Pub. Investors Arbitration Bar Ass'n v. Sec. & Exch. Comm'n
| Decision Date | 14 November 2014 |
| Docket Number | No. 13–5137.,13–5137. |
| Citation | 771 F.3d 1 |
| Parties | PUBLIC INVESTORS ARBITRATION BAR ASSOCIATION, Appellant, v. SECURITIES AND EXCHANGE COMMISSION, Appellee. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Julie A. Murray argued the cause for appellant. With her on the briefs was Daniel A. Ball.
Brian Wolfman was on the brief for amici curiae Citizens for Responsibility and Ethics in Washington, et al., in support of appellant.
Karen J. Shimp, Special Trial Counsel, U.S. Securities and Exchange Commission, argued the cause for appellee. With her on the brief were Melinda Hardy, Assistant General Counsel, and Sarah E. Hancur, Senior Counsel. Kathleen Cody, Senior Counsel, entered an appearance.
Before: TATEL and BROWN, Circuit Judges, and SILBERMAN, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge TATEL.
Exemption 8 of the Freedom of Information Act protects from disclosure records “related to examination ... reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.” Congress has now clarified that the Securities and Exchange Commission is such an agency and—central to the issue before us—that the Financial Industry Regulatory Authority (FINRA), a private organization that oversees securities arbitrations, is such an institution. In this case, the Commission argues that Exemption 8 allows it to withhold documents it collected while examining FINRA's program for arbitrating disputes between securities brokers and their customers. The district court agreed, and, for the reasons set forth in this opinion, so do we.
The Exchange Act of 1934 authorizes the Commission to delegate “certain governmental functions to private [self-regulatory organizations].” In re Series 7 Broker Qualification Exam Scoring Litigation, 548 F.3d 110, 114 (D.C.Cir.2008). Pursuant to this sort of delegation, FINRA enforces securities rules with respect to its members—securities brokers and dealers doing business with the public. FINRA also facilitates nearly all securities-related arbitrations and mediations in the United States. In those arbitration proceedings, the parties are presented with a list of arbitrators, may strike available arbitrators under certain conditions, and must rank the remaining ones in order of preference. FINRA collects those lists and appoints a panel made up of the arbitrators with the best combined rankings.
The Commission has “broad authority” to oversee FINRA's practices “relating to customer disputes, including the power to mandate the adoption of any rules [the agency] deems necessary to ensure that arbitration procedures adequately protect statutory rights.” Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 233–34, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987). That oversight may take the form of such “reasonable periodic, special, or other examinations” as the Commission “deems necessary or appropriate in the public interest.” 15 U.S.C. § 78q (also known as Exchange Act § 17). Drawing on this authority, the Commission's Market Oversight Program inspects FINRA's arbitration services and recommends policy changes when appropriate. See U.S. Government Accountability Office, GAO–12–625, Securities Regulation: Opportunities Exist to Improve SEC's Oversight of the Financial Industry Regulatory Authority 10–11, 18–19 (2012).
Appellant, the Public Investors Arbitration Bar Association (PIABA), is an organization whose members represent individual investors in disputes with securities brokers. As part of its mission, PIABA promotes the arbitration-related interests of its constituents. In pursuit of that goal, PIABA sent the Commission a FOIA request seeking records related to the agency's audits, inspections, and reviews of FINRA's arbitration program.
Acting on that request, the Commission searched its archives and identified 65 boxes containing potentially responsive records, most of which concern the agency's responses to consumer complaints about FINRA's arbitration process. But it refused to turn those documents over to PIABA, claiming that the requested records were all protected from disclosure under Exemption 8. That provision allows the Commission to withhold records that are “contained in or related to [its] examination ... reports.” 5 U.S.C. § 552(b)(8). Concluding that it collected all responsive documents while examining FINRA's arbitration program—including during several inquiries it initiated in response to consumer complaints—the Commission denied PIABA's FOIA request and its subsequent administrative appeal.
