Prudential Locations Llc v. U.S. Dep't of Hous.

• Decision Date: 09 June 2011
• Docket Number: No. 09–16995.,09–16995.
• Parties: PRUDENTIAL LOCATIONS LLC, a Hawaii limited liability company, Plaintiff–Appellant,v.U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

648 F.3d 768

11 Cal. Daily Op. Serv. 7059

2011 Daily Journal D.A.R. 8492

PRUDENTIAL LOCATIONS LLC, a Hawaii limited liability company, Plaintiff–Appellant,

v.U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Defendant–Appellee.

No. 09–16995.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 15, 2011.Filed June 9, 2011.

Paul Alston and Jason H. Kim, Alston Hunt Floyd & Ing, Honolulu, HI, for the plaintiff-appellant.Tony West, Assistant Attorney General, Steve Frank and Leonard Schaitman, Attorneys, U.S. Department of Justice, Civil Division, Washington, D.C., and Edward H. Kubo, Jr., United States Attorney, Honolulu, HI, for the defendant-appellee.Appeal from the United States District Court for the District of Hawai‘i, Susan Oki Mollway, Chief District Judge, Presiding. D.C. No. 1:09–cv–00128–SOM–KSC.Before: A. WALLACE TASHIMA, WILLIAM A. FLETCHER, and MARSHA S. BERZON, Circuit Judges.

OPINION

BERZON, Circuit Judge:

This is a Freedom of Information Act (“FOIA”) case concerning a request for documents about individuals who reported to the U.S. Department of Housing and Urban Development (“HUD”) their suspicions that Prudential Locations LLC (“Prudential”), a real estate company, was violating the law. HUD produced the documents, but redacted the two of them at issue here to conceal information that identified the complaining individuals. In defense of the redactions, HUD asserted, and the district court agreed, that the redactions were justified pursuant to FOIA Exemption 6, which allows an agency to withhold “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); see Prudential Locations LLC v. HUD, 646 F.Supp.2d 1221, 1228 (D.Haw.2009).

Under the case law, Exemption 6 requires courts to balance the personal privacy interests protected by the exemption against the public interest furthered by disclosure. See Lahr v. Nat'l Transp. Safety Bd., 569 F.3d 964, 973 (9th Cir.2009). That inquiry requires assessing the magnitude of the privacy interests at stake and the severity of the invasion of those interests that would be occasioned by disclosure. Here, we are faced with an additional, different question: How likely is it that disclosure would result in any privacy invasion at all? We remand because HUD has not provided a factual basis sufficient to answer any of those three questions. See Fiduccia v. U.S. Dep't of Justice, 185 F.3d 1035, 1040 (9th Cir.1999); Wiener v. FBI, 943 F.2d 972, 979 (9th Cir.1991). In light of the FOIA's strong presumption in favor of disclosure, and the narrow reach of the FOIA exemptions, see, e.g., Milner v. Dep't of Navy, ––– U.S. ––––, 131 S.Ct. 1259, 1265, 179 L.Ed.2d 268 (2011), we cannot affirm the grant of summary judgment on the current record. While HUD has conjured the specter of privacy interests, it has not adduced evidence establishing such interests are actually at stake, or if they are, how much weight they should be accorded.

I

HUD is responsible for administering and enforcing the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601–2617. One of the purposes of RESPA is to “eliminat[e] ... kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services.” 12 U.S.C. § 2601(b)(2). To achieve that purpose, the act prohibits, among other things, giving or accepting “fee[s], kick-back[s] or thing[s] of value” for referring “business incident to or a part of a real estate settlement service involving a federally related mortgage loan.” Id. § 2607(a). The documents at issue here are two communications notifying HUD of suspected violations of RESPA's prohibitions on kickbacks and referral fees.

The first document is a short letter dated July 7, 2003 (the “2003 Letter”). The letter averred that “Prudential Locations Real Estate Salespersons get monetary kickbacks ($ $,$ $ $) for the amount of business that is referred to Wells Fargo.” Attached to the letter was an article from the Honolulu Star–Bulletin purportedly supporting the allegations. The informant did not expressly request an investigation, but did ask: “Is it a violation of RESPA for real estate agents to receive compensation for steering business to a specific Lender?” The author of the letter neither requested anonymity nor affirmatively authorized release of his name.

