United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
Fish Senior United States District Judge.
the court is the defendant Internal Revenue Service
(“IRS”)’s motion for summary judgment
(docket entry 21). For the reasons stated below, the
IRS’s motion for summary judgment is granted in part
and denied in part.
case arises from a Freedom of Information Act
(“FOIA”) request made by the plaintiff Highland
Capital Management, LP (“Highland”) to the IRS.
Highland is a Delaware limited partnership whose headquarters
is in Dallas, Texas. Complaint (docket entry 2) ¶ 1. The
IRS is a government agency of the United States within the
meaning of FOIA, 5 U.S.C. § 552. Complaint ¶ 2;
Answer (docket entry 14) ¶ 2.
October 19, 2016, Highland filed a FOIA request with the IRS
[d]ocuments and emails sent to the Brattle Group by the IRS
in connection with the IRS’s audit of the 2008 tax year
of Highland Capital Management, LP, and documents and emails
sent by the Brattle Group to the IRS, including documents
relating to the IRS’s hiring of the Brattle Group, the
Brattle Group’s Reports dated October 23, 2015 and
February 2, 2016, and its “Phase I Report, ” in
connection with the IRS’s audit of the 2008 tax year of
Highland Capital Management, LP.
to Memorandum in Support for the Internal Revenue
Service’s Motion for Summary Judgment (“Appendix
in Support”), Exhibit A (docket entry 23); see
also Complaint ¶ 12; Answer ¶ 12. The IRS
hired The Brattle Group to provide expert advice related to
the examination of Highland’s tax returns for the
taxable years 2008 and 2009. Appendix in Support, Exhibit 2
First Search Conducted by the IRS
respond to Highland’s FOIA request, on November 1,
2016, the IRS assigned IRS Disclosure Office caseworker
Patricia Williams (“Williams”) to begin searching
for responsive documents. Appendix in Support, Exhibit 1
¶ 8. Williams located Highland’s examination case
file using the IRS’s Integrated Data Retrieval System
(“IDRS”), a system consisting of computer
databases and programs that support IRS employees working
active tax cases. Id. ¶ 11. The IDRS manages
data that has been retrieved from the Master File System, the
IRS’s nation-wide information system containing most
taxpayer account information. Id. Using the IDRS
allows employees to take specific actions on taxpayer
accounts, track status, and post transaction updates to the
Master File. Id. Williams used a series of command
codes to retrieve summaries of information for the years
requested by Highland, as well as detailed information about
Highland’s 2008 tax year, and the examination case
ongoing for tax year 2008. Id. ¶ 14.
result of her initial search, Williams spoke with an agent to
obtain more information about Highland’s request; this
agent informed Williams that Revenue Agent Marcia Vanterpool
(“Vanterpool”) could provide her with additional
information about the examination records. Appendix in
Support, Exhibit 1 ¶ 14. Then, on November 8, 2016,
Williams contacted Vanterpool, who informed Williams that she
would be able to locate the documents requested by Highland
in the examination case file, but that the team conducting
Highland’s civil examination would require additional
time to review the responsive records for confidential
information. Id. ¶ 15. Accordingly, Williams
mailed an extension letter to Highland on November 14, 2016,
extending the response date of the FOIA request to January
13, 2017. Id. ¶ 16.
her conversation with Williams, Vanterpool brought the FOIA
request to the attention of the examination team. Appendix in
Support, Exhibit 1 ¶ 17. Chief Counsel Attorney Veronica
Richards (“Richards”), who the IRS assigned to
provide legal counsel to the agents conducting
Highland’s examination, held a meeting with several IRS
employees who were conducting Highland’s examination to
discuss Highland’s FOIA request. Appendix in Support,
Exhibit 2 ¶ 10. The employees at the meeting were
Revenue Agents Betty Wang (“Wang”), Vanterpool,
Edward “Buck” Townsend (“Townsend”),
and Ronald “Mark” Degan (“Degan”).
Appendix to Reply in Support of the Internal Revenue
Service’s Motion for Summary Judgment (“Appendix
to Reply”) (docket entry 38), Exhibit 1 ¶ 6. That
same day, Townsend emailed Financial Products Senior Advisor
Mark Perwien (“Perwien”) and IRS contract
representative Nick Wynen (“Wynen”) to inform
them that they would need to search their records for
responsive documents. Id. After the meeting,
Richards asked all employees who were working on
Highland’s examination to provide any responsive
records they possessed. Appendix in Support, Exhibit 2 ¶
10. Richards and Wang determined that any copies of records
involving The Brattle Group would be maintained by Richards,
Wang, or Wynen. Id. ¶¶ 10, 11. For the
search for responsive records, Wang and Wynen would serve as
the two main points of contact with The Brattle Group, while
Richards would serve as the examination team’s primary
point of contact with the Disclosure Office. Id.
