SBA reply in support of stay pending appeal — WP Co. v. SBA

Record facts

UNITED STATES DISTRICT COURT · No. 1:20-cv-01240-JEB · Doc. 26 · 2020-11-19 · 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. 
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. 
 
 
REPLY IN SUPPORT OF MOTION FOR A STAY PENDING APPEAL  
AND FOR ADMINISTRATIVE STAY  
 
Dated: November 19, 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 26   Filed 11/19/20   Page 1 of 8

 
 
 
There are strong grounds for granting a stay of the Court’s November 5 Order until 
December 7, 2020, or, if the government files a notice of appeal, pending appeal.  No. 20-1240 
ECF No. 24 (Nov. 12, 2020) (“Mem.”).  Permitting the Order to be enforced before the government 
has even decided whether to appeal would compel the U.S. Small Business Administration (SBA) 
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—a disclosure SBA has contended 
would contravene FOIA Exemptions 4 and 6.  Such a disclosure would irreparably harm the 
government and borrowers by mooting any appeal concerning the records, and would improperly 
invade the confidentiality and privacy rights of millions of borrowers already struggling to cope 
with the effects of the pandemic and the resulting economic distress.  Plaintiffs, by contrast, would 
suffer no cognizable harm from preservation of the status quo during the normal operation of the 
appellate process.  Indeed, the government has committed to making an appeal determination by 
December 7, 2020, almost a month earlier than the January 5, 2021 deadline ordinarily available 
under Federal Rule of Appellate Procedure 4.  Contrary to Plaintiffs’ contentions in opposition 
(No. 20-1240 ECF No. 25 (Nov. 16, 2020) (“Opp.”)), the failure to grant the requested stay would 
mark a dramatic departure from the standard practice of federal courts in FOIA cases.  See, e.g., 
HHS v. Alley, 556 U.S. 1149 (2009) (staying district court’s order directing agency to disclose 
records under FOIA, pending final disposition of appeal).   
I. 
THE BALANCE OF HARMS OVERWHELMINGLY FAVORS THE STAY 
The balance of harms weighs heavily in favor of the requested stay.  Mem. 4-7.  
Disclosing the portions of the records at issue would render this case moot as to the information 
sought, would irreparably harm the government by depriving it of its right to appellate review, 
and would irreparably harm the confidentiality and privacy interests of millions of individuals 
and small business borrowers identified in those records.  By contrast, the granting of a stay 
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will cause no cognizable harm to Plaintiffs.     
a.  Plaintiffs fail to address the reality that disclosure of the information at issue would 
moot the government’s appeal.  Once the disputed information is released, Plaintiffs, as FOIA 
requestors, would obtain all the relief that is available under FOIA.  Courts therefore have 
consistently held that disclosure of disputed records will moot a challenge to an agency’s denial 
of a FOIA request.  Mem. 4-5; see also Payne Enters., Inc. v. United States, 837 F.2d 486, 487, 
490-91 (D.C. Cir. 1988) (“It is, of course, true that, ‘however fitful or delayed the release of 
information under the FOIA may be, once all requested records are surrendered, federal courts 
have no further statutory function to perform’ with respect to the particular records that were 
requested.”) (quoting Perry v. Block, 684 F.2d 121, 125 (D.C. Cir. 1982)). 
Plaintiffs offer no justification for departing from the prevailing practice of federal 
courts, which routinely stay FOIA disclosure orders pending a government appeal.  Such stays 
are necessary to avoid mooting the appeal and destroying the government’s right to obtain 
appellate review.  See John Doe Agency, et al. v. John Doe Corp., 488 U.S. 1306, 1309 (1989) 
(Marshall, J., in chambers) (need to preserve government’s right to appeal is “perhaps the most 
compelling justification” for granting a stay in FOIA cases) (quoting New York v. Kleppe, 429 
U.S. 1307, 1310 (1976)); see also Pratt v. Webster, 673 F.2d 408, 413 (D.C. Cir. 1982). 
Plaintiffs err in contending (Opp. 7-8) that the irreparable harm to the appellate right is 
negated here because their FOIA requests purportedly do not seek SBA’s “own information” 
and no borrower “has intervened to seek a stay.”  As an initial matter, if Plaintiffs are now 
