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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 4, 2008 Decided March 6, 2009
No. 08-5060
PAULINE STONEHILL, CO-EXECUTOR AND CO-SPECIAL
ADMINISTRATOR OF THE ESTATE OF HARRY S. STONEHILL,
APPELLANT
v.
INTERNAL REVENUE SERVICE,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 06cv00599)
Robert E. Heggestad argued the cause and filed the briefs
for appellant.
Jonathan S. Cohen, Attorney, U.S. Department of Justice,
argued the cause for appellee. With him on the brief were
Nathan J. Hochman, Assistant Attorney General, Jeffrey A.
Taylor, U.S. Attorney, and Bethany B. Hauser, Attorney. John
A. Dudeck Jr., Attorney, entered an appearance.
2
Before: HENDERSON, ROGERS and GRIFFITH, Circuit
Judges.
Opinion for the Court by Circuit Judge ROGERS.
ROGERS, Circuit Judge: The issue in this appeal is whether
an agency may withhold documents under Exemption 5 of the
Freedom of Information Act (“FOIA”), 5 U.S.C. § 552(b)(5),
when it did not invoke the same underlying privilege claims in
an ongoing discovery dispute in a different, non-FOIA case in
which those documents were withheld as irrelevant. Harry S.
Stonehill, through his estate, maintains that the waiver rule
requiring all FOIA exemptions to be raised at the same time in
the original district court FOIA proceedings, see, e.g., Maydak
v. Dep’t of Justice, 218 F.3d 760, 764 (D.C. Cir. 2000), should
be extended to apply to contemporaneous proceedings involving
the same documents and parties and equally applicable
privileges. However, Stonehill’s suggestion to extend the FOIA
waiver rule to discovery proceedings overlooks critical
differences between the two information-gathering regimes such
that the extension would not necessarily advance the policy
goals underlying the waiver rule. Accordingly, we affirm the
grant of summary judgment to the IRS.
I.
This FOIA case is intertwined with Stonehill’s effort to
obtain vacation of a judgment foreclosing tax liens on his
property. He seeks through civil discovery and FOIA to obtain
documents that would show that United States law enforcement
officials, in resisting a motion to suppress evidence,
misrepresented the United States’ involvement in a 1962 raid on
Stonehill’s offices in the Philippines by Philippine law
enforcement authorities. See United States v. Stonehill, 53 F.
App’x 470, 471 (9th Cir. 2002) (unpublished) (“Stonehill III”);
3
United States v. Stonehill, 702 F.2d 1288, 1292 (9th Cir. 1968)
(“Stonehill II”); Stonehill v. United States, 405 F.2d 738, 743-46
(9th Cir. 1968) (“Stonehill I”); Appellant’s Br. at 7-8. The Ninth
Circuit has suggested that suppression of the seized evidence,
consisting of thirty-five truckloads of documents, would have
been required under the Fourth Amendment if United States
agents had conducted the raids. Stonehill I, 405 F.2d at 743.
Stonehill initially filed a FOIA request with the IRS on July
10, 1998, on behalf of himself and his business associate Robert
P. Brooks. He requested all records pertaining to Stonehill and
Brooks, including particular documents regarding the early
1960s investigation of their Philippines businesses. The IRS
responded that only five responsive documents could be found
after “thorough research.” Letter from Stephen H. Flesner,
Disclosure Officer, Internal Revenue Service, to Robert E.
Heggestad, Heggestad & Weiss, PC (undated). On January 5,
1999, Stonehill requested additional information regarding IRS
materials referenced in documents he had obtained from the
State Department. The IRS responded that the documents could
not be located and suggested that the Justice Department might
be able to provide more helpful documents. Stonehill filed an
administrative appeal and the IRS repeated that the documents
could not be located.
On October 2, 2000, based on documents he had received
from other agencies in response to his FOIA requests, Stonehill
filed a motion pursuant to Federal Rule of Civil Procedure 60(b)
in the Central District of California to vacate the tax judgment
on the ground it was procured through a fraud on the court. He
also renewed his FOIA request with the IRS on March 15, 2001.
The IRS initially stayed review, responding only on October 16,
2001, after the district court had denied Stonehill’s Rule 60(b)
motion on August 28, 2001. The IRS informed Stonehill that
approximately 90 boxes containing responsive documents had
4
been located. On November 26, 2002, the IRS issued a final
response to Stonehill’s FOIA request, stating that some
documents had been provided to him and others were being
withheld or redacted pursuant to FOIA Exemptions 3, 5, 7(C),
and 7(D). On June 17, 2003, the IRS General Appeals office
issued a partial determination of Stonehill’s appeal, affirming
the disclosure officer’s decision that certain exemptions applied
while reserving judgment on certain documents withheld under
Exemption 3 that were not yet available for review. On
September 5, 2003, that office advised Stonehill that it was
suspending review of the remaining Exemption 3 documents
while the discovery litigation was ongoing in the district court
following a remand by the Ninth Circuit, see Stonehill III, 53 F.
App’x 470; the office noted that if Stonehill prevailed in the
district court, his FOIA appeal would appear to be rendered
moot.
On December 20, 2005, the California district court granted
Stonehill’s motion to compel production of documents and
rejected the IRS’s claims that the attorney-client privilege and
work product doctrine barred production. The district court
ordered the government to “turn over documents regarding the
1966 Tax Division investigation into the government’s role in
the 1962 raids.” United States v. Stonehill, No. CV 65-127-PA,
at 8 (C.D. Cal. Dec. 20, 2005) (“Stonehill IV”).1 The district
court also denied the motion to compel production of documents
involving third-party taxpayer information and some treaty
obligation information, as well as some confidential informant
information redacted by the Central Intelligence Agency. Id. at
4-8. Although the IRS produced some documents pursuant to
1
The case is lodged in the United States District Court for the
District of Oregon.
5
the discovery order, those documents were redacted on
relevance grounds; other documents were withheld as irrelevant.
On March 31, 2006, Stonehill filed his FOIA complaint in
the district court here, seeking production of IRS records from
the Stonehill files regarding his former attorney. In an amended
complaint he requested additional documents responsive to his
1998 FOIA request. The IRS produced a Vaughn index,
invoking Exemptions 3, 5, 6, and 7(C), and moved for summary
judgment. In opposing summary judgment, Stonehill argued the
IRS was collaterally estopped from raising the same privileges
in the FOIA litigation as it raised in the Rule 60 proceeding, and
was barred from invoking for the first time the deliberative
process privilege as to 172 documents, as the IRS had not
opposed disclosure of any documents based on the deliberative
process privilege in the Rule 60 discovery proceeding. He
further argued that the IRS could not raise the attorney work
product doctrine as to 681 documents, or 26 U.S.C. § 6103,
protecting confidentiality of tax information, as a justification
for withholding 157 documents under FOIA Exemption 3,
because the IRS had not asserted those grounds for
nondisclosure with respect to those particular documents in the
Rule 60 proceeding.
The D.C. district court agreed that the IRS was collaterally
estopped with respect to documents for which it had claimed the
same justifications for nondisclosure in discovery. The
California district court’s December 2005 decision had applied
the same criteria in assessing the claimed privileges as apply
under Exemption 5 and the issue had been fully and fairly
litigated then. However, the district court rejected Stonehill’s
waiver argument with regard to new privilege claims and
granted summary judgment for the IRS.
6
II.
On appeal, Stonehill urges adoption of a rule that where
parallel FOIA and non-FOIA proceedings are pending
contemporaneously involving the same documents, the same
reviewing body or officer, and the same, equally applicable
privileges, failure to raise a privilege in one proceeding will
constitute a waiver in the parallel proceeding, absent compelling
circumstances. See Appellant’s Br. at 27. Alternatively, he
urges this court to hold that waivers occurred in his case because
by not raising the deliberative process and attorney work
product privileges in the parallel discovery proceeding, the IRS
intentionally relinquished its right to assert them in this FOIA
proceeding. Specifically, he points out that despite earlier
opportunities to invoke privileges, the IRS delayed its review
and production of documents and conducted unnecessary
duplicative document reviews in response to his FOIA request,
with the result that his effort to gain access to information has
been unduly delayed. Now, over a decade after his initial FOIA
request, he is confronted with newly invoked FOIA exemptions
involving privileges that could have been asserted earlier in
resisting discovery.
The requirement for an agency, as a general rule, to invoke
all FOIA exemptions “‘at the same time, in the original district
court proceedings,’” August v. FBI, 328 F.3d 697, 699 (D.C. Cir.
2003) (quoting Maydak v. Dep’t of Justice, 218 F.3d 760, 764-
65 (D.C. Cir. 2000)), is premised on two policy goals: (1) “the
interest in judicial finality and economy, which has ‘special
force in the FOIA context, because the statutory goals —
efficient, prompt, and full disclosure of information — can be
frustrated by agency actions that operate to delay the ultimate
resolution of the disclosure request,’” id. (quoting Senate of
Puerto Rico v. Dep’t of Justice, 823 F.2d 574, 580 (D.C. Cir.
1987)), and (2) preventing the government from playing cat and
7
mouse by “withholding its most powerful cannon until after the
[d]istrict [c]ourt has decided the case and then springing it on
surprised opponents and the judge,” id. Basic “fairness to
parties seeking disclosure ordinarily requires that they be
afforded a full and concentrated opportunity to challenge and
test comprehensively the agency’s evidence regarding all
claimed exemptions,” Senate of Puerto Rico, 823 F.2d at 580.
The FOIA disclosure regime, however, is distinct from civil
discovery. See NLRB v. Sears, Roebuck & Co., 421 U.S. 132,
144 n.10 (1975). Different considerations determine the
outcome of efforts to obtain disclosure: relevance, need, and
applicable privileges – bounded by the district court’s exercise
of discretion – in the discovery regime, see FED. R. CIV. P.
26(b)(1), statutory exceptions reflecting a congressional
balancing of interests in FOIA. See North v. Walsh, 881 F.2d
1088, 1095 (D.C. Cir. 1989). Because these considerations
present different issues, that a document is exempt from
discovery does not necessarily mean it will be exempt from
disclosure under FOIA. Id.; cf. 18 CHARLES ALLEN WRIGHT,
ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE
AND PROCEDURE § 4417, at 449 (2d ed. 2002). Additionally,
while information disclosed during discovery is limited to the
parties and can be subject to protective orders against further
disclosure, when a document must be disclosed under FOIA, it
must be disclosed to the general public and the identity of the
requester is irrelevant to whether disclosure is required. See
FTC v. Grolier Inc., 462 U.S. 19, 28 (1983); Loving v. Dep’t of
Defense, 550 F.3d 32, 39 (D.C. Cir. 2008); North, 881 F.2d at
1095-96. Conversely, even as to FOIA Exemption 5, which
incorporates the privileges the government typically enjoys in
pretrial discovery, see Grolier, 462 U.S. at 28, not all documents
available in discovery are also available pursuant to FOIA.
Exemption 5 “protects only those memoranda which would not
normally be discoverable in civil litigation against an agency,”
8
Ryan v. Dep’t of Justice, 617 F.2d 781, 790 (D.C. Cir. 1980),
whereas case-specific exceptions can sometimes permit
discovery of otherwise privileged material. See Grolier, 462
U.S. at 28 (“It is not difficult to imagine litigation in which one
party’s need for otherwise privileged documents would be
sufficient to override the privilege but that does not remove the
documents from the category of the normally privileged.”). The
fact, then, that certain FOIA exemptions overlap with grounds
for nondisclosure in discovery does not require extending the
equitable FOIA waiver rule even when the discovery
proceedings and FOIA litigation are contemporaneous and
involve the same documents and parties and equally applicable
privileges.
Given the distinct nature of these two information-gathering
regimes, extension of the FOIA waiver rule to discovery
proceedings would not advance the policy interest in finality and
judicial economy, which is based on FOIA’s goal of prompt
disclosure of information. See, e.g., Senate of Puerto Rico, 823
F.2d at 580. Stonehill maintains that allowing the IRS to raise
FOIA exemptions for the first time in this FOIA litigation has
resulted in unnecessary delay and wasted judicial resources. In
part, he offers, this is because the IRS undertook a separate
review of the documents for the FOIA proceeding even though
the IRS had previously reviewed the documents in response to
his discovery requests. However, for two principal reasons we
conclude Stonehill has not shown that extension of the FOIA
waiver rule would eliminate an agency’s need to conduct a
separate FOIA review or otherwise avoid necessary delays.
First, although the grounds for nondisclosure underlying
FOIA Exemptions 3 and 5 may be invoked in civil discovery,
some FOIA exemptions are not applicable to discovery. Even
after reviewing documents for privileges in response to a
discovery request, an agency could reasonably undertake a
9
separate review to determine whether other exemptions are
applicable. Likewise, even those privileges that are available
both in discovery and in the FOIA context may not be equally
applicable in the two proceedings. Therefore, an agency could
reasonably reconsider its invocation, or lack thereof, of certain
privileges before making determinations in the FOIA litigation.
That an agency ultimately may conclude that the privileges are
equally applicable would not necessarily mean that it could
know this in advance of a separate FOIA-specific review.
Similarly, as the IRS did here, an agency may need to assess the
applicability of any unwaivable statutory exemptions, like 26
U.S.C. § 6103, which protects confidentiality of tax information.
See August, 328 F.3d at 701.
Second, the stakes of disclosure are different in the two
regimes, justifying and arguably necessitating separate reviews
with distinct considerations in mind during each. Documents
released in a FOIA action must be made available to the public
as a whole, North, 881 F.2d at 1096, and, unlike in civil
discovery, see FED. R. CIV. P. 37, there is no opportunity to
obtain a protective order. In that respect, the stakes of
disclosure for the agency are greater in the FOIA context. The
stakes in the discovery context are also high insofar as there is
a risk of a production order if a privilege is not invoked and
because of the generally non-appealable nature of discovery
orders, see In re England, 375 F.3d 1169, 1174 (D.C. Cir. 2004).
However the agency may prioritize these considerations, the
motivating concerns are distinct in the two contexts.
Extending the waiver rule, then, would not necessarily
prevent separate reviews of documents for parallel proceedings
involving the same documents and privileges that turn out to be
equally applicable. Moreover, even to the extent a waiver rule
might eliminate the need for a separate review in response to a
FOIA request, the rule itself could result in delay in judicial
10
resolution of the discovery issues while the agency, anticipating
the possibility of future FOIA litigation, prepared a Vaughn
index or developed reasons for objecting to release in a later
FOIA case even where those reasons would not be raised in the
discovery proceeding; the agency would need to assess all
possible privileges even after it determined that the documents
were irrelevant to the non-FOIA proceedings. Cf. North, 881
F.2d at 1099.
Neither would extension of the FOIA waiver rule to
discovery proceedings necessarily advance the second goal of
promoting government fairness by requiring the government, in
general, to raise all its exemptions at the same time, so that
neither the parties nor the court are surprised by assertions of
new exemptions, and so that parties have concentrated
opportunities to challenge agency attempts to withhold
documents. See Senate of Puerto Rico, 823 F.2d at 580.
Stonehill’s reasons for extension of the FOIA waiver rule are
stronger here. He contends he has been deprived of “a fair and
concentrated opportunity to challenge the evidentiary basis for
hundreds of IRS exemptions that have changed in the FOIA
administrative proceeding, the Rule 60(b) proceeding and again
in the FOIA litigation.” Appellant’s Br. at 36. A change of
agency tactics in invoking privileges could indeed be evidence
of the cat-and-mouse game of which this court has been “wary,”
August, 328 F.3d at 697.
The IRS’s decision to invoke additional privileges in the
FOIA litigation is hardly inconsistent with the different stakes
involved, as distinct from reflecting a “sinister,” August, 328
F.3d at 700, or improper motivation. For example, the IRS was
under no obligation to invoke privileges for documents it had
determined were irrelevant under Rule 26(b)(1) in the Rule
60(b) proceeding whereas it had the prerogative to invoke
privileges for those documents in the FOIA litigation, where
11
relevance was not a bar to production. More significantly, the
incentives for prompt agency review and production in response
to document requests already exist. In the FOIA context, the
waiver rule seeks to eliminate further litigation about newly
asserted FOIA exemptions, once an exemption has been asserted
and the court has rejected it. See Maydak, 218 F.3d at 764;
Ryan, 617 F.2d at 792; Jordan v. Dep’t of Justice, 591 F.2d 753,
779-80 (D.C. Cir. 1978). Absent such a rule, the IRS offers, an
agency “might be tempted to litigate its claimed FOIA
exemptions one by one for strategic reasons, see Ryan, 617 F.2d
at 792, or to delay a careful examination of documents until its
first claimed exemptions have been rejected, see Jordan, 591
F.2d at 780.” Appellee’s Br. at 30-31. As noted, in a discovery
proceeding there are potentially adverse consequences if the
agency fails to examine the documents and to raise all its
defenses: The district court may order production, see FED. R.
CIV. P. 37, and the agency could not rely on immediate appeal.
On appeal, the agency would encounter the prudential rule
against raising new arguments, see Jordan, 591 F.2d at 780, and
could not rely, as a matter of course, on the opportunity to
invoke additional defenses to production upon remand.
Given the existing motivations for an agency to be
forthright in asserting its justifications for nondisclosure during
discovery, extending the FOIA waiver rule to those proceedings
would at best have a marginal benefit in terms of ensuring
government fairness. Undue delays and duplicative agency
conduct can be prevented through the exercise of district court
discretion, cf. Laborers’ Int’l Union of N. Am. v. Dep’t of
Justice, 772 F.2d 919, 920-21 (D.C. Cir. 1984), advancing many
of the objectives that Stonehill seeks from extension of the
waiver rule. For example, after succeeding in his appeal to the
Ninth Circuit, Stonehill obtained a broad discovery production
order from the district court in December 2005, Stonehill IV, No.
CV 65-127-PA, at 8, 17, rejecting most of the IRS’s privilege
12
objections. In the FOIA litigation, too, the district court ruled
that collateral estoppel barred the IRS from invoking the same
privileges for the same documents as in the Rule 60 proceeding
as the issues had been decided under the same standards in the
December 2005 order.
Although Stonehill was confronted in the FOIA action with
new objections to disclosure long after he made his FOIA
request, even the particular circumstances of his case do not
show that extending the waiver rule to discovery would advance
the relevant policy goals, much less that there was a waiver by
the IRS. Assuming the IRS’s stay of his administrative FOIA
appeal pending resolution of the discovery proceedings was
unfair to the extent it postponed resolution of asserted FOIA
exemptions, the stay also arguably facilitated the efficient use of
judicial resources by avoiding delays in the discovery
proceeding attendant to agency reviews influenced by FOIA
demands. The district court’s application of estoppel principles
in the FOIA action avoided further delay and conserved judicial
resources regarding privileges that had already been litigated
and decided. In any event, the stay alone does not show an
improper motivation by the IRS. Cf. Boyd v. Criminal Division
of the U.S. Dep’t of Justice, 475 F.3d 381, 391 (D.C. Cir. 2007);
Iturralde v. Comptroller of Currency, 315 F.3d 311, 314-15
(D.C. Cir. 2003). That the same person reviewed the requested
documents in both proceedings lends no support for extension
of the FOIA waiver rule, because the likely effect of a ruling on
that basis would be for agencies to use different reviewers in
different proceedings, hardly consistent with the goals of
efficiency and prompt disclosure. That the IRS did not assert
the deliberative process privilege during the administrative
appeal is not inconsistent with the waiver rule, which requires
only that all privileges be asserted in the original district court
proceedings and even allows for exceptions in extraordinary
circumstances. See August, 328 F.3d at 699. The IRS also is not
13
responsible for all of the delay in this case. Cf. Weisberg v.
