Judicial Watch, Inc. v. Rossotti

• Decision Date: 02 May 2003
• Docket Number: No. 02-5154.,02-5154.
• Citation: 326 F.3d 1309
• Parties: JUDICIAL WATCH, INC., Appellant, v. Charles O. ROSSOTTI, Commissioner, Internal Revenue Service and Department of Treasury, Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1309

326 F.3d 1309

JUDICIAL WATCH, INC., Appellant, v. Charles O. ROSSOTTI, Commissioner, Internal Revenue Service and Department of Treasury, Appellees.

No. 02-5154.

United States Court of Appeals, District of Columbia Circuit.

Argued March 17, 2003.

Decided May 2, 2003.

Appeal from the United States District Court for the District of Columbia (No. 01cv01612).

Larry E. Klayman argued the cause and filed the briefs for appellant.

Gretchen M. Wolfinger, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief were Roscoe C. Howard, Jr., U.S. Attorney, and Jonathan S. Cohen, Attorney, U.S. Department of Justice.

Before: SENTELLE, HENDERSON and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

Appellant, a non-profit organization, argues that it qualifies for a fee waiver under the Freedom of Information Act because disclosure of the requested documents regarding a conflict-of-interest waiver received by the Commissioner of the Internal Revenue Service would serve the "public interest." The district court thought appellant's request too "general and formulaic" to satisfy FOIA. We disagree. Following Congress's directive that FOIA's fee waiver requirement be liberally construed, and finding appellant's request both reasonably specific and non-conclusory — all that our case law requires — we reverse.

I.

Intended to "ensure an informed citizenry, vital to the functioning of a democratic society, needed to check against corruption and to hold the governors accountable to the governed," NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 242, 98 S.Ct. 2311, 2327, 57 L.Ed.2d 159 (1978), the Freedom of Information Act requires federal agencies to disclose information upon request unless the statute expressly exempts the information from disclosure. 5 U.S.C. § 552 et seq. Although requesters must pay reasonable charges associated with processing their requests, 5 U.S.C. § 552(a), FOIA section 552(a)(4)(A)(iii) requires agencies to waive fees for requesters able to demonstrate that "disclosure of the information is in the public interest." Requesters may seek judicial review of denials of fee waivers only after exhausting specified administrative remedies. 5 U.S.C. § 552(a)(6)(A)(i), (ii); Oglesby v. U.S. Dep't of the Army, 920 F.2d 57, 61-62 (D.C.Cir.1990) (holding that FOIA administrative exhaustion requirement is jurisdictional). A requester is considered to have constructively exhausted administrative remedies and may seek judicial review immediately if (with one exception not relevant here) the agency fails to answer the request within twenty days. 5 U.S.C. § 552(a)(6)(c). If the agency responds to the request after the twenty-day statutory window, but before the requester files suit, the administrative exhaustion requirement still applies. Oglesby, 920 F.2d at 64-65.

On June 6, 2001, appellant, Judicial Watch, Inc., "a non-profit, non-partisan, public interest organization committed to fighting corruption by government officials," Appellant's Br. at 2, sent virtually identical FOIA requests to the Internal Revenue Service and the Department of the Treasury. The two requests sought information about former Internal Revenue Service Commissioner Charles Rossotti's relationship with American Management Systems, Inc., a company he co-founded and in which he retained stock; the company's contract with the IRS; and Rossotti's receipt of a conflict-of-interest waiver from Treasury. Specifically, the letters requested information concerning:

1. IRS Commissioner Charles O. Rossotti's December 11, 2000 waiver, executed by former Deputy Treasury Secretary Stuart Eizenstadt, concerning the "Custodial Accounting Project" (hereinafter "CAP").

2. IRS Commissioner Charles O. Rossotti and American Management Systems, Inc. (hereinafter "AMS").

3. Decision(s) concerning CAP that have or would have a direct and predictable effect on IRS Commissioner Charles O. Rossotti's financial interest in AMS.

4. The decision to grant IRS Commissioner Charles O. Rossotti a conflict-of-interest waiver on December 11, 2000.

5. Communications between IRS Commissioner Charles O. Rossotti, former Deputy Treasury Secretary Stuart Eizenstadt, and/or former Treasury Department Assistant General Counsel Kenneth Schmalzbach concerning the December 11, 2000 conflict-of-interest waiver and/or CAP, and/or AMS.

