Plaintiffs' opposition to SBA motion for stay — WP Co. v. SBA

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UNITED STATES DISTRICT COURT · No. 1:20-cv-01240-JEB · Doc. 25 · 2020-11-16 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA 
 
WP COMPANY LLC  
d/b/a THE WASHINGTON POST, et al., 
Plaintiffs, 
v. 
U.S. SMALL BUSINESS ADMINISTRATION, 
                                                          
Defendant. 
  
 
Case No. 1:20-cv-1240-JEB 
 
   
 
PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FOR STAY 
This Court, firmly and unequivocally, found that the U.S. Small Business Administration 
(the “SBA”) has wrongfully withheld from the public timely information of significant interest 
during the COVID-19 pandemic.  With no minced words, the Court on November 5, 2020, 
ordered the SBA by November 19 to “release the names, addresses, and precise loan amounts of 
all individuals and entities that obtained COVID-related loans pursuant to the Paycheck 
Protection Program and Economic Injury Disaster Loans program.”  Order (Dkt. 22) at ¶ 5.  The 
SBA has withheld this information (the “Loan Data”) for many months, in clear violation of the 
Freedom of Information Act (“FOIA”), even though it explicitly told loan applicants that the data 
is public information.   
The SBA seeks to delay its disclosure obligations even further by requesting a stay of the 
November 5 Order pending possible appeal.  SBA’s Mot. for Stay (Dkt. 24) (“Stay Mot.”).  The 
Court should deny that motion and maintain the November 19 release deadline.  The SBA does 
not and cannot justify continuing to keep the Loan Data from the public.  Moreover, that data is 
essential to the public’s evaluation, at this very moment, of the Congress’s and the President’s 
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continuing responses to the pandemic.  This Court should deny the stay and order the 
government to adhere to the November 19 deadline. 
ARGUMENT 
 
A stay from the district court is not to be granted lightly, even – or especially – in FOIA 
cases of great public importance like this one.  See, e.g., Protect Democracy Project, Inc. v. 
Dep’t of Justice, 2020 U.S. Dist. LEXIS 203292, at *26-29 (D.D.C. Oct. 30, 2020) (denying 
“any request to stay” preliminary order for plaintiff in FOIA case where “the public interest is 
particularly well-served by the timely release of the requested documents”).  Because “a stay 
pending appeal is always an extraordinary remedy,” the party seeking a stay “carries a heavy 
burden to demonstrate that the stay is warranted.”  McCammon v. United States, 584 F. Supp. 2d 
193, 197 (D.D.C. 2008) (internal marks and citation omitted).  To carry that burden, the party 
seeking a stay must satisfy a four-factor test that weighs “(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.”  Loving v. IRS, 920 F. Supp. 2d 108, 
110 (D.D.C. 2013) (Boasberg, J.) (citations omitted) (denying stay).  The SBA does not make the 
necessary showing on any of these factors, and it therefore fails to carry its burden for a stay. 
I. 
The SBA Is Not Likely To Prevail On Appeal. 
 
The SBA argues that “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,” or, at a minimum, that 
the case “presents a serious legal question” for appeal.  Stay Mot. at 14.  The force of this 
Court’s logic and language in the November 5, 2020 Opinion (“Op.”) (Dkt. 23), however, 
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demonstrates how unlikely the SBA is to succeed on appeal, and that the case turns on 
straightforward applications of familiar law to undisputed facts. 
A. 
The SBA has not identified a “serious legal question” as to Exemption 4. 
 
