Court filing
SBA motion for stay pending appeal — Wp Co. v. SBA (D.D.C.)
Filed November 12, 2020 in Wp Co v. SBA; one of 21 filings from this case.
Record facts
| Court | UNITED STATES DISTRICT COURT |
|---|---|
| Filed | 2020-11-12 |
UNITED STATES DISTRICT COURT · No. 1:20-cv-01240-JEB · Doc. 24 · 2020-11-12 · Docket on CourtListener
Full text
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
WP COMPANY LLC d/b/a THE
WASHINGTON POST, et al.,
Plaintiffs,
v.
Civil Action No. 20-1240 (JEB)
U.S. SMALL BUSINESS
ADMINISTRATION,
Defendant.
CENTER FOR PUBLIC INTEGRITY,
Plaintiff,
v.
Civil Action No. 20-1614 (JEB)
U.S. SMALL BUSINESS
ADMINISTRATION,
Defendant.
DEFENDANT’S MOTION FOR STAY
Defendant United States Small Business Administration hereby respectfully moves for
(1) a stay of this Court’s Order of November 5, 2020 until December 7, 2020, or, if Defendant
files a notice of appeal by that date, pending appeal; and (2) an immediate administrative stay
extending through this Court’s ruling on the instant motion to stay; and (3) should this Court
deny the instant motion to stay, an administrative stay further extending through disposition by
the United States Court of Appeals for the District of Columbia Circuit of any motion for stay
pending appeal filed in that Court.
The reasons for this motion are further set forth in the Memorandum of Points and
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 1 of 20
-2-
Authorities in support, filed herewith.
A proposed order regarding the motion for stay is filed herewith.
Under Local Civil Rule 7(m), counsel for SBA conferred with Counsel for Plaintiffs in
Case No. 20-1240, and in Case No. 20-1614, before filing this motion. Counsel for Plaintiffs
stated that Plaintiffs oppose the requested relief.
Dated: November 12, 2020
Respectfully submitted,
JEFFREY BOSSERT CLARK
Acting Assistant Attorney General
ELIZABETH J. SHAPIRO
Deputy Branch Director
/s/ Indraneel Sur
INDRANEEL SUR
JAMES BICKFORD
Trial Attorneys
Federal Programs Branch,
Civil Division
United States Department of Justice
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 616-8448
E-mail: Indraneel.Sur@usdoj.gov
Counsel for Defendant
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 2 of 20
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
WP COMPANY LLC d/b/a THE
WASHINGTON POST, et al.,
Plaintiffs,
v.
Civil Action No. 20-1240 (JEB)
U.S. SMALL BUSINESS
ADMINISTRATION,
Defendant.
CENTER FOR PUBLIC INTEGRITY,
Plaintiff,
v.
Civil Action No. 20-1614 (JEB)
U.S. SMALL BUSINESS
ADMINISTRATION,
Defendant.
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S
MOTION FOR STAY
AND FOR IMMEDIATE ADMINISTRATIVE STAY
Dated: November 12, 2020
JEFFREY BOSSERT CLARK
Acting Assistant Attorney General
ELIZABETH J. SHAPIRO
Deputy Branch Director
INDRANEEL SUR
JAMES BICKFORD
Trial Attorneys
Federal Programs Branch, Civil Division
United States Department of Justice
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 616-8448
E-mail: Indraneel.Sur@usdoj.gov
Counsel for Defendant
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 3 of 20
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TABLE OF CONTENTS
INTRODUCTION .......................................................................................................................... 1
STANDARD OF REVIEW ............................................................................................................ 3
ARGUMENT .................................................................................................................................. 4
I.
SBA will be Irreparably Harmed Absent a Stay .................................................................. 4
II.
Plaintiff Will Not Be Substantially Harmed By a Stay. ....................................................... 5
III.
The Public Interest Supports Granting A Limited Stay. ...................................................... 6
IV.
