Kaye v. Burns

• Decision Date: 05 April 1976
• Docket Number: No. 75 Civ. 1873.,75 Civ. 1873.
• Citation: 411 F. Supp. 897
• Parties: Richard S. KAYE, Plaintiff, v. Arthur F. BURNS, Board of Governors of the Federal Reserve System and Theodore E. Allison, Defendants.
• Court: U.S. District Court — Southern District of New York

411 F. Supp. 897

Richard S. KAYE, Plaintiff, v. Arthur F. BURNS, Board of Governors of the Federal Reserve System and Theodore E. Allison, Defendants.

No. 75 Civ. 1873.

United States District Court, S. D. New York.

April 5, 1976.

Alexander, Katz & Rosenberg by John M. Burns, III, New York City, for plaintiff.

Robert B. Fiske, Jr., U. S. Atty., S. D. N. Y., by Stuart I. Parker, Asst. U. S. Atty., New York City, for defendants.

OPINION

ROBERT L. CARTER, District Judge.

Plaintiff has moved for an order, pursuant to 5 U.S.C. § 552(a)(4)(E), assessing against the defendants attorneys' fees and litigation costs incurred by the plaintiff. The motion is denied, and the action is hereby dismissed as moot.

FACTS

This action was brought under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552(a)(4)(B), to obtain disclosure of certain records of the Federal Reserve System. Defendant Arthur F. Burns ("Burns") is the Chairman of the Board of Governors of the Federal Reserve System ("Board"), and defendant Theodore E. Allison ("Allison") is the Secretary of the Board of Governors and the person to whom plaintiff addressed his initial requests for the production and disclosure of Agency records.

On October 27, 1974, plaintiff demanded from defendants certain records relating to various acquisitions by, and other activities of the Equimark Corporation ("Equimark"). On December 7, 1974, plaintiff, by letter, made an additional demand for certain other documents. Both of these requests were honored with one exception — the Board refused to furnish a copy of a letter dated August 21, 1973, to Equimark Corporation, from Theodore E. Allison, Assistant Secretary of the Board, respecting Equimark's acquisition of six offices of First Provident Company, Inc. On December 17, 1974, Allison (then Secretary of the Board) wrote to plaintiff informing him that that letter, in the judgment of the Board's Legal Division, related to an examination report prepared by, on behalf of, and for the use of the Board, and was part of the Board's "investigatory files compiled for law enforcement purposes" and was not available by law to a party other than an agency. The letter went on to relate that, accordingly, the Board's staff was of the opinion that disclosure of the August 21, 1973 letter was not required by the Freedom of Information Act or the Board's Rules Regarding Availability of Information,¹ and that plaintiff could seek a formal ruling from the Board on his request. By letter dated December 24, 1974, plaintiff filed a formal appeal to the Board from its decision not to produce the letter.

Plaintiff's appeal was denied by the Board on January 17, 1975. The Board reiterated its position that the letter requested was exempt from disclosure under the Freedom of Information Act by virtue of 5 U.S.C. § 552(b)(7) and (8) of the Act which provide in pertinent part as follows:

"This section does not apply to matters that are —

"(7) investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an impartial adjudication, (C) constitute an unwarranted invasion of personal privacy, (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (E) disclose investigative techniques and procedures, or (F) endanger the life or physical safety of law enforcement personnel;

"(8) contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions."

It was the opinion of the Board that the letter in issue "related" to an examination report prepared on behalf of, and for the use of the Board within the meaning of exemption (b)(8) and that while the Board's primary responsibility was not as an investigative body, that role was "sometimes necessarily assumed as an incident to its regulatory responsibilities", and, as such, the letter was likewise exempt under exemption (b)(7) of the Act.

On January 9, 1975, plaintiff filed a new, formal request with the Board for the production of a copy of the written record prepared by a member or members of the staff of the Board of Governors of a summary of a meeting held in April of 1972 and attended by members of the Board's staff and Donald C. Bush, Counsel for Equimark Corporation.²

By letter dated January 11, 1975, Kaye clarified his request for summaries of the April, 1972 meeting and further requested that the Board conduct a "careful, thorough search" to locate the records requested.

