Court filing
Plaintiffs' reply in support of supplemental cross-motion for summary judgment — WP Co. v. SBA
Filed May 14, 2021 in Wp Co v. SBA; one of 21 filings from this case.
Record facts
| Court | UNITED STATES DISTRICT COURT |
|---|---|
| Filed | 2021-05-14 |
UNITED STATES DISTRICT COURT · No. 1:20-cv-01240-JEB · Doc. 46 · 2021-05-14 · 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.
U.S. SMALL BUSINESS ADMINISTRATION,
Defendant.
Case No. 1:20-cv-1240-JEB
Oral Argument Requested
REPLY MEMORANDUM IN FURTHER SUPPORT OF PLAINTIFFS’
SUPPLEMENTAL CROSS-MOTION FOR SUMMARY JUDGMENT
Dated: May 14, 2021
Charles D. Tobin (#455593)
Maxwell S. Mishkin (#1031356)
Kristel Tupja (#888324914)
BALLARD SPAHR LLP
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
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 1 of 14
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TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... ii
PRELIMINARY STATEMENT .....................................................................................................1
ARGUMENT ...................................................................................................................................3
I.
THE SBA FAILS TO JUSTIFY ITS WITHHOLDINGS UNDER
EXEMPTION 4 ...................................................................................................................3
A.
The SBA Incorrectly Tries To Shift The Burden Of Proof Onto
Plaintiffs ...................................................................................................................3
B.
The SBA Fails To Show That Any Particular Lenders Actually And
Customarily Treat Interim Loan Status Information As Confidential .....................4
C.
The SBA Fails To Show That DUNS Numbers Are Customarily And
Actually Treated As Private .....................................................................................7
II.
THE SBA FAILS TO JUSTIFY ITS WITHHOLDINGS UNDER
EXEMPTION 8 ...................................................................................................................8
III.
THE SBA FAILS TO JUSTIFY WITHHOLDING CONCEDEDLY NON-
EXEMPT EMPLOYER IDENTIFICATION NUMBERS ..................................................9
CONCLUSION ..............................................................................................................................10
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 2 of 14
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TABLE OF AUTHORITIES
Page(s)
Cases
Bartko v. Department of Justice,
898 F.3d 51 (D.C. Cir. 2018) .....................................................................................................3
*Evans v. Federal Bureau of Prisons,
951 F.3d 578 (D.C. Cir. 2020) .................................................................................................10
*Food Marketing Institute v. Argus Leader Media,
139 S. Ct. 2356 (2019) ...............................................................................................................1
Hopkins v. Women’s Division, General Board of Global Ministries,
284 F. Supp. 2d 15 (D.D.C. 2003) .............................................................................................9
Johnson v. Executive Office for U.S. Attorneys,
310 F.3d 771 (D.C. Cir. 2002) ...................................................................................................2
Mead Data Center, Inc. v. Department of the Air Force,
566 F.2d 242 (D.C. Cir. 1977) ...................................................................................................9
Public Citizen, Inc. v. OMB,
598 F.3d 865 (D.C. Cir. 2009) ...................................................................................................3
Public Citizen v. Department of State,
11 F.3d 198 (D.C. Cir. 1993) .....................................................................................................4
*Renewable Fuels Association v. EPA,
2021 U.S. Dist. LEXIS 21137 (D.D.C. Feb. 4, 2021) .......................................................1, 4, 7
Wolf v. CIA,
473 F.3d 370 (D.C. Cir. 2007) ...................................................................................................4
WP Co. LLC v. SBA,
2020 U.S. Dist. LEXIS 206836 (D.D.C. Nov. 5, 2020) ........................................................3, 8
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 3 of 14
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PRELIMINARY STATEMENT
The SBA’s Opposition (“Opp.”) fails to justify its withholding of interim loan status
information, borrower DUNS numbers, and borrower EINs (together, the “Additional Data”) –
indeed, it focuses more on trying to excuse those failures than on trying to address them. The
Court should reject the SBA’s claims and order the agency to release the Additional Data in full.
First, the SBA still fails to demonstrate that interim loan status information “is both
customarily and actually treated as private by its owner” such that it qualifies for withholding
under Exemption 4. Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356, 2366 (2019). As
this Court has explained, an agency claiming Exemption 4 must show “how the particular party
customarily treats the information, not how the industry as a whole treats the information.”
Renewable Fuels Ass’n v. EPA, 2021 U.S. Dist. LEXIS 21137, at *21 (D.D.C. Feb. 4, 2021)
(emphasis added). The SBA, however, did not look at the customary practice of any PPP lender.