SBA Is Likely to Succeed on the Merits of Its Appeal ........................................................ 7
A. SBA’s Exemption 4 Contention presents a Serious Legal Question for
Appeal ......................................................................................................................... 7
B.
SBA’s Exemption 6 Contention presents a Serious Legal Question for
Appeal ...................................................................................................................... 10
CONCLUSION ............................................................................................................................. 12
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 4 of 20
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TABLE OF AUTHORITIES
Cases
Al-Anazi v. Bush,
370 F. Supp. 2d 188 (D.D.C. 2005) ............................................................................................ 4
Comm. On the Judiciary U.S. House of Reps. v. Miers,
575 F. Supp. 2d 201 (D.D.C. 2008) ........................................................................................ 5, 6
Consumers’ Checkbook Ctr. For the Study of Servs. v. Dep’t of Health &
Human Servs.,
554 F.3d 1046 (D.C. Cir. 2009) ...................................................................................... 7, 10, 11
Ctr. for Int’l Envt’l Law v. Office of U.S. Trade, Rep.,
240 F. Supp. 2d 21 (D.D.C. 2003) .............................................................................................. 5
Ctr. for Nat’l Sec. Studies v. U.S. Dep’t of Justice,
217 F. Supp. 2d 58 (D.D.C. 2002) .............................................................................................. 5
Cuomo v. U.S. Nuclear Regulatory Comm’n,
772 F.2d 972 (D.C. Cir. 1985) ................................................................................................ 3, 4
Dep’t of Justice v. Reporters Comm. for Freedom of the Press,
489 U.S. 749 (1989) ................................................................................................................ 6, 7
Dunlap v. Presidential Advisory Comm’n on Election Integrity,
319 F. Supp. 3d 70 (D.D.C. 2018) .............................................................................................. 3
Food Marketing Institute v. Argus Leader Media,
139 S. Ct. 2356 (2019) ................................................................................................................ 9
In re Sealed Case (Medical Records),
381 F.3d 1205 (D.C. Cir. 2004) .................................................................................................. 4
Irons v. FBI,
811 F.2d 681 (1st Cir. 1987) ....................................................................................................... 4
John Doe Agency, et al. v. John Doe Corp.,
488 U.S. 1306 (1989) .............................................................................................................. 3, 5
Judicial Watch, Inc. v. Dep’t of Justice,
432 F.3d 366 (D.C. Cir. 2005) .................................................................................................... 4
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 5 of 20
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Light v. Dep’t of Justice,
968 F. Supp. 2d 11 (D.D.C. 2013) .............................................................................................. 8
Maydak v. U.S. Dep’t of Justice,
218 F.3d 760 (D.C. Cir. 2000) .................................................................................................... 8
Military Audit Project v. Casey,
656 F.2d 724 (D.C. Cir. 1981) .................................................................................................... 8
Mobley v. CIA,
806 F.3d 568 (D.C. Cir. 2015) .................................................................................................... 1
Nat’l Ass’n of Retired Fed. Emps. v. Horner,
879 F.2d 873 (D.C. Cir. 1989) .................................................................................................. 10
People for the Am. Way Found. v. U.S. Dep’t of Educ.,
518 F. Supp. 2d 174 (D.D.C. 2007) ............................................................................................ 5
Population Inst. v. McPherson,
797 F.2d 1062 (D.C. Cir. 1986) .................................................................................................. 4
Providence Journal Co. v. FBI,
595 F.2d 889 (1st Cir. 1979) ................................................................................................... 4, 5
Quiñón v. FBI,
86 F.3d 1222 (D.C. Cir. 1996) .................................................................................................... 6
Shapiro v. U.S. Dep’t of Justice,
No. 13-cv-555, 2016 WL 3023980 (D.D.C. May 25, 2016) ................................................... 4, 7
U.S. Dep’t of Def. Dep’t of Military Affairs v. FLRA,
964 F.2d 26 (D.C. Cir. 1992) .................................................................................................... 11
U.S. Dep’t of Justice v. Landano,
