Robbins Geller Rudman & Dowd LLP v. U.S. Sec. & Exch. Comm'n
| Decision Date | 30 December 2019 |
| Docket Number | No. 19-CV-933 (RER),19-CV-933 (RER) |
| Citation | 419 F.Supp.3d 523 |
| Parties | ROBBINS GELLER RUDMAN & DOWD LLP, Plaintiff, v. UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Evan Jay Kaufman, Michael G. Capeci, Samuel H. Rudman, Robbins Geller Rudman & Dowd LLP, Melville, NY, for Plaintiff.
Kathleen Anne Mahoney, United States Attorneys Office Eastern District of New York, Brooklyn, NY, Vincent Lipari, United States Attorneys Office Eastern District of New York, Central Islip, NY, for Defendant.
The Securities and Exchange Commission (the "SEC" or "Defendant") moves this Court1 to issue an Order entering summary judgment against Robbins Geller Rudman & Dowd LLP ("Plaintiff") in this Freedom of Information Act ("FOIA") action. (See Dkt. No. 24 ("SEC Mem. of Law")). Plaintiff brought suit on February 15, 2019, seeking injunctive relief to enforce its right to obtain records in Defendant's possession pursuant to FOIA. . Defendant opposed Plaintiff's request on the basis that the records are exempt from disclosure under 5 U.S.C. § 552(b)(7)(A) ("Exemption 7(A)"). (Id. ¶ 9). Defendant now moves this Court to grant summary judgment and dismiss this action on the basis that the SEC properly determined the requested records are exempt from FOIA disclosure and no portion of the records can be segregated. (See SEC Mem. of Law). For the reasons set forth herein, the SEC's motion is GRANTED and judgment is entered in favor of Defendant.
Plaintiff is a law firm that is currently representing clients in a securities law class action lawsuit (the "PLSRA litigation")2 against Hertz Global Holdings, Inc. ("Hertz"), which centers on allegations of accounting fraud perpetuated by former Chief Executive Officer, Mark P. Frissora, and former Chief Financial Officer, Elyse Douglas, during fiscal years 2011 to 2013. (Compl. ¶ 3; Dkt. No. 27 ("Pl. Opp. Mem.") at 10). The SEC began investigating Hertz during the pendency of the PSLRA litigation. (Pl. Opp. Mem. at 11).
In July 2015, Hertz admitted, among other things, that the company overstated its net income between 14.64% and 32.12% for the fiscal years in question, and its executives set an "inappropriate tone at the top" that may have resulted in improper accounting practices within the company. (Dkt. No. 29-2 at ¶ 2; In re Hertz Global Holdings, Inc. Sec. Litig. , No. 2:13-CV-7050 (MCA) (LDW), 2017 WL 1536223, at *6 (D.N.J. Apr. 27, 2017). Based on these admissions, Plaintiff's clients sought relief pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Securities Act"). (Pl. Opp. Mem. at 11). The district court of New Jersey, however, found the element of scienter insufficiently pleaded and dismissed the case. In re Hertz Global Holdings, Inc. Sec. Litig. , 2017 WL 1536223, at *18.
Subsequently, Plaintiff appealed the district court's decision3 and filed a FOIA request to the SEC for the following records (the "Hertz Documents"):
(Compl. ¶¶ 3, 8). The SEC denied this request eight days later, citing Exemption (7)(A) as the basis for its denial. (Id . ¶ 9).
Then on December 31, 2018, Hertz settled with the SEC for its Securities Act violations, resulting in the publicly available "Order Instituting Cease-and-Desist Procedures Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities and Exchange Act of 1934, Making Findings, and Imposing a Cease and Desist Order" ("Cease-and-Desist Order"). (Compl. ¶ 11; Dkt. No. 1-2). Plaintiff claims that this Cease-and-Desist Order allegedly refers to the Hertz Documents previously sought in its FOIA request. (Pl. Opp. Mem. at 12). These Documents are of interest to Plaintiff because it believes information contain within these Documents led the SEC to make "numerous factual findings [in its investigation] that undermine the scienter arguments made by Hertz and the Hertz Executives in the PSLRA [Hertz] Litigation." (Id .).4
Plaintiff then renewed its FOIA request for categories (1) and (2) of the Hertz Documents. (Compl. ¶ 15). On February 1, 2019, the SEC's FOIA Branch Chief denied the request on the basis of Exemption 7(A), except for twelve pages of potentially responsive records. (Id. ¶ 16; Pl. Opp. Mem. at 15). Plaintiff appealed this determination on two grounds: (1) the Hertz documents were compiled by Hertz for business purposes, not law enforcement purposes, as required by Exemption 7(A); and (2) the SEC cannot maintain the position that its investigation is ongoing because the Cease-and-Desist Order establishes that it has concluded. (Compl. ¶¶ 21–22). The SEC denied Plaintiff's appeal, concluding that the SEC "had confirmed with staff that releasing the documents responsive to Items 1 and 2 ... could reasonably be expected to cause harm to ongoing law enforcement proceedings." (Dkt. No. 1-6 at 2–3). This denial forms the basis of the instant litigation requesting injunctive relief against Defendant for violations of 5 U.S.C. § 552.5 (Dkt. No. 1-1 at 1).
