Stolt-Nielsen Transportation Group Ltd. v. United States

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 21, 2008 Decided July 25, 2008

No. 07-5191

STOLT-NIELSEN TRANSPORTATION GROUP LTD.,
APPELLANT

v.

UNITED STATES OF AMERICA,
APPELLEE

CONSOLIDATED WITH 07-5192

Appeals from the United States District Court
for the District of Columbia
(No. 05cv02217)

J. Mark Gidley argued the cause for appellant. With him on
the briefs was Lucius B. Lau. Christopher M. Curran entered an
appearance.

Alisa B. Klein, Attorney, U.S. Department of Justice, argued
the cause for appellee. With her on the brief were Thomas O.
Barnett, Assistant Attorney General, Jeffrey S. Bucholtz, Acting
Assistant Attorney General, Jeffrey A. Taylor, U.S. Attorney,
Jonathan F. Cohn, Deputy Assistant Attorney General, and
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Mark B. Stern, Attorney. Charlotte A. Abel and R. Craig
Lawrence, Assistant U.S. Attorneys, entered appearances.

Before: SENTELLE, Chief Judge, TATEL and GARLAND,
Circuit Judges.

Opinion for the Court filed by Chief Judge SENTELLE.

SENTELLE, Chief Judge: This is an appeal by Stolt-Nielsen
Transportation Group (“Stolt-Nielsen”) from a summary
judgment in favor of the United States in a FOIA action in
which Stolt-Nielsen had sought, inter alia, all amnesty
agreements entered into by the Antitrust Division of the United
States Department of Justice since 1993. The district court held
that the agreements were exempt under several provisions of the
Freedom of Information Act (“FOIA”), 5 U.S.C. § 552. The
court further held that no portions of the documents were
“reasonably segregable” so as to make provision of redacted
versions of the exempt documents subject to release under
FOIA. Upon review, we conclude that only two possible
exemption provisions are applicable and that the record does not
support a conclusion that exempt portions of the documents are
not reasonably segregable. We therefore vacate the judgment of
the district court and remand the matter to the district court for
further proceedings to establish the feasibility of the release of
redacted versions of the amnesty agreements.

BACKGROUND

Appellant Stolt-Nielsen is a parcel tanker shipping
company. Allegedly in the late 1990’s and early 2000’s, Stolt-
Nielsen colluded with other parcel tanker shipping companies
not to compete for each other’s customers on deep-sea trade
routes as part of an international cartel. Apparently fearing
prosecution for this collusion, in early 2000 Stolt-Nielsen
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entered into an amnesty agreement with the Antitrust Division
of the Department of Justice (“Division”), under which the
Division agreed not to prosecute Stolt-Nielsen for its collusion
in exchange for reporting its illegal antitrust activity. The
Division’s amnesty agreements are part of its amnesty program,
also known as the corporate leniency program, adopted in its
current form in 1993. The Stolt-Nielsen amnesty agreement and
the other agreements sought by Stolt-Nielsen in this proceeding
are based on the model amnesty agreement drafted by the
government in the early days of the program. According to the
government, “amnesty agreements are conducted with the
express undertaking that the negotiations and the information
provided by the applicant will remain confidential, even after the
investigation at issue is closed.” Appellee Br. at 7.

In 2004, the Division, in the belief that Stolt-Nielsen had
not complied with the requirements of the amnesty agreement,
revoked Stolt-Nielsen’s amnesty. There followed a flurry of
litigation between Stolt-Nielsen and the government, most of
which is not relevant to the issues in the current proceeding. See
Stolt-Nielsen, S.A. v. United States, 442 F.3d 177 (3d Cir.), cert.
denied, 127 S. Ct. 494 (2006); United States v. Stolt-Nielsen,
S.A., 524 F. Supp. 2d 586 (E.D. Pa. 2007). After the disclosure
of the Division’s revocation of Stolt-Nielsen’s conditional
amnesty, the government, with leave of the U.S. District Court
for the Eastern District of Pennsylvania, made public Stolt-
Nielsen’s amnesty agreement. During the course of the ongoing
litigation, Stolt-Nielsen made a series of FOIA requests for a
broad range of information concerning the amnesty program,
including, as relevant here, requests for “all amnesty agreements
entered into by the Antitrust Division from August 1993 to the
present.” This request involved approximately 100 amnesty
agreements. The FOIA request expressly stated that Stolt-
Nielsen would accept the agreements “with the names and
identities of the relevant companies or individuals redacted.”
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The government withheld all amnesty agreements that had not
already been released.