508 U.S. 165 (1993) .................................................................................................................... 8
United States v. Bookhardt,
277 F.3d 558 (D.C. Cir. 2002) .................................................................................................... 1
United States v. Philip Morris Inc.,
314 F.3d 612 (D.C. Cir. 2003) ................................................................................................ 4, 5
Washington Metro. Area Transit Comm’n v. Holiday Tours, Inc.,
559 F.2d 841 (D.C. Cir. 1977) ................................................................................................ 3, 7
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 6 of 20
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Wolf v. CIA,
473 F.3d 370 (D.C. Cir. 2007) .................................................................................................... 8
Statutes
5 U.S.C. § 552(b)(4) ....................................................................................................................... 7
5 U.S.C. § 552(b)(6) ..................................................................................................................... 10
Rules
Fed. R. App. P. 4(a)(1)(B)(ii) ......................................................................................................... 1
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 7 of 20
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INTRODUCTION
The U.S. Small Business Administration (SBA) is considering whether to appeal from this
Court’s Order of November 5, 2020, in which the Court directed SBA under the Freedom of
Information Act (“FOIA”) to “release the names, addresses, and precise loan amounts of all
individuals and entities that obtained COVID-related loans pursuant to the [PPP] and [EIDL] by
November 19, 2020[.]” November 5 Order ¶ 5, ECF No. 22. To preserve SBA’s right to appeal,
and to avoid irreparable harm to SBA and to privacy and business confidentiality interests of the
millions of individuals and businesses nationwide who obtained assistance through the PPP and
EIDL in response to the pandemic, SBA respectfully requests that the November 5 Order be stayed
until Monday, December 7, 2020, or, if SBA files a notice of appeal by that date, pending appeal.
Such relief would provide the Acting Solicitor General of the United States additional time to
consider whether to authorize an appeal. “[A]ny appeal of a decision adverse to the government
must be approved by the Solicitor General[.]” United States v. Bookhardt, 277 F.3d 558, 563 n.6
(D.C. Cir. 2002). Correspondingly, where, as here, “one of the parties” in a civil case “is a United
States agency, a notice of appeal must be filed within 60 days after entry of the judgment or order
appealed.” Mobley v. CIA, 806 F.3d 568, 576 (D.C. Cir. 2015) (citing Fed. R. App. P.
4(a)(1)(B)(ii)). The government would thus ordinarily have until January 5, 2021 to determine
whether to appeal.
SBA meets all the traditional requirements for the requested stay, which would maintain
the status quo. At the outset, disclosure on the November 19, 2020 compliance date, before SBA
has even had opportunity to finish deliberating on whether to appeal, would moot any such appeal.
That is, SBA, and the many individual borrowers and businesses across the nation whose interests
the agency legitimately seeks to protect against unwarranted intrusion in this case, will be
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irreparably harmed if the information withheld is released pending appeal. Once the information
is disclosed, it cannot be recalled, and the confidentiality of the PPP and EIDL information in
dispute would be lost for all time. Furthermore, Plaintiffs would not be substantially injured by a
stay. The PPP currently stands closed to new applications, making the data about PPP borrowers
a question of historical interest that can be amply examined once an appeal is decided. A stay will
also serve the public interest, which must include the privacy interests of the millions of ordinary
individuals and businesses that obtained PPP and EIDL assistance in the midst of the pandemic.
Moreover, SBA is likely to succeed on the merits of its appeal. At a minimum, SBA’s
arguments raise serious legal questions for appeal, which is all that is required where, as here, the
balance of harms strongly favors a stay. There is a serious legal question, for example, about the
correct Exemption 6 balance in this case between borrower privacy and the perceived need for
enhanced public disclosure, and there would be fair ground for the SBA to contend that the D.C.
Circuit should draw that balance differently from this Court. There are likewise serious questions
with respect to disclosure under Exemption 4.
Under Local Civil Rule 7(m), counsel for SBA conferred with Counsel for Plaintiffs in
Case No. 20-1240, and in Case No. 20-1614, before filing this motion. Counsel for Plaintiffs in
both cases stated that Plaintiffs oppose the requested relief.