¶¶ 10, 11.
Townsend, Perwien, and Degan searched for records responsive
to Highland’s FOIA request in November 2016. Appendix
to Reply, Exhibit 1 ¶ 7. The records located during
their searches were given to the IRS Disclosure Office and
were included in the original release to Highland.
Id. These four custodians, however, were not able to
provide facts describing their respective searches in the
November 2016 search. Id.
same time, Richards, Wang, and Wynen conducted separate
searches for responsive documents. As the primary point of
contact with the disclosure office, Richards reviewed the
examination case file provided by Vanterpool. Appendix in
Support, Exhibit 1 ¶ 17. Additionally, Richards
conducted a search of her emails and paper files for any
communications between herself and The Brattle Group which
related to Highland. Appendix in Support, Exhibit 2 ¶
main point of contact with The Brattle Group, Wang searched
IRS documents for records relating to The Brattle Group
responsive to Highland’s request. Wang kept a log of
all electronic and paper documents received from, or sent to,
The Brattle Group. Id. ¶ 13. Wang used the log
to determine where relevant records responsive to
Highland’s request were located in the examination case
file, and found the electronically stored files related to
The Brattle Group. Id. In addition, Wang conducted a
search of her emails, using keyword searches of Brattle Group
employees who had worked with Wang. Id.
served as the contract representative of The Brattle Group
and searched his records from his work and relationship with
The Brattle Group for records responsive to Highland’s
request. Wynen maintained a file on his IRS computer where he
stored all emails and documents related to his work as the
IRS contract representative for The Brattle Group.
Id. ¶ 14. To identify responsive records, Wynen
conducted a manual search of his file. Id.
responsive records found by Wang, Vanterpool, Townsend,
Degan, Perwien, and Wynen were given to Richards for review.
Richards reviewed all records discovered in this search
process and produced them to Williams for her own review.
search process took several months to complete. Richards
completed her initial review of the responsive records on
December 13, 2016. Id. Due to technical issues in
the electronic storing process of the files prepared and
reviewed by Richards, Williams was unable to begin her
subsequent review of the responsive records produced by
Richards until March 3, 2017. Id. ¶ 18.
Williams completed her subsequent review of the records on
May 30, 2017 and sent the records back to Richards for
additional review on June 7, 2017. Id. ¶ 19. On
July 18, 2017, Williams received notification that Richards
had completed her additional review. Id. During this
review process, extension letters were mailed to Highland on
January 12, 2017; February 8, 2017; March 29, 2017; April 26,
2017; and June 30, 2017. Id. ¶ 20.
23, 2017, the Disclosure Office shipped all the responsive
records found in the search process and determined non-exempt
by Richards and Williams to Highland along with the
IRS’s determination letter. Appendix in Support,
Exhibit 1 ¶ 20. The determination letter reported that
13, 409 pages of responsive records were located in response
to Highland’s request, with 132 pages withheld in part
and 1, 632 pages withheld in full. Appendix in Support,
Exhibit B. Highland then submitted an administrative appeal
of the IRS’s determination on October 12, 2017.
Appendix in Support, Exhibit 1 ¶ 21. The IRS’s
Appeals Office reviewed the July 23, 2017 response letter as
well as the material and documents withheld, and on December
1, 2017 sustained the IRS’s determination, including
its decision to withhold 132 pages in part and 1, 632 pages
in full. Id. ¶¶ 22-23; Appendix in
Support, Exhibit C.
Complaint Filed and Second Search
after unsuccessfully appealing the IRS determination,
Highland filed its complaint on January 24, 2018.
See Complaint. After the complaint was filed, IRS
Office of Chief Counsel attorney Christopher Valvardi
(“Valvardi”) was assigned to assist the
Department of Justice in the litigation. Appendix in Support,
Exhibit 2 ¶ 3. The IRS filed its answer on March 28,
2018. See Answer. Williams left the IRS in January
of 2018, leaving Valvardi unable to procure detailed
explanations of the bases for withholding the records that
were not produced with the non-exempt responsive records
released to Highland on July 23, 2017. Appendix in Support,
Exhibit 2 ¶ 19. Accordingly, Valvardi conducted his own
independent review of all responsive records. Id.
