Koopmann v. U.S. Dep't of Transp.

Decision Date16 August 2018
Docket Number18-CV-3460 (JMF)
Citation335 F.Supp.3d 556
Parties Gary KOOPMANN, Timothy Kidd, and Victor Pirnik, Plaintiffs, v. UNITED STATES DEPARTMENT OF TRANSPORTATION et al., Defendants.
CourtU.S. District Court — Southern District of New York

Michael Jonathan Wernke, Jeremy Alan Lieberman, Pomerantz LLP, New York, NY, for Plaintiffs.

Peter Max Aronoff, United States Attorney's Office for the SDNY, New York, NY, for Defendants.

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge

The United States Department of Transportation ("USDOT"), like most federal agencies, has enacted a set of regulations—known as " Touhy regulations" after the Supreme Court case that spawned them—governing when its employees may be called by private parties to testify in court. On their face, USDOT's regulations apply to both "current" and "former" employees. The principal question is this case is whether application of the regulations to "former" employees is lawful, as the statute pursuant to which the regulations were enacted—the Housekeeping Statute, 5 U.S.C. § 301 —speaks only of "employees." The case arises out of another case, Pirnik v. Fiat Chrysler Automobiles N.V. , 15-CV-7199 (JMF) (S.D.N.Y.) ("Pirnik "), in which Plaintiffs here bring securities-fraud claims against Fiat Chrysler Automobiles ("FCA") and other defendants. In an effort to obtain evidence concerning FCA's communications with the National Highway Traffic Safety Administration ("NHTSA"), a part of USDOT, Plaintiffs sought to depose a former NHTSA employee, and USDOT—invoking its Touhy regulations—denied the request. Pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 500 et seq. , Plaintiffs bring this suit to challenge that denial as "arbitrary, capricious, an abuse of discretion, and in excess of [USDOT's] statutory jurisdiction." (Docket No. 1 ("Compl.") ¶ 59). Defendants now move to dismiss or, in the alternative, for summary judgment; Plaintiffs cross-move for summary judgment. (Docket Nos. 23, 25).

Based on the text, structure, and purpose of the Housekeeping Statute, the Court concludes that USDOT's Touhy regulations are unlawful to the extent that they apply to former employees. Accordingly, and for the other reasons stated below, Plaintiffs' motion for summary judgment is GRANTED, and Defendant's motion is DENIED.

LEGAL BACKGROUND

"The antecedents" of today's Housekeeping Statute "go back to the beginning of the Republic, when statutes were enacted to give heads of early Government departments authority to govern internal department affairs." Chrysler Corp. v. Brown , 441 U.S. 281, 309, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979). Those early laws "were consolidated into one statute in 1874 and the current version of the statute was enacted in 1958." Id. The current version provides in full as follows:

The head of an Executive department or military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property. This section does not authorize withholding information from the public or limiting the availability of records to the public.

5 U.S.C. § 301. Pursuant to that statute, USDOT promulgated regulations "governing the testimony of an employee in legal proceedings." Testimony of Employees of the Department and Production of Records in Legal Proceedings, 49 C.F.R. § 9.1(a) (2017). These regulations—commonly known as " Touhy regulations" after the Supreme Court's decision in United States ex rel. Touhy v. Ragen , 340 U.S. 462, 71 S.Ct. 416, 95 L.Ed. 417 (1951) —establish "procedures to be followed when an employee is issued a subpoena, order or other demand ... by a court or other competent authority, or is requested by a private litigant, to provide testimony or produce records concerning information acquired in the course of performing official duties or because of the employee's official status." 49 C.F.R. § 9.1(a). Generally speaking, they prohibit any USDOT employee from "provid[ing] testimony or produc[ing] any material contained in the files of the Department, or disclos[ing] any information or produc[ing] any material acquired as part of the performance of that employee's official duties." Id. § 9.5.

In a case between private litigants, however, when an employee receives a subpoena or other demand to testify or produce records, "agency counsel, in his or her discretion, may grant the employee permission to testify or produce records"—but "only if the purposes of this part are met or agency counsel determines that an exception is appropriate." Id. § 9.11(b). Section 9.1(b), in turn, identifies five "purposes of this part": (1) "[c]onserv[ing] the time of employees for conducting official business"; (2) "[m]inimiz[ing] the possibility of involving the Department in controversial issues not related to its mission"; (3) "[m]aintain[ing] the impartiality of the Department among private litigants"; (4) "[a]void[ing] spending the time and money of the United States for private purposes"; and (5) "protect[ing] confidential, sensitive information and the deliberative processes of the Department." Id. § 9.1(b). Finally, Section 9.1(c) defines when an "exception" may be appropriate—namely, "when the deviation will not interfere with matters of operational or military necessity, and when agency counsel determines that" (1) the exception "is necessary to prevent a miscarriage of justice"; (2) "[t]he Department has an interest in the decision that may be rendered in the legal proceeding"; or (3) "[t]he exception is in the best interest of the Department or the United States." Id. § 9.1(c).

