Edelman v. Sec. & Exch. Comm'n

• Decision Date: 23 March 2018
• Docket Number: Civil Action No. 14–1140 (RDM)
• Citation: 302 F.Supp.3d 421
• Parties: Richard EDELMAN, Plaintiff, v. SECURITIES AND EXCHANGE COMMISSION, Defendant.
• Court: U.S. District Court — District of Columbia

302 F.Supp.3d 421

Richard EDELMAN, Plaintiff,

v.SECURITIES AND EXCHANGE COMMISSION, Defendant.

Civil Action No. 14–1140 (RDM)

United States District Court, District of Columbia.

Signed March 23, 2018

Scott Allan Hodes, Scott A. Hodes, Attorney at Law, Washington, DC, John Wyeth Griggs, Griggs & Adler, P.C., Reston, VA, for Plaintiff.

Melinda Hardy, Securities & Exchange Commission, Office of General Counsel, Philip J. Holmes, Securities & Exchange Commission, Division of Enforcement, Washington, DC, for Defendant.

MEMORANDUM OPINION

RANDOLPH D. MOSS, United States District JudgePlaintiff Richard Edelman operates a website on which he publishes information relating to the transfer of "ownership of the Empire State Building" to the Empire State Realty Trust ("ESRT"). Edelman v. SEC , 172 F.Supp.3d 133, 138 (D.D.C. 2016) ( Edelman I ). Following the formation of the ESRT, investors in the Empire State Building "bec[a]me investors in the ESRT." Dkt. 39–2 at 1 (Pl.'s SUMF ¶ 2). In 2014, Edelman lodged six requests for records under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, with the Securities and Exchange Commission ("SEC"), seeking documents relating to the SEC's "review of the ... transaction." Edelman I , 172 F.Supp.3d at 138. Among other records, Edelman requested "a set of complaints submitted by Empire State Building investors to the SEC." Id. at 140. Dissatisfied with the SEC's response, Edelman filed this FOIA action. Dkt. 1. The Court has already resolved two rounds of dueling motions for summary judgment, see Edelman I , 172 F.Supp.3d 133 ; Edelman v. SEC , 239 F.Supp.3d 45 (D.D.C. 2017) ( Edelman II ), and the matter is now before the Court on the third—and final—round of summary judgment motions, see Dkt. 37; Dkt. 39.

The only question that remains is whether the SEC may withhold the identities of thirty-six investors (or associated parties) in the Empire State Building who contacted the SEC to voice concerns regarding the creation of the ESRT. The answer turns on whether the complainants' privacy interest outweighs the public interest in knowing their identities. Applying this balancing test, the Court concludes that the SEC is not required to disclose the identities of the thirty-six complainants. The Court, accordingly, will GRANT the SEC's motion for summary judgment, Dkt. 37, and will DENY Edelman's cross-motion for summary judgment, Dkt. 39.

I. BACKGROUND

The factual background and procedural history of this case have been described at length in the Court's earlier memorandum opinions. See Edelman I , 172 F.Supp.3d at 138–42 ; Edelman II , 239 F.Supp.3d at 49–50. As relevant to the motions currently before the Court, the SEC produced 1,447 pages of consumer complaint documents. Dkt. 37–1 at 1–2 (Second Barss Decl. ¶ 4). In doing so, however, the SEC redacted the names of seventy individuals "who had communicated their concerns ... about the ESRT transaction" to the SEC. Id. (Second Barss Decl. ¶ 4). The seventy complainants "included individual investors in the [Empire State Building], relatives of investors, and trustees of family trusts that hold ... shares" in the property. Id. (Second Barss Decl. ¶ 4).

The last time this case was before the Court, the SEC invoked Exemption 6 to justify the redactions. Exemption 6 "protects information about individuals in ‘personnel and medical files and similar files’ when its disclosure ‘would constitute a clearly unwarranted invasion of personal privacy.’ " Shapiro v. U.S. Dep't of Justice , 153 F.Supp.3d 253, 257 (D.D.C. 2016) (quoting 5 U.S.C. § 552(b)(6) ). The SEC asserted that Exemption 6 permitted it "to shield [the] complainants from being harassed or ridiculed by any person they may have criticized in their complaints." Edelman II , 239 F.Supp.3d at 55 (internal quotation marks and citation omitted). Edelman countered that their privacy interest was "not particularly strong because the complaints are commercial in nature and because several of the complainants have ... agreed to the disclosure of their identities." Id. In Edelman II , the Court denied both motions for summary judgment on this point. Id. at 57. The Court explained its reasoning as follows:

Given the fact-intensive nature of the required inquiry, the Court cannot accept the SEC's invitation to sustain its application of Exemption 6 to all identifying information about all of the complainants. This is not to say, however, that the SEC cannot make a sufficient showing that the identities of some of the complainants implicate privacy interests that outweigh the public interest in disclosure. But because the current record lacks sufficient information for the Court to conduct the required balancing, and because the SEC ... should conduct the relevant balancing in the first instance, the Court will deny summary judgment at this time.