Valvardi processed the documents provided to Highland by the
Disclosure Office to apply and index the redaction markings
for the exempt portions of the records. Appendix in Support,
Exhibit 2 ¶ 20. During his review, Valvardi compared the
processed copies of the documents with the records originally
sent to the Disclosure Office by the examination team and
observed that some pages originally provided by the
examination team were missing from the copies provided to
Highland. Id. Ultimately, the reason for the missing
pages is unclear, but appears to have been a result of
difficulties encountered by the IRS’s computer systems
in processing the documents for production to Highland.
Id. In August of 2018, the IRS included the
previously missing pages in the released records, increasing
the total number of pages determined to be responsive from
13, 409 to 15, 349. Id.; Highland Capital
Management, L.P.’s Response to Internal Revenue
Service’s Motion for Summary Judgment
(“Response”) (docket entry 26) at 3. From this
amount, Valvardi reviewed and determined that 14, 937 pages
could be released in full, 52 pages should be withheld in
part, and 360 pages should be withheld in full. Appendix in
Support, Exhibit 2 ¶ 21.
Motion for Summary Judgment Filed and Third Search
August 10, 2018, the IRS filed the instant motion for summary
judgment, as well as an accompanying memorandum in support.
See Motion for Summary Judgment; Memorandum in
Support of the Internal Revenue Service’s Motion for
Summary Judgment (“Memorandum in Support”)
(docket entry 22). In its memorandum in support, the IRS
argues that the evidence establishes that the IRS conducted a
reasonable search for records responsive to Highland’s
FOIA request and that the IRS is properly withholding
information from Highland because it is exempt from
disclosure. See id. at 18-35. On October 1, 2018,
Highland filed its response. See Response. In its
response, Highland argues that there exists a genuine dispute
of fact as to whether the IRS conducted an adequate search as
required by FOIA. Id. at 5-7. Highland also argues
that portions of both Thompkins’s and Valvardi’s
affidavits should be stricken on grounds of inadmissible
hearsay. Id. at 14-15.
December 2018, Valvardi and the IRS undertook a new search
and review of records to supplement the Disclosure
Office’s July 2017 production to Highland. Appendix to
Reply, Exhibit 1 at 2-7. The new search included the
potentially responsive records held by Vanterpool, Townsend,
Perwien, and Degan, none of whom kept contemporaneous
accounts of the steps they took while assisting in the
original November 2016 search. Id. at 2-6. In
November 2018, Valvardi provided Degan with detailed
instructions to conduct a new search, including a list of
search terms. Appendix to Reply, Exhibit A. Degan used the
provided search terms to search for responsive documents in
his email and on the hard drive of his IRS computer. Appendix
to Reply, Exhibit 1 ¶ 11-12. The search yielded one
email, which The Brattle Group did not send or receive, so
the email itself is not responsive to the FOIA request.
Id. ¶ 13. The email did, however, include an
attachment of 5 pages of potentially responsive material,
with one page having already been produced to Highland in the
original July 2017 production. Id. ¶ 14.
Valvardi and the IRS withheld the remaining four pages as
was unable to follow the same procedure for Vanterpool and
Townsend, as they had both separated from the IRS by the time
of the December 2018 search. Appendix to Reply, Exhibit 1 at
4-6. Additionally, neither Vanterpool, Townsend, nor Perwien
created contemporaneous accounts of the steps they took while
assisting with the original 2016 search. Id. Thus,
to conduct a more thorough search of Vanterpool’s,
Townsend’s, and Perwien’s records, the
IRS’s Information Technology (“IT”)
personnel collected all the electronic records maintained by
Vanterpool and Townsend and provided the records to Valvardi.
Id. ¶¶ 22-23. The IRS IT personnel also
provided Valvardi with all the electronic records maintained
by Perwien which had been collected for other cases.
Id. Valvardi subsequently used the keywords he
provided to Degan to search Vanterpool’s,
Townsend’s, and Perwien’s records. Id.
¶ 25. The search returned 467 email files, containing
2118 total pages, and 124 non-email files, containing
approximately 7120 total pages. Id. ¶ 26. Upon
manual review of the electronic files found through the
search, Valvardi determined that only 45 of the email records
were communications with The Brattle Group that were not
duplicates of records already produced from other sources,
and that all the non-email files were duplicates of records
already produced from other sources. Id. ¶ 27.
In total, Valvardi’s search of Vanterpool, Townsend,
and Perwien’s electronic files produced 105 pages of
responsive records, labeled with Bates page numbers 15350
through 15455. Id. ¶ 28.
during the new December 2018 search, Valvardi discovered that
some documents that Wang and Richards had provided to the
Disclosure Office during the original FOIA search in 2016
contained embedded electronic attachments that were not
visible when Valvardi first reviewed the original batch of
documents. Id. ¶ 29. Valvardi reviewed the
records from the original July 2017 production to find all
hidden attachments and discovered that many were duplicate
copies of records already reviewed and either produced to
Highland or withheld as exempt. Id. ¶ 31. An
additional 403 pages of attachments, however, were not
previously produced to Highland, and were accordingly
produced to Highland under Bates page numbers 15456 through
15858. Id. ¶ 32. In total, as the result of the
new December 2018 search, on February 8, 2019, the IRS
produced to Highland 508 additional documents (403 pages of
attachments and 105 pages of electronic files) numbered 15350
through 15858. Id. ¶ 33.
March 4, 2019, the IRS filed its reply in support of its
motion for summary judgment. See Internal Revenue
Service’s Reply in Support of its Motion for Summary
Judgment (“Reply”) (docket entry 37). In its
reply, IRS first details the new December 2018 search and
then argues that both the original 2016 search and its
subsequent reviews and searches led by Valvardi were adequate
and reasonable under FOIA. Id. at 1-6. Moreover, the
IRS contends that it exceeded requirements to demonstrate
proper withholding of information under FOIA by providing
both Vaughn declarations as exhibits to the original
motion and the reply, and by providing a Vaughn
index as an exhibit to its reply. Id. at 6-9;
see Appendix to Reply, Exhibit B; see
generally Appendix in Support; Appendix to Reply.
filed its surreply on March 18, 2019. See Highland
Capital Management, L.P.’s Surreply to Internal Revenue
Service’s Reply in Support of Motion for Summary
Judgment and Request for Hearing (“Surreply”)
(docket entry 39). In its surreply, Highland argues that the
exemptions claimed by the IRS are a pretext to prevent
Highland from obtaining the “Phase I Report”
created by The Brattle Group regarding the IRS’s
ongoing examination into Highland’s tax year 2008.
Id. at 2-5. Highland additionally requests a hearing
with the court in order to present its evidence and prove to
the court that the IRS is wrongfully withholding from
Highland information that is properly disclosable.
Id. The IRS’s motion for summary judgment is
now ripe for decision.
general, summary judgment is proper only if “there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a), (c)(1). “In the FOIA context, however, the
traditional [summary judgment] standard is modified because
‘the threshold question in any FOIA suit is whether the
requester can even see the documents the character
of which determines whether they can be
released.’” Batton v. Evers, 598 F.3d
169, 175 (5th Cir. 2010) (quoting Cooper Cameron Corp. v.
U.S. Department of Labor, Occupational Safety and Health
Administration, 280 F.3d 539, 543 (5th Cir. 2002))
(emphasis in original). “The FOIA expressly places the
burden on the defending agency to sustain its action and show
that it acted in accordance with the statute.”
Driggers v. United States, No. 3:11-CV-0229-N, 2011
WL 5525337, at *3 (N.D. Tex. Oct. 26, 2011) (Ramirez, M.J.)
(citing Batton, 598 F.3d at 175; Cooper
Cameron, 280 F.3d at 543); see also 5 U.S.C.
§ 552(a)(4)(B) (“. . . and the burden is on the
agency to sustain its action.”). To meet its summary
judgment burden, the agency must establish that: (1) its
search for the requested material is adequate; and (2) that
each responsive document is either produced, unidentifiable,
or exempt from production. Driggers, 2011 WL
5525337, at *3; Cooper Cameron, 280 F.3d at 543.
applying this standard, the court is mindful of FOIA’s
purpose. The FOIA “embodies a philosophy of full
disclosure by government agencies and requires them to make
their records available to the public.”
Driggers, 2011 WL 5525337, at *2 (citing 5 U.S.C.
§ 552). Moreover, “[t]he FOIA was enacted to
‘pierce the veil of administrative secrecy and to open
agency action to the light of public scrutiny.’”
Batton, 598 F.3d at 175 (quoting Department of
the Air Force v. Rose, 425 U.S. 352, 361 (1976)).
Accordingly, the exemptions to disclosure an agency may claim
“are explicitly limited by statute and should be
construed narrowly.” Id. Furthermore, in a
FOIA case a court should grant an agency’s motion for
summary judgment only if the agency identifies the documents
at issue and explains why they fall under the claimed
exemptions. Id.; Cooper Cameron, 280 F.3d
at 543. If there is contradictory evidence or evidence of