Plaintiff has clarified that it seeks "documents produced to the Commission by third parties," and not "records reflecting Defendant's internal or interagency practices or communications" or other privileged or confidential information." (Pl. Opp. Mem. at 19 (citing Dkt. No. 17 at 2)). The SEC identified approximately 160,000 documents that Hertz produced during the investigation but assert that these documents could still interfere with an on-going investigation (Dkt. No. 29 ¶ 12; Dkt. No. 1-6 at 4). Accordingly, the SEC has moved for summary judgment dismissing this action based on its valid withholding of documents pursuant to Exemption 7(A), or alternatively, the inapplicability of the public domain doctrine to these documents.6
A court may force an agency to disclose records pursuant to a FOIA request only where the plaintiff demonstrates that the agency has "(1) improperly, (2) withheld, (3) agency records." Grand Cent. P'ship v. Cuomo , 166 F.3d 473, 478 (2d Cir. 1999) (quoting U.S. Dep't of Justice v. Tax Analysts , 492 U.S. 136, 142, 109 S.Ct. 2841, 106 L.Ed.2d 112 (1989) ) (quotation marks omitted). The agency may contest this allegation by demonstrating that its search for documents "was adequate and that any withheld documents fall within an exemption to FOIA." Carney v. U.S. Dep't of Justice , 19 F.3d 807, 812 (2d Cir. 1994). If an agency meets its burden without any issues of material facts, it is entitled to summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
In deciding a motion for summary judgment, the Court will "draw all reasonable inferences and resolve all ambiguities in favor of the non-moving part." Garza v. Marine Transp. Lines, Inc. , 861 F.2d 23, 26 (2d Cir. 1988). The Court then determines whether the movant has presented sufficient evidence to demonstrate that the factfinder could reasonably find for the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In FOIA actions an agency may use affidavits or declarations, which are given a presumption of good faith, to present evidence supporting its motion. Carney, 19 F.3d at 812 (2d Cir. 1994). The Court deems the agency's justification for withholding documents sufficient if the justification "appears logical and plausible." Am. Civil Liberties Union v. U.S. Dep't of Def. , 901 F.3d 125, 133 (2d Cir. 2018), as amended (Aug. 22, 2018).
With a valid justification summary judgment is warranted unless the plaintiff can present evidence of "bad faith on the part of the agency sufficient to impugn the agency's affidavits or declarations" or "that an exemption claimed by the agency should not apply or summary judgment is otherwise inappropriate." Carney , 19 F.3d at 812 (citing Goland v. CIA , 607 F.2d 339, 355 (D.C. Cir. 1978) ); see also Schwartz, 2016 WL 154089, at *8 (citing Grand Cent. P'ship 166 F.3d at 478 ). "FOIA cases are generally and most appropriately resolved on motions for summary judgment."7 Platsky v. Food & Drug Admin. , No. 13-CV-6250 (SLT) (RLM), 2014 WL 7391611, at *3 (E.D.N.Y. Dec. 24, 2014) (citation omitted), aff'd 642 Fed. Appx. 63 (2d Cir. 2016), as amended (Jun. 21, 2016); see also Kaminsky v. Nat'l Aeronautics and Space Admin. , No. 08-CV-3313 (ARR) (LB), 2010 WL 276184, at *5 (E.D.N.Y. Jan. 19, 2010) (citation omitted), aff'd 402 Fed. Appx. 617 (2d Cir. 2010).
Exemption 7(A) permits agencies to withhold "records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information could reasonably be expected to interfere with enforcement proceedings." 5 U.S.C. § 552(b)(7). Where the validity of an Exemption 7(A) withholding is challenged, the SEC must show "(1) a law enforcement proceeding is pending or prospective and (2) release of the information could reasonably be expected to cause some articulable harm." New York Times Co. v. U.S. Dep't of Justice , 390 F. Supp. 3d 499, 513 (S.D.N.Y. 2019) (quoting New York Times Co. v. U.S. Dep't of Justice , No. 14-CV-03776 (AT) (SN), 2016 WL 5946711, at *7 (S.D.N.Y. Aug. 18, 2016) ) (internal quotation marks omitted). The agency need not justify the withholding of each document with...
To continue reading
Request your trial
-
Cui v. Fed. Bureau of Investigation
...release of the information could reasonably be expected to cause some articulable harm." Robbins Geller Rudman & Dowd LLP v. U.S. Sec. & Exch. Comm'n , 419 F. Supp. 3d 523, 530–31 (E.D.N.Y. 2019) (quoting N.Y. Times Co. , 390 F. Supp. 3d at 512–13 ); see also Azmy v. U.S. Dep't of Def. , 56......