Id.

In accordance with Edelman II , the SEC subsequently disclosed the names of thirty-four of the seventy complainants. Those complainants, the SEC explained, had (1) "stated in affidavits ... that their names need not be withheld;" (2) "given interviews about the ESRT transaction;" (3) "posted their concerns on [the] [I]nternet;" or (4) "appeared as parties [or] counsel [in] lawsuits against the ESRT trustees." Dkt. 37–1 at 2 (Second Barss Decl. ¶ 5). The remaining thirty-six complainants, however, do not appear to have engaged in any such public activity. Id. (Second Barss Decl. ¶ 6). The SEC, accordingly, has continued to withhold their names on the grounds that this information falls within Exemption 6. See id. (Second Barss Decl. ¶ 6). The SEC has now renewed its motion for summary judgment, Dkt. 37, and Edelman has renewed his cross-motion, Dkt. 39.

II. LEGAL STANDARD

FOIA cases are typically resolved on motions for summary judgment under Federal Rule of Civil Procedure 56. See, e.g., Beltranena v. U.S. Dep't of State , 821 F.Supp.2d 167, 175 (D.D.C. 2011). To prevail on a summary judgment motion, the moving party must demonstrate that there are no genuine issues of material fact and that he or she is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Fed. R. Civ. P. 56. In a FOIA action, the agency may meet its burden by submitting "relatively detailed and non-conclusory" affidavits or declarations, SafeCard Servs., Inc. v. SEC , 926 F.2d 1197, 1200 (D.C. Cir. 1991), and an index of the information withheld, Vaughn v. Rosen , 484 F.2d 820, 826–28 (D.C. Cir. 1973) ; Summers v. Dep't of Justice , 140 F.3d 1077, 1080 (D.C. Cir. 1998). Because "it is the function, not the form, of the [ Vaughn ] index that is important," Keys v. U.S. Dep't of Justice , 830 F.2d 337, 349 (D.C. Cir. 1987), an agency may submit a declaration "in lieu of the index itself," so long as the declaration adequately identifies the records withheld and the agency's reasons for doing so, Judicial Watch, Inc. v. Food & Drug Admin. , 449 F.3d 141, 146 (D.C. Cir. 2006). An agency "is entitled to summary judgment if no material facts are in dispute and if it demonstrates ‘that each document that falls within the class requested either has been produced ... or is wholly exempt from the [FOIA's] inspection requirements.’ " Students Against Genocide v. U.S. Dep't of State , 257 F.3d 828, 833 (D.C. Cir. 2001) (quoting Goland v. CIA , 607 F.2d 339, 352 (D.C. Cir. 1978) ). The Court reviews the agency's decision de novo , and the agency bears the burden of sustaining its action. 5 U.S.C. § 552(a)(4)(B).

III. ANALYSIS

The Freedom of Information Act "mandates that an agency disclose records on request, unless they fall within one of nine [exclusive] exemptions." Milner v. Dep't of Navy , 562 U.S. 562, 565, 131 S.Ct. 1259, 179 L.Ed.2d 268 (2011). All that remains at issue in this third round of cross-motions for summary judgment is Exemption 6.

Exemption 6 provides that an agency need not disclose "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy." 5 U.S.C. § 552(b)(6). The parties—and the Court—agree that the information at issue here—the identities of the complainants—is contained in "similar files" and thus satisfy Exemption 6's threshold requirement. See Dkt. 37 at 4; Dkt. 39–1 at 2 n.2; see also Edelman II , 239 F.Supp.3d at 54–55 ; People for the Am. Way Found. v. Nat'l Park Serv. , 503 F.Supp.2d 284, 303 (D.D.C. 2007). The more difficult question is whether disclosure of the thirty-six complainants' identities "would constitute a clearly unwarranted invasion of personal privacy." 5 U.S.C. § 552(b)(6). To make that determination, the Court employs a two-step test. First, the Court must decide whether "disclosure would compromise a substantial, as opposed to a de minimis , privacy interest." Nat'l Ass'n of Home Builders v. Norton , 309 F.3d 26, 33 (D.C. Cir. 2002) (internal quotation marks omitted). Second, if so, the Court must weigh "the private interest involved (namely, the individual's right of privacy) against the public interest (namely, ... to open agency action to the light of public scrutiny)." Judicial Watch , 449 F.3d at 153 (internal quotation marks omitted).

With respect to the first step, the Court concludes that disclosure would compromise a substantial privacy interest. To be sure, Exemption 6 "does not categorically exempt individuals' identities" from disclosure "because the privacy interest at stake may vary depending on the context in which it is asserted." Am. Immigration Lawyers' Ass'n v. Exec. Office of Immigration Review , 830 F.3d 667, 675 (D.C. Cir. 2016) (quoting Judicial Watch , 449 F.3d at 153 ). Here, however, the SEC—at least now—does not purport to assert a categorical exemption. Rather, following the Court's decision in Edelman II , the SEC engaged in a case-by-case review of the privacy interests at stake, and it disclosed the identities of roughly half of the seventy complainants....