McKinley v. Board of Governors Plaintiff McKinley Cross-Motion for Summary Judgment (Lawsuit #3)

8/4/2019 McKinley v. Board of Governors Plaintiff McKinley Cross-Motion for Summary Judgment (Lawsuit #3)

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

VERN McKINLEY, )

)Plaintiff, ) Case No. 10:0751 (ABJ)

)

v. )

)BOARD OF GOVERNORS OF )

THE FEDERAL RESERVE SYSTEM, ))

)Defendant. )

____________________________________)

CROSS-MOTION FOR SUMMARY JUDGMENT

Plaintiff Vern McKinley, by counsel and pursuant to Rule 56(c) of the Feder

Civil Procedure, hereby cross-moves for summary judgment against Defendant Boa

Governors of the Federal Reserve System. As grounds therefor, Plaintiff respectfu

Court to the accompanying Plaintiffs Memorandum of Law in Opposition to Defen

Motions for Summary Judgment and in Support of Plaintiffs Cross-Motion for Sum

Judgment and Plaintiffs Response to Defendants Statement of Material Facts Not

Dispute and Plaintiffs Statement of Material Facts Not in Genuine Dispute in Supp

Plaintiffs Cross-Motion for Summary Judgment.

Dated: August 31, 2011 Respectfully submitted,

Paul J. Orfanedes (D.C. Bar No

/s/ Michael Bekesha

Case 1:10-cv-00751-ABJ Document 19 Filed 08/31/11 Page 1 o


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VERN McKINLEY, ))

Plaintiff, ) Case No. 10:0751 (ABJ))

v. ))

BOARD OF GOVERNORS OF )THE FEDERAL RESERVE SYSTEM, )

))

Defendant. )____________________________________)

PLAINTIFFS MEMORANDUM OF LAW IN OPPOSITION TO DEFEN

MOTIONS FOR SUMMARY JUDGMENT IN PART AND IN SUPPOR

PLAINTIFFS CROSS-MOTION FOR SUMMARY JUDGMENT

Plaintiff Vern McKinley, by counsel and pursuant to Rule 56 of the Federal R

Procedure, respectfully submits this memorandum of law in opposition to Defendan

Governors of the Federal Reserve Systems motions for summary judgment in part a

of Plaintiffs cross-motion for summary judgment. As grounds therefor, Plaintiff s

follows:

MEMORANDUM OF LAW

I. Background.

This case concerns Freedom of Information Act (FOIA) requests served on

Governors of the Federal Reserve System (the Board) by a private citizen for reco



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Bank of New York(FRBNY) to lend up to $85 billion to the American Internatio

(AIG) under section 13(3) of the Federal Reserve Act. When the Board eventual

minutes of the September 16, 2008 meeting, the minutes only summarily stated that

disorderly failure of AIG was likely to have a systemic effect on financial markets t

already experiencing a significant level of fragility. Nowhere did the Board identif

evidence it considered or how it analyzed this evidence.

With respect to Lehman Brothers, the Board was concerned that if Lehman B

declared bankruptcy there could be a severe threat to U.S. and global financial stabi

the end, the Board took no action to bailout Lehman Brothers. However, just as

AIG, the Board did not identify the specific evidence it considered or how it analyzed

to determine what, if any, systemic effect the bankruptcy filing of Lehman Brothers w

the financial markets.

Given the lack of any public explanation of the underlying justifications of t

decisions, McKinley submitted two FOIA requests to the Board in an effort to disco

Government is up to. U.S. Dept of Justice v. Reporters Comm. for Freedom of Pr

749, 780 (1989). After not receiving a response from the Board on either request, M

initiated this lawsuit on May 11, 2010. The Board produced records responsive to

requests on November 9, 2010 and May 27, 2011. In total for both requests, the Bo

575 pages in their entirety, produced 751 pages in part, and withheld 1062 pages in



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II. Argument.

