Defendant FHFA Reply in Supprt of Summ Judg 21 Jan 2011 (Lawsuit #4)
Defendant FHFA Reply in Supprt of Summ Judg 21 Jan 2011 (Lawsuit #4)
Defendant FHFA Reply in Supprt of Summ Judg 21 Jan 2011 (Lawsuit #4)
TONY WEST
Assistant Attorney General
JOHN TYLER
Assistant Branch Director, Federal Programs
Branch
BRADLEY H. COHEN
Trial Attorney, Department of Justice, Civil
Division, Federal Programs Branch
Post Office Box 883
Washington, D.C. 20044
Tel: (202) 305-9855
Fax: (202) 616-8470
[email protected]
PRELIMINARY STATEMENT
In this Freedom of Information Act case, Plaintiff Vern McKinley seeks documents
related to the September 7, 2008 announcement by the Federal Housing Finance Agency
(“FHFA”) and the U.S. Department of the Treasury that FHFA would place the Federal National
Mortgage Association (“Fannie Mae”) and the Federal National Home Loan Mortgage
Corporation (“Freddie Mac”) into conservatorship. FHFA found three documents responsive to
Plaintiff’s request in its Office of General Counsel and withheld all three in their entirety
pursuant to Exemption 5.
Plaintiff does not challenge the adequacy of the search and agrees that Document 1 is
protected by the attorney-client privilege, but challenges whether the attorney work product
doctrine and deliberative process privilege apply to Documents 2 and 3. These two documents
were created in the period preceding the FHFA’s September 7, 2008 decision. Both address the
possible implementation of a conservatorship or receivership and also various legal steps that
After conceding that Documents Numbers 2 and 3 were prepared when reasonably
anticipated legal challenges existed, and that parts of Document Number 2 address this
anticipated litigation, Plaintiff makes two arguments. Plaintiff first claims that these two
rather than potential litigation, so that the attorney work product doctrine should not apply.
Second, Plaintiff claims that, even if the attorney work product doctrine applies in part, the Court
should require Defendant to withhold only those portions of the responsive records that fall
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This Court should reject both lines of argument. First, the existence of multiple purposes
behind the two documents, including the policy question from which the litigation purpose
arises, does not defeat the attorney work product claim. The party claiming protection of the
work product doctrine need not show that a document was used “primarily to assist in” litigation;
rather, the agency need only establish that the document was prepared or obtained “because of”
the prospect of litigation. The Vaughn index and Pollard Declaration clearly describe the legal
actions (both defensive and affirmative) that were anticipated and the sections of the document
that address these anticipated legal steps. Moreover, if a document is prepared “because of”
reasonably anticipated litigation, any portion of the document, not just the portion concerning
opinions, legal theories, and the like is exempt from disclosure under Exemption 5. Hence,
In addition, Plaintiff argues that FHFA has a burden to show that there will be harm to
the decision-making process in order to establish that the documents are protected by the
deliberative process privilege. This argument is simply wrong, as the only requirement for
establishing the application of the deliberative process privilege is to demonstrate that the
document(s) were both predecisional and deliberative. Moreover, Plaintiff is well aware that
there is no additional showing required, given that Plaintiff unsuccessfully made this same
argument before this Court in other litigation, where it was rejected as a mischaracterization of
controlling D.C. Circuit authority. See McKinley v. FDIC, No. 09-1263, 2010 WL 3833667, at
*9-10 (D.D.C. Sept. 29, 2010) (agency need only establish that withheld documents were
predecisional and deliberative, not that disclosure would cause harm to the decision-making
process). Notwithstanding Plaintiff’s misstatement of the law, FHFA’s Vaughn index and
affidavits overwhelmingly support its assertion that the documents are predecisional and
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deliberative. Lastly, because all of Plaintiff’s arguments can easily be addressed based on the
affidavits, the Court need not conduct an in camera review and should grant summary judgment
in favor of FHFA.