SBA accordingly requests that the Court stay its November 5 Order until Monday,
December 7, 2020 or, if SBA files a notice of appeal by that date, pending appeal. SBA further
requests that the Court enter an immediate administrative stay extending through this Court’s
ruling on the instant motion to stay and, should this Court deny the motion, further extending
through the D.C. Circuit’s ruling on a motion for stay filed in that Court.
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 9 of 20
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STANDARD OF REVIEW
“An order maintaining the status quo is appropriate when a serious legal question is
presented, when little if any harm will befall other interested persons or the public and when
denial of the order would inflict irreparable injury on the movant.” Washington Metro. Area
Transit Comm’n v. Holiday Tours, Inc., 559 F.2d 841, 844 (D.C. Cir. 1977). Accordingly, a
party seeking a stay pending appeal must show that four factors weigh in favor of a stay: “(1)
the likelihood that the party seeking the stay will prevail on the merits of the appeal; (2) the
likelihood that the moving party will be irreparably harmed absent a stay; (3) the prospect that
others will be harmed if the court grants the stay; and (4) the public interest in granting the
stay.” Cuomo v. U.S. Nuclear Regulatory Comm’n, 772 F.2d 972, 974 (D.C. Cir. 1985) (per
curiam); see, e.g., John Doe Agency, et al. v. John Doe Corp., 488 U.S. 1306, 1308-09 (1989)
(Marshall, J., in chambers) (staying FOIA disclosure order of lower court pending disposition
of cert petition where, inter alia, “fact that disclosure would moot that part of the [challenged]
decision requiring disclosure of the Vaughn index would also create an irreparable injury”).
“A party does not necessarily have to make a strong showing with respect to the first
factor (likelihood of success on the merits) if a strong showing is made as to the second factor
(likelihood of irreparable harm).” Dunlap v. Presidential Advisory Comm’n on Election
Integrity (“Dunlap II”), 319 F. Supp. 3d 70, 83 (D.D.C. 2018) (citing Cuomo, 772 F.2d at
974). Furthermore, “courts often recast the likelihood of success factor as requiring only that
the movant demonstrate a serious legal question on appeal where the balance of harms strongly
favors a stay.” Al-Anazi v. Bush, 370 F. Supp. 2d 188, 193 n.5 (D.D.C. 2005) (citations
omitted); see Population Inst. v. McPherson, 797 F.2d 1062, 1078 (D.C. Cir. 1986); see also
Shapiro v. U.S. Dep’t of Justice, No. 13-cv-555, 2016 WL 3023980, at *7-8 (D.D.C. May 25,
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 10 of 20
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2016).
ARGUMENT
I.
SBA will be Irreparably Harmed Absent a Stay
The requested stay, which would enable SBA and the Solicitor General to determine
whether to appeal, is warranted to prevent irreparable harm to SBA’s appellate rights. Where,
as here, an order directs an agency to produce documents the agency asserts are legally exempt
or privileged against disclosure, compliance with the order “mak[es] the issue . . . effectively
moot.” In re Sealed Case (Medical Records), 381 F.3d 1205, 1210 (D.C. Cir. 2004) (Garland,
J.) (quoting United States v. Philip Morris Inc., 314 F.3d 612, 619 (D.C. Cir. 2003)). That is
because compliance “let[s] the cat out of the bag, without any effective way of recapturing it if
the district court’s directive [is] ultimately found to be erroneous.” Judicial Watch, Inc. v. Dep’t
of Justice, 432 F.3d 366, 369 (D.C. Cir. 2005) (quoting Irons v. FBI, 811 F.2d 681, 683 (1st
Cir. 1987)). The government’s right to appeal from this Court’s November 5 Order thus “will
become moot” once SBA “surrender[s]” the PPP and EIDL information over which SBA has
asserted exemptions from disclosure under FOIA, because the ordered release will cause
“confidentiality [to] be lost for all time[,]” thereby “utterly destroy[ing] the status quo[.]”
