisions, procedures, and essential transactions of the agency . . . to protect the legal and financial 11 rights of the Government and of persons directly affected by the agency’s activities.” 44 U.S.C. § 12 3101. “The Federal Records Act entrusts the Archivist, who is the head of NARA, to provide 13 ‘guidance and assistance to Federal agencies’ to ensure that such federal records are properly 14 preserved.” Citizens for Resp. & Ethics in Washington v. Nat’l Archives & Recs. Admin., 2021 15 WL 950142, at *1 (D.D.C. Mar. 12, 2021) (“Crew II”) (internal quotation omitted). 16 “The Archivist works cooperatively with federal agencies to determine which records an 17 agency must preserve in the archives and which records may be segregated and disposed because 18 of their ‘temporary value.’” Id. (internal quotation omitted). “Agency heads request ‘disposition 19 authority’—permission to discard records—from the Archivist and submit to the Archivist plans 20 to dispose of records that are no longer ‘needed by [the agency] in the transaction of its current 21 business and that do not appear to have sufficient administrative, legal, research, or other value to 22 warrant their further preservation.’” Id. (internal quotation omitted). These plans can include 23 “schedules proposing the disposal” of records that lose their “administrative, legal, research, or 24 other value” over time and do not qualify for permanent retention. 44 U.S.C. § 3303(3). After 25 preparing a proposed schedule, the agency head then submits the schedule to the Archivist for 26 approval. 36 C.F.R. §§ 1220.12, 1225.12(i). The Archivist “examine[s] the lists and schedules” 27 and, following a public notice and comment period, determines if any of the records “have 28 sufficient, administrative, legal, research, or other value to warrant their continued preservation” 2 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 3 of 15 1 “after the lapse of the period specified.” 44 U.S.C. § 3303a(a). If the answer is no, the Archivist 2 may then empower the requesting agency to dispose of the records in accordance with the 3 proposed schedule. Id. § 3303a(a)(1)-(2). 4 In addition to the use and approval of records schedules, the Federal Records Act also “sets 5 forth a structure whereby the Archivist and agency heads are to work together to ensure that 6 documents are not unlawfully destroyed.” Citizens for Resp. & Ethics in Washington v. U.S. 7 S.E.C., 916 F.Supp.2d 141, 145 (D.D.C. 2013) (“Crew I”). For example, each agency head: 8 shall notify the Archivist of any actual, impending, or threatened unlawful removal, defacing, alteration, corruption, deletion, erasure, or other destruction of records in the custody of the agency, and with the assistance of the Archivist shall initiate action through the Attorney General for the recovery of records the head of the Federal agency knows or has reason to believe have been unlawfully removed from that agency, or from another Federal agency whose records have been transferred to the legal custody of that Federal agency. 9 10 United States District Court Northern District of California 11 12 44 U.S.C. § 3106(a). If the agency head does not initiate such an action, the Archivist “shall 13 request the Attorney General to initiate such action, and shall notify the Congress when such a 14 request has been made.” Id. § 3106(b). 15 2. 16 The Freedom of Information Act Under FOIA, each agency is required to make public various records upon request, subject 17 to certain exceptions. 5 U.S.C. § 552. If an agency improperly withholds agency records in 18 response to a FOIA request, the party making the request may ask the district court to “to enjoin 19 the agency from withholding agency records and to order the production of any agency records 20 improperly withheld from the complainant.” Id. § 552(a)(4)(B). 21 22 23 B. SEC’s 2019 Amendment and 2020 Records Disposition Schedule 1. The 2019 Amendment In April 2019, the SEC amended the disclosure requirements set out in Regulation S-K for 24 material contracts and other exhibits filed under the Securities Act and the Exchange Act. The 25 amendment (the “2019 Amendment”) permitted registrants to self-redact portions of confidential 26 filings if such redactions were “both not material and would likely cause competitive harm to the 27 registrant if publicly disclosed.” 