6. The decision to grant AMS the contract for an automated financial management system and software supporting CAP.

Claiming that disclosing such information would serve the "public interest," 5 U.S.C. § 552(a)(4)(A)(iii), Judicial Watch sought a fee waiver in connection with each request. The IRS replied by letter dated July 5. Without addressing the fee waiver request, the July 5 letter asked Judicial Watch for additional time to respond. The letter explained that if Judicial Watch did not agree to the extension, the organization could seek judicial review. Judicial Watch never answered.

Treasury responded to Judicial Watch's fee waiver request with multiple letters, only two of which are relevant here. By letter dated July 10, Treasury asked for additional information from Judicial Watch regarding its waiver request. Judicial Watch never replied, so on August 10, Treasury informed Judicial Watch that its request would be deemed withdrawn within thirty days unless it complied with Treasury's advance fee payment requirement. Again, Judicial Watch did not respond, and Treasury administratively closed the matter.

On July 25, Judicial Watch filed suit in the U.S. District Court for the District of Columbia seeking to compel the two agencies to grant fee waivers. In an opinion addressing both fee waiver requests, the district court granted summary judgment for the IRS and dismissed the complaint against Treasury. Judicial Watch v. Rossotti, No. 01-1612 (D.D.C. Mar. 18, 2002). With respect to Treasury, the court found that Judicial Watch failed to exhaust its administrative remedies because the Department's July 10 letter, sent before Judicial Watch filed suit, constituted a substantive response. Addressing the merits of the IRS request, the district court characterized Judicial Watch's June 6 letter as "general and formulaic," finding that it fell "far short" of demonstrating that release of the information would be in the public interest. Id., mem. op. at 8.

Judicial Watch appeals. We review the district court's decision to grant summary judgment and to dismiss the complaint de novo. Trifax Corp. v. Dist. of Columbia, 314 F.3d 641, 643 (D.C.Cir.2003). We also review de novo an agency's denial of a fee waiver request, but our review is "limited to the record before the agency." 5 U.S.C. § 552(a)(4)(A)(vii).

II.

Judicial Watch challenges the district court's grant of summary judgment to the IRS and dismissal of its complaint against Treasury. The government defends the district court's reason for granting summary judgment to the IRS, but offers a new justification for dismissing the complaint against Treasury. See Dimond v. Dist. of Columbia, 792 F.2d 179, 187 (D.C.Cir.1986) (noting that appellate court can consider any argument on appeal that supports the district court's judgment). Citing Treasury regulations providing that FOIA's twenty-day time limit does not apply to requests that fail to "conform in every respect" to the department's regulations, 31 C.F.R. § 1.5(a)(1), and that requests are only "considered to have been received on the date on which a complete request ... has been received," id. at § 1.5(f), the government argues that Judicial Watch failed to constructively exhaust its administrative remedies both because FOIA's twenty-day statutory window did not apply to its nonconforming request and because Judicial Watch's incomplete request was never considered to be "received." According to the government, our disposition of Judicial Watch's case against Treasury therefore turns on the adequacy of its June 6 letter: If the letter did not demonstrate Judicial Watch's eligibility for a fee waiver, then Treasury had no obligation to respond and Judicial Watch failed to exhaust its administrative remedies; but if Judicial Watch qualified for a fee waiver, then it constructively exhausted its administrative remedies because Treasury did not respond substantively within twenty days. Given the district court's reason for granting summary judgment to the IRS—that Judicial Watch failed to qualify for a fee waiver—both cases now turn on whether the June 6 letters demonstrate that disclosure of the information would serve the "public interest." 5 U.S.C. § 552(a)(4)(A)(iii).

In order to demonstrate that a FOIA request is in the public interest, and therefore eligible for a fee waiver, the requester must show that disclosure of the information "is likely to contribute significantly to public understanding of the operations or activities of the government and is not primarily in the commercial interest of the requester." 5 U.S.C. § 552(a)(4)(A)(iii). Because the government does not argue that the requests serve Judicial Watch's "commercial interests," this case turns on whether disclosure of the information is "likely to contribute significantly to public understanding of the [government's] operations or activities." On this issue, the IRS's implementing regulation essentially repeats the statute's language and includes the following non-exclusive list of factors the agency "shall consider":

(A) Whether the subject of the releasable records concerns the agency's operations or activities;

(B) Whether the releasable records are likely to contribute to an understanding of the agency's operations or activities;

(C) Whether the releasable records are likely to contribute to the general public's understanding of the agency's operations or activities (e.g., how will the requester convey the information to the general public);

(D) The significance of the...