As the Court is now familiar, the SBA has argued that it may withhold the Loan Data 
under Exemption 4, not because the Loan Data itself is confidential, but because it contends that 
the Loan Data could be used to reverse-engineer confidential payroll data not even contained in 
the SBA records.  Plaintiffs responded, and the Court agreed, that this argument “collapses” 
because it rests on the false premise “that the requested loan data necessarily reveals a business’s 
payroll information.”  Op. at 14.  As the Court concluded, the SBA cannot substantiate the 
predicate assumptions necessary for this reverse engineering, namely that borrowers (1) took the 
maximum loan amounts available to them; and (2) pay salaries exclusively under $100,000.  Id. 
at 14-18.  Thus, the Court correctly concluded, the Loan Data “enable[s] only bare speculation” 
as to the payroll information of any “given borrower.”  Id. at 18-19.  This speculation upon 
speculation, the Court noted, does not suffice to meet the requirements for withholding 
“proprietary” information under Exemption 4.  
Moreover, the Court observed that even if the Loan Data did reliably reveal payroll 
information – and it does not – “the agency likely still could not withhold such information under 
Exemption 4 . . . because the PPP loan application expressly notified potential borrowers . . . that 
their names and loan amounts would be ‘automatically released’ upon a FOIA request.”  Id. at 
20.  Thus, the SBA separately failed to show “how the loan data could remain ‘confidential’ for 
purposes of Exemption 4 when the Government not only provided no assurance of privacy, but 
also told borrowers explicitly that the information would be disclosed.”  Id. 
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The SBA has not identified any serious legal question that remains following this Court’s 
compelling rejection of its Exemption 4 arguments.  Instead, the SBA simply restates several of 
its previous positions without even addressing the Court’s logical reasoning, let alone pointing 
out any flaws. 
First, the SBA argues that “under its longstanding policy reflected in its Standard 
Operating Procedure, borrower payroll information is confidential and generally exempt from 
disclosure.”  Stay Mot. at 8.  But once again, the SBA “fails to mention” as this Court aptly 
noted, “that the very next page of the SOP lists ‘[n]ames and commercial street and email 
addresses of recipients of approved loans’ and ‘[k]inds and amounts of loans’ under the heading, 
‘INFORMATION GENERALLY DISCLOSED.’”  Op. at 26 (emphasis in original).   
Second, the SBA asserts that it has justified the withholdings by releasing its “‘grouping’ 
of the records into ‘categories and offering generic reasons for withholding the documents in 
each category.’”  Stay Mot. at 8 (quoting Maydak v. Dep’t of Justice, 218 F.3d 760, 763, 765 
(D.C. Cir. 2000) (SBA’s emphasis) (citations omitted)).  But as Plaintiffs have already explained, 
“Maydak does not support an Exemption 4 claim based on a generic showing; rather, it 
recognizes that the government ‘satisfies its burden of proof under Exemption 7(A) by grouping 
documents in categories and offering generic reasons for withholding the documents in each 
category’ and observes that ‘other exemptions’ not including Exemption 4 can be satisfied 
‘through generic, categorical showings’ as well.”  Reply in Further Support of Pls.’ Cross-Mot. 
for Summ. J. (Dkt. 21) at 7 n.3 (quoting Maydak, 218 F.3d at 765-66 (emphasis added)).  This 
argument as well presents no serious legal question about this Court’s rejection of the SBA’s 
Exemption 4 claim.   
Third, the SBA insists that it “explained the analytical connection between the PPP loan 
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amount and a borrower’s average monthly payroll,” and that “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.”  Stay Mot. at 9 (SBA’s emphasis).  But the Court 
explicitly found that, regardless of the specific characteristics of any particular borrower, this 
supposed “analytical connection” relies on “assumptions” that are so “fundamentally flawed” it 
is impossible for “onlookers [to] deduce a business’s payroll from the loan data with any degree 
of confidence.”  Op. at 15.   
 
Fourth, the SBA claims that “the text of the [PPP application] form itself” supports 
keeping loan amounts and borrower names secret – even though the form stated that “names of 
borrowers” and “amount[s] of the loan[s]” would be “automatically released” under FOIA.  Stay 
Mot. at 8-9.  The SBA acknowledges that “this Court reached a contrary conclusion about the 
‘natural reading’ of the application form,” but the agency urges that it “should be permitted to 
present [this issue] to the D.C. Circuit on appeal.”  Id.  That the SBA continues to stake this 
claim is remarkable.  It is just the latest in “a series of arguments that essentially all reduce to the 
unavailing contention that the agency did not mean what the loan-application forms actually 
said,” Op. at 25, which does not give rise to a “serious legal question.”  Further, the SBA has yet 
to identify a single borrower out of the millions that received COVID-related assistance who 
actually read the loan application form the way the SBA claims is most “natural.”  The fact that 
not one borrower has spoken up in this regard to support the SBA – whether by moving to 
intervene in these proceedings, submitting a brief as amicus curiae, or providing a declaration for 
the SBA itself to file – amounts to a “silence [that] can be likened to the dog that did not bark.”  
Cf. Chisom v. Roemer, 501 U.S. 380, 396 & n.23 (1991) (rejecting party’s suggested legislative 
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interpretation in part because no actual legislator “identified or mentioned it at some point in the 
unusually extensive legislative history”) (citing The Complete Sherlock Holmes (1927)). 
 
Because the SBA has not identified any “serious legal question” concerning its 
Exemption 4 arguments, let alone that it has a “likelihood” of prevailing on appeal, the SBA has 
failed to carry its burden on the first element of the stay test with respect to Exemption 4. 
B. 
The SBA has not identified a “serious legal question” as to Exemption 6. 
 
In its November 5 Opinion, the Court also found that the balance between the privacy 
interest and the public interest in the release of the Loan Data, under Exemption 6, “is not 
particularly close.”  Op. at 38.  Borrowers were placed on notice that the Loan Data would be 
public record, which “substantially diminish[es] the privacy interest at stake,” see id. at 24, while 
the public interest in disclosure is “powerful” because the Loan Data will “enable[] meaningful 
evaluation of whether the PPP and EIDL program are being operated consistent with applicable 
legal constraints; whether funds have been distributed fairly, equitably, and devoid of fraud; and 
whether the programs are achieving their purpose,” see id. at 30.   
The SBA responds that a stay is warranted because “the D.C. Circuit could reach a 
different conclusion about the significance of the privacy interest . . . and about the balance 
between that interest and the opposing interest in disclosure,” and that “the D.C. Circuit could 
disagree” as to the public benefits of monitoring the loan programs.  Stay Mot. at 11 (emphasis 
added).  The Supreme Court has expressly stated, however, that the party seeking a stay must 
show “more than a mere possibility of relief” on appeal.  Nken v. Holder, 556 U.S. 418, 434 
(2009) (emphasis added and internal marks omitted).  The SBA does not provide this Court with 
any case law from the D.C. Circuit to support a finding that the appeals court is “likely,” which 
is the correct legal standard, to reach a different conclusion on the Exemption 6 balancing.  Nor 
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does the SBA offer any reason to believe a “serious” question exists on the settled propositions 
that (1) an agency’s representation that information will be public diminishes the privacy interest 
in that information; and (2) the public has a powerful interest in information that allows for 
“‘scrutiny of agency action that distributes extensive amounts of public funds in the form of 
subsidies and other financial benefits.’”  Op. at 30 (quoting Multi Ag Media LLC v. Dep’t of 
Agric., 515 F.3d 1224, 1232 (D.C. Cir. 2008)). 
As with Exemption 4, the SBA has not demonstrated a likelihood of prevailing on appeal 
– or even pointed to a “serious legal question” that remains for appeal – regarding its arguments 
under Exemption 6. 
II. 
The SBA Would Not Be Harmed Absent A Stay. 
 
On the second stay factor, the SBA principally asserts that its right to appeal this Court’s 
decision will be “irreparably harmed” if no stay is entered, because “the ordered release will 
cause confidentiality to be lost for all time.”  Stay Mot. at 4 (citation and internal marks omitted).  
The SBA fails to show, however, that such disclosure would cause harm, let alone irreparable 
harm, to the agency itself.   
This is not a case, unlike many the SBA cites, where the government seeks to keep secret 
its own internal processes and thus arguably stands to be harmed by release of the requested 
records.1  Nor is it a case where a non-party whose purportedly private information is subject to 
release has intervened to seek a stay, as was the case in Providence Journal Co. v. FBI, 595 F.2d 
                                                 
1 See Judicial Watch, Inc. v. Dep’t of Justice, 432 F.3d 366, 369 (D.C. Cir. 2005) (stay prevented 
release of records withheld under Exemption 5 as deliberative or attorney-client privileged); 
People for the Am. Way Found. v. Dep’t of Educ., 518 F. Supp. 2d 174 (D.D.C. 2007) (stay 
prevented release of records withheld under Exemption 5 as deliberative); Ctr. for Int’l Envtl. 
Law v. Office of the U.S. Trade Rep., 240 F. Supp. 2d 21 (D.D.C. 2003) (same). 
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889 (1st Cir. 1979) (cited at Stay Mot. at 4).  The SBA thus cannot assert a risk of irreparable 
harm when the agency’s own information is not subject to disclosure, and when no third party 
has objected to the release. 
III. 
A Stay Would Substantially Harm Plaintiffs And The Public. 
 