17 C.F.R. § 229.601 (version effective January 4, 2021 to March 28 3 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 4 of 15 1 14, 2021) (“Rule 601”). Previously, the only procedures for obtaining confidential treatment for 2 exhibits filed under the Exchange Act and Securities Act were set out in Exchange Act Rule 24b-2 3 (“Rule 24b-2”) and Securities Act Rule 406 (“Rule 406”), which require registrants to submit a 4 detailed application to the SEC identifying the particular text for which confidential treatment is 5 sought, a statement of the legal grounds for the exemption, and an explanation of why, based on 6 the facts and circumstances of the particular case, disclosure of the information was unnecessary 7 for the protection of investors. Id. §§ 240.24b-2(b)(2), 230.406(b)(2). Upon receipt of an 8 application, known as a “confidential treatment request” or “CTR,” SEC staff evaluate whether the 9 request appears appropriate and whether to issue comments on the application. Id. §§ 240.24b- 10 United States District Court Northern District of California 11 12 2(b)(2), 230.406(b)(2). 2. The 2020 Schedule Following the 2019 Amendment, the SEC developed a proposed records disposition 13 schedule for “[m]aterials submitted in support of a request for confidential treatment pursuant to 14 Rules 406 and 24b-2” and submitted the proposal to NARA for appraisal and approval. See 15 Records Schedule DAA-0266-2019-0002, available at https://www.archives.gov/files/records- 16 mgmt/rcs/schedules/independent-agencies/rg-0266/daa-0266-2019-0002_sf115.pdf. The proposed 17 schedule (the “2020 Schedule”) provided that all temporary materials justifying a request for 18 confidential treatment of information (and submitted under Rules 406 or 24b-2) were to be 19 disposed of three years after the entry of a confidential treatment order. Id. at 3; id. at 6 (“This 20 item covers materials voluntarily submitted by an entity requesting confidential treatment of 21 business information following the optional method of a traditional/legacy confidential treatment 22 request allowed by Rules 406 and 24b-2. This type of submission is no longer required by the 23 Commission but remains as an option for use at the discretion of the registrant at the time of a 24 filing.”). On November 25, 2019, a NARA staff appraiser prepared a memorandum evaluating 25 and recommending approval of the SEC’s proposed schedule. See NARA-19-0018-0003 (the 26 “Appraisal”), available at https://www.regulations.gov/document/NARA-19-0018-0003. 27 28 As background to the record schedule, the Appraisal’s “Additional Background Information” section stated in relevant part: 4 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 5 of 15 1 Records schedule item DAA-0266-2014-0001-0001, Unredacted Exhibits made certain CTR materials filed with the Commission permanent records because by law, they had to be managed and maintained separately in paper form from the related electronically filed Registration Statements. In 2016, the SEC initiated a review of rules found in 17 CFR Chapter II pursuant to Section 610 of the Regulatory Flexibility Act. The review led to changes in SEC regulations which eliminated the requirements for registrants to request confidential treatment of portions of registration submissions. As a result, unredacted exhibits are no longer required to be submitted to the Commission, and item DAA-0266-2014-0001-0001 is rendered obsolete and is superseded by item DAA-0266-2019-0002-0001 of this proposed schedule. The revised regulations continue to allow entities to submit an elective confidential treatment request. If such a request should occur, documents received by the Commission would be authorized for disposal under item DAA-0266-2019-0002-0001 2 3 4 5 6 7 8 9 Appraisal at 6. Finally, the Appraisal set out the following “Appraisal Justification”: 10 * Previously approved as temporary. Confidential Treatment Request (CTR) Supplemental Materials, DAA-0266-2016-0001-0001 * Similar records have been approved as temporary. Commodity Futures Trading Commission, Petitions for Confidential Treatment of Regulatory Filings, N1-180-00-001 / 313/a United States District Court Northern District of California 11 12 13 14 15 Id. at 7. Less than one month later, on December 18, 2019, NARA published a notice in the Federal 16 Register, inviting public comment on the proposed records schedule. See Records Schedules; 17 Availability and Request for Comments, 84 Fed. Reg. 69,395 (Dec. 18, 2019). After publication 18 of the notice, which drew no comments, the Archivist approved the schedule on February 20, 19 2020. See NARA-19-0018 Consolidated Reply for All Schedules in This Notice (No Comments 20 Received), available at https://www.regulations.gov/document/NARA-19-0018-0007. 