conceding that the information sought is not “‘official information that sheds light on an 
agency’s performance of its statutory duties,’” but instead is “information about private citizens 
. . . that reveals little or nothing about an agency’s own conduct,” that means the public interest 
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under FOIA does not favor disclosure—which, at a minimum, undercuts Plaintiffs’ opposition 
to the stay application (and, indeed, their Exemption 6 argument on the merits).  Mem. 6-7; see 
Quiñón v. FBI, 86 F.3d 1222, 1231 (D.C. Cir. 1996) (quoting Dep’t of Justice v. Reporters 
Comm. for Freedom of the Press, 489 U.S. 749, 773 (1989)).   
But even if Plaintiffs are not making such a concession, their attempt to fence off SBA’s 
interests from the borrowers’ interests is incorrect.  Through FOIA, Congress sought “to balance 
the public’s need for access to official information with the Government’s need for 
confidentiality.”  Weinberger v. Catholic Action of Hawaii, 454 U.S. 139, 144 (1981) (emphasis 
added).  While FOIA generally calls for “broad disclosure of Government records,” Congress 
also “realized that legitimate governmental and private interests could be harmed by release of 
certain types of information.”  Dep’t of Justice v. Julian, 486 U.S. 1, 8 (1988) (quotation marks 
omitted).  Because “public disclosure is not always in the public interest,” Congress “provided 
that agency records may be withheld” if they fall within one of the Act’s exemptions.  CIA v. 
Sims, 471 U.S. 159, 166-67 (1985) (emphasis added); see Bonner v. U.S. Dep’t of State, 928 
F.2d 1148, 1152 (D.C. Cir. 1991) (“FOIA judicial review . . . remains an assessment of the 
agency decision to withhold a document”).  Those exemptions “are intended to have meaningful 
reach and application.”  John Doe Agency v. John Doe Corp., 493 U.S. 146, 152 (1989).   
Accordingly, in this case, by invoking Exemptions 4 and 6 as grounds for withholding 
agency information obtained from borrowers, SBA is not simply acting on behalf of borrowers, 
but, rather, the agency is carrying out its own responsibilities under FOIA to protect the interests 
of those borrowers and the SBA programs to which these loans relate.  See 15 U.S.C. § 631(a) 
(declared policy under Small Business Act, 15 U.S.C. § 631 et seq., is to “aid, counsel, assist, 
and protect, insofar as is possible, the interests of small-business concerns,” and thereby to 
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preserve the free enterprise system “essential” to national economic well-being and security) 
(emphases added).  For example, agencies routinely redact third party personally identifying 
information under Exemption 6, but courts do not require those third parties to intervene in 
Exemption 6 cases, as would be expected if courts believed the agencies lacked a sufficient 
interest in maintaining such redactions.  Plaintiffs’ attempt to assign significance to the absence 
of private party intervention in this case is therefore mistaken.  Nor would intervention have 
been practicable, given that Plaintiffs themselves insisted that this case be litigated on an 
accelerated briefing schedule, leaving scant opportunity for intervention or amicus filings.  See 
No. 20-1240 ECF No. 10, at 2 (June 29, 2020). 
b.  Plaintiffs are also wrong to ignore the irreparable harm to affected individuals and 
businesses nationwide whose information would be disclosed absent a stay.  Mem. 5-7.  
Although Plaintiffs contend that Exemptions 4 and 6 do not protect the information sought, if 
the Court of Appeals were to disagree with that contention, the confidentiality and privacy 
interests of the borrowers in the disputed information would be irrevocably lost through an 
earlier disclosure. 
c.  Contrary to Plaintiffs’ contention (Opp. 8-10), staying the November 5 Order until 
December 7, 2020, or pending appeal if one is brought, will cause Plaintiffs no cognizable, 
irreparable harm.  They proffer only bare, unsupported assertions of harm predicated on news 
reports (not evidence) describing speculation about potential future COVID-related relief 
Congress could enact, and on Department of Justice statements describing episodes of COVID-
related fraud currently being prosecuted.  But mere speculation about future legislation does not 
make information about past PPP and EIDL borrowers “a live and pressing issue.”  Opp. 9.  
