Halloran v. Veterans Admin., s. 88-6180

• Decision Date: 06 June 1989
• Docket Number: 89-2055,Nos. 88-6180,s. 88-6180
• Citation: 874 F.2d 315
• Parties: 35 Cont.Cas.Fed. (CCH) 75,689 Bernard T. HALLORAN, Plaintiff-Appellee, v. VETERANS ADMINISTRATION, Defendant-Appellant. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 315

874 F.2d 315

35 Cont.Cas.Fed. (CCH) 75,689

Bernard T. HALLORAN, Plaintiff-Appellee, v. VETERANS ADMINISTRATION, Defendant-Appellant.

Nos. 88-6180, 89-2055

Summary Calendar.

United States Court of Appeals,

Fifth Circuit.

June 6, 1989.

Leonard Schaitman and Susan Sleater, Attys., Civ. Div. Appellate Staff, Dept. of Justice, Washington, D.C., for defendant-appellant.

Bernard T. Halloran, Houston, Tex., pro se.

Thomas C. Halloran, Lexington, Mass., for plaintiff-appellee.

Appeals from the United States District Court for the Southern District of Texas.

Before POLITZ, KING and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

During an investigation into alleged fraud by a United States government contractor, Veterans Administration (VA) officials surreptitiously taped a series of conversations among undercover government agents, employees of the contractor, and third parties. In response to a request under the Freedom of Information Act (FOIA), 5 U.S.C. Sec. 552, for transcripts of the tapes, the government released copies of the transcripts from which it deleted (1) identifying information regarding the suspects and third parties and (2) medical information about one particular third party. The district court ordered the government to produce unredacted copies of the transcripts; because we conclude that the information withheld by the government comes within the FOIA exemption for "records or information compiled for law enforcement purposes [the disclosure of which] ... (C) could reasonably be expected to constitute an unwarranted invasion of privacy," id. Sec. 552(b)(7)(C), we reverse and render.

I.

A.

In 1984, Santa Fe Engineers, Inc. ("Santa Fe"), contracted with the VA to renovate two VA medical centers; Santa Fe in turn subcontracted a portion of this work relating to asbestos removal to All Professional Services, Inc. (APS). During the course of the work, APS alleged, Santa Fe sent a letter to APS suggesting that the two firms bill the government for more than the contract price--$30 per cubic foot removed--and split the excess. APS perceived this suggestion as a kickback proposal, and so informed the VA Office of Inspector General.

In response to the tip, the Inspector General, working with APS employees, began an undercover investigation of Santa Fe. During the investigation, the Inspector General had APS employees or an undercover federal agent wear hidden microphones to tape, secretly, conversations with Santa Fe employees. Six transcripts, totaling 198 pages, were made from these tapes.

After the investigation was completed, the Inspector General recommended to the Justice Department that criminal indictments be sought against Santa Fe and three of its employees. The United States Attorney's Office, after reviewing the evidence and the Inspector General's recommendation, declined to prosecute, citing, inter alia, "the lack of sufficient evidence."

B.

Bernard Halloran, an attorney, began representing APS in 1985, while the investigation was underway. During this time, Halloran, on behalf of APS, sought to collect money from Santa Fe for work performed by APS on, inter alia, the VA project. Currently, the dispute between APS and Santa Fe over the amount due APS for its work on the VA project is the subject of a civil lawsuit.

Pursuant to the FOIA, Halloran requested that the VA release to him, inter alia the transcipts of the conversations secretly taped during the Inspector General's investigation. Although it notified Halloran that it was processing his request, the VA failed to produce the transcripts within the statutory period, and Halloran filed the instant suit. Shortly thereafter, the VA released redacted copies of the transcripts; these redactions are the subject of this appeal.

The VA made two sets of deletions from the transcripts. First, it deleted the names of, and other identifying information relating to, forty-two individuals, i.e., the three unindicted suspects of the investigation, other persons participating in the conversations, and third parties mentioned in the conversations, including one federal employee who was not involved in the investigation. The VA did not delete from the transcripts the names of APS employees mentioned in Halloran's FOIA request or the federal special agents who worked with APS during the investigation. Second, the VA deleted medical information, relating to one person, that had been revealed during the course of one of the conversations.

Halloran objected to the deletions, contending that the information deleted was not exempt from disclosure under the FOIA. After performing an in camera inspection of the unedited transcripts, the district court concluded that the FOIA exemptions under which the VA sought to justify the deletions were not applicable. Accordingly, it ordered the VA to produce the deleted information. ¹ The VA appeals.

II.