Most significant for purposes of this case, USDOT's Touhy regulations define "employee" to include "any current or former officer or employee of the Department." Id. § 9.3 (emphasis added). Notably, until 1993, the definition of "employee" did not include the words "or former." In that year, however, USDOT amended its regulations to (among other things) extend to the testimony of former employees. See Testimony of Employees of the Department and Production of Records in Legal Proceedings ("Notice of Proposed Rulemaking"), 57 Fed. Reg. 9224 (March 17, 1992) (proposing the amendment); Testimony of Employees of the Department and Production of Records in Legal Proceedings ("Notice of Final Rule"), 58 Fed. Reg. 6719 (Feb. 2, 1993). In USDOT's final notice of the new language, the agency explained that it "believes that it possesses ample authority under the broad language of 5 U.S.C. [§] 301 to enlarge the definition of Department employees in its regulations." Notice of Final Rule, 58 Fed. Reg. at 6722. Further, USDOT wrote, " 5 U.S.C. [§] 301 does not exclude former employees or contractors from the realm of its coverage." Id.

FACTUAL BACKGROUND

In Pirnik , Plaintiffs claim that "FCA and certain of its officers and executives repeatedly assured investors that FCA was compliant with vehicle safety and emissions regulations." (Compl. ¶ 12). Plaintiffs allege that these representations were materially false and/or misleading because FCA ignored various safety obligations and misled federal regulators, including NHTSA. Accordingly, at least some of Plaintiffs' allegations in Pirnik turn on FCA's compliance and communication with NHTSA. ( Id. ).

On February 6, 2018, Plaintiffs' counsel issued a subpoena to Robert Garris, a former NHTSA employee. (Id. ¶¶ 1, 21). Garris had worked in NHTSA's Recall Management Division, where he conducted investigations regarding the performance of safety recalls initiated by vehicle manufacturers, including a recall initiated by FCA. (Id. ¶¶ 14-15). Pursuant to the USDOT's Touhy regulations, Plaintiffs' counsel submitted a request to NHTSA to take Garris's deposition. (Id. ¶ 23). On March 6, 2018, NHTSA denied that request by letter, stating that it "seeks to delve behind the formal record," that Garris would "have little or no [relevant] knowledge," and that Plaintiffs could obtain evidence of communications between NHTSA and the FCA defendants from the FCA defendants themselves. (Compl., Ex. 2 ("Denial Letter"), at 3-4). NHTSA acknowledged that Garris was "a former employee" and that his testifying would thus "not divert him from performing any governmental duties," but concluded that other NHTSA employees would "have to take time away from their official duties to prepare for the deposition, as well as travel to them." (Id. at 4). Balancing the "stated need for the testimony of Mr. Garris" against the purposes of USDOT's regulations, NHTSA therefore denied the request. (Id. at 5).

LEGAL STANDARDS

The APA authorizes a reviewing court to "hold unlawful and set aside agency action, findings, and conclusions found to be ... arbitrary [or] capricious," "contrary to constitutional right," "in excess of statutory jurisdiction," or "without observance of procedure required by law."

5 U.S.C. § 706(2)(A)-(D). Where, as here, "a party seeks review of agency action under the APA, the district judge sits as an appellate tribunal," and "[t]he entire case on review is a question of law." Am. Biosci., Inc. v. Thompson , 269 F.3d 1077, 1083 (D.C. Cir. 2001) (internal quotation marks omitted); see also Just Bagels Mfg. v. Mayorkas , 900 F.Supp.2d 363, 372 n.7 (S.D.N.Y. 2012). While the usual summary judgment standard under Rule 56 of the Federal Rules of Civil Procedure does not apply in such cases, see Ass'n of Proprietary Colls. v. Duncan , 107 F.Supp.3d 332, 344 (S.D.N.Y. 2015) (citing UPMC Mercy v. Sebelius , 793 F.Supp.2d 62, 67 (D.D.C. 2011), summary judgment is nonetheless "generally appropriate," as "[t]he question whether an agency's decision is arbitrary and capricious" or in excess of statutory jurisdiction "is a legal issue amenable to summary disposition," Noroozi v. Napolitano , 905 F.Supp.2d 535, 541 (S.D.N.Y. 2012) (internal quotation marks omitted).

DISCUSSION

As noted, the principal...

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