Providence Journal Co. v. FBI, 595 F.2d 889, 890 (1st Cir. 1979). The resulting harm to SBA
will be “irreparabl[e].” Id.
For that reason, “[p]articularly in the FOIA context, courts have routinely issued stays
where the release of documents would moot a defendant’s right to appeal.” People for the Am.
Way Found. v. U.S. Dep’t of Educ., 518 F. Supp. 2d 174, 177 (D.D.C. 2007) (citing John Doe
Agency, 488 U.S. at 1308-09); see also Ctr. for Int’l Envt’l Law v. Office of U.S. Trade Rep.,
240 F. Supp. 2d 21, 23 (D.D.C. 2003); Ctr. for Nat’l Sec. Studies v. U.S. Dep’t of Justice, 217
F. Supp. 2d 58, 58 (D.D.C. 2002).
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 11 of 20
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Importantly, the irreparable harm that would result from compelled release of the
information withheld here would not only harm SBA, but it would also harm the many
individuals and businesses whose loans are at issue. Borrowers are already suffering from the
dramatic decrease in economic activity the pandemic inflicted. It would contradict the purposes
of the CARES Act to subject them to further risk—in particular, the risk of competitors and
other interested parties inferring payroll information from loan amounts and attributing that
information to particular businesses, and using that information to the disadvantage of
borrowers. See Manger Decl. ¶ 105, ECF No. 14-1 (1st Manger Decl.).
II.
Plaintiffs Will Not Be Substantially Harmed By a Stay.
Furthermore, a stay is appropriate because the “issuance of the stay will not cause
substantial harm to other parties[.]” Comm. On the Judiciary U.S. House of Reps. v. Miers, 575
F. Supp. 2d 201, 203 (D.D.C. 2008) (quoting Philip Morris, Inc., 314 F.3d at 617). Here, the
“granting of a stay” would “be detrimental” to Plaintiffs “only to the extent that it postpones
the moment of disclosure assuming [they] prevail[] by whatever period of time may be required
for [the D.C. Circuit] to hear and decide [any] appeal[].” See Providence Journal, 595 F.2d at
890.
Such a postponement would not result in significant harm to the Plaintiffs here. The
PPP closed to new applications on August 8, 2020, and Plaintiffs have already received
extensive descriptions and data about the PPP and EIDL loans and assistance. Indeed,
numerous news organizations, including Plaintiffs, have already published articles about SBA’s
lending activities under the CARES Act. Because the PPP loans have already been made and
new applications are not being considered, many of the records are mainly of historical interest,
and that interest can be vindicated at the end of any appeal. Cf. Comm. on the Judiciary, 575 F.
Supp. 2d at 208 (current Congress would suffer “substantial harm” if it were denied information
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 12 of 20
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prior to its expiration).
In that regard, although Plaintiffs in Case No. 20-1240 pressed for a truncated summary
judgment briefing schedule based on the assertion that the information sought was necessary
“before the November 2020 general election so that voters will be able to consider the
information released when they cast their ballot,” (No. 20-1240, ECF No. 10, at 2 (June 29,
2020)), November 2, 2020 has now passed. Postponing release to allow for orderly D.C. Circuit
adjudication therefore cannot in any way affect how voters “cast their ballot” in that general
election.
III.
The Public Interest Supports Granting A Limited Stay.
The public interest also supports granting the requested interim relief. SBA fully
acknowledges the importance of the public interest served by adherence to FOIA.
Nevertheless, the public interest protected by the FOIA “is that in ‘official information that
sheds light on an agency’s performance of its statutory duties.’” Quiñón v. FBI, 86 F.3d 1222,
1231 (D.C. Cir. 1996) (emphasis added) (quoting Dep’t of Justice v. Reporters Comm. for
Freedom of the Press, 489 U.S. 749, 773 (1989)). But until the D.C. Circuit can adjudicate
SBA’s appeal, it would not serve the public interest to compel disclosure of the information
withheld, given that the records contain, inter alia, information about millions of individuals
and businesses that are not parties to this action—the PPP borrowers and recipients of EIDL
assistance—and given also that the information released (including names, addresses, and loan
amounts) could be exploited to the detriment of those borrowers. See, e.g., 1st Manger Decl.