Balanced against the SBA’s clear unlikelihood of prevailing on appeal and its failure to 
show irreparable harm absent a stay, the remaining factors – the public interest and the harm 
from granting a stay – weigh squarely in favor of denying a stay and maintaining the order that 
SBA timely release the Loan Data.  Indeed, the Court has already acknowledged the enormous 
public interest in disclosure, characterizing it as significant, powerful, and weighty.  See 
generally Op. at 38-40.  
On this point the SBA severely downplays the imminent public importance of this 
information.  According to the SBA, the Loan Data is “mainly of historical interest” because the 
“loans have already been made and new applications are not being considered.”  Stay Mot. at 5.  
The SBA fails to mention, however, that SBA Administrator Carranza is at this moment 
advocating for “a new round of loans and aid from the government to keep employees working 
as the pandemic continues to spread.”  See Josyana Joshua, Small Businesses Need More Aid to 
Keep Employees, SBA Chief Says, Bloomberg News (Oct. 27, 2020), 
https://www.bloomberg.com/news/articles/2020-10-27/small-businesses-need-more-aid-to-keep-
employees-sba-chief-says.  Indeed, Senate Majority Leader McConnell recently stated that an 
“economic stimulus bill should be completed before the end of the year and will be the focus 
when the Senate resumes work” after the election.  See Erica Werner, McConnell says stimulus 
bill is top priority when Senate returns, The Washington Post (Nov. 4, 2020), 
https://www.washingtonpost.com/us-policy/2020/11/04/mcconnell-new-stimulus-bill/.  
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President-elect Biden likewise has “said one of his top priorities would be passing a stimulus 
plan.”  See Betsy McKay & Jonathan D. Rockoff, What Are Joe Biden’s Plans for Covid-19?, 
The Wall Street Journal (Nov. 13, 2020), https://www.wsj.com/articles/what-are-joe-bidens-
plans-for-covid-19-11605291824.   
Thus, while the Loan Data concerns funds that are already disbursed, the public interest 
in understanding how assistance efforts are working – and any failures in the disbursement 
process that the government needs to address going forward – is a live and pressing issue.  This 
imminent public interest weighs heavily against delaying disclosure.  See Protect Democracy 
Project, Inc. v. Dep’t of Def., 263 F. Supp. 3d 293, 301 (D.D.C. 2017) (finding “the potential for 
irreparable harm” from delaying disclosure of responsive records “because ongoing public and 
congressional debates about issues of vital national importance cannot be restarted or wound 
back”) (internal marks and citation omitted). 
The Court need only look at the Department of Justice’s recent publicity to determine that 
the Loan Data remains of ongoing public interest because the risk of waste, fraud, and abuse 
continues to threaten taxpayer dollars.  Just in the weeks since briefing on summary judgment 
closed in this matter, the Justice Department has announced several more prosecutions for 
COVID-related fraud.  See Washington Man Charged With COVID-Relief Fraud, Dep’t of 
Justice (Oct. 27, 2020), https://www.justice.gov/opa/pr/washington-man-charged-covid-relief-
fraud; Five Charged in Connection with COVID-Relief Fraud Scheme, Dep’t of Justice (Oct. 22, 
2020), https://www.justice.gov/opa/pr/five-charged-connection-covid-relief-fraud-scheme, Texas 
Man Charged In $24 Million COVID-Relief Fraud, Dep’t of Justice (Oct. 9, 2020), 
https://www.justice.gov/opa/pr/texas-man-charged-24-million-covid-relief-fraud (defendant 
“used the proceeds primarily for personal expenses, spending them on multiple homes and 
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luxury cars, including a 2020 Bentley convertible, and sending millions of dollars in 
international transfers, the indictment alleges”); Florida Recording Artist and Pennsylvania Man 
Charged for Role in $24 Million COVID-Relief Fraud Scheme, Dep’t of Justice (Oct. 6, 2020), 
https://www.justice.gov/opa/pr/florida-recording-artist-and-pennsylvania-man-charged-role-24-
million-covid-relief-fraud; Hawaii CEO Charged with COVID-Relief Fraud, Dep’t of Justice 
(Sept. 30, 2020), https://www.justice.gov/opa/pr/hawaii-ceo-charged-covid-relief-fraud.  Staying 
release of the Loan Data, as the SBA requests, would thus further delay the public from “tak[ing] 
its own look at the programs [to] ‘more easily determine whether’ the government ‘is catching 
cheaters.’”  Op. at 34 (quoting Multi Ag Media, 515 F.3d at 1232). 
 
On balance, none of the four factors supports a stay, while several factors weigh strongly 
against any further delay of disclosure.  The Court should therefore maintain the November 19 
deadline for release of the Loan Data. 
CONCLUSION 
For the foregoing reasons, Plaintiffs respectfully request that the Court deny the SBA’s 
motion for stay. 
Dated:  November 16, 2020 
 
 
 
 
 
  
Respectfully submitted,  
 
BALLARD SPAHR LLP 
 
/s/ Charles D. Tobin  
 
 
 
Charles D. Tobin (#455593) 
Maxwell S. Mishkin (#1031356) 
Kristel Tupja (#888324914) 
1909 K Street, NW, 12th Floor 
Washington, DC 20006 
Telephone: (202) 661-2200 
Fax: (202) 661-2299 
tobinc@ballardspahr.com 
mishkinm@ballardspahr.com 
tupjak@ballardspahr.com 
 
Counsel for Plaintiffs 
 
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