With these administrative proceedings behind it, PIABA sued the Commission in the United States District Court for the District of Columbia, and the parties cross-moved for summary judgment. The district court granted the Commission's motion, concluding that the requested records “relate[ ] to” the agency's “examinations” of FINRA and that Exemption 8 therefore protects them from disclosure. Public Investors Arbitration Bar Association v. SEC, 930 F.Supp.2d 55 (D.D.C.2013). In arriving at this conclusion, the district court rejected PIABA's two main contentions: that Exemption 8 protects only information related to financial examinations and so does not apply to the Commission's oversight of FINRA's arbitration program; and that the agency failed to identify a particular report to which each contested document relates. Addressing the first argument, the district court relied on what it called Exemption 8's “plain meaning” and purpose, as well as its relationship to other financial legislation. It emphasized that Exemption 8 nowhere distinguishes between a regulated entity's financial and administrative activities, and it found that applying Exemption 8 in this case would serve the enacting Congress's stated purpose of protecting the cooperative relationship between the Commission and the entities it regulates, including FINRA. Id. at 63–67. As for PIABA's second argument—that not every “potentially responsive document ... relate[s] to [a particular] examination report of some kind”—the district court held that nothing in Exemption 8 requires the Commission to point to any such specific report. In any event, the district court found, the Commission had in fact met that burden, pointing out that the agency had conducted its inquiries into PIABA's arbitration program under its examination authority and that each investigation “resulted in a writing, either termed a report or closing memorandum.” Id. at 70–72.
PIABA now appeals. ACLU v. DOJ, 655 F.3d 1, 5 (D.C.Cir.2011) (citations and internal quotation marks omitted). “[B]ecause FOIA's terms apply government-wide,” moreover, “we generally decline to accord deference to agency interpretations of the statute, as we would otherwise do under Chevron. ” Al–Fayed v. CIA, 254 F.3d 300, 307 (D.C.Cir.2001).
Read beginning to end, FOIA Exemption 8 protects information “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.” 5 U.S.C. § 552(b) (8). Although the exemption is a mouthful, Congress has gone to some trouble to spell things out. It has made clear, for example, that “[f]or the purpose of FOIA, the Commission is an agency responsible for the regulation or supervision of financial institutions,” and it has confirmed that “any entity ... the Commission is responsible for regulating, supervising, or examining under [the Exchange Act] is a financial institution.”15 U.S.C. § 78x(e). Here, the Commission does not argue that the requested records pertain to operating or condition reports. To resolve this case, then, we need determine only whether the requested records are “contained in or related to” an “examination report” that Exemption 8 covers. That inquiry proceeds in two parts: we first address whether the contested records implicate a relevant Commission “examination” and, if they do, we then ask whether they relate to a particular “report.”
Although insisting that Exemption 8 provides no protection for the records it seeks, PIABA has strikingly little evidence for that claim. The organization begins with a cursory nod to the exemption's text, arguing that “examination report” is “not part of common parlance” but rather is an “industry-specific” term with a “special or technical meaning.” Appellant's Br. at 22–24. Accordingly, it urges us to read the phrase as a “term of art,” rather than as a general definition that applies to all agencies in all situations. Id. Such precise, industry-specific meaning, PIABA admits, does not emanate from the text of the statute—or, indeed, from anything else in the U.S.Code.
To tease out the words' specific meaning, PIABA goes directly to Exemption 8's legislative history, which it claims reveals that Congress intended to protect only financial information and not “reviews or inspections of a purely administrative function of a[ ] self-regulatory organization like FINRA.” Id. at 24. Guided by that narrow meaning, PIABA emphasizes that the records at issue here have no bearing on FINRA's financial transactions or its fiscal condition. Instead, they “concern FINRA's management of its arbitrator pool, its selection and evaluation of those arbitrators, and the adequacy of arbitrators' disclosures.” Id. at 32. The requested documents, PIABA concludes, therefore do not qualify as the type of examination reports Congress wrote Exemption 8 to protect.
By contrast, the Commission largely sticks to the text of Exemption 8 and...
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