A. Summary Judgment Standard.

In FOIA litigation, as in all litigation, summary judgment is appropriate only

pleadings and declarations demonstrate that there is no genuine issue of material fac

moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby,

242, 248 (1986); Fed.R.Civ.P. 56(c). In FOIA cases, agency decisions to withhol

information under FOIA are reviewed de novo. Judicial Watch, Inc. v. U.S. Posta

F. Supp.2d 252, 256 (D.D.C. 2004). In reviewing a motion for summary judgment

the court must view the facts in the light most favorable to the requester. Weisberg

States Dept of Justice, 745 F.2d 1476, 1485 (D.C. Cir. 1984).

B. Defendant has failed to conduct adequate searches.

For a government agency to obtain summary judgment on the adequacy of th

agency must demonstrate beyond material doubt that its search was reasonably calc

uncover all relevant documents. Nation Magazine v. United States Customs Serv

885, 890 (D.C. Cir. 1995) (quotingTruitt v. Department of State, 897 F.2d 540, 542

1990)). Specifically, an agency must make a good faith effort to conduct a search

requested records, using methods which can be reasonably expected to produce the

requested, and it cannot limit its search to only one record system if there are others

to turn up the information requested. Nation Magazine, 71 F.3d at 890 (internal c



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information with respect to the Boards decision to bailout AIG and the Boards m

analysis related to the ultimate bankruptcy of Lehman Brothers. As the Board itsel

Board requested information and advice from FRBNY officers and staff. Declarati

M. Ashton (Ashton Decl.) at 9 (with respect to AIG); Declaration of Patrick M.

(Parkinson Decl.) at 10 (with respect to Lehman Brothers). Yet, the Board only

collected records from 190-200 Board members, officers, and staff in nine division

Board. Declaration of Alison M. Thro (Thro Decl.) at 13. The Board therefore

admits that it failed to search for records at the FRBNY even though it is reasonably

such searches of the records of FRBNY would produce records responsive to McKi

requests.

Although FRBNY is technically not a component of the Board or a governm

itself and thus not subject to FOIA directly, certain records of FRBNY are neverthel

records. Pursuant to the Boards regulations, records of FRBNY become records o

when they are created or obtained by FRBNY pursuant to the performance of functi

behalf of the Board. 12 C.F.R. 261.2(i)(1)(i) (Records of the Board include . . . a

coming into the possession and under control of . . . any Federal Reserve Bank, in the

of functions for or on behalf of the Board.); see alsoFox News Network, LLC v. Bo

Governors of the Federal Reserve System, 601 F.3d 158, 161 (2nd Cir. 2010). Bas

declarations submitted by the Board, records of FRBNY with respect to AIG and Leh



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FRBNYgathered information in order to assist the Boardin its determination wh

authorize the FRBNY to extend a loan to AIG. Declaration of Richard Charlton (

Decl.) at 6 (emphasis added). Moreover, once FRBNY collected the informatio

AIG, it analyzed the information and subsequently provided its assessment to the B

Richard M. Ashton, Deputy General Counsel of the Board, testifies, Over the next

several senior staff members at the FRBNY and the Board, working with the Presid

FRBNY, Timothy Geithner, began to analyze and assess the extent and implications

imminent financial crisis facing AIG. Ashton Decl. at 7. Similarly, Patricia C.

Senior Advisor and Senior Vice President of the Markets Group at FRBNY, states,

coordination with the Board of Governors of the Federal Reserve System, theFRBN

analyzes this information to assist the Federal Reserve in understanding how finan

and the broader economy generally, are functioning. Declaration of Patricia C. M

(Mosser Decl.) at 3. Finally, and most importantly, FRBNY was acting on beh

Board at all times. As Mr. Ashton succinctly explains, The Board solicited the FR

opinions and advice. Ashton Decl. at 9. Therefore, based on the evidence pres

Board, it is evident that FRBNY maintains information that came into its possession

while it was performing functions for or on behalf of the Board. Pursuant to the Bo

regulations, these records are Board records regardless of whether such records reac

officials, or staff of the Board.



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FRBNY in order to assist the Board. Declaration of Patrick M. Parkinson (Parkin

10. He also testifies that FRBNY was able rapidly to access and provide inform

Board because of FRBNYs unique involvement in, and knowledge of, the financi

through its conduct of open market operations and intervention in foreign exchange

behalf of the Federal Reserve System. Id. In other words, the Board sought out a

relied on information gathered by FRBNY.