Instead, the SBA simply throws up its hands and protests that “it would be utterly infeasible” to
survey even a “fraction of PPP lenders to assess their confidentiality practices regarding interim
loan status data.” Opp. at 13. By refusing to make any effort on this point, the SBA fails to meet
its burden under Exemption 4.
Second, the SBA likewise fails to explain how DUNS numbers could possibly amount to
“private” information within the scope of Exemption 4 given that multiple federal agencies make
DUNS numbers available for download on their websites in bulk and on demand. The SBA
claims that “the release by certain other agencies of D-U-N-S Numbers . . . does not imply that
[Dun and Bradstreet] authorized release of the D-U-N-S Number for PPP loans,” Opp. at 16, but
that falls far short of carrying the SBA’s burden to show that DUNS numbers are “actually” and
“customarily” treated as confidential information. Food Mktg. Inst., 139 S. Ct. at 2366.
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 4 of 14
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Third, the SBA failed to raise Exemption 8 in the first round of summary judgment, and
thus it forfeited its argument for withholding interim loan status information under that
exemption as well. The SBA claims that the Court should excuse that failure because “the
information in dispute [now] is different from the information disputed through the first set of
summary judgment briefs,” Opp. at 18, but the relevant question is whether the agency could
have asserted Exemption 8 earlier under the same theory it now espouses. The answer to that
question is plainly yes, and the SBA does not even attempt to suggest otherwise.1
Fourth, the SBA fails to provide a “detailed justification” for withholding concededly
non-exempt EINs on the grounds that they are not “reasonably segregable” from exempt SSNs.
Johnson v. Exec. Office for U.S. Attorneys, 310 F.3d 771, 776 (D.C. Cir. 2002) (internal marks
omitted). Plaintiffs have observed that the SBA could seek assistance in segregating the data
from the Social Security Administration or the IRS, but the SBA rejects that idea out of hand,
proposing its own rule that “[i]nformation that cannot be segregated by any technical means
available to the agency that holds the record is not ‘reasonably segregable.’” Opp. at 20. If
either of those agencies could assist the SBA with the data segregation process, however, there
would indeed be technical means “available” to the SBA. By refusing to make any effort on this
point as well, the SBA fails to justify its withholding of responsive and non-exempt EINs.
Nearly a year ago, this Court gave the SBA a two-week deadline to “produce any
responsive non-exempt records” in this case. See Minute Order of June 29, 2020. The SBA still
has not fully complied with that order. In light of the SBA’s latest failure to carry its burden on
its withholdings, the Court should order the SBA to promptly release the Additional Data and
1 Indeed, rather than press the issue, the SBA now tells the Court that it “need not address” the
Exemption 8 claim on the grounds that those withholdings will rise or fall on whether the Court
finds the same information to be confidential, or not, under Exemption 4. See Opp. at 17-18.
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 5 of 14
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award Plaintiffs their costs and reasonable attorneys’ fees for this supplemental round of
summary judgment.
ARGUMENT
On each of its withholdings, the SBA fails to rebut FOIA’s “presumption in favor of
disclosure” that underlies FOIA’s objective “‘to pierce the veil of administrative secrecy and to
open agency action to the light of public scrutiny.’” Pub. Citizen, Inc. v. OMB, 598 F.3d 865,
869 (D.C. Cir. 2009) (quoting Dep’t of Air Force v. Rose, 425 U.S. 352, 360-61 (1976)).
I.
THE SBA FAILS TO JUSTIFY ITS WITHHOLDINGS UNDER EXEMPTION 4.
The SBA concedes, as it must, that an agency can withhold information under Exemption
4 only where that information “‘is customarily kept private, or at least closely held, by the person
imparting it.’” Opp. at 15 (quoting Food Mktg. Inst., 139 S. Ct. at 2363). As a result, the SBA
cannot properly withhold any of the Additional Data under Exemption 4 because it has failed to
show that the “person[s] imparting” that information actually and customarily keep it private.
A.
The SBA Incorrectly Tries To Shift The Burden Of Proof Onto Plaintiffs.
Rather than even attempt to justify its withholdings under Exemption 4, the agency
instead tries repeatedly to shift the burden of proof onto Plaintiffs by conflating the usual
Exemption 4 test with the “public domain” doctrine. That doctrine is inapposite here.
It is well settled that an agency asserting a FOIA exemption “bears the burden of proving
that [the] exemption applies.” Bartko v. Dep’t of Justice, 898 F.3d 51, 62 (D.C. Cir. 2018). In
the context of an Exemption 4 claim specifically, this Court has explained that the “SBA must
show that [the withheld information] is (1) commercial or financial, (2) obtained from a person,
and (3) privileged or confidential.” WP Co. LLC v. SBA (“WP I”), 2020 U.S. Dist. LEXIS
206836, at *16 (D.D.C. Nov. 5, 2020) (citation and internal marks omitted). To withhold interim
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 6 of 14
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loan status information under Exemption 4, therefore, the SBA bears the burden of
demonstrating that the information is privileged or confidential.
The “public domain” doctrine, by contrast, provides that “when information has been
officially acknowledged, its disclosure may be compelled even over an agency’s otherwise valid
exemption claim.” Wolf v. CIA, 473 F.3d 370, 378 (D.C. Cir. 2007) (internal marks omitted).
That doctrine thus requires the plaintiff to make a threshold showing that the information was
“previously disclosed.” Pub. Citizen v. Dep’t of State, 11 F.3d 198, 201 (D.C. Cir. 1993).
According to the SBA, the burden here “is on Plaintiffs to show that the information they
seek is in the ‘public domain.’” Opp. at 13. But Plaintiffs are not asserting the public domain
doctrine in this case. Rather, the parties dispute whether the SBA’s Exemption 4 claim is valid
in the first instance. The SBA thus bears the burden, set out in Food Marketing Institute, of
showing that interim loan status information is privileged or confidential. As explained below, it
has failed to carry that burden.
B.
The SBA Fails To Show That Any Particular Lenders Actually And
Customarily Treat Interim Loan Status Information As Confidential.
According to the SBA, interim loan status information “is kept confidential by
longstanding practice between borrowers and lenders.” Opp. at 4. As Plaintiffs have pointed
out, however, in determining whether information is both customarily and actually treated as
private, “[t]he question is ‘how the particular party customarily treats the information, not how
the industry as a whole treats the information.’” Renewable Fuels, 2021 U.S. Dist. LEXIS
21137, at *21 (emphasis added) (quoting Ctr. for Auto Safety v. NHTSA, 244 F.3d 144, 148 (D.C.
Cir. 2001)). The SBA failed to make such a particularized showing in its opening brief, and it
fails again in its Opposition.
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 7 of 14
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Given that Exemption 4 requires a particularized assessment of confidentiality, not an
industry-wide assessment, the SBA’s refusal to ask any actual PPP lenders about their customary
confidentiality practices is inexplicable. Instead, the SBA lashes out at Plaintiffs for putting the
agency to its proof: the SBA asserts that it would require “an imaginary world of zero costs and
unlimited time” to satisfy its duties under FOIA “by surveying some fraction of PPP lenders to
assess their confidentiality practices regarding interim loan status data.” Opp. at 13. “[I]n the
real world,” the SBA claims, “it would be utterly infeasible to conduct that kind of inquiry.” Id.
As Plaintiffs have noted, however, the top 15 PPP lenders alone are responsible for
approximately 35 percent of all PPP loans this year, and the SBA could at least have surveyed
this small group of major lenders about their particular practices. See Mem. in Supp. of Pls.’
Suppl. Cross-Mot. for Summ. J. (“Mem.”) at 10, Dkt. 41. The SBA has not explained why it
refused to expend even that minimal amount of effort to show that any particular lenders
customarily and actually keep interim loan status information private. The agency has therefore
failed to substantiate its withholdings under Exemption 4.
Moreover, to illustrate that lenders do not actually keep interim loan status information
private, Plaintiffs noted in their opening brief that lenders provide information about borrowers
to commercial credit bureaus, which then make that information publicly available in business
credit reports. Mem. at 10. The SBA offers several responses, none of which hits the mark.
First, the SBA asserts that under “the plain text of the Code of Federal Regulations,”
interim loan statuses “other than charged-off or paid-in-full” are exempt from disclosure under
FOIA. Opp. at 5. That regulatory text, however, says nothing about whether, in practice, lenders
actually and customarily treat interim loan status information as confidential.
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 8 of 14
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Second, the SBA argues that even if lenders make interim loan status information
available to commercial credit bureaus, such disclosures do not alter the “private” nature of the
information. Opp. at 6-8. More specifically, the SBA claims that interim loan status information
remains private because one of the commercial credit bureaus, Experian, requires purchasers of
business credit reports to have “legitimate commercial purposes” and to agree to “maintain the
information in strict confidence.” Opp. at 7. That argument, however, fails for lack of any
limiting principle: under the SBA’s logic, business loan status information would remain
“private” no matter how many times a commercial credit bureau has shared it.
Third, the SBA claims that lenders provide slightly different loan status information to
commercial credit bureaus and to the SBA. Opp. at 8-14. But this argument, as discussed above,
conflates the Exemption 4 test with the “public domain” doctrine. Id. at 8-9. Plaintiffs do not
need to prove that the withheld loan status information is identical to information the government
has previously and officially disclosed; the SBA needs to prove that lenders customarily and
actually treat interim loan status information as confidential. The agency fails to do so here.
Fourth, the SBA insists that releasing the loan status information would cause
“competitive harm” by “disclos[ing] the entire loan portfolio for each (now identifiable) lender,
which is not information that can be gleaned from aggregated commercial credit reports.” Opp.
at 11-13 (SBA’s emphasis). Setting aside the Supreme Court’s rejection of the “competitive
harm” test in Food Marketing Institute, the purported risk of harm is pure speculation.
According to the SBA, “if Lender X knew the full set of Lender Y’s borrowers and their
delinquent status, Lender X could focus its marketing efforts on Lender Y’s most on-time
borrowers while leaving Lender Y to service the rest.” Opp. at 11. That may be a valid reason
not to disclose an ordinary loan portfolio, but the SBA “guarantees one hundred percent of the
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 9 of 14
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value of PPP loans.” See Mem. in Supp. of SBA’s Suppl. Mot. for Summ. J. at 5, Dkt. 37. The
PPP lenders should therefore be made whole no matter how many of their PPP borrowers may
become delinquent.
Fifth, the SBA observes that “even if [business credit] reports impaired the
confidentiality of such data for borrowers with an available commercial credit report, they
certainly do not affect the confidentiality of loan status information for borrowers without such
reports.” Opp. at 14. That argument only underscores why the SBA must support its Exemption
4 claims on a particularized basis, not on a categorical basis. To the extent that some borrowers’
loan status information is maintained in confidence, while others are not, the SBA bears the
burden of identifying those differences and withholding only the interim loan statuses that
demonstrably are actually and customarily kept private. See Renewable Fuels, 2021 U.S. Dist.
LEXIS 21137, at *21. It has failed to carry that burden here.
C.
The SBA Fails To Show That DUNS Numbers Are Customarily And
Actually Treated As Private.
The SBA likewise fails to carry its burden under Exemption 4 to demonstrate that DUNS
numbers are customarily and actually treated as private. The Court should accordingly direct the
SBA to release this information as well.
As Plaintiffs have shown, the Government itself makes wide swaths of DUNS numbers
available to the public through easily accessible online search tools. Mem. at 13-14. The SBA
again responds by trying to shift the burden of proof. Conflating the Exemption 4 test with the
“public domain” doctrine, the SBA argues that “Plaintiffs fail to identify specific information in
the public domain that duplicates that being withheld.” Opp. at 15 (citation and internal marks
omitted). The proper standard for this Court to apply, however, is whether the SBA has carried
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 10 of 14
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its burden of demonstrating that the DUNS numbers fall within the scope of Exemption 4. WP I,
2020 U.S. Dist. LEXIS 206836, at *16.
The SBA does not and cannot carry this burden because multiple federal agency websites
make DUNS numbers available on demand and in vast quantities with no apparent restrictions on
their use. Mem. at 14. The SBA responds that “each website has specific terms of use noting
that the use is highly restricted,” Opp. at 17, but the SBA does not claim – nor could it – that
members of the public even have to read those terms, let alone agree to them, before obtaining
the DUNS numbers. Likewise, the SBA asserts that “it remains ‘expressly impermissible to
disseminate [DUNS numbers] in bulk,’” see id., but that is precisely what the Government does
when it lets members of the public download tens of thousands of DUNS numbers at a time with
just a few keystrokes. See Mishkin Decl. at ¶¶ 12-14, Dkt. 42-3.
Because the SBA has not shown that DUNS numbers are customarily and actually treated
as private, the agency has failed to carry its burden to withhold the numbers under Exemption 4.
II.
THE SBA FAILS TO JUSTIFY ITS WITHHOLDINGS UNDER EXEMPTION 8.
Plaintiffs have shown that the SBA waived or forfeited any claim under Exemption 8
because the agency failed to raise that exemption in the prior round of summary judgment. See
Mem. at 14-16. The SBA challenges that proposition, see Opp. at 17-19, but the point is moot
for two reasons. First, the Plaintiffs agree with the SBA that the Court “need not address”
Exemption 8 because “[i]f the information is confidential . . . , it is properly withheld under
Exemption 4 (so no Exemption 8 analysis is necessary). If, on the other hand, the information is
not confidential, then it cannot be withheld under either exemption under the circumstances here
presented.” Opp. at 17-18. Of course, if the SBA’s Exemption 4 claim fails, the Exemption 8
claim fails along with it.
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 11 of 14
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Second, Plaintiffs have demonstrated that even if the SBA could raise an Exemption 8
claim for the first time, the SBA still has not shown, and cannot show, that releasing loan status
information would create a reasonably foreseeable risk of harm to the relationship between
lenders and the agency – the interest that Exemption 8 is meant to protect. Mem. at 17-18. The
SBA does not respond to that point, and thus concedes it. See Hopkins v. Women’s Div., Gen.
Bd. of Glob. Ministries, 284 F. Supp. 2d 15, 25 (D.D.C. 2003) (“It is well understood in this
Circuit that when a [party] files an opposition to a dispositive motion and addresses only certain
arguments raised by the [movant], a court may treat those arguments that the [opposition] failed
to address as conceded.”), aff’d, 98 F. App’x 8 (D.C. Cir. 2004).
III.
THE SBA FAILS TO JUSTIFY WITHHOLDING CONCEDEDLY NON-EXEMPT
EMPLOYER IDENTIFICATION NUMBERS.
As Plaintiffs have previously explained, an agency must satisfy a demanding test in
seeking to withhold responsive and concededly non-exempt information on the grounds that it is
not “reasonably segregable” from exempt material. Mem. at 19-20. Specifically, the agency
must demonstrate that the exempt and non-exempt material are “inextricably intertwined.” Mead
Data Cent., Inc. v. Dep’t of the Air Force, 566 F.2d 242, 260 (D.C. Cir. 1977). Here, the SBA
claims that it has passed that test in withholding non-exempt EINs along with exempt SSNs,
because it “explained in great detail why it could not segregate [EINs] for release.” Opp. at 19.
In reality, the SBA only has explained how it got itself into its present state of possessing
intertwined SSNs and EINs, not why that intertwined data is inextricable.
The SBA’s attempted explanation is the very definition of conclusory: the SBA states
that “there is no way for the SBA to reliably distinguish SSNs from EINs,” citing its Chief FOIA
Officer’s assertion that the “SBA has no way to check or correct for such errors.” Id. (citing
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 12 of 14
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Benderson Decl. at ¶ 75). The SBA’s counsel does not claim that the agency has even tried to
segregate the data.
That kind of flimsy claim does not carry the agency’s heavy burden. As Plaintiffs have
noted, see Mem. at 20-21, in Evans v. Federal Bureau of Prisons, the Government claimed that it
lacked the technical ability to segregate exempt and non-exempt portions of responsive video,
and the D.C. Circuit rejected that bald assertion, holding “that the government is required to
explain why the possibility of [a] method of segregability is unavailable if it is to claim the
protection of the exemption.” 951 F.3d 578, 587 (D.C. Cir. 2020) (emphasis added). The SBA
has likewise not explained why there is no possible method of segregating EINs from SSNs.
Nor has the SBA explained why it refuses even to inquire whether the Social Security
Administration or the IRS might be able to distinguish SSNs from EINs. The SBA asserts only
that it was not “obligated to seek technical assistance” from those agencies and that, by its own
definition, “[i]nformation that cannot be segregated by any technical means available to the
agency that holds the record is not ‘reasonably segregable.’” Opp. at 20. But that simply begs
the question, because if the Social Security Administration or the IRS could segregate the data,
then such technical means would in fact be “available” to the SBA.
By sitting on its hands, the SBA has failed to carry its burden of demonstrating that the
non-exempt EINs are “inextricably intertwined” with the exempt SSNs. The Court should deny
the SBA’s supplemental motion on this basis as well.
CONCLUSION
For the foregoing reasons and those stated in their opening brief, Plaintiffs respectfully
request that their supplemental cross-motion for summary judgment be granted, that the SBA’s
supplemental motion for summary judgment be denied, that the SBA be ordered to disclose the
Case 1:20-cv-01240-JEB Document 46 Filed 05/14/21 Page 13 of 14
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Additional Data in full, and that Plaintiffs be awarded the additional costs and attorneys’ fees
they have incurred in this second round of summary judgment.
Dated: May 14, 2021
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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