Moreover, the existence of criminal prosecutions “in the weeks since briefing on summary 
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judgment closed in this matter” shows that release of the disputed information is not critical to 
government efforts to redress “waste, fraud, and abuse,” which can continue even if disclosure 
in this action is stayed pending appeal.  Id.   
II. 
THERE ARE AT LEAST SERIOUS MERITS QUESTIONS FOR APPEAL 
If the government were to appeal (a decision Plaintiffs would deny the Acting Solicitor 
General adequate time to consider), there are at least “questions going to the merits so serious, 
substantial, difficult and doubtful, as to make them a fair ground for litigation and thus for more 
deliberative investigation” under Exemptions 4 and 6.  Wash. Metro. Area Transit Comm’n v. 
Holiday Tours, Inc., 559 F.2d 841, 844 (D.C. Cir. 1977); Mem. 7-12. 
Although Plaintiffs disagree with SBA (Opp. 2-7), they simply recite portions of this 
Court’s November 5, 2020 Memorandum Opinion.  But the analysis cannot end there.  Plaintiffs 
misunderstand the showing required to warrant a stay under the circumstances here, where the 
equities weigh decisively in favor of preserving the status quo and preserving the government’s 
right to appeal.  In that regard, while Plaintiffs seek to rely (Opp. 2) on this Court’s denial of an 
Internal Revenue Service motion for suspension of an injunction pending appeal in Loving v. 
IRS, 920 F. Supp. 2d 108 (D.D.C. 2013), that decision correctly recognized the applicable legal 
standard here.   
Indeed, “[t]he IRS is correct,” this Court observed in Loving, “that the Court need not 
determine that it erred and will likely be reversed—an acknowledgment one would expect few 
courts to make; instead, so long as the other factors strongly favor a stay, such remedy is 
appropriate if ‘a serious legal question is presented.’”  Id. at 110 (citing, inter alia, Holiday 
Tours, 559 F.2d at 843).  “Although the Court continues to believe its decision was correct,” 
this Court continued, “it is certainly cognizant that the issue is one of first impression and raises 
serious and difficult legal questions.  If the other factors tip in favor of a stay, therefore, this 
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factor will not preclude one.”  Id. 
SBA meets that standard here.  This case raises questions of first impression:  The D.C. 
Circuit has not previously applied Exemptions 4 or 6 to a case involving the extraordinary 
emergency circumstances that gave rise to the PPP and EIDL programs at issue here.  Among 
other things, the D.C. Circuit has not ruled under those exemptions that isolated provisions of 
the borrower application forms could override SBA’s pre-existing Standard Operating 
Procedure (which committed the agency to preserving proprietary and confidential information 
obtained from borrowers).  Nor has the D.C. Circuit balanced the public and private interests 
presented in this case under Exemption 6, and the validity of the analogy between this case to 
prior decisions (including Multi AG Media v. Dep’t of Agriculture, 515 F.3d 1224 (D.C. Cir. 
2008), and Consumers’ Checkbook Ctr. v. Dep’t of Health & Human Servs., 554 F.3d 1046 
(D.C. Cir. 2009)) remains unresolved.   
At a minimum, Plaintiffs’ disagreement on the merits with SBA cannot undermine the 
seriousness or difficulty of the legal questions presented.  So, even if this Court is not convinced 
it “will likely be reversed,” because “the other factors tip in favor of a stay,” as explained, the 
likelihood of success requirement is satisfied on the government’s showing of a serious legal 
question for appeal.  Loving, 920 F. Supp. 2d at 110.   
* 
* 
* 
* 
For the foregoing reasons and those stated in the opening memorandum, the application for 
a stay of the November 5, 2020 order pending the filing of a notice of appeal by December 7, 2020, 
or pending appeal if such a notice is filed, should be granted.  Should this Court deny the stay 
application, it should nevertheless extend the administrative stay it entered on November 13, 2020, 
through the D.C. Circuit’s ruling on any motion for stay pending appeal filed in that Court. 
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Dated:  November 19, 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 26   Filed 11/19/20   Page 8 of 8

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