Moreover, FRBNY gathered information related to Lehman Brothers pursua

delegation of authority related to Large Financial Institutions (LFIs). Declaration

Davis (Davis Decl.) at 2. As Jeanmarie Davis, Senior Vice President and head

Financial Market Infrastructure Function of the Financial Institution Supervision Gr

FRBNY, explains, FRBNY examiners, utilizing the Boards supervisory authority

information from various supervised LFIs regarding their exposure to Lehman Broth

Decl. at 6 (emphasis added). Similarly, FRBNY also gathered information under

delegated authority. For example Jeff J. Stehm, Senior Associate Director in the D

Reserve Bank Operations and Payments Systems of the Board, testifies that the Bo

the Federal Reserve Bank of New York, conducts regular examinations of state m

Edge Act corporations, and other financial institutions subject to the Boards superv

authority. Declaration of Jeff J. Stehm (Stehm Decl.) at 5. Moreover, and mor

he states that the Board, in its supervisory capacity, and its delegee, the FRBNY, g



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Boards own regulations, these records are Board records regardless of whether such

reached members, officials, or staff of the Board.

Pursuant to the Boards regulations, records of FRBNY become records of th

they are created pursuant to the performance of functions for or on behalf of the Boa

the declarations presented by the Board, it is undisputed that FRBNY collected data

information, and undertook other tasks to determine the condition of AIG and Lehma

well as financial systems generally at the direction of and under the supervision of t

Therefore,because the Board did not conduct a searchreasonably calculated to unc

relevant documents[,] the Board must be compelled to conduct proper searches of B

located at FRBNY to discover records responsive to McKinleys requests, regardles

such records reached members, officials, or staff of the Board, and McKinley is enti

summary judgment regarding the inadequacy of the FDICs original search. Steinb

Dept of Justice, 23 F.3d 548, 551 (D.C. Cir. 1994), quoting Weisberg v. U.S. Dept o

F.2d 1476, 1485 (D.C. Cir. 1984).

C. Defendant Continues to Withhold Material that is Readily-Avail

Public.

Under this Circuits public-domain doctrine, records normally exempted from

under FOIA lose their protective cloak once disclosed and preserved in a permanen

record. Cottone v. Reno, 183 F.3d 550, 554 (D.C. Cir. 1999); see alsoUnited Stat

Association v. Central Intelligence Agency, 620 F. Supp. 565, 571 (D.D.C. 1985) (



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records. Cottone, 183 F.3d at 554. To satisfy its burden, the requester must poin

information in the public domain that appears to duplicate that being withheld. Id

Afshar v. Department of State, 702 F.2d 1125, 1130 (D.C. Cir. 1983)). In the insta

Board has improperly withheld at least 17 records responsive to McKinleys reques

those specific records have been disclosed and are preserved in a permanent public

Although the Board continues to withhold these records from McKinley, they are rea

athttp://fcic.law.stanford.edu/resource. As is evident from comparing the copies o

available records with copies of the records being withheld by the Boardas attach

Declaration of Michael Bekeshathe records located online appear[] to duplicate

withheld. Afshar, 702 F.2d at 1130. The Board therefore must produce the 17 r

McKinley.2

D. Defendant Continues to Improperly Withhold Records.

For an agency to prevail on a claim of exemption, it must prove that each d

falls within the class requested either has been produced, is unidentifiable, or is who

from the Acts inspection requirements. Goland v. Central Intelligence Agency, 6

1 The 17 records are attached to the Declaration of Michael Bekesha. With rethe records are found on the pages Bates stamped: BOG-FOIA-10-251-00009697BOG-FOIA-10-251-000169170; and BOG-FOIA-10-251-000262263. With rLehman Brothers, the records are found on pages Bates stamped: BOG-FOIA-10-2620; BOG-FOIA-10-267-00002829; BOG-FOIA-10-267-00003133;BOG-FOIA-10-267-00004145; BOG-FOIA-10-267-00005860; BOG-FOIA-10

http://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resource


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352 (D.C. Cir. 1978). Reliance on agency affidavits is warranted if the affidavits

documents and the justifications for nondisclosure with reasonably specific detail, d

that the information withheld logically falls within the claimed exemption, and are n

controverted by either contrary evidence in the record nor by evidence of agency ba