The VA argues that its refusal to release the identifying and medical information is justified under both FOIA exemption 6, which excepts from disclosure "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of privacy," 5 U.S.C. Sec. 552(b)(6), and exemption 7(C), which excepts "records or information compiled for law enforcement purposes ... [the disclosure of which] could reasonably be expected to constitute an unwarranted invasion of personal privacy." 5 U.S.C. Sec. 552(b)(7)(C). We conclude that the district court erred by rejecting the VA's argument that the deleted information was protected from disclosure under exemption 7(C); for that reason, we do not reach the issue of whether the same information is also within the scope of exemption 6.

A.

Although the FOIA embodies "a general philosophy of full agency disclosure," Department of the Air Force v. Rose, 425 U.S. 352, 360, 96 S.Ct. 1592, 1598-99, 48 L.Ed.2d 11 (1976) (quoting S.Rep. No. 813, 89th Cong., 1st Sess. 3 (1965)), the Act also reflects Congress's awareness that other concerns may require a departure from this general philosophy:

The Act expressly recognizes ... that public disclosure is not always in the public interest and consequently provides that agency records may be withheld from disclosure under any one of the nine exemptions defined in 5 U.S.C. Sec. 552(b).

Baldrige v. Shapiro, 455 U.S. 345, 352, 102 S.Ct. 1103, 1108, 71 L.Ed.2d 199 (1982). One of the most important concerns counterbalancing the public's general interest in disclosure is the desire to protect individuals' privacy interests; it is for this reason that two out of the nine exemptions, exemptions 6 and 7(C), refer explicitly to "privacy," with several others motivated by privacy concerns as well. ²

Congress contemplated that in applying these exemptions, courts would reconcile these competing interests by balancing all while ignoring none. It is not, Congress noted,

an easy task to balance the opposing interests, but it is not an impossible one either.... Success lies in providing a workable formula which encompasses, balances, and protects all interests, yet places emphasis on the fullest responsible disclosure.

S.Rep. No. 813 at 3 (quoted in EPA v. Mink, 410 U.S. 73, 80, 93 S.Ct. 827, 832-33, 35 L.Ed.2d 119 (1973)). If more proof of this fact is needed, an explicit statutory warrant to engage in such guided balancing can be found in the language of the exemptions. ³

Reviewing courts have decided FOIA cases using precisely the sort of structured balancing test contemplated by Congress. See Department of Justice v. Reporters Committee for the Freedom of the Press, --- U.S. ----, 109 S.Ct. 1468, 1476, 103 L.Ed.2d 774 (1989); Rose, 425 U.S. at 370-73, 96 S.Ct. at 1603-05; Senate of Puerto Rico v. Department of Justice, 823 F.2d 574, 587 (D.C.Cir.1987). The first step is to identify and evaluate the specific privacy interests implicated by the information encompassed by the disclosure request. See Reporters Committee, 109 S.Ct. at 1476-80; Lesar v. Department of Justice, 636 F.2d 472, 488 (D.C.Cir.1980). Conversely, the next step is to identify and evaluate the particular public interests that may be served--or disserved--by disclosure of the information. See Reporters Committee, 109 S.Ct. at 1480-83. Only after first examining each interest do we perform the actual weighing of the interests for and against disclosure.

This balancing process must be guided by the nuances of the statutory text. Prior to 1986, exemption 7(C), like exemption 6, applied to disclosures that "would constitute" an invasion of privacy. In 1986, Congress amended exemption 7(C), substituting for the phrase "would constitute" the phrase "could reasonably be expected to constitute." In the Court's view, the amendment

represents a considered congressional effort 'to ease considerably a Federal law enforcement agency's burden in invoking [Exemption 7]'.... [I]n determining the impact on personal privacy from disclosure of law enforcement records or information, the stricter standard of whether such disclosure 'would' constitute an unwarranted invasion of such privacy gives way to the more flexible standard of whether such disclosure 'could reasonably be expected to' constitute such an invasion.

Reporters Committee, id. at 1473 n. 9 (quoting 132 Cong.Rec. S16504 (Oct. 15, 1986) (statement of Sen. Hatch)).

There is another crucial difference between the language in exemptions 6 and 7(C) that guides our application of the exemption 7(C) balancing test. Unlike exemption 6, which requires that an invasion of privacy be "clearly unwarranted" before nondisclosure is authorized, exemption 7(C) omits the adverb "clearly," requiring only that the invasion of privacy be "unwarranted." This omission, the product of explicit bargaining between the President and Congress, has been interpreted to mean that Congress intended that "the standard for evaluating a threatened invasion of privacy interests resulting from the...