21 C. 22 Plaintiff Bioscience Advisors, Inc. is a private company that tracks SEC filings submitted Bioscience Advisors, Inc. 23 with confidential treatment requests (including those submitted under Rules 406, 24b-2, and 601). 24 After the confidential treatment orders expire, Plaintiff requests copies of the unredacted exhibits 25 from the SEC through FOIA requests and incorporates the information they contain into its 26 commercial database of biopharmaceutical industry financial updates, deal announcements, and 27 searchable contracts. According to Plaintiff, in 2020 the SEC began responding to Plaintiff’s 28 FOIA requests by stating that the requested filings were unavailable and presumptively subject to 5 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 6 of 15 1 the 2020 Schedule. Plaintiff filed this lawsuit in February 2021. See Dkt. No. 1. After Defendants filed a 2 3 partial motion to dismiss, Dkt. No. 24, the parties stipulated to the filing of an amended complaint 4 that would moot Defendants’ motion, Dkt. No. 30, which the Court granted. Dkt. No. 31. In May 5 2021, Plaintiff filed its First Amended Complaint. Dkt. No. 32 (“FAC”). The Court dismissed the 6 FAC in part on February 8, 2022. See Dkt. No. 39. Plaintiff filed its Second Amended Complaint 7 on March 1, 2022. See Dkt. No. 43 (“SAC”). Defendants now move for summary judgment. 8 II. 9 United States District Court Northern District of California 10 LEGAL STANDARD A. Summary Judgment Summary judgment is proper when a “movant shows that there is no genuine dispute as to 11 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 12 A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson 13 v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is “genuine” if there is evidence 14 in the record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. 15 But in deciding if a dispute is genuine, the Court must view the inferences reasonably drawn from 16 the materials in the record in the light most favorable to the nonmoving party, Matsushita Elec. 17 Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986), and may neither weigh the 18 evidence nor make credibility determinations. See Anderson, 477 U.S. at 249. 19 With respect to summary judgment procedure, the moving party always bears both the 20 ultimate burden of persuasion and the initial burden of producing those portions of the pleadings, 21 discovery, and affidavits that show the absence of a genuine issue of material fact. Celotex Corp. 22 v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party will bear the burden of proof on an 23 issue at trial, it must show that no reasonable trier of fact could not find in its favor. Celotex, 477 24 U.S. at 325. “If a moving party fails to carry its initial burden of production, the nonmoving party 25 has no obligation to produce anything, even if the nonmoving party would have the ultimate 26 burden of persuasion at trial.” Id. at 1102–03. 27 28 “If, however, a moving party carries its burden of production, the nonmoving party must produce evidence to support its claim or defense.” Id. at 1103. In doing so, the nonmoving party 6 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 7 of 15 1 “must do more than simply show that there is some metaphysical doubt as to the material facts.” 2 Matsushita Elec., 475 U.S. at 586. A nonmoving party must also “identify with reasonable 3 particularity the evidence that precludes summary judgment,” because the duty of the Court is not 4 to “scour the record in search of a genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 5 1279 (9th Cir. 1996). If a nonmoving party fails to produce evidence that supports its claim or 6 defense, courts must enter summary judgment in favor of the movant. Celotex, 477 U.S. at 323. 