McCready v. Nicholson

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Citation465 F.3d 1
Docket NumberNo. 04-5425.,04-5425.
PartiesSheila Clarke McCREADY and E. Robert McCready, Jr., Appellants v. R. James NICHOLSON, in his capacity as Secretary of the United States Department of Veterans Affairs, Appellee.
Decision Date19 September 2006

Appeal from the United States District Court for the District of Columbia (No. 01cv02219).

Joseph G. Cosby argued the cause for appellants. With him on the briefs was Richard H. Gordin.

Lisa S. Goldfluss, Assistant U.S. Attorney, argued the cause for appellee. With her on the brief were Kenneth L. Wainstein, U.S. Attorney, and Michael J. Ryan, Assistant U.S. Attorney. R. Craig Lawrence, Assistant U.S. Attorney, entered an appearance.

Before: SENTELLE, GARLAND and GRIFFITH, Circuit Judges.

Opinion for the Court filed by Circuit Judge GRIFFITH.

GRIFFITH, Circuit Judge.

Appellant Sheila McCready claims that her employer, the United States Department of Veterans Affairs ("VA"), violated various provisions of the Privacy Act, 5 U.S.C. § 552a, in investigating allegations of misconduct in her office. McCready alleges that the VA, in the course of its investigation, created records about her that were filled with inaccuracies, and that she is entitled under the Privacy Act to review and amend those records. She also alleges that the VA improperly disclosed those records to the media and public, and illegally used them to take adverse action against her. The District Court granted summary judgment in favor of the VA on all twelve of McCready's claims, eight of which, McCready argues on appeal, should have survived the VA's summary judgment motion. For the reasons below, we affirm the District Court's judgment in part, reverse in part, and remand for further proceedings.

I.

In June 1999, the VA's Inspector General, in response to a confidential complaint of fiscal mismanagement and operational abuse, began an audit of the VA's Office of Congressional Affairs (the "Office") and McCready, who had been the head of the Office since July 1998. On October 21, 1999, the Secretary of the VA relieved McCready of her responsibilities and reassigned her to the Office of the Secretary. McCready would later be reassigned on November 22, 1999, to the Office of the Under Secretary for Veterans Health Administration. The Inspector General's audit produced three documents that have become the subject of this litigation: (1) a "Draft Audit Report," issued only to the Assistant Secretary for Policy and Planning in October 1999;1 (2) a "Final Audit Report," issued on January 7, 2000, to various VA officials, the Office of Management and Budget, the General Accounting Office,2 and various Congressional committees; and (3) an "Addendum Audit Report," issued on March 22, 2000, to the same recipients as the Final Audit Report (collectively, the "Inspector General's Reports"). The Inspector General's Office posted the Final Audit Report and the Addendum Audit Report on its website in spring 2000.

On January 19, 2000, twelve days after the Final Audit Report was released, the Assistant Secretary for Personnel Management, Edward Powell, sent a memorandum to the Secretary of the VA (the "Powell Memorandum"), discussing McCready's financial management of the Office. That very day, the Associated Press published an article highly critical of McCready's management. A short time later, on February 11, 2000, the Associated Press published a second article about McCready's performance. This second article quoted verbatim from Powell's private memorandum to the Secretary.

McCready wrote a memorandum to the General Counsel of the VA on March 17, 2000, responding to the Final Audit Report's allegations. McCready similarly responded to the Addendum Report on March 23, 2000. The Secretary of the VA asked the General Counsel's Office and the Office of the Assistant Secretary for Human Resources and Administration to determine whether the Inspector General's Reports "provide[ ] a basis for an adverse or other action against" McCready. The General Counsel and Assistant Secretary examined the Inspector General's charges and McCready's responses, and made a recommendation to the Secretary on July 17, 2000 (the "General Counsel's Review"). The VA completely redacted that recommendation from the copy of the memorandum it provided to McCready, but the Secretary of the VA wrote to McCready three days later that "[a]fter reviewing [McCready's] point-by-point response to the [Inspector General's] audit," he "concluded that no disciplinary action is warranted" and "[t]he matter is closed."