Based on that letter, HUD initiated an investigation into Prudential's business practices, ultimately confirming the informant's allegations. HUD found Prudential had violated RESPA by giving valuable things, including expensive vacation packages and a lease on a Mercedes–Benz, to its salespeople in return for referral of business to Wells Fargo Home Mortgage Hawaii, LLC, a company in which Prudential had a financial interest. After the investigation, Prudential entered into a settlement agreement with HUD in 2005, consenting to a $48,000 penalty and promising not to violate RESPA in the future.

The second document at issue is an email, dated January 19, 2008 (the “2008 Email”), alleging that Prudential was continuing to violate RESPA even after the settlement. The author of the email claimed to know about the continued violations because “an agent from Prudential ... expressed concern that his company was violating RESPA laws again.” The sender urged HUD to “interview [Prudential's] agents [to] confirm there was a direct violation of RESPA again and be very strict on them.” Unlike the first complainant, this author specifically requested anonymity in his communication to HUD.

After receiving this email, HUD initiated a second investigation of Prudential. That investigation did not reveal any RESPA violations, and it was closed in March 2009.

In June 2008, while the second investigation was in progress, Prudential filed a FOIA request with HUD, seeking “[d]ocuments sufficient to show the identity of all parties who provided information to HUD relating to the initiation” of the two investigations. HUD produced about four hundred pages of responsive documents in March 2009.

As part of that bundle, HUD released the 2003 Letter, redacting what appears to be a letterhead and a signature. HUD also produced a redacted copy of the 2008 Email, concealing the information contained in the email's “from” line, the first half of the first sentence of the email, and the signature line. Also redacted was a sentence in the body of the email, leaving it to read: “Please take this action and I can be contacted at [REDACTED] but I would like to remain anonymous [REDACTED].” The first redaction in that sentence looks to be about the length of a phone number or email address, and the second spans approximately 10–12 average-length words.

In a letter accompanying the released documents, HUD relied on FOIA Exemption 6 to justify the redactions, stating that “[r]elease of this information would constitute an unwarranted invasion of personal privacy” and “[t]he interest of the general public in reviewing these portions of government documents does not outweigh the individuals' right to privacy.”

Unsatisfied with this response, Prudential filed a complaint in the United States District Court for the District of Hawai‘i seeking unredacted copies of the two documents. In reply, HUD supported withholding the information by submitting a declaration from Ivy Jackson, the Director of the Office of RESPA and Interstate Land Sales at HUD. Jackson averred that “[i]t has been the policy of this office to never disclose the identity of a complainant whether or not the complainant affirmatively authorized the release.... These industry insiders are potentially vulnerable to retaliation, i.e. loss of employment, loss of business and legal action.” She further declared that “when speaking before industry groups I have stated that it is the policy of the office not to disclose the identity of any complainant.” Finally, according to Jackson, the RESPA investigations office has a “consistent policy and practice” of “protect [ing] the identity of persons providing information about possible RESPA violations, unless the person has specifically authorized release of his or her name.”

On cross-motions for summary judgment, the district court agreed with HUD that Exemption 6 justified redacting the information, and granted the agency's motion. Prudential appealed.

II

We apply a two-step standard of review to summary judgment in FOIA cases. We “first determine[ ] under a de novo standard whether an adequate factual basis exists to support the district court's decision [ ].” Lane v. Dep't of Interior, 523 F.3d 1128, 1135 (9th Cir.2008) (citing Lion Raisins, Inc. v. U.S. Dep't of Agric., 354 F.3d 1072, 1078 (9th Cir.2004)). If the district court did not have an adequate factual basis, we remand. Fiduccia, 185 F.3d at 1040. “If an adequate factual basis exists, then the district court's conclusions of fact are reviewed for clear error, while legal rulings, including its decision that a particular exemption applies, are reviewed de novo.” Lane, 523 F.3d at 1135.

The FOIA is a disclosure statute, enacted to “permit access to official information long shielded unnecessarily from public view.” Milner, 131 S.Ct. at 1262 (quoting EPA v. Mink, 410 U.S. 73, 80, 93 S.Ct. 827, 35 L.Ed.2d 119 (1973)). Such access to government information helps “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.” John Doe Agency v. John Doe Corp., 493 U.S. 146, 152, 110 S.Ct. 471, 107 L.Ed.2d 462 (1989) (citation and quotation marks omitted).

Of course, not all governmental information must be made publicly available; accordingly, the FOIA contains specific discretionary exemptions to its disclosure requirements. See 5 U.S.C. § 552(b)(1)-(9); Elec. Frontier Found. v. Office of the Dir. of Nat'l Intelligence, ...