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Ayyad v. Internal Revenue Service

United States District Court, D. Maryland

February 2, 2018



          Paula Xinis United States District Judge.

         Pending before the Court in this Freedom of Information Act (“FOIA”) case are cross-motions for summary judgment filed by Plaintiff Abdelrahman and Sara Ayyad (“Plaintiffs”), ECF No. 18, and Defendant Internal Revenue Service (“the IRS”), ECF No. 25. The issues are fully briefed and a hearing was held on February 1, 2018. For the reasons explained below, the Court GRANTS in part and DENIES in part Plaintiffs' motion, and GRANTS in part and DENIES in part the IRS's Motion.

         I. BACKGROUND

         The following facts are undisputed. Since 2006, Plaintiffs have been the subject of the Internal Revenue Service (“the IRS”) examinations regarding their federal income tax returns for tax years 2006 through 2012. ECF No. 1. On March 9, 2016, Plaintiffs each filed FOIA requests, seeking the production of agency records including, but not limited to, the following:

• The full administrative file developed by Kenneth Feldman, an IRS Revenue Agent in Baltimore, Maryland office, from the date of his assignment through the date of the submission of the FOIA request;
• All records including, but not limited to, the examination, assessment, and appeals with respect to plaintiffs' income tax returns during the period of Mr. Feldman's assignment to plaintiffs' case;
• All written correspondence, electronic or otherwise, among Agent Feldman, Bisamber Misir, Quinton J. Ferguson, Larry Timms, and any other IRS employee relating to the examination of plaintiffs' account;
• Any records relating to any civil and/or criminal fraud investigation or assessments, including any correspondence from or to a fraud technical advisor any IRS employee engaged in a similar role as a fraud technical advisor, or any other IRS employees or agents engaged in the investigation and/or assessment of fraud. This request included, but was not limited to: Form 11661, Fraud Development Stats; Form 2797, Referral Report of Potential Criminal Fraud Cases; and/or any other forms prepared and/or filed in furtherance of a civil and/or criminal fraud investigation or assessment, and any records relating to the preparation and filing of those forms;
• The entire case history for all examinations for tax period 2006 through 2013;
• Any records relating to any accuracy-related penalty determinations or assessments;
• Any records relating to the preparation and filing of the statutory notice of deficiency dated November 30, 2012 issued by the IRS Richmond Office for tax period 2009;
• The identification of any official(S0 having control of any records being requested; and
• The administrative appeals file for atax years 2006 through 2009 was specifically not requested.

ECF No. 1 at ¶ 7.

         IRS Disclosure Specialist Jennifer J. Perez received and processed the requests on March 10, 2016. See Decl. of Jennifer J. Perez (“Perez Decl.”), ECF No. 25-4 at ¶¶ 1, 4. Perez determined that the responsive records were likely located in Plaintiffs' IRS examination files which consists of relevant physical notes and records as well as an electronic file maintained in the agency's “Services' Information management System” (“IMS”). Decl. of Kenneth N. Feldman (“Fedlman Decl.”), ECF No. 25-2 at ¶ 4.

         On April 12, the IRS notified the Ayyads that it would process their FOIA requests as a single request because the Ayyads are married and their FOIA requests almost identical. ECF No. 1 at ¶ 25. Six days later, Perez informed Plaintiffs that the Service located 2, 885 pages of responsive records and would provide them in “PDF” format. Id. at ¶ 12, Ex. B. Of these 2, 885 responsive records, the agency redacted 21 pages and withheld 120 pages under claimed FOIA exemptions. Id. Plaintiffs requested that the IRS produce a Vaughn Index, [1] which the IRS did not do. Id. at ¶ 14. Plaintiffs filed an administrative appeal on June 14, 2016, again requesting a Vaughn index from the IRS. The IRS denied the Ayyads' request on June 22, 2016. ECF No. 1at ¶ 19; see also ECF No. 1-2 at 42-44.

         On August 31, 2016, after exhausting all administrative remedies, Plaintiffs filed suit under 5 U.S.C. § 552, alleging that the IRS unlawfully withheld responsive agency records to which Plaintiffs are entitled. ECF No. 1. Plaintiffs again requested that the Court order the IRS to produce a Vaughn Index of all responsive records withheld under claim of exemption. Id. at 9.