7 B. 8 FOIA, 5 U.S.C. § 552, “was enacted to facilitate public access to Government documents.” United States District Court Northern District of California 9 FOIA Lahr v. Nat’l Transp. Safety Bd., 569 F.3d 964, 973 (9th Cir. 2009) (internal quotations omitted). 10 The goal of FOIA is to “ensure an informed citizenry, vital to the functioning of a democratic 11 society, needed to check against corruption and to hold the governors accountable to the 12 governed.” Id. (quotation omitted). At the same time, FOIA contemplates that the government 13 may have legitimate reasons for withholding some information from the public. Id. Accordingly, 14 FOIA “requires federal agencies to make Government records available to the public, subject to 15 nine exemptions for specific categories of material.” Milner v. Dep’t of Navy, 562 U.S. 562, 564 16 (2011). These nine FOIA exemptions are “explicitly made exclusive and must be narrowly 17 construed.” Id. at 565 (quotation omitted). 18 FOIA cases are typically decided on motions for summary judgment because the facts are 19 rarely in dispute. See Minier v. Cent. Intelligence Agency, 88 F.3d 796, 800 (9th Cir. 1996). On a 20 motion for summary judgment, a district court analyzes the withholding of documents de novo. 5 21 U.S.C. § 552(a)(4)(B). FOIA permits a district court to enjoin a defendant agency from 22 withholding agency records or to order a defendant agency to produce any improperly withheld 23 records. Id. 24 A defendant agency “must show that its search for responsive records was adequate, that 25 any claimed exemptions actually apply, and that any reasonably segregable, non-exempt parts of 26 records have been disclosed after redaction of exempt information.” Light v. Dep’t of Justice, 968 27 F. Supp. 2d 11, 23 (D.D.C. 2013); accord Lahr, 569 F.3d at 973; Pac. Fisheries, Inc. v. United 28 States, 539 F.3d 1143, 1148 (9th Cir. 2008). The agency bears the burden to show that it has 7 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 8 of 15 1 complied with its obligations under FOIA. 5 U.S.C. § 552(a)(4)(B). 2 III. 3 Defendants submit that they are entitled to summary judgment on Plaintiff’s claims 4 because the SEC has complied with its obligations under FOIA, the APA, and the FRA. In 5 particular, Defendants contend that i) Plaintiff waived the right to argue that the schedule violates 6 the FRA; ii) the schedule is consistent with the FRA; iii) Plaintiff has not shown that NARA’s 7 approval of the schedule was arbitrary and capricious; iv) the SEC’s adoption of the schedule 8 approved by NARA was reasonable and required by law; v) the SEC Chair did not violate the 9 FRA by failing to address the alleged destruction of records; vi) and the SEC did not violate 10 United States District Court Northern District of California DISCUSSION FOIA. 11 A. 12 As an initial matter, the Court agrees that Plaintiff waived its arguments regarding the Plaintiff has Waived the Argument that the Schedule Violates the FRA 13 adoption of the policy. Courts generally do not consider a challenge to agency action when raised 14 for the first time in court. Exxon Mobil Corp. v. U.S. E.P.A., 217 F.3d 1246, 1249 (9th Cir. 2000). 15 Waiver is excused only in “exceptional circumstances.” Universal Health Servs., Inc. v. 16 Thompson, 363 F.3d 1013, 1021 (9th Cir. 2004). 17 Bioscience had an opportunity to comment regarding the proposed schedule and did not do 18 so. The record clearly shows that there was a notice-and-comment period beginning on December 19 18, 2019. See Dkt. No. 59-3, First Administrative R., at 1. “NARA published notice in the 20 Federal Register” and posted the proposed schedule on regulations.gov. Id. at 3-4. NARA 21 received no comments on the proposed schedule, and after the Archivist approved it on February 22 20, 2020, the SEC began destroying documents in accordance with the schedule. See id. at 4. 