Stolt-Nielsen filed the instant action under FOIA seeking
release of a number of documents, including the amnesty
agreements currently at issue. The government filed a Vaughn
Index, asserting that the agreements were exempted from release
by FOIA Exemptions 2, 3, 5, and 7(A), (C), and (D). See
Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973). Both parties
moved for summary judgment. The district court held that the
documents were properly withheld, relying on all exemptions
asserted by the government. The court further held that no
portions of the agreements were reasonably segregable “because
of the nature of these documents.” Stolt-Nielsen v. United
States, 480 F. Supp. 2d 166, 182 (D.D.C. 2007). Upon this
holding the district court granted the government’s motion for
summary judgment and denied the motion of Stolt-Nielsen.
Stolt-Nielsen filed the present appeal seeking reversal of the
district court’s judgment insofar as it applied to the amnesty
agreements, apparently abandoning its request for other
information. Upon review, we conclude that only Exemption
7(D) and possibly 7(A) are applicable to the documents and
further that the government has not established that there are no
reasonably segregable portions of the documents required to be
released under FOIA, 5 U.S.C. § 552(b). We therefore vacate
the judgment of the district court and remand for further
proceedings to establish what portions of the amnesty
agreements must be released under FOIA.

ANALYSIS

Our review of the district court’s decision in a summary
judgment proceeding is de novo. Sussman v. U.S. Marshals
Serv., 494 F.3d 1106, 1111–12 (D.C. Cir. 2007). In the district
court, as noted above, the Division relied upon six grounds of
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exemption. On appeal, the government relies upon only
Exemptions 7(A) and 7(D), apparently abandoning its reliance
upon the other sections. We think this abandonment wise, as
none of the other exemptions are applicable to these documents.
Although abandoned by the government, we will briefly allude
to the inapplicability of the other exemptions, as the district
court relied upon them in its published opinion. See Stolt-
Nielsen v. United States, supra.

Exemption 2, 5 U.S.C. § 552(b)(2), permits an agency to
withhold information “related solely to the internal personnel
rules and practices of an agency.” This exemption applies only
to material that “meets the test of ‘predominant internality,’”
and where the “disclosure significantly risks circumvention of
agency regulations or statutes.” Crooker v. Bureau of Alcohol,
Tobacco & Firearms, 670 F.2d 1051, 1074 (D.C. Cir. 1981).
The requested documents on their face do not “relate[] solely to
the internal personnel rules and practices of an agency.” See 5
U.S.C. § 552(b)(2). They deal entirely with the relationship
between the government and a private party—a self-disclosing
antitrust violator—and cannot be withheld under Exemption 2.

Exemption 3, 5 U.S.C. § 552(b)(3), permits an agency to
withhold information “specifically exempted from disclosure by
statute.” In the district court the government contended that the
documents were exempted from disclosure under Rule 6(e) of
the Federal Rules of Criminal Procedure. Rule 6(e) prohibits,
with exceptions, the disclosure of matters “occurring before the
grand jury.” In the district court the Division’s Vaughn Index
stated that certain of the withheld amnesty agreements “are
grand jury exhibits, reveal information discussed before the
grand jury, and were created for the purposes of the
investigations at issue.” While this may be true, “[t]here is no
per se rule against disclosure of any and all information which
has reached the grand jury chambers.” Senate of the
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Commonwealth of Puerto Rico v. U.S. Dep’t of Justice, 823 F.2d
574, 582 (D.C. Cir. 1987). For Rule 6(e) to be applicable, “the
touchstone is whether disclosure would tend to reveal some
secret aspect of the grand jury’s investigation[,] such matters as
the identities or addresses of witnesses or jurors, the substance
of testimony, the strategy or direction of the investigation, the
deliberations or questions of jurors, and the like.” Id. (citations
and internal quotation marks omitted). In other words, the
government may not bring information into the protection of
Rule 6(e) and thereby into the protection afforded by Exemption
3, simply by submitting it as a grand jury exhibit. A contrary
holding could render much of FOIA’s mandate illusory, as the
government could often conceal otherwise disclosable
information simply by submitting the information to a grand
jury.1

Exemption 5, 5 U.S.C. § 552(b)(5), permits an agency to
withhold “inter-agency or intra-agency memorandums or letters
which would not be available by law to a party other than an
agency in litigation with the agency.” As with Exemption 3, the
amnesty agreements do not fall within Exemption 5 by the terms
of the statute. To qualify as exempt under this section, a
document must meet two conditions: “its source must be a
Government agency, and it must fall within the ambit of a
privilege against discovery under judicial standards that would
govern litigation against the agency that holds it.” Dep’t of
Interior v. Klamath Water Users Protective Ass’n, 532 U.S. 1,
8 (2001). Without regard to the applicability of discovery rules,
an amnesty agreement between a government agency and an
external party is not an inter-agency or intra-agency

1
To the extent that disclosure of a particular agreement could
tend to reveal the identities or addresses of witnesses or the substance
of their testimony before a grand jury, Exemption 3 is redundant of
Exemption 7(D), as discussed below.
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memorandum or letter. It is not a communication either
between the Division and some other agency or between two
parts of the Division, and it does not appear to be a
memorandum at all.

In the district court, the government relied upon Exemption
6, as did the district court in its opinion. As that exemption
protects only “personnel and medical files and similar files the
disclosure of which would constitute a clearly unwarranted
invasion of personal privacy,” and as there is nothing in the
amnesty agreements which fits that description, we assume that
the government and the district court relied upon this section
with reference to other information no longer at issue.

