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Washington D.C. Federal Judge orders SEC to turn over SEC
                     lawyers notes taken during meetings and phone calls with Malkin
                     Holdings managers, their lawyers, and investors during sale of Empire State Building to ESRT REIT.​

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​Case TitleEDELMAN v. SECURITIES AND EXCHANGE COMMISSION
DistrictDistrict of Columbia
CityWashington, DC
Case Number1:2014cv01140
Date Filed2014-07-03
Date ClosedOpen
JudgeJudge Randolph D. Moss
PlaintiffRICHARD EDELMAN
Case DescriptionRichard Edelman, who operates a website providing information to investors in the Empire State Building, submitted six FOIA requests to the Securities and Exchange Commission concerning investments related to the Empire State Building. After the agency failed to respond to any of his requests within the statutory time limit, Edelman appealed the denial of his requests. In response to two of his appeals, the agency issued a Glomar response, neither confirming nor denying the existence of records, under Exemption 7(A) (ongoing investigation). Edelman finally filed suit.
Complaint issues: Failure to respond within statutory time limit, Exemption 7(A) - Categorical exemption


DefendantSECURITIES AND EXCHANGE COMMISSION
Documents
Docket
Complaint
Opinion/Order [24]
FOIA Project Annotation: In a decision that has far-reaching effects on what records qualify as agency records, Judge Randolph Moss has ruled that notes taken by SEC attorneys during meetings and phone conversations are not categorically exempt from FOIA because they are personal records rather than agency records. While the distinction between agency and personal records comes up in litigation only occasionally, as a matter of interpretation agencies generally assume that notes taken by an employee to memorialize an exchange are personal to that employee and are not agency records unless specifically relied upon by the agency. Instead of a presumption that the notes were personal, Moss concluded the notes were taken by the attorneys as part of their jobs and reflected work done for the agency, not for their personal convenience. Moss noted that "what little evidence the SEC has submitted shows that the notes 'facilitated the day-to-day operations of the' SEC's review of the transaction, whether or not they were incorporated into the official file that was created to accompany that review. It is thus incorrect to assert that the notes were created for the 'personal convenience' of the attorneys; it is more accurate to say that they were created for the attorneys' 'professional convenience.' Such records are not categorically shielded from FOIA's reach, whether or not they were distributed within the agency. To make distribution the centerpiece of the 'agency records' analysis cannot be squared with the purposes of FOIA." The case involved multiple requests made by Richard Edelman for records concerning the SEC's decision to approve the formation of the Empire State Realty Trust, which converted ownership of the Empire State Building into a real estate investment trust. Edelman was a former investor in the Empire State Building and maintained a website that provides information to investors and the public about the conversion. Edelman eventually filed suit over six requests he had made for records pertaining to the transaction. Edelman had appealed the agency's failure to respond for several of the requests. The agency acknowledged that it had failed to respond within the statutory time limits and remanded most of his requests, all of which had been processed by the time Moss decided the case. The status of the attorneys' notes was part of the agency's response to Edelman's request for records concerning the agency's reviews of consumer complaints about the transaction. The agency claimed that Edelman had failed to exhaust his administrative remedies for a request for confidential records submitted by the Empire State Realty Trust. Edelman had appealed the agency's failure to respond on time and the agency remanded the case for processing. Without reference to the remand, two weeks later the agency responded to the request, telling Edelman that it had found no records and that he had the right to appeal that decision. The next day, Edelman received a letter acknowledging the remand on appeal and indicating the agency would begin processing the remand. A week after that, Edelman received another letter from the agency explaining in more detail the basis for its no records claim and, again, indicating he had the right to appeal that decision. Edelman did not appeal. The agency argued Moss did not have jurisdiction over the request because Edelman had failed to appeal before filing suit. Moss found that Oglesby v. Dept of Army applied in these circumstances. Moss explained that "if 'an administrative appeal is mandatory if the agency cures its failure to respond within the statutory period by responding to the FOIA request before suit is filed,' it stands to reason that the appeal is mandatory even if the agency's failure to respond initially is 'cured' only after a remand. . .Edelman cannot now rely on the SEC's initial failure to timely respond to the request to excuse his failure to file an appeal from the Commission's subsequent decision." Turning to the records status of the attorneys' notes, Moss indicated that "surprisingly, it is an open question within this circuit whether notes taken by individual agency employees in the course of performing their official duties are 'agency records' subject to FOIA. The district judges who have considered the question have held, by and large, that they are not. . .[H]owever, the Court disagrees and concludes that FOIA and the relevant caselaw do not support the categorical exclusion of notes taken and used solely by individual agency employees from the statute's reach." The Supreme Court first interpreted the statutory meaning of agency records in two cases�"Kissinger v. Reporters Committee, 445 U.S. 136 (1980), and Forsham v. Harris, 445 U.S. 169 (1980)�"ruling that to be subject to FOIA a record must be in the custody and possession of the agency. The Court tweaked that definition in Dept of Justice v. Tax Analysts, 492 U.S. 136 (1989), in which the Court ruled that records obtained and controlled by an agency were agency records. Moss found that two D.C. Circuit decisions�"Bureau of National Affairs v. Dept of Justice, 742 F.2d 1484 (D.C. Cir. 1984), and Consumer Federation of America v. Dept of Agriculture, 455 F.3d 283 (D.C. Cir. 2006), both of which involved appointment calendars�"were the most relevant case law to the circumstances here. He pointed out, however, that both cases involved a mix of personal and agency information. He explained that "by contrast, the notes in this case contain no personal content whatsoever, or at least the SEC has not suggested that they do." He added that "the SEC merely argues that the notes are not agency records because, although the attorneys created them in furtherance of their official duties, they did so individually, not at the agency's behest." Based on those two cases, Moss examined whether the SEC had control and use of the notes. He observed that "the SEC argues that it did not control the notes because the employees were not required to keep them. . .and they were not incorporated into the SEC's files. But the Commission's assertions rest on misunderstanding the law and facts. As a matter of law, it is not at all clear whether the Federal Records Act, or the SEC's regulations would have obligated the attorneys to maintain the notes that were the topic of Edelman's two requests." Moss pointed out that "it is difficult to imagine that the SEC does not at least require that its staff maintain some record of witness interviews." The agency also argued the notes were not integrated into the agency's files. Moss indicated that "it is hard to understand why it would matter, for purposes of FOIA, whether a document is kept on an attorney's agency computer or in her agency desk�"at least to the extent the document concerns agency business rather than personal matters. Indeed, it is safe to assume that some of the most consequential records in the government have at times resided in individual offices rather than in agencies' centralized filing systems. Treating those records as beyond FOIA's reach cannot be squared with the statutory goal of 'opening agency action to the light of public scrutiny.'" Moss recognized that his ruling might impact agency employees' willingness to take notes at all. But he indicated that "many of the notes that may be subject to the Court's interpretation will likely be exempt from disclosure under one of FOIA's statutory exemptions." Stressing that his ruling was limited, Moss observed that "all the Court concludes at this juncture is that the notes in this case are not categorically exempt from FOIA simply because they were maintained and used exclusively by their authors." 
Issues: Litigation - Jurisdiction - Failure to Exhaust, Agency Record - Control