ARGUMENT
Plaintiff concedes that Documents 2 and 3 were “prepared at a time when the possibility
of legal challenges by the Board of Directors and management of Fannie Mae and Freddie Mac
existed.” Pl. Br. at 6. Plaintiff also “does not contest” that discussion in Document 2 of what
FHFA “could expect in terms of judicial review of a legal challenge” is exempt from disclosure
Plaintiff has thus admitted that litigation was reasonably foreseeable and that at least
portions of the documents implicate the work product doctrine. Plaintiff’s main complaint is that
these two documents, as described in the Vaughn index, “primarily focus” on the policy of
conservatorship over receivership, rather than its “litigation implications,” and thus, in Plaintiff’s
view, they should not fall within the protection of the attorney work product doctrine. Pl. Br. at
7. In addition, to the extent the work product doctrine applies, Plaintiff asks that only “limited
There are several problems with Plaintiff’s argument. First, the dual purposes underlying
the documents (policy advice and preparation for litigation) are neither contradictory nor
mutually exclusive. Moreover, the existence of the policy rationale serves as the basis for the
litigation preparation and thus does not undermine the attorney work product claim. See
Delaney, Migdail & Young Chartered v. IRS, 826 F.2d 124, 126-27 (D.C. Cir. 1987) (work
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product claim sustained where documents in question had the policy-making purpose of helping
the IRS decide whether to adopt a proposed system of statistical sampling for its corporate audit
program, but also had a litigation purpose of addressing expected litigation that would result
from adoption of the program). In addition, the D.C. Circuit does not require that the document
be used “primarily to assist in” litigation, see, e.g., United States v. El Paso Co., 682 F.2d 530,
543 (5th Cir. 1984), but rather simply that the document must have been prepared “because of”
reasonably foreseeable litigation. See Senate of Puerto Rico v. U.S. Dep’t of Justice, 823 F.2d
574, 587 n. 42 (D.C. Cir. 1987) (attorney work product doctrine applies if “the document can
fairly be said to have been prepared or obtained because of the prospect of litigation.”)
(emphasis added); United States v. Adlman, 134 F.3d 1194, 1198-1202 (2d Cir. 1998)
(explaining that the “primarily to assist in” litigation test has been rejected in many Circuits,
Thus, “the ‘testing question’ for the work product privilege ... is whether in light of the
nature of the document and the factual situation in the particular case, the document can fairly be
said to have been prepared or obtained because of the prospect of litigation.” In re Sealed Case,
146 F.3d 881, 884 (D.C. Cir. 1998). To meet this standard, a party “must at least have had a
subjective belief that litigation was a real possibility, and that belief must have been objectively
Applying this test to the contents of the documents as reflected in the Vaughn index and
Declarations, the two withheld documents were drafted by attorneys in the Office of General
Counsel based on a pressing concern that some sort of legal action (either affirmative or
defensive) would have to be taken in response to FHFA’s decision. In the absence of this
specific concern about reasonably anticipated litigation, legal counsel would not have been asked
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to prepare a chart and memorandum analyzing the effects of the contemplated decision. See,
e.g., Equal Rights Ctr. v. Post Properties, Inc., 247 F.R.D. 208, 210-11 (D.D.C. 2008)
(application of “because of” litigation test involves analyzing whether the document in question
would have been prepared irrespective of the anticipated litigation). As explained by FHFA’s
General Counsel, both documents were created for meetings with senior executives, who were
seeking advice regarding the litigation consequences of whichever policy they chose:
Pollard Decl., ¶ 14. Thus, although portions of these documents are focused on assisting
policymakers in their policy decision-making process, the documents themselves were prepared
due to reasonably anticipated litigation resulting from any of the contemplated courses of action.
Second, Plaintiff’s assertion that parts of the documents (all of which clearly reflect
predecisional deliberations1) should be disclosed ignores explicit case law on the scope of
attorney work product protection. Attorney work product protection extends to the entire
document identified as attorney work product, including factual material appearing within the
1
As discussed in Defendant’s opening brief, should the Court determine that the attorney
work product doctrine does not apply to one or both of these documents, FHFA reserves the right
to undertake such a review to determine whether withheld factual material would reveal FHFA’s
deliberative process. See, e.g., Horowitz v. Peace Corps, 428 F.3d 271, 277 (D.C. Cir. 2005)
(protecting requested document where decisionmaker’s “thought processes are woven into
document to such an extent” that any attempt at segregating out information would reveal agency
deliberations); Rein v. U.S. Patent & Trademark Office, 553 F.3d 353, 375 (4th Cir. 2009)
(protecting factual portions of document because such information, when viewed as part of a
larger document “would reveal the very predecisional and deliberative material Exemption 5
protects.”).