Dep’t of Justice, 745 F.2d 1476, 1498 (D.C. Cir. 1984).
Stonehill submitted his FOIA request in 1998, but did not file
his FOIA action until 2006, more than five years after he filed
the Rule 60(b) motion. Given that Stonehill adopted a litigation
strategy based on using two separate regimes for obtaining the
desired documents, Stonehill’s complaints about delay cannot be
totally divorced from the choices he made.
Finally, Stonehill’s proposal to extend the FOIA waiver rule
to discovery proceedings fails to take into account that the
waiver rule is not rigidly applied. Rather, the court sometimes
excuses apparent waivers based on extraordinary circumstances,
in recognition of the fact that “although FOIA strongly favors
prompt disclosure, its nine enumerated exemptions are designed
to protect those ‘legitimate governmental and private interests’
that might be ‘harmed by release of certain types of
information.’” August, 328 F.3d at 699 (quoting John Doe
Agency v. John Doe Corp., 493 U.S. 146, 152 (1989)); see also
EPA v. Mink, 410 U.S. 73, 80 (1973). Absent evidence of
improper motives for obtaining a tactical advantage, interim
developments including the factual development of a case or
changes in an applicable legal doctrine may warrant allowing an
agency to invoke an exemption for the first time on appeal. Id.
at 700. Implicit in this approach is the acknowledgment that,
given the balance of interests reflected in FOIA, some delays are
inevitable in litigation over the invocation of statutory
exemptions. Here, the several discovery proceedings and
Stonehill’s successful appeal to the Ninth Circuit led to
production requirements that, to some extent, may have affected
the IRS’s approach in resisting discovery and hardly curtailed its
efforts to protect privileges in the FOIA proceeding.
Congress has addressed concerns about delays in civil
proceedings in the Civil Justice Reform Act of 1990, see 28
14
U.S.C. §§ 471-73, and district court rules reflect such efforts,
see, e.g., D.D.C. R. 16.3 (pre-trial conference requirement,
largely mirroring D.D.C. Civil Justice Expense and Delay
Reduction Plan, eff. Mar. 1, 1994). But delays attendant to
information-gathering regimes may often simply be the result of
additional searches for documents as well as additional
document reviews. Some delay may be reduced, as occurred
here, through the district court’s exercise of discretion to
facilitate production of documents and to eliminate needless
relitigation through application of equitable estoppel principles.
Although the IRS did not produce 90 boxes of documents until
after the California district court denied Stonehill’s Rule 60(b)
motion, and then stayed the administrative appeal pending the
district court’s discovery decision on remand, Stonehill does not
suggest that the IRS would have located the documents sooner
or proceeded without staying the FOIA appeal had the FOIA
waiver rule applied to discovery. Any unfairness caused by
release of requested documents after Stonehill’s death is
mitigated by his estate’s vigorous pursuit of his claims.
Considering the circumstances as a whole, then, we are not
persuaded that the court should link the two information-
gathering regimes through a waiver rule when doing so would
not necessarily advance the policy goals underlying the rule.
Delays within the FOIA regime, Stonehill’s principal focus, do
not provide a rationale for linking its waiver rule to discovery
where different considerations are involved. Accordingly, we
affirm the grant of summary judgment.