The only exemptions possibly applicable to the amnesty
agreements are those created by subsection (b)(7) of FOIA,
specifically Exemptions 7(A) and 7(D).2 The relevant portion
of subsection (b)(7) exempts

records or information compiled for law enforcement
purposes, but only to the extent that the production of
such law enforcement records or information (A) could
reasonably be expected to interfere with enforcement
proceedings, . . . [or] (D) could reasonably be expected
to disclose the identity of a confidential source,
including a State, local, or foreign agency or authority
or any private institution which furnished information
on a confidential basis, and, in the case of a record or
information compiled by criminal law enforcement

2
The government in the district court and the district court in
its opinion also relied upon Exemption 7(C). As with the other
exemptions discussed above, we think the government’s abandonment
is well taken as Exemption 7(C) does not appear applicable or justified
by the Vaughn Index.
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authority in the course of a criminal investigation or by
an agency conducting a lawful national security
intelligence investigation, information furnished by a
confidential source . . . .

5 U.S.C. § 552(b)(7). We agree that the Vaughn Index
establishes at least a colorable basis for the assertion of
Exemption 7(A) or (D) withholding. However, that does not
end the case. It does appear that the names of amnesty
applicants are present and perhaps other information contained
in the agreement could identify amnesty applicants and
information they furnished as confidential sources and that the
government might lawfully withhold that information. But
FOIA further provides that “[a]ny reasonably segregable portion
of a record shall be provided to any person requesting such
record after deletion of the portions which are exempt under” the
subsection setting forth the exemption. 5 U.S.C. § 552(b).
Indeed, “[t]he focus of FOIA is information, not documents, and
an agency cannot justify withholding an entire document simply
by showing that it contains some exempt material.” Mead Data
Cent., Inc. v. U.S. Dep’t of Air Force, 566 F.2d 242, 260 (D.C.
Cir. 1977). Otherwise put, “an entire document is not exempt
merely because an isolated portion need not be disclosed . . . .
[T]he agency may not sweep a document under a general
allegation of exemption . . . [i]t is quite possible that part of a
document should be kept secret while part should be disclosed.”
Vaughn, 484 F.2d at 825.

This being the established rule for FOIA withholding of
redacted versions of possibly segregable material, it follows that,
as we have stated before, “[a]ny reasonably segregable portion
of a record shall be provided to a person requesting such record
after deletion of the portions which are exempt.” See Sussman,
494 F.3d at 1116 (quoting 5 U.S.C. § 552(b)). Therefore,
“[b]efore approving the application of a FOIA exemption, the
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district court must make specific findings of segregability
regarding the documents to be withheld.” Id. In the record
before the district court, specifically the government’s Vaughn
Index, the government’s only justification for withholding the
agreements in the face of the redaction of identifying
information is a conclusory affidavit by a Division official
declaring that a Division paralegal had “reviewed each page
line-by-line to assure himself that he was withholding from
disclosure only information exempt pursuant to the Act.” The
Division’s conclusion on a matter of law is not sufficient support
for a court to conclude that the self-serving conclusion is the
correct one. In argument before the district court and this court,
the Division attempted a post hoc fleshing out of its conclusion
by asserting that the dates of various documents could allow
persons with expert knowledge of antitrust proceedings to
determine what industries were under investigation. This does
not, of course, explain why dates could not be redacted along
with names if that protection is found to be necessary. The
Division further argues that the redacted documents without
names and dates would provide no meaningful information.
Neither is this justification. FOIA does not require that
information must be helpful to the requestee before the
government must disclose it. FOIA mandates disclosure of
information, not solely disclosure of helpful information.

As we noted in Sussman, before we will uphold the district
court’s conclusion that withholding of information is lawful
under FOIA in the face of possible redaction, “the district court
must make specific findings of segregability regarding the
documents to be withheld.” Sussman, 494 F.3d at 1116. Indeed,
“if the district court approves withholding without such a
finding, remand is required even if the requestee did not raise
the issue of segregability before the court.” Id. (citing Johnson
v. EOUSA, 310 F.3d 771, 776 (D.C. Cir. 2002); Trans-Pac.
Policing Agreement v. U.S. Customs Serv., 177 F.3d 1022, 1028
 10

(D.C. Cir. 1999)). So much more so where, as here, the
requestee did raise the segregability issue before the district
court.

While perhaps in theory we could conduct a further review
in this court under our de novo standard, in the interest of
efficiency we have long required the district court to make the
first finding on the segregability question. See, e.g., Summers v.
Dep’t of Justice, 140 F.3d 1077, 1081 (D.C. Cir. 1998). As in
earlier cases, “[w]e therefore leave it to the district court to
determine on remand whether more detailed affidavits are
appropriate or whether an alternative such as in camera review
would better strike the balance between protecting [exempted]
information and disclosing nonexempt information as required
by the FOIA.” Krikorian v. Dep’t of State, 984 F.2d 461, 467
(D.C. Cir. 1983).

CONCLUSION

In short, for the reasons set forth above, we vacate the
district court’s grant of summary judgment and remand this case
for further proceedings consistent with this opinion.