Sciba v. Board of Governors, 2005 U.S. Dist. LEXIS 45686, *4 (D.D.C. Nov. 5, 20

Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981)). The court may

camerainspection of the withheld documents to insure that agencies do not misuse

exemptions to conceal non-exempt information. Carter v. U.S. Dept of Commerc

388, 393 (D.C. Cir. 1987) (quoting Allen v. Central Intelligence Agency, 636 F.2d 1

(D.C. Cir. 1980)).

The Board claims a combination of FOIA Exemptions 4, 5, and 8 with respe

responsive records it continues to withhold from McKinley.

FOIA Exemption 4permits the withholding of trade secrets and commercia

information obtained from a person that is privileged or confidential. 5 U.S.C. 5

order to determine whether information was privileged or confidential, courts look t

production was compulsory or whether it was provided to the government voluntari

provision of the information was compulsory, it will not be considered confidentia

submitter can show that disclosure will (1) impair the governments ability to obtai

information in the future; or (2) cause substantial harm to the competitive position o

Case 1:10-cv-00751-ABJ Document 19 Filed 08/31/11 Page 10


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be released to the public by the person from whom it was obtained. Defenders of

F. Supp.2d at 7-8 (quoting Critical Mass Energy Project v. Nuclear Regulatory Com

871, 879 (D.C. Cir. 1992) (en banc)).

FOIA Exemption 5 allows an agency to withhold records or information tha

inter-agency or intra-agency memorandums or letters which would not be available

party other than an agency in litigation with the agency. 5 U.S.C. 552 (b)(5). C

recognized three types of Exemption 5 withholdings: the deliberative process privi

attorney-client privilege, and the attorney work product doctrine. See Coastal State

617 F.2d at 862. The Board purportedly invokes the deliberative process privilege

work product doctrine, and the attorney client privilege.

For an agency to properly withhold material under the deliberative process p

FOIA Exemption 5, material must be both pre-decisional and deliberative. Public C

OMB, 598 F.3d 865, 876 (D.C. Circuit 2009). A document also must be a direct p

deliberative process in that it makes recommendations or expresses opinions on lega

matters. Id. (internal citation omitted). And only those portions of a predecision

that reflect the give and take of the deliberative process may be withheld. Id. (quo

Reports v. Dept of Justice, 926 F.2d 1192, 1195 (D.C. Cir. 1991).

In applying the deliberative process privilege it is essential to examine the pu

privilege. The court examines whether "disclosure of materials would expose an ag



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disclosure is likely in the future to stifle honest and frank communication within the

Coastal States Gas Corp. v. Dept of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980).

agencys responsibility to show by specific and detailed proof that disclosure would

than further, the purposes of the FOIA. Mead Data Central Inc. v. U.S. Dept of t

566 F.2d 242, 258 (D.C. Cir. 1977); see also Senate of Puerto Rico v. U.S. Dept of

F.2d 574, 585 (D.C. Cir. 1987) (affirming agencys burden of proof in terms of spec

detail);Formaldehyde Inst. v. U.S. Dept of Health and Human Services, 889 F.2d 1

(D.C. Cir. 1989) (an agency must demonstrate how disclosure would work to "the de

decisionmaking process").

Moreover, the deliberative process privilege is a narrowly construed exempt

does not shield documents that simply state or explain a decision the government h

made or protect material that is purely factual, unless the material is so inextricably

with the deliberative sections of documents that its disclosure would inevitably reve

governments deliberations. In re Sealed Case, 121 F.3d 729, 737 (D.C. Cir. 1997

FOIA Exemption 8 provides that an agency may withhold information that is

or related to the examination, operating or condition reports prepared by, or on behal

use of an agency responsible for the regulation or supervision of financial institution

552(b)(8).

While McKinley challenges the Boards withholdings generally for its failur


C 1 10 00751 ABJ D t 19 Fil d 08/31/11 P 13


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i. Specific challenges to the Boards claims of FOIA exemptions wi

respect to the AIG-related records.