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document, and thus, segregability is not required. See Judicial Watch, Inc. v. Dep’t of Justice,
432 F.3d 366, 371 (D.C. Cir. 2005); see also Martin v. Office of Special Counsel, 819 F.2d 1181,
1185-86 (D.C. Cir. 1987) (unlike the deliberative process privilege, the work product protection
Although Document 2 contains sections which analyze “the features, strengths, and
conservatorship,” see Wright Decl., Attachment A, the author’s role was to inform the decision-
maker not just of the merits of respective policy positions, but also of the potential for judicial
review and what options FHFA might have in court. Id. The attorney’s thoughts and mental
impressions about the rationale behind FHFA’s policy decision and its effect on anticipated
litigation (including the assembling of relevant facts) would be compromised by revealing the
document as a whole. Hence, the D.C. Circuit has explicitly advised that “factual material is
itself privileged when it appears within documents that are attorney work product.” Judicial
Watch, 432 F.3d at 371. The attorney work product is thus designed to protect “[a]ny part of [a
document] prepared in anticipation of litigation, not just the portions concerning opinions, legal
theories, and the like ….” McKinley v. FDIC, 2010 WL 3833667 at *10 (internal quotation and
citation omitted).
“the ability of FHFA to seek a cease and desist order to effect changes in the Enterprises.”
Wright Decl., ¶ 17. While Plaintiff points to portions of Document 3 that discuss the
ramifications of choosing conservatorship or receivership and the factors that would support
either choice, Plaintiff neglects to mention that a portion of the document addresses the
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cease and desist order.” See Wright Decl., Attachment A. The fact that these contemplated legal
steps were not ultimately undertaken does not remove the protection of the attorney work
product doctrine. See FTC v. Grolier, Inc., 462 U.S. 19, 28 (1983) (“[W]e hold that under
Exemption 5, attorney work-product is exempt from mandatory disclosure without regard to the
As long as the document as a whole was prepared because of litigation, sections of the
document do not cease being exempt because they do not explicitly discuss the formulation of
legal arguments. See, e.g., Hanson v. U.S. Agency for Int’l Development, 372 F.3d 286, 293 (4th
Cir. 2004) (describing the attorney’s role as not just formulating legal arguments, but as
amount.”). In Hanson, the Fourth Circuit addressed the intersection between attorney work
product and deliberative process. In that case, the author of the withheld document was advising
the agency about a construction dispute regarding a USAID-funded project in Egypt. Id. at 289.
In doing so, he sought to both inform the agency’s policy deliberations over whether to approve
material changes to its development project and bolster its legal defense in resolving a
construction dispute on favorable terms. Id. at 289, 292. The court pointed out that the
document involved the “direct application of his legal skills” and the attorney had to “sift
through the facts with an eye to the legally relevant.” Id. at 293. Specifically, the author had to
“monitor[] settlement negotiations, exercise[] legal judgment in assessing the positions of the
parties, recommend[] a settlement amount for the dispute, and advise[] USAID on how it should
change the dynamics of the negotiation process.” Id. Likewise, in this case, the attorney
author(s) were required to advise FHFA about the strengths and weaknesses of instituting a
conservatorship, but also to exercise legal judgment regarding how this decision would
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other types of legal action (e.g., issuing an informal order or cease and desist order). Because
both documents were obtained or prepared as a result of this reasonably anticipated litigation,
Plaintiff’s second argument is that FHFA is required to show that the material withheld
pursuant to the deliberative process privilege would actually harm the agency’s decision-making
process if it were disclosed to the public. See Pl. Br. at 10-11. This is simply a misstatement of
Curiously, Plaintiff neglects to mention that this very same argument raised by him in
another case was explicitly rejected by this Court. See McKinley v. FDIC, 2010 WL 3833667, at
*10 (“Having established that the withheld documents were both ‘predecisional’ and
‘deliberative,’ defendant is not also required to establish that the release of the withheld
Plaintiff argued that the following statement from Mead Data Ctr. v. U.S. Dep’t of the Air Force
required a showing of harm: “An agency cannot meet its statutory burden of justification by
conclusory allegations of possible harm. It must show by specific and detailed proof that
disclosure would defeat, rather than further, the purpose of FOIA.” 566 F.2d 242, 258 (D.C. Cir.