¶ 109. Those individuals and businesses have privacy and commercial confidentiality interests
in the disputed records, which would be best served by allowing for appellate review of
whether that information is subject to disclosure under the unusual facts of this action, which
arises from the aftermath of the COVID-19 public health emergency. After all, “information
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about private citizens . . . that reveals little or nothing about an agency’s own conduct” does
not serve a relevant public interest under FOIA. Consumers’ Checkbook Ctr. For the Study of
Servs. v. Dep’t of Health & Human Servs., 554 F.3d 1046, 1051 (D.C. Cir. 2009) (quoting
Reporters Comm., 489 U.S. at 773).
IV.
SBA Is Likely to Succeed on the Merits of Its Appeal
Furthermore, if SBA appeals, it is likely to prevail on at least one—if not both—of the
merits issues that would arise on appeal from this Court’s November 5 Order. A stay is thus
warranted in recognition of the significant possibility that the D.C. Circuit might reach a different
conclusion on at least one of the “serious legal question[s]” presented here. Holiday Tours, 559
F.2d at 844; see, e.g., Shapiro, 2016 WL 3023980, at *8 (where, as here, FOIA disclosure order
would moot FBI’s right to appeal, merits analysis required only “a substantial question for appeal,”
because “it makes little sense to make the issuance of a stay contingent on the [District] Court’s
determination that its own ruling was likely wrong”).
A.
SBA’s Exemption 4 Contention Presents a Serious Legal Question for Appeal
The case presents a serious legal question about SBA’s invocation of Exemption 4—which
protects “commercial or financial information obtained from a person and privileged or
confidential[,]” 5 U.S.C. § 552(b)(4)—“to withhold the precise amounts of all PPP loans of
$150,000 or more, as well as the names and addresses of all borrowers of PPP loans of less than
that figure.” Memorandum Opinion, ECF No. 23, at 11 (Nov. 5, 2020) (“Mem. Op.”).
SBA’s declarations invoked Exemption 4 by showing “that the information withheld
logically falls within the claimed exemption[.]” Light v. Dep’t of Justice, 968 F. Supp. 2d 11, 22
(D.D.C. 2013) (quoting Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981)). That
is, SBA’s “justification for invoking a FOIA exemption” was “sufficient” by “appear[ing] ‘logical’
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 14 of 20
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or ‘plausible.’” Wolf v. CIA, 473 F.3d 370, 374-75 (D.C. Cir. 2007). Following a “well
established” pathway, the agency met its evidentiary burden through the declarations of William
Manger, Chief of Staff in the Office of the Administrator and the Associate Administrator for the
Office of Capital Access at SBA, who explained the agency’s “grouping” of the records into
“categories and offering generic reasons for withholding the documents in each category.”
Maydak v. U.S. Dep’t of Justice, 218 F.3d 760, 763, 765 (D.C. Cir. 2000) (emphasis added). The
agency’s approach was also consistent with Supreme Court precedent adopting an objective test,
albeit in the slightly different context—asking whether “an implied assurance of confidentiality
fairly can be inferred[,]” based on “generic circumstances” surrounding the communication
between an informant (in a criminal case) and the government that would “characteristically
support an inference of confidentiality[.]” U.S. Dep’t of Justice v. Landano, 508 U.S. 165, 173,
177, 179 (1993) (emphasis added).