On February 8, 2001, McCready's counsel requested that the Inspector General correct several errors in the Final Audit and Addendum Reports, expunge the entire reports in light of those errors, or, in the alternative, incorporate McCready's response. The Inspector General denied that request. McCready's counsel appealed the Inspector General's decision to the VA's General Counsel. Citing the Privacy Act, McCready again wrote to the Inspector General on March 29, 2001, and requested various documents relating to the Inspector General's audit. The Inspector General responded that "records pertaining to [McCready] are not maintained in a Privacy Act system of records" and "therefore, we are processing [McCready's] letter as a [Freedom of Information Act] request."

McCready also requested that various VA offices expunge the Powell Memorandum. The Director of the VA's Information Management Service determined that five offices within the VA maintained copies of the Powell Memorandum. The Office of the General Counsel expunged the Powell Memorandum from its files, but the other offices decided to retain it. McCready wrote to the remaining four offices and asked them to attach her response to the Powell Memorandum, or, alternatively, correct the Memorandum based upon her response, and inform anyone known to possess the Memorandum of her response and any corrections. The Inspector General agreed to include McCready's response in its files.

McCready and her husband, Robert,3 filed an eleven-count complaint on October 26, 2001, and a twelve-count amended complaint on January 24, 2002, alleging that the VA improperly maintained, disclosed, refused access to, and/or refused to amend the Inspector General's Reports, the Powell Memorandum, and the General Counsel's Review. In essence, McCready's twelve counts sought to compel the VA to correct alleged inaccuracies in various documents notify all recipients (including Congress) that the documents had been amended and that McCready would not be subject to disciplinary action, and require the VA to act in accordance with the Privacy Act. McCready also sought damages, attorneys' fees, and costs.

The VA requested, without objection from the plaintiffs, that it be allowed to immediately file what the District Court deemed "a preliminary motion for summary judgment based on lack of subject matter jurisdiction." The District Court granted that request. Plaintiffs represent in their brief, and the Government does not contest, that the "parties agreed that the case would benefit from determining several purely legal issues before engaging in discovery." Appellants' Br. at 11. The Government filed its motion for summary judgment based on lack of subject matter jurisdiction, and, shortly thereafter, the Calendar Committee of the District Court reassigned the matter to a new district judge.

On the merits, the VA argued that the Privacy Act did not provide the District Court subject matter jurisdiction because the various documents were not maintained in a "system of records," as required by the Act. The VA also argued that, pursuant to 5 U.S.C. § 552a(k)(2), the Inspector General's Reports were exempt from some of the Privacy Act provisions at issue because they were investigative materials compiled for law enforcement purposes. Some of McCready's claims also failed, the VA contended, because McCready's complaint did not establish that any fact compiled by the VA was inaccurate, and that McCready had not suffered an adverse effect or adverse determination.

McCready opposed the VA's motion, arguing that most of her Privacy Act claims did not require proof of a system of records. In any event, the Government's declarations, McCready contended, were too "conclusory" to support summary judgment, as they did not, among other things, identify the systems of records searched. McCready also argued that she was "entitled to discovery to determine whether the records at issue are in any `system of records.'" In her view, the Government had not met its burden to show that the Inspector General's Reports qualified for an exemption under the Privacy Act. Finally, McCready contended there were material issues of fact precluding summary judgment regarding whether the documents at issue were accurate and whether McCready had suffered adverse determinations.

McCready also invoked Federal Rule of Civil Procedure 56(f), arguing that several issues raised by the Government went beyond pure issues of law and required discovery for their resolution. Plaintiffs' counsel filed an affidavit identifying several issues needing discovery. The Government argued in reply that discovery was not necessary. McCready was permitted to file a sur-reply.

After receiving the parties' briefs, the District Court sua sponte ordered additional briefing. The existing briefs, the Court determined, were "sufficient to allow the Court to decide all issues except for allegations raised in Count XI of the Complaint that the VA website and EDMS [Electronic Data Management System]," a database used by the VA, are "Privacy Act `systems of records.'" A declaration provided by the Government, however, was "insufficient" to decide that remaining issue. The District Court invited the parties to file further ...

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