         On November 8, 2016, months after Plaintiffs' FOIA action was filed in this Court, IRS determined that they had not performed an adequate search in response to Plaintiffs' request for “all written correspondence, electronic or otherwise, among Agent Feldman, Mr. Bisamber Misir, Mr. Quinton J. Ferguson, Mr. Larry Timms, and any other IRS employee relating to the examination of plaintiffs' account.” ECF No. 25-1 at ¶ 4; see also Decl. of William E. Rowe (“Rowe Decl.”), ECF No. 28-1 at ¶¶ 18-19. IRS instructed Agent Feldman to provide all electronic correspondence related to Plaintiffs' examinations. Id. at ¶¶ 21-22; Feldman Decl., ECF No. 25-2 at ¶ 6. Agent Feldman located 872 additional pages of responsive electronic correspondence, of which the IRS redacted 176 pages and withheld 27 pages, claiming various FOIA exemptions. Rowe Decl, ECF No. 28-1 at ¶ 25. These emails were provided to Plaintiff s on March 2, 2017 with the Bates range IRS 000001-000872 (“March 2 release”). See 25-1 at 5. The IRS did not provide a Vaughn Index.

         After reviewing the March 2 release, Plaintiffs' counsel noted that email correspondence between Agent Feldman and Bisamber Misir regarding Plaintiffs' tax returns, on which Plaintiff's counsel was originally copied, was missing from the IRS's disclosures. ECF No. 18-1. Plaintiff's counsel contacted the IRS regarding these missing emails on March 8, 2017. ECF No. 18-1 at 4. The IRS then conducted yet another search of Agent Feldman's Outlook inbox and enlisted several information technology specialists to determine why the emails were not produced by the initial search. Feldman Decl., ECF No. 25-2 at ¶ ¶10-17. After a month of investigation, the IRS was unable to ascertain why the referenced email was not included in Agent Feldman's search results and the investigation was closed. Id. The IRS released the missing emails to Plaintiff on May 31, 2017 with Bates range IRS001080-81. ECF No. 25-1 at 5-6. The IRS did not conduct further review of Agent Feldman's inbox or conduct searches of other email inboxes. ECF No. 25-1; Rowe Decl., ECF No. 28-1 at ¶ 45.

         In addition to the missing electronic correspondence, Plaintiffs' counsel also informed the IRS that the March 2 release did not include the emails' respective attachments. ECF No. 18-1 at 3-4. On March 17, 2017, Plaintiff moved for summary judgment in their favor and renewed their request for a Vaughn Index. ECF No. 18.

         On April 25, 2017, the Court issued an order requiring the IRS to release all remaining responsive, non-exempt records to Plaintiff by May 31, 2017. ECF No. 24. The IRS thereafter located 6, 568 additional pages of potentially responsive attachments not previously identified, more than a year after Plaintiffs' FOIA request and months of ongoing litigation. Within this newfound document trove, the IRS redacted 412 pages and withheld 3, 474 pages. ECF No. 25-1 at 5; Feldman Decl., ECF No. 25-2 at ¶¶18-19; Rowe Decl., ECF No. 28-1 at ¶¶ 46-50. These responsive documents were provided - again without a Vaughn Index - to Plaintiffs on May 31, 2017, with the Bates range 000001-0006568. ECF No. 25-1 at 5-6. The IRS then filed its cross-motion for summary judgment, arguing that it has now fully complied with FOIA in releasing responsive documents and that the agency adequately claimed FOIA related exemptions for withheld and redacted documents. Id. at 7. In support, the IRS submitted affidavits with broad descriptions of the covered documents, but it did not submit a Vaughn Index. See, e.g., ECF Nos. 18-1 at 11 & 25-1 at 6.

         II. Standard of Review

         Congress enacted FOIA to promote government transparency and “permit access to official information long shielded unnecessarily from public view.” Milner v. Dep't of Navy, 562 U.S. 562, 565 (2011) (quoting EPA v. Mink, 410 U.S. 73, 79 (1973)); 5 U.S.C. § 552. FOIA is “a means for citizens to know ‘what their Government is up to.' This phrase should not be dismissed as a convenient formalism. It defines a structural necessity in a real democracy.” Nat'l Archives & Records Admin. v. Favish, 541 U.S. 157, 171-72 (2004) (internal quotations and citations omitted).

         This strong interest in transparency, however, must be balanced against the “legitimate governmental and private interests [that] could be harmed by release of certain types of information.” United Techs. Corp. v. U.S. Dep't of Defense, 601 F.3d 557, 559 (D.C. Cir. 2010). To that end, Congress established nine FOIA exemptions under which agencies may withhold information from disclosure. 5 U.S.C. § 552 (b). “These exemptions are explicitly made exclusive, and must be narrowly construed.” Milner, 562 U.S. at 565 (internal quotations and citations omitted); see also Jones v. Murphy, 256 F.R.D. 510, 514 (D. Md. 2008) (noting that “[i]t is the responsibility of the Court to construe the privilege strictly and allow protection of documents only if specific requirements are met.”) (internal citations omitted).