As SBA explained through its unrebutted declarations, under its longstanding policy
reflected in its Standard Operating Procedure, borrower payroll information is confidential and
generally exempt from disclosure. Viewed in context, SBA explained, it did not intend to disclose
PPP loan amounts and borrower names: The PPP application form language substantially derived
from the pre-existing Section 7(a) program application—listing “names of borrowers” and loan
amount as information that would be “automatically released”—did not override the SBA’s
longstanding policy against disclosure of payroll data. Indeed, by referring to items applicable
only to 7(a) loans and not to PPP loans—such as collateral, which is not required for a PPP loan,
and general loan terms and maturity, which are set by the CARES Act—the text of the form itself
undermines the suggestion that the disclosure set aside the SBA’s commitment to protecting the
confidentiality of payroll information. See 2d Manger Decl., ECF No. 20-2 ¶¶ 13-18; 1st Manger
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 15 of 20
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Decl. ¶¶ 94-105. Although this Court reached a contrary conclusion about the “natural reading”
of the application form (Mem. Op. 20, 23-27), whether the SBA’s unrebutted declarations met its
burden as a matter of law is at least a serious question that SBA should be permitted to present to
the D.C. Circuit on appeal.
Moreover, although the Manger declaration explained the analytical connection between
the PPP loan amount and a borrower’s average monthly payroll, the Court faulted that rationale
based on its perception that SBA’s assumptions—“1) that a [PPP] borrower took out a loan for the
maximum amount allowed; and 2) that a PPP borrower would pay few if any of its employees
more than $100,000”—were not “necessarily true for any given borrower.” Mem. Op. 14-15
(emphasis added) (citation omitted). The Court remarked that there were incentives for certain
borrowers to seek a loan amount below the maximum, and that there were some PPP borrowers
that did pay employees more than $100,000 a year (for example, the Court focused on certain large
law firms). Mem. Op. 15-19. In rejecting SBA’s rationale on that ground, the Court essentially
demanded that the agency justify its Exemption 4 analysis by examining the specific characteristics
of each of the several million PPP borrowers whose loans SBA was administering (there were
already 4.9 million such loans by July 6, 2020). (This Court did not suggest that Food Marketing
Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019), the most recent Supreme Court precedent
interpreting Exemption 4, required such an approach, and, indeed, the D.C. Circuit has not yet
applied Argus Leader.)
But SBA was not required to present borrower-specific details to explain the Exemption 4
withholdings for each borrower under Maydak and Landano, which contemplated agency FOIA
exemptions predicated on “generic” analysis applying to large groups of records. Nor would such
an approach have been practicable, given the CARES Act’s imperative to SBA to act swiftly in
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 16 of 20
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distributing agency-backed loans to mitigate the current economic conditions arising from the
COVID-19 emergency. See 1st Manger Decl. ¶ 15. In light of the need to proceed expeditiously,
it would have taken too long for SBA to require borrowers to substantiate their need for
confidential treatment of individual data elements in their PPP loan applications, and for SBA
itself to make borrower-specific determinations regarding treatment of payroll information as
“confidential” or otherwise proprietary. See 1st Manger Decl. ¶¶ 13-15, 95, 105.
Applying Maydak and Landano and accounting for the highly unusual emergency at issue
in this case, the D.C. Circuit could reach a conclusion different from this Court’s, thus presenting
a serious legal question regarding Exemption 4.
B.
SBA’s Exemption 6 Contention Presents a Serious Legal Question for Appeal
This case also presents a serious legal question about SBA’s invocation of Exemption 6—
which protects certain “files the disclosure of which would constitute a clearly unwarranted
invasion of personal privacy[,]” 5 U.S.C. § 552(b)(6)—“to withhold the names and addresses of
borrowers of PPP loans of less than $150,000, as well as names and addresses of sole
proprietorships and independent contractors that received EIDL loans of any amount.” Mem. Op.
21.
Exemption 6 requires the court to decide “whether ‘disclosure would compromise a
substantial, as opposed to a de minimis, privacy interest[,]’” and, “[i]f a substantial privacy interest
is at stake, then . . . balance the privacy interest in non-disclosure against the public interest.”
Consumers’ Checkbook Ctr., 554 F.3d at 1050 (quoting Nat’l Ass’n of Retired Fed. Emps. v.
