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Smart-Tek Automated Services Inc. v. United States Internal Revenue Service

United States District Court, S.D. California

July 20, 2017



          Barry Ted Moskowitz, Chief judge United States District Court

         The United States Internal Revenue Service (“IRS”) has filed a motion for summary judgment as to Plaintiff's claims under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, et seq. (ECF No. 26.) For the reasons discussed below, the IRS's motion will be granted in part and denied without prejudice in part.

         I. BACKGROUND

         This is one of five actions filed by related entities against the IRS.[1] Each case is based on the claim that the IRS failed to comply with its obligations under 5 U.S.C. § 552 to respond to FOIA requests submitted by the plaintiffs. Plaintiffs contend they submitted their requests after the IRS filed a series of liens against them between 2011 and 2013 holding them liable for payroll tax liabilities of other corporations under alter ego and/or successor liability theories.

         Plaintiff Smart-Tek Automated Services Inc. (“Plaintiff”) alleges it sent a written FOIA request to the IRS on May 12, 2014. Compl. (ECF No. 1) ¶ 10. Under 5 U.S.C. § 552(a)(6)(A)(i), an agency has 20 business days following receipt of a FOIA request to determine whether to comply with the request and must “immediately” notify the requester of its determination. 5 U.S.C. § 552(a)(6)(A)(i). On June 26, 2014, the IRS allegedly sent a response to Plaintiff in which it acknowledged receipt of the request but “failed to make any determination about the request.” Compl. ¶ 11. On February 27, 2015, having received no further response from the IRS, Plaintiff initiated this action.

         On October 7, 2016, the IRS filed the instant motion. It indicates it has now completed its search for records and released 14, 544 pages in full, and 3, 479 pages in part, of non-exempt documents responsive to Plaintiff's FOIA request. It seeks summary judgment on the ground that it has fully discharged its obligations under 5 U.S.C. § 552. Plaintiff opposes the motion. (ECF No. 31.)


         A. FOIA Summary Judgment Standard

         Summary judgment is appropriate if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates “there is no genuine dispute as to any material fact.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of showing there is no material factual dispute and he or she is entitled to prevail as a matter of law. Celotex, 477 U.S. at 323. If the moving party meets its burden, the nonmoving party must go beyond the pleadings and identify specific facts which show a genuine issue for trial. Id. at 324.

         District courts are directed to conduct a de novo review of the adequacy of an agency's response to a FOIA request. 5 U.S.C. § 552(a)(4)(B); U.S. Dep't of Justice v. Reporters Comm. for Freedom of Press, 489 U.S. 749, 755 (1989).

         Because FOIA cases rarely involve material factual disputes, they “are typically and appropriately decided on motions for summary judgment.” Defenders of Wildlife v. U.S. Border Patrol, 623 F.Supp.2d 83, 97 (D.D.C. 2009); see Shannahan v. Internal Revenue Serv., 637 F.Supp.2d 902, 912 (W.D. Wash.2009). Courts “follow a two-step inquiry when presented with a motion for summary judgment in a FOIA case.” Shannahan, 637 F.Supp.2d at 912.

         First, the district court must determine whether the agency has established that it fully discharged its obligation under FOIA to conduct an adequate search for responsive records. Zemansky v. U.S. Envtl. Prot. Agency, 767 F.2d 569, 571 (9th Cir. 1985). To meet this burden, the agency must:

demonstrate that it has conducted a “search reasonably calculated to uncover all relevant documents.” Further, the issue to be resolved is not whether there might exist any other documents possibly responsive to the request, but rather whether the search for those documents was adequate. The adequacy of the search, in turn, is judged by a standard of reasonableness and depends, not surprisingly, upon the facts of each case. In demonstrating the adequacy of the search, the agency may rely upon reasonably detailed, nonconclusory affidavits submitted in good faith.

Id. (quoting Weisberg v. U.S. Dep't of Justice (“Weisberg II”), 745 F.2d 1476, 1485 (D.C. Cir. 1984)).

         If the agency satisfies its initial burden, the court proceeds to the second step and considers “‘whether the agency has proven that the information that it did not disclose falls within one of nine FOIA exemptions.'” Shannahan, 637 F.Supp.2d at 912 (quoting Los Angeles Times Commc'ns, LLC v. Dep't of the Army, 442 F.Supp.2d 880, 894 (C.D. Cal. 2006)). Agencies seeking to withhold documents pursuant to a FOIA exemption “have been required to supply the opposing party and the court with a ‘Vaughn index, ' identifying each document withheld, the statutory exemption claimed, and a particularized explanation of how disclosure of the particular document would damage the interest protected by the claimed exemption.” Wiener v. Fed. Bureau of Investigation, 943 F.2d 972, 977 (9th Cir. 1991); see Vaughn v. Rosen, 484 F.2d 820, 823-25 (D.C. Cir. 1973). “The purpose of a Vaughn index ‘is … to afford the requester an opportunity to intelligently advocate release of the withheld documents and to afford the court the opportunity to intelligently judge the contest.'” Shannahan, 637 F.Supp.2d at 912 (quoting Wiener, 943 F.2d at 979).

