Judge Rules IRS Has Not Yet Established Reasonableness, Nor Has Plaintiff Yet Established Unreasonableness, of IRS Records Search in FOIA Dispute

United States District Judge Landya McCafferty of the District of New Hampshire has issued an order allowing a private citizens group to proceed in its Freedom of Information Act suit against the Internal Revenue Service.  The order sets forth the posture of the case, the gist of which appears in the following excerpts:

In May of 2013, the Internal Revenue Service (“IRS”) became embroiled in a “targeting” scandal after it admitted that it had singled out politically conservative organizations by delaying and more closely scrutinizing their applications for tax-exempt status. In the wake of the scandal, Citizens for a Strong New Hampshire, Inc. (“Citizens”) filed a records request with the IRS pursuant to the Freedom of Information Act, 5 U.S.C. § 552 (“FOIA”). The request sought disclosure of correspondence between two New Hampshire politicians and certain high-ranking IRS officials. Now, Citizens has brought this lawsuit, accusing the IRS of conducting an inadequate search, unreasonably delaying its disclosure, and unlawfully withholding responsive documents.  Both parties have filed motions seeking summary judgment. …

 

The Complaint suggests that the targeting by the IRS of conservative organizations was spurred, in part, by Democrats in Congress. For example, in 2012, New Hampshire Senator Jeanne Shaheen was among several Democratic senators to co-sign a letter to the commissioner of the IRS, urging the IRS to investigate tax-exempt organizations that might be abusing their exempt status by engaging in partisan political activity. In June of 2014, Citizens made a FOIA request to the IRS, seeking “[a]ny and all documents or records of email or correspondence to or from New Hampshire Senator [] Jeanne Shaheen and Congresswoman Carol Shea-Porter [] to or from [three high-ranking IRS officials] between the dates of January 1, 2009 and May 21, 2013.” See FOIA Request (doc. no. 1-1). One of the three named IRS officials was Lois Lerner who, at the time, served as the Director of the Exempt Organizations Unit, which oversaw applications for tax exemption. …

 

Citizens alleges that the correspondence that it sought would have been of interest to voters in advance of the 2014 election. Citizens has brought a claim against the IRS for violation of FOIA, alleging that the IRS: (1) conducted an inadequate search; (2) unduly delayed its disclosure such that Citizens could not disseminate the results of the search to voters in advance of the 2014 national election; and (3) unlawfully withheld the 51 pages of responsive but purportedly exempt documents. Citizens seeks an order requiring the IRS to disclose the remaining 51 pages, a declaratory judgment that the IRS violated FOIA, as well as an award of fees and costs. The IRS denies the allegations and argues that it is entitled to judgment as a matter of law. Both parties now seek summary judgment. [footnotes omitted]

Having conducted an in camera review of the documents that the IRS claimed were exempt from disclosure, Judge McCafferty concluded that the IRS properly withheld 51 pages of materials (the general nature of which she summarizes in the order). More interestingly, Judge McCafferty denied both parties’ motions for summary judgment on the reasonableness of the IRS’s records search.  On the latter denials, Judge McCafferty summarized her findings as follows:

Put simply, there exist genuine issues of material fact as to whether the IRS conducted an adequate search, and the record does not entitle either party to summary judgment on this issue.

What does the order mean for the litigation?  Judge McCafferty explains as follows:

[N]either party is entitled to summary judgment on the issue of the sufficiency of the search, leaving the potential for a most unusual occurrence: a FOIA trial. See Margaret B. Kwoka, The Freedom of Information Act Trial, 61 Am. U. L. Rev. 217, 257-58 (2011) (calculating that, between 1979 and 2008, less than 1% of FOIA cases went to trial, and further observing that “[i]n recent years, it is fair to say there have been essentially no FOIA trials”). The court will schedule a conference with the parties in order to discuss next steps. The parties should be prepared to discuss, among other topics, the scope and logistics of a trial, the need for discovery, and the prospects of settlement.

Other Coverage: Tax Notes Today (Electronic Cite: 2015 TNT 170-3).

JRB