Horner, 879 F.2d 873, 874 (D.C. Cir. 1989)). The Manger declaration explained SBA’s rationale
for concluding that the substantial privacy interest against freewheeling disclosure of financial
information tied to names and addresses outweighed the interest in additional public disclosure
about the PPP and EIDL program administration (factoring in statistical information about the
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 17 of 20
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programs SBA had already released). See 1st Manger Decl. ¶¶ 106-113. This Court nevertheless
rejected that rationale, based on its perceptions that the privacy interest was diminished by certain
phrases in SBA’s borrower application forms, and that the existence of governmental inquiries
into PPP and EIDL administration separate from this case counted in favor of disclosure of the
private information in this case. Mem. Op. 22-40.
But the validity of the balance drawn by this Court is a substantial question for appeal,
because the D.C. Circuit could reach a different conclusion about the significance of the privacy
interest (including the effect, if any, of the language of agency forms, viewed in light of the
protections for confidential information set forth in SBA’s longstanding Standard Operating
Procedures), and about the balance between that interest and the opposing interest in disclosure.
As to the substantiality of the privacy interest: In Consumers’ Checkbook Center, the D.C. Circuit
noted that it had “consistently held that an individual has a substantial privacy interest under FOIA
in his financial information, including income[,]” and remarked that “requested information need
not reveal completely an individual’s personal finances to implicate substantial privacy concerns.”
554 F.3d at 1050-51. Whether phrasing in agency forms of disputed significance can undercut
such a substantial privacy interest is an issue awaiting authoritative decision from the D.C. Circuit.
And, as to the interest in public disclosure: Although this Court relied (Mem. Op. 32-35)
on inquiries regarding fraud or other misconduct by recipients of CARES Act relief by federal
prosecutors and other government officials, this Court’s characterization of those inquiries as a
factor supporting additional disclosure under FOIA, the D.C. Circuit could disagree. Rather, as in
Consumers’ Checkbook Center, it could hold that the criminal prosecutions and other
investigations are ‘“alternative source[s] of information available that could serve the public
interest in disclosure” and that therefore “diminish [the] public interest value of disclosure” to the
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 18 of 20
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instant FOIA requesters. See 554 F.3d at 1053 (quoting U.S. Dep’t of Def. Dep’t of Military Affairs
v. FLRA, 964 F.2d 26, 29-30 (D.C. Cir. 1992)). Indeed, given that prosecutions into fraud or
misconduct involving improperly obtained PPP or EIDL assistance concern unlawful conduct by
borrowers, it is (at a minimum) less than clear that those prosecutions imply that SBA “was engaged
in illegal activity[,]” such that the Exemption 6 balance weighs against the agency. Cf. 554 F.3d
at 1054 n.5 (Exemption 6 requires “more than unsupported allegations that an agency is not doing
its job”) (emphasis added).
As to Exemption 6, therefore, the D.C. Circuit could reach a conclusion different from this
Court’s, thus presenting a separate, serious legal question.
CONCLUSION
For the foregoing reasons, SBA’s motion for a stay should be granted, and this Court’s
Order of November 5, 2020 should be stayed until December 7, 2020, or, if SBA files a notice of
appeal by that date, pending appeal. Moreover, the Court should enter an immediate
administrative stay extending through this Court’s ruling on the instant motion to stay and,
should this Court deny the motion, further extending through the D.C. Circuit’s ruling on a
motion for stay pending appeal filed in that Court.
Case 1:20-cv-01240-JEB Document 24 Filed 11/12/20 Page 19 of 20
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Dated: November 12, 2020
Respectfully submitted,
JEFFREY BOSSERT CLARK
Acting Assistant Attorney General
ELIZABETH J. SHAPIRO
Deputy Branch Director
/s/ Indraneel Sur
INDRANEEL SUR
JAMES BICKFORD
Trial Attorneys
Federal Programs Branch,
Civil Division
United States Department of Justice
P.O. Box 883
Washington, D.C. 20044
Telephone: (202) 616-8448
E-mail: Indraneel.Sur@usdoj.gov
Counsel for Defendant
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