On January 22, 1975, Allison responded to the request for the summary of the April, 1972 meeting. The pertinent portion of that letter is set out in the margin.³

On March 4, 1975, following a further exchange of correspondence, Mr. Jeffrey M. Bucher, the Governor designated to consider appeals of persons denied access to agency records, responded to Mr. Kaye's hitherto unsatisfied document requests.

With respect to the request for the summary of the April, 1972 meeting, the Bucher letter indicated that notwithstanding the Board's earlier position that such a summary would be exempt under the (b)(7) investigatory exemption, see note 3, supra, the request could not be complied with in any event since a search of the Board's records had disclosed no summaries of that meeting.⁴

With respect to the August 21, 1973 letter, the Board retreated somewhat from its earlier position, noting that "it appears that it is no longer appropriate to rely on the exemption for investigatory files", and that while the letter might have been an investigatory record within the meaning of § 552(b)(7), as amended, the production of the letter would not bring about any of the consequences specifically enumerated in clauses (A)-(F) of that newly amended section. Nevertheless, the Board was of the view that the 1974 amendments to the Freedom of Information Act had not altered the applicability of § 552(b)(8) to the letter. Since the letter in question related to matters raised in a joint examination of Equimark Corporation and its subsidiaries conducted by the Federal Reserve Banks of Cleveland, New York and Richmond pursuant to the Board's authority under section 5(c) of the Bank Holding Company Act, 12 U.S.C. § 1844(c) to "make examinations of each bank holding company and each subsidiary thereof", the Board reaffirmed its view that the August 21, 1973 letter related to an examination report prepared by, on behalf of, and for the use of the Board which was responsible for the regulation and supervision of financial institutions. Again, plaintiff's request for production of the letter was denied.⁵

On April 18, 1975, plaintiff commenced this action to obtain a preliminary and final injunction against the improper withholding of the documents which the Board had refused to furnish — i. e., the summaries of the April, 1972 meeting and the Allison letter of August 21, 1973.⁶

Finally, on June 16, 1975 — some two months after the commencement of the action —the United States Attorney provided to the plaintiff a copy of the August 21, 1973 letter. The letter, from the secretary of the Board of Governors of the Federal Reserve System to the president of Equimark, advised Equimark that the Board had referred the alleged unlawful acquisition by Equimark of assets of First Provident Company, Inc. to the Criminal Division of the Department of Justice for appropriate action. The Board alleges, and plaintiff does not dispute the fact that on June 16, 1975, the Justice Department's criminal investigation of Equimark ended when Equimark pleaded guilty to an indictment returned by a federal grand jury in Baltimore, Maryland on that day. Since the June 16th indictment in effect made public the contents of the letter, the Board authorized its immediate disclosure to the plaintiff, and a copy of the letter was mailed to the plaintiff on June 16, 1975. During the pendency of the criminal investigation of Equimark, the Board had been requested by the Criminal Division of the Department of Justice not to make the letter public. See affidavit of Stuart I. Parker, Assistant United States Attorney, sworn to November 14, 1975, at ¶¶ 5-6.

Several points emerge from this rather detailed recitation of the facts. First, it is clear that plaintiff has expended considerable time and effort to obtain the documents and records sought. Second, it is equally clear that the underlying action under the Freedom of Information Act to compel the Board's production of documents is now (and has been since June 16, 1975) moot in the sense that there is no longer an active case or controversy within the meaning of Article III of the Constitution. See SEC v. Medical Committee for Human Rights, 404 U.S. 403, 92 S.Ct. 577, 30 L.Ed.2d 560 (1972); Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 1950-51, 23 L.Ed.2d 491, 502 (1969); see generally, 13 Wright, Miller and Cooper, Federal Practice and Procedure § 3533 (1975 ed.).

With respect to the demand for summaries of the April, 1972 meeting, the Board has alleged, and plaintiff has apparently conceded that such summaries do not exist.

In addition, the other document upon which plaintiff instituted his action — the letter of August 21, 1973 — has been produced by the Board. Consequently, this action is hereby dismissed as moot.

The issue remaining before us is whether plaintiff is entitled to recover attorneys' fees and litigation costs in bringing this suit.

Discussion

I.

Section 552(a)(4)(E) of the Freedom of Information Act, as amended, provides for the recovery of attorney fees...