         Finally, “even if the agency satisfies the two-part test, it generally must still disclose any reasonably segregable portions of the withheld documents.” Id.; 5 U.S.C. § 552(b) (“Any reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt under this subsection.”). “‘The burden is on the agency to establish that all reasonably segregable portions of a document have been segregated and disclosed.'” Id. (quoting Pac. Fisheries Inc. v. United States, 539 F.3d 1143, 1148 (9th Cir. 2008).

         B. Reasonableness of Search

         The IRS contends it has conducted an adequate search for records responsive to Plaintiff's FOIA request. To fulfill its obligations under FOIA, “the agency must show that it made a good faith effort to conduct a search for the requested records, using methods which can be reasonably expected to produce the information requested.” Oglesby v. U.S. Dep't of the Army, 920 F.2d 57, 68 (D.C. Cir. 1990). The agency must show “[w]hat records were searched, by whom, and through what process.” Steinberg v. U.S. Dep't of Justice, 23 F.3d 548, 552 (D.C. Cir. 1994). An agency can meet its burden by submitting a “reasonably detailed, nonconclusory” affidavit “in good faith.” Id. at 551 (quoting Weisberg II, 745 F.2d at 1485). 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 allow the plaintiff to challenge the procedures utilized” are insufficient to fulfill the agency's burden. Weisberg v. U.S. Dep't of Justice, 627 F.2d 365, 371 (D.C. Cir. 1980). In determining whether an agency has met its burden to prove an adequate search, “the facts must be viewed in the light most favorable to the requestor.” Zemansky, 767 F.2d at 571 (citing Weisberg II, 745 F.2d at 1485).

         Here, the IRS submits the declaration of Delphine Thomas to support its contention that it conducted an adequate search for records in response to Plaintiff's FOIA request. (ECF No. 26-5.) Thomas is a Senior Disclosure Specialist whose duties include responding to FOIA requests for IRS records, which requires her to “have knowledge of the types of documents created and maintained by the various divisions and functions of the Service and an understanding of the provisions of the FOIA.” Thomas Decl. ¶ 1.

         Thomas states that Ed Pullman, the disclosure specialist initially assigned to process Plaintiff's FOIA request, now has a different role with the IRS and is “unavailable to declare in this case.” Id. ¶ 3. She was assigned to respond to Plaintiff's request on October 17, 2014, and thereafter familiarized herself with the search conducted before she was involved by talking to Pullman and reviewing his case file. Id. ¶ 4.

         Thomas states that the IRS Disclosure Office received a written FOIA request from Plaintiff on May 29, 2014, seeking “‘a complete copy of the administrative file'” for Plaintiff. Id. ¶ 6.[2] Pullman found the request overbroad, so he contacted Plaintiff's representative and suggested narrowing its scope. Id. ¶ 7. Plaintiff's representative thereafter left Pullman a voicemail “clarifying that the request was for the administrative files for the tax forms 940, 941, and 1120 for tax years 2007-2014.” Id. ¶ 8.

         According to Thomas, Pullman thereafter searched for “files” using the IRS's Integrated Data Retrieval System (“IDRS”), an electronic system that “manages data that has been retrieved from the Master File System” which is “the Service's nation-wide electronic information system containing permanent taxpayer account information.” Id. ¶¶ 9-12. His IDRS search showed there was collection activity related to Plaintiff, and he thereafter learned from Tax Law Specialist Athena Amparano that the collection matter was assigned to Revenue Officer John Black (“RO Black”) Id. ¶ 13.

         Thomas indicates that on July 16, 2014, “the Disclosure Office learned from RO Black that documents responsive to [Plaintiff's] requests would be located within the commingled files maintained by RO Black on these entities and over twenty (20) related entities.” Id. ¶ 15. RO Black had “started a collection proceeding on one of the entities and, as he progressed, realized that all the entities were related, ” had the other entities' files transferred to him and “started working the case as one large case.” Id. As he received new documents, “he added them to the boxes in chronological order, not based on any particular entity, ...

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