         An agency's decision to withhold records under a FOIA exemption is not entitled to deference, and the Court must conduct a de novo review of the administrative record with a strong presumption in favor of disclosure. 5 U.S.C. § 552(a)(4)B); Dep't of State v. Ray, 502 U.S. 164, 173 (1991). FOIA's segregation requirement also requires the agency to provide “any reasonably segregable portion of a record” after it has redacted the exempt portions. 5 U.S.C. §552(b). The Government bears the burden of providing that documents withheld in full are not “reasonably segregable.” Id.; see also Williamette Indus., Inc. v. United States, 689 F.2d 865, 868 (9th Cir. 1982), cert denied, 460 U.S. 1052 (1983).

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Hill v. Lockheed Martin Logistics Mgmt., Inc., 354 F.3d 277, 283 (4th Cir.2004) (en banc) (internal quotation marks omitted). As a general rule, FOIA determinations should be resolved on summary judgment. Hanson v. U.S. Agency for Intern. Dev., 372 F.3d 286, 290 (4th Cir. 2004).

         III. Analysis

         The Ayyads, in short, argue that summary judgment should be granted in their favor because the IRS has failed to demonstrate that it performed a reasonable search and has not established that exemptions apply to withheld or redacted documents. The IRS, by contrast, argues that summary judgment is appropriate in its favor because the record evidence indisputably demonstrates adequate search and appropriate claimed exemptions. At summary judgment in a FOIA case, the Court reviews the record evidence to determine: (1) the reasonableness of its search for responsive records, and (2) that any redacted or withheld records fall under one of FOIA's disclosure exemptions. Rein v. U.S. Patent & Trademark Office, 553 F.3d 353, 362 (4th Cir. 2009). The Court addresses each element of this inquiry in turn.

         1. Adequacy of the Government's Search

         As to the claimed adequacy of the search, the agency must show that it has “conducted a search reasonably calculated to uncover all relevant documents.” Weisberg v. DOJ, 705 F.2d 1344, 1451 (D. C. Cir. 1983). In deciding whether the government's search was reasonable, a court is to consider “not whether any further documents might conceivably exist but rather whether the government's search for responsive documents was adequate.” Perry v. Block, 684 F.2d 121, 129 (D.C. Cir. 1982); see also Ethyl Corp. v. U.S. EPA, 25 F.3d 1241, 1246 (4th Cir. 1994). Thus, the adequacy of the search is determined “not by the fruits of the search, but by the appropriateness of the methods used to carry out the search.” Iturralde v. Comptroller of Currency, 315 F.3d 311, 315 (D.C. Cir. 2003). “FOIA does not require a perfect search, only a reasonable one.” Rein v. U.S. Patent & Trademark Office, 553 F.3d 353, 362 (4th Cir. 2009) (citing Meeropol v. Meese, 790 F.2d 942, 956 (D.C. Cir. 1986).

         Adequacy of a search does not require “meticulous documentation” of “an epic search for the requested records, ” but must be demonstrated through “affidavits that explain in reasonable detail the scope and method of the search conducted by the agency.” Perry, 684 F.3d at 127; see also Weisberg, 627 F.2d at 371 (agency affidavits that “do not denote which files were searched, or by whom, do not reflect any systematic approach to document location, and do not provide information specific enough to enable [the requester] to challenge the procedures utilized” are insufficient to support summary judgment). An affidavit is “reasonably detailed” if it “set[s] forth the search items and the type of search performed . . . averring that all files likely to contain responsive materials (if such records exist) were searched.” Ethyl Corp, 25 F.3d at 1247.

         On summary judgment, for the plaintiffs to demonstrate the inadequacy of a FOIA search, they must “identify specific deficiencies in the agency's response” that contradict the adequacy of the search or suggest bad faith. CareToLive v. FDA, 631 F.3d 336, 341-42 (6th Cir. 2011); see also Heily v. U.S. Dep't of Commerce, 69 F. App'x 171, 173 (4th Cir. 2003). Here, Plaintiffs posit the following deficiencies: (1) Defendant's failure to search outside Agent Feldman's email for responsive electronic communications; (2) the absence of case history for tax years 2006-2009 and 2011-2013; (3) Plaintiff's unrebuttable evidence that at least five ...

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