1977). Judge Huvelle explained that this statement from Mead was taken out of context because
the court was referring in passing to the agency’s negotiation proceedings with an outside party,
i.e., to material that was indisputably not part of the agency’s internal deliberative process. 2010
WL 3833667 at *9 (citing Mead, 566 F.2d at 257-258). The Mead Court’s legal analysis of
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which material fell within the deliberative process privilege under Exemption 5 still relied upon
whether the documents were both “predecisional” and “part of the deliberative process.” Id.
(citing Mead, 566 F.2d at 257-258). Thus, Judge Huvelle reiterated that no showing of harm to
Notwithstanding this Court’s rejection of this argument, Plaintiff again takes out of
context quotes from various D.C. Circuit cases in an attempt to craft a new legal standard that
these cases that an agency must show harm to its decision-making process in order to sustain a
Institute v. Dep’t of Health and Human Services and the Court of Appeal’s acknowledgment that
the factual record in that case established that disclosure of reviewers’ comments would
seriously harm the deliberative process. 889 F.2d 1118, 1124 (D.C. Cir. 1989). But nowhere
does the Court of Appeals state that an agency is required to show such harm to establish the
privilege. Instead, the Court held: “[w]e find that the Review Letter was both ‘predecisional’
and a part of the agency’s ‘deliberative process.” Therefore, we hold that, pursuant to Exemption
5, HHS may withhold the Review Letter from disclosure under FOIA.” Id. at 1125 (emphasis
added). Likewise, Plaintiff points to government witness testimony in Horowitz v. Peace Corps.,
428 F.3d 271, 276-77 (D.C. Cir. 2005), that in the witness’s “opinion,” disclosing deliberative
materials would discourage officials from creating these documents, see Pl. Br. at 11. Plaintiff
infers from this statement that the Court of Appeals was somehow announcing a new legal
2
Plaintiff has appealed this decision, which is currently pending before the D.C. Circuit
Court of Appeals. See McKinley v. FDIC, No. 09-1263, 2010 WL 3833667 (D.D.C. Sept. 29,
2010), appeal docketed, No. 10-5353 (D.C. Cir. Oct. 22, 2010).
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After evaluating the witnesses' testimony and credibility, the district court
concluded Giron had not made a final decision about separating Horowitz. The
document was prepared as an aid for Giron's decision-making process and for
consultation with other Peace Corps officials. Hence, the document qualified as
deliberative and predecisional.
Id. at 277 (emphasis added). Thus, as this Court is well aware, to come within the deliberative
process privilege under Exemption 5, FHFA need only show that the withheld material was
“predecisional” and “deliberative.” Public Citizen, Inc. v. Office of Management and Budget,
598 F.3d 865, 874 (D.C. Cir. 2010). This standard is easily met here.
Both documents challenged by Plaintiff are “predecisional” (i.e., they were created prior
to FHFA’s September 6, 2008 decision to place Fannie Mae and Freddie Mac into
conservatorship). See Pollard Decl., ¶¶ 12, 13. Moreover, both specifically are labeled as
“drafts” and no final version of either of the documents has been located, id., leaving open the
possibility of later modification and refinement of policy. See, e.g., Pub. Employees for Envt’l
Responsibility v. Bloch, 532 F. Supp. 2d 19, 22 (D.D.C. 2008) (holding that “draft texts [of
position statements] considered along the way” fall within Exemption 5). The Office of General
Counsel created these documents, rather than the FHFA Director, who, by statute, has the actual
legal authority to institute the conservatorship. See 12 U.S.C. § 4617(a). If the author lacks
“legal decision authority,” the document should be considered predecisional. Pfeiffer v. CIA, 721
F. Supp. 337, 339 (D.D.C. 1989) (finding document “predecisional” where author lacked
authority “to speak finally and officially for the agency”); Tax Analysts v. IRS, 152 F. Supp. 2d 1,
decisionmaking authority to a different component office” that had such authority), aff’d in part,
rev’d in part on other grounds and remanded, 294 F.3d 71 (D.C. Cir. 2002).
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These documents also reflect communications that are “deliberative” in that they involve
counsel describing a host of legal and policy options to address the deteriorating condition of
Fannie Mae and Freddie Mac. See Wright Decl., ¶ 15 (describing the various policy options
being considered by FHFA); Pollard Decl., ¶¶ 12-13 (explaining with whom the documents were
shared). These documents were not shared with anyone outside of FHFA and FHFA’s outside
counsel. Wright Decl., ¶ 15. Rather, they were used to discuss the strengths and weaknesses of
the various courses of agency action, including the potential effects of instituting a
conservatorship or receivership and/or challenges of issuing a consent order or cease and desist
order. Id., ¶ 17. Documents 2 and 3 were created for meetings with senior executives at FHFA
to discuss various policy options that the agency could take with regard to the Enterprises and
were provided to these senior policymakers in order to assist their decision-making. Pollard
Decl., ¶¶ 12, 13. These are precisely the sort of deliberations meant to be protected by the
privilege. See Mead, 566 F.2d at 257 (“Discussions among agency personnel about the relative
merits of various positions which might be adopted ... are as much a part of the deliberative
process as the actual recommendations and advice which are agreed upon.”); Lewis-Bey v. DOJ,
595 F. Supp. 2d 120, 133 (D.D.C. 2009) (material considered “deliberative” where it reflects
“candid discussions of the strengths and weaknesses” of the agency’s case and disclosure “would
have the effect of inhibiting the free flow of recommendations and opinions.”).
These combined features indicate that the documents in question were “prepared in order
Aircraft Eng’g Corp., 421 U.S. 168, 184 (1975). Accordingly, FHFA properly withheld these
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A district court should only conduct in camera review of documents withheld under a
FOIA exemption under two circumstances. First, if the affidavits submitted by the parties are
whether the claimed exemption applies, then the court may conduct in camera review. See
Carter v. U.S. Dep’t of Commerce, 830 F.2d 388, 392 (D.C. Cir. 1987). Second, if there is
evidence of agency bad faith, then in camera inspection may be required. However, there “must
be tangible evidence of bad faith,” for without such evidence, “the court should not question the
Plaintiff makes no claim of agency bad faith. Plaintiff has been able to sufficiently test
FHFA’s claim of attorney work product and deliberative process privilege by describing in detail
the contents of both Documents 2 and 3 and the agency’s justification for each withholding,
based on the affidavits submitted by the agency. See, e.g., Pl. Br. at 7-8. Based on the detailed
affidavits, see Wright Decl., ¶¶ 17-18, Attachment A, and Pollard Decl., ¶¶ 12-14, this Court
may easily conclude that these affidavits “sufficiently describe the documents and set forth
proper reasons for invoking an exemption,” so that in camera inspection of those documents is
unnecessary. Juarez v. U.S. Dep’t of Justice, 518 F.3d 54, 60 (D.C. Cir. 2008). The Court
should thus act within its “broad discretion by declining to conduct such a review.” Id. (internal
CONCLUSION
For the foregoing reasons, this Court should grant FHFA’s motion for summary
judgment.
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JOHN R. TYLER
Assistant Director,
Federal Programs Branch
s/ Bradley H. Cohen
Mailing Address:
Post Office Box 883
Washington, D.C. 20044
Courier Address:
20 Massachusetts Ave, N.W.
Washington, D.C. 20001
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CERTIFICATE OF SERVICE
I hereby certify that on January 21, 2011, a copy of the foregoing pleading was filed
electronically via the Court’s ECF system, which sent notification of such filing to counsel of record.
s/ Bradley H. Cohen
BRADLEY H. COHEN
Trial Attorney
Federal Programs Branch
U.S. Department of Justice, Civil Division
Telephone: (202) 305-9855
Fax: (202) 318-0486
Email: [email protected]
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