23 This means that absent exceptional circumstances Plaintiff cannot now challenge the Agency’s 24 adoption of the schedule in this litigation.3 25 3 26 27 28 Plaintiff argues that applying these principles would amount to an “exhaustion doctrine,” and contends that doing so would “flout[] the Ninth Circuit’s reasoning in Universal Health.” Dkt. No. 61 (“Opp.”) at 10. The Court disagrees. In Universal Health, a party failed to comment in the administrative proceeding, and the Ninth Circuit found that the party thus could not raise arguments challenging the administrative action for the first time in court. The court noted that its holding did not impose an “exhaustion of remedies rule that forecloses judicial review”: instead, it “only foreclose[d] arguments that may be raised on judicial review.” 363 F.3d at 1020 (emphasis 8 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 9 of 15 United States District Court Northern District of California 1 Moreover, Bioscience points to no exceptional circumstances justifying relief from the 2 consequences of its waiver. “In determining whether exceptional circumstances exist, we balance 3 the agency's interests in applying its expertise, correcting its own errors, making a proper record, 4 enjoying appropriate independence of decision and maintaining an administrative process free 5 from deliberate flouting, against the interests of private parties in finding adequate redress for their 6 grievances.” Universal Health, 363 F.3d at 1021 (internal citation omitted). Here, Plaintiff 7 simply asserts that enforcing Universal Health’s waiver rule would leave it without a remedy. But 8 that cannot be a basis for a finding of exceptional circumstances, because it is the direct 9 consequence in every case of having a waiver rule in the first place. Plaintiff’s argument that 10 Defendants’ position imposes a “de facto exhaustion requirement in contravention of Ninth Circuit 11 law,” Opp. at 11, fails to show exceptional circumstances for the same reason described above: 12 there simply is no such requirement, as Universal Health confirmed. And Johnson v. Dir., Off. of 13 Workers’ Comp. Programs does not support any different conclusion, because there the agency 14 (the Benefits Review Board) had changed its own position on the question at issue in a subsequent 15 decision. 183 F.3d 1169, 1171 (9th Cir. 1999). In other words, in those circumstances, the agency 16 had already applied its expertise as to the issue at hand, so there was no risk of “usurping the 17 agency’s authority to decide the issue in the first instance[.]” Id. But here, without dispute, 18 Plaintiff failed to raise the arguments it now asserts during the notice and comment period at all, 19 depriving the Agency of the opportunity to consider them in the normal administrative process. 20 As such, the Court finds that Plaintiff fails to show any exceptional circumstances that excuse its 21 failure to raise in the administrative process the arguments it now presses on judicial review. See 22 Universal Health, 363 F.3d at 1021 (“Given that the hospitals have offered no compelling reason 23 why they did not raise their arguments before the Secretary, we think that there is no basis for 24 finding exceptional circumstances to exist here.”). 25 Accordingly, Bioscience has waived its right to challenge adoption of the schedule, and the 26 27 28 added). That is the exact situation presented here: Plaintiff did not have to satisfy any exhaustion requirement to bring a lawsuit, but it has waived any arguments it failed to raise in the notice and comment process. Accordingly, the conclusion that Plaintiff has waived the arguments it asserts in this case is directly driven by, not inconsistent with, Universal Health. 9 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 10 of 15 1 2 3 United States District Court Northern District of California 4 Court grants summary judgment in favor of Defendants on Bioscience’s first two claims. B. Plaintiff’s Other FRA Claims Also Fail 1. Alleged Unauthorized Destruction of Records Plaintiff is correct that the FRA requires the head of a federal agency to “notify the 5 Archivist of any actual, impending, or threatened unlawful removal, defacing, alteration, 6 corruption, deletion, erasure or other destruction of records[.]” 44 U.S.C. § 3106(a). But Plaintiff 7 does not seriously contest that the documents described in the Complaint (at paragraphs 29-31 and 8 65) were not destroyed, and in fact have been provided to it, as the uncontroverted record 9 confirms. See Opp. at 16; Dkt. No. 60-2 (Declaration of Mark Tallarico), ¶¶ 10, 14-15. 10 Mistakenly reporting that the documents were destroyed and then remedying that mistake by 11 providing the requested documents does not amount to unlawful destruction of records. 12 Moreover, Plaintiff’s assertion that this position conflicts with prior representations by the SEC is 13 irrelevant. See id. In Plaintiff’s own words, its “entire point [] is that the SEC is improperly 14 handling its FOIA requests,” id., but this broad assertion fails to identify any specific unlawful 15 threatened or actual removal, defacing, alteration, corruption, deletion, erasure, or other 16 destruction of records. Without such a showing, there simply is no issue of fact as to the existence 17 of any harm cognizable under the statute. 18 19 2. Actions Required of Defendants Under the FRA Plaintiff next argues that Defendants are in violation of the FRA because they still have not 20 asked the Attorney General to investigate the alleged unlawful removal or destruction of the 21 documents at issue. See SAC ¶ 62. In the Court’s February 8, 2022 Order Granting Defendant’s 22 Motion to Dismiss in Part (see Dkt. No. 39), the Court allowed Plaintiff’s third claim to survive 23 because Defendants had argued that the claim should be dismissed on mootness grounds alone. 24 However, the record is now more fully developed, and supports the entry of summary judgment in 25 Defendants’ favor. A duty to involve the Attorney General is triggered only when the “agency 26 knows or has reason to believe” the records in question have been removed unlawfully. 44 U.S.C. 27 § 3106(a). Plaintiff fails to allege or point to any evidence that Defendants have unlawfully 28 removed any documents, and the statute unambiguously requires that showing. See Citizens for 10 United States District Court Northern District of California Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 11 of 15 1 Resp. & Ethics in Washington v. U.S. S.E.C., 916 F. Supp. 2d 141, 147 (D.D.C. 2013). And 2 Plaintiff’s reliance on Armstrong v. Bush does not help its case, because it has not pointed to 3 anything creating any issue of fact as to whether Defendants were aware of any unlawful removal 4 or destruction of records (given that the uncontroverted record shows that the three specific 5 documents identified by Plaintiff were not destroyed). See 924 F.2d 282, 295 (D.C. Cir. 1991) 6 (permitting private enforcement suit where “the agency head or Archivist does nothing while an 7 agency official destroys or removes records in contravention of agency guidelines and 8 directives”). Nothing supports Plaintiff’s assertion that the agency knew of any imminent 9 unlawful destruction or removal of records. Moreover, even if there were any such evidence, 10 when Plaintiff notified the agency of what it believed to be the imminent destruction of records, 11 the agency notified the Archivist, which evaluated the claim and determined it to be “unfounded.” 12 See Dkt. No. 59-7, Declaration of Donald Rosen (“Rosen Decl.”) ¶¶ 4-10. Therefore, there is no 13 genuine issue of material fact as to Plaintiff’s claim that the Defendants “did nothing,” warranting 14 summary judgment in Defendants’ favor. 15 C. 16 “FOIA requires an agency responding to a request to ‘demonstrate that it has conducted a Summary Judgment is Warranted as to Plaintiff’s FOIA Claims 17 search reasonably calculated to uncover all relevant documents.’” Lahr v. Nat’l Transp. Safety 18 Bd., 569 F.3d 964, 986 (9th Cir. 2009) (quoting Zemansky v. EPA, 767 F.2d 569, 571 (9th Cir. 19 1985)). “This showing may be made by ‘reasonably detailed, nonconclusory affidavits submitted 20 in good faith.’” Id. “In evaluating the sufficiency of an agency’s search, ‘the issue to be resolved 21 is not whether there might exist other documents possibly responsive to the request, but rather 22 whether the search for those documents was adequate.’” Id. (emphases in original). “To prevail 23 on a motion for summary judgment, the agency must demonstrate ‘beyond material doubt . . . that 24 it has conducted a search reasonably calculated to uncover all relevant documents.’” Frost v. U.S. 25 Dept. of Justice, No. 17-CV-01240-JCS, 2018 WL 1626682, at *4 (N.D. Cal. Apr. 4, 2018) 26 (citation omitted). 27 The Court agrees that Defendants have shown that they conducted an adequate search for 28 11 United States District Court Northern District of California Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 12 of 15 1 responsive records in response to Plaintiff’s FOIA requests.4 Defendants provide detailed 2 affidavits describing the process by which they searched for the requested records. Affidavits that 3 describe what was searched and by whom are enough to establish an adequate search. See 4 Lawyers' Comm. for C.R. of San Francisco Bay Area v. U.S. Dep't of the Treasury, 534 F. Supp. 5 2d 1126, 1131 (N.D. Cal. 2008). Defendants’ affidavits explain who handled Plaintiffs’ FOIA 6 requests and how those professionals conduct their searches. See Dkt. No. 60-1 (Declaration of 7 Raymond McInerney) at ¶¶ 5-9 (describing steps taken by FOIA Research Specialists), Dkt. No. 8 60-2 (Declaration of Mark Tallarico) (describing steps taken to confirm the reasonableness of the 9 underlying searches in response to FOIA administrative appeals filed by Plaintiff’s founder). The 10 affidavits explain how the designated employees searched for potentially responsive documents, 11 including by contacting Corporation Finance staff, and substantiate why this approach was 12 reasonably calculated to uncover such documents. The Court disagrees with Plaintiff’s unfounded assertion that the affidavits simply “parrot 13 14 applicable legal standards,” Opp. at 20. As Defendants point out, Plaintiff entirely fails to address 15 the McInerney Declaration in its opposition. Id. Moreover, Plaintiff makes much of the fact that 16 Mr. Tallarico “did not confirm the destruction of the unredacted exhibits by the Corporation 17 Finance staff; rather, he merely took their word for it.” Id. But Defendants are right that 18 Plaintiff’s preferred investigative project was not required for the searches conducted to be 19 adequate. See Lahr, 569 F.3d at 990 (“As a general matter, an affidavit from an agency employee 20 responsible for supervising a FOIA search is all that is needed to satisfy the personal knowledge 21 requirement of Federal Rule of Civil Procedure 56(e)”) (internal quotations and citation omitted); 22 Judicial Watch, Inc. v. U.S. Dept. of Housing and Urban Dev., 20 F. Supp. 3d 247, 254-55 23 (D.D.C. 2014) (explaining that “it is permissible for an agency to rely on subject matter experts to 24 conduct individualized searches for documents when responding to FOIA requests”). Because the 25 record here confirms that the agency has shown beyond material doubt that it conducted a search 26 4 27 28 Plaintiff does not rebut Defendants’ claim that it failed to exhaust administrative remedies as required for 83 FOIA requests, Opp. at 19. Defendants also note, without rebuttal, that to the extent Plaintiff alleged for the first time in the Second Amended Complaint that certain records were improperly withheld, Plaintiff failed to exhaust that claim either. See Mot. at 22; Opp. at 1920 (failing to respond to this argument). 12 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 13 of 15 United States District Court Northern District of California 1 reasonably calculated to uncover all relevant documents, summary judgment is warranted. 2 D. 3 In response to Defendants’ Motion for Summary Judgment, Plaintiff contends that it has Plaintiff’s Rule 56(d) Motion is Denied 4 not had the opportunity to take sufficient discovery to oppose the motion. See R. 56(d) Mot. 5 Plaintiff alleges that additional discovery would show at least two disputed material facts. See id. 6 at 4. First, Plaintiff avers that additional discovery would show that Defendants destroyed 7 documents on September 3, 2020 rather than October 15, 2020. See id. Second, Plaintiff contends 8 that without additional discovery, it would have no way of knowing exactly what documents 9 Defendants may have destroyed on September 3, 2020. See id. at 5. Plaintiff argues that the 10 litigation hold itself would be superfluous if Defendants truly destroyed the documents it claims to 11 have on September 3, 2020. See id. 12 “A party seeking relief under Rule 56(d) must show ‘(1) that they have set forth in 13 affidavit form the specific facts that they hope to elicit from further discovery, (2) that the facts 14 sought exist, and (3) that these sought-after facts are essential to resist the summary judgment 15 motion.’” Hernandez v. Costco Wholesale Corp., No. 21-CV-00686-HSG, 2022 WL 225624, at 16 *1 (N.D. Cal. Jan. 26, 2022) (quoting State of Cal., on Behalf of Cal. Dept. of Toxic Substances 17 Control v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998)). 18 The underlying premise of Plaintiff’s motion is that discovery is necessary so it can police 19 whether the SEC is correctly applying its own document retention policies. See R. 56(d) Mot. at 4 20 (identifying “the central issue of this case” as “whether the SEC properly applied the Policy in 21 allegedly destroying the unredacted exhibits [Plaintiff] requested”), 5 (“The SEC’s document 22 retention policies and judgment in relation to [litigation hold] policies is crucial to determining 23 whether the SEC was complying with its own document retention policies, the veracity of the 24 SEC’s statements regarding document destruction, and whether the SEC acted arbitrarily and 25 capriciously in applying those policies.”). But Defendants are correct that it is well-established 26 that the FRA creates no private right of action to enforce such policies. See Kissinger v. Reps. 27 Comm. for Freedom of the Press, 445 U.S. 136, 149 (1980) (“The legislative history of the Acts 28 reveals that their purpose was not to benefit private parties, but solely to benefit the agencies 13 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 14 of 15 1 themselves and the Federal Government as a whole”); Armstrong, 924 F.2d at 294 (explaining that 2 the FRA “preclud[es] private litigants from suing directly to enjoin agency actions in 3 contravention of agency guidelines,” and finding that “[i]t would clearly contravene this system of 4 administrative enforcement to authorize private litigants to invoke federal courts to prevent an 5 agency official from improperly destroying or removing records”); Competitive Enter. Inst. v. U.S. 6 Env't Prot. Agency, 67 F. Supp. 3d 23, 31 (D.D.C. 2014) (dismissing claim by private litigant 7 challenging agency’s records disposal decisions). Accordingly, considering the Rule 56(d) motion within the legally accurate framing of the 8 United States District Court Northern District of California 9 scope of Plaintiff’s claims, the Court agrees with Defendants that the proposed discovery is not 10 essential to oppose the summary judgment motion, especially in light of well-settled general 11 principles that narrowly circumscribe discovery in APA and FOIA cases. First, Plaintiff has failed 12 to show why discovery showing that certain documents were destroyed on September 3, 2020 13 rather than October 15, 2020 would create any genuine issue of material fact as to any of its 14 claims. See Dkt. No. 63 (“Opp. to R. 56(d) Mot.) at 5-6. Second, Defendants’ affidavits already 15 set out the destruction dates of the records in question. See id. at 7-8. Third, Plaintiff fails to 16 show why anything about the scope or execution of Defendants’ litigation hold is material or 17 essential (or even relevant) to the claims. See id. at 9-10. Ultimately, Plaintiff fails to show that 18 any discovery is necessary or would change any of the conclusions the Court has already 19 explained in finding summary judgment warranted as to all of its claims. 5 20 // 21 // 22 // 23 // 24 // 25 26 27 28 5 The Court also notes that other district courts have concluded that, absent a showing of bad faith, the appropriate remedy when an agency’s declarations are deficient under FOIA is to “request that [the] agency supplement its supporting declarations rather than order discovery.” Frost, 2018 WL 1626682 at * 10. Because the Court has found the agency’s affidavits here adequate, it need not reach whether supplementation of those affidavits would be the proper next step as opposed to ordering discovery. 14 Case 4:21-cv-00866-HSG Document 72 Filed 01/11/23 Page 15 of 15 1 IV. CONCLUSION The Court GRANTS Defendants’ Motion for Summary Judgment in its entirety, and 2 DENIES Plaintiff’s Rule 56(d) Motion. The Clerk is directed to enter judgment in favor of 3 Defendants and to close the case. 4 IT IS SO ORDERED. 5 Dated: January 11, 2023 6 7 8 HAYWOOD S. GILLIAM, JR. United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