Bates Numbers BOG-FOIA 10-251-000071 (71) and BOG-FOIA 10-251-

(127)4 are emails that report and summarize conversations with AIG. As can b

from the records themselves, the authors are simply reporting conversations, not exp

opinions on legal or policy matters. These records do not reflect any give and take

deliberative process. The Board improperly redacted material from these documen

the deliberative process privilege.

Bates Numbers 78 and 83 are emails regarding an assessment of AIGs con

of the problems and potential solutions. As proof of its claim of the deliberative p

privilege, the Board asserts that disclosure of the material would have a chilling ef

intra-agency communications. Such a claim is far too speculative and vague to dem

the material would defeat purposes of FOIA or stifle honest and frank communicati

agency. These emails are between Chairman Bernanke of the Federal Reserve and

Chairman Kohn, which is not a subordinate-superior relationship, but one of equals.

v. Rosen, 523 F.2d 1136, 1146 (D.C. Cir. 1975) (Exemption 5 is designed to protect

advice to superiors). Asserting that members of the Board will no longer engage in

discourse if material regarding AIGs (now past) financial condition is made public

unpersuasive.

Bates Number 92-93 is an email entitled AIG solvency. The Board descr


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and does not reflect the give and take of the deliberative process. See Public Citize

876.

Bates Numbers 103 and 104 are email attachments described as an economi

AIG solvency. This material appears to be factual in nature and does not reflect the

of the deliberative process. Additionally, the Board fails to demonstrate by specifi

proof how the release of an economic analysis of a decision already made would harm

decisionmaking process. See Judicial Watch, Inc. v. U.S. Postal Service, 297 F. Su

263 (D.D.C. 2004) (material that was simply compiled and involved little or no j

all was not deliberative).

Bates Number 135, like Bates Number 127 above, is an email summarizing

conversation with AIG. The author is simply reporting a conversation, not express

opinions on legal or policy matters. Bates Number 135 does not reflect any give an

deliberative process. SeeAccess Reports, 926 F.2d at 1195.

Bates Number 135 is also not protected by the attorney client privilege. Th

client privilege only extends to communications in which an attorneys counsel is s

legal matter. See Coastal States, 617 F.2d at 862. The privilege is, however, na

construed and is limited to those situations in which its purpose will be served. Id

words, only communications that seek legal advice from a professional legal adv

capacity as such are protected. In re Lindsey, 158 F.3d 1263, 1270 (D.C. Cir. 199



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Index asserts that the withheld material is two different things. In the description

material column, it states that the withheld material was the identity of an outside an

claim(s) of exemption column, it states that the withheld material is a confidentia

source. The Vaughn descriptions are incompatible.

Bates Number 860 is an email whose subject matter is described as AIGs c

The Board claims the email concerns AIGs options. The Board provides no add

information. When creating a Vaughn index, "[a] withholding agency must describ

document or portion thereof withheld, and for each withholding it must discuss the c

of disclosing the sought-after information." King v. Dept. of Justice, 830 F.2d 210, 2

Cir. 1987). The description for Bates Number 860 is vague and insufficient.

Bates Number 848 is an email described as summarizing a discussion with

President Geithner regarding AIG. Similar to Bates Numbers 72, 127 and 447, su

conversation, like reporting a conversation, does not express any opinions on legal o

matters and does not reflect any give and take of the deliberative process. See Publi

F.3d at 876; seealsoAccess Reports, 926 F.2d at 1195. Additionally, the Boards

too vague. A conversation about AIG could be anything, and it is not deliberative si

it involves AIG in general.

Bates Numbers 854, 855, 857, and 858 are emails described as comments o

update on AIG discussion logistics, and update on logistics. From the descripti




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client privilege. Because the attorney client privilege is a narrowly construed exem

absolutely necessary for the Board to establish that the communication specifically

advice from the Board General Counsel in his capacity as a professional legal advi

Lindsey, 158 F.3d at 1270. The vague topic of logistics does not afford the Boa

necessary specificity to satisfy its burden of proof.

Bates Numbers 865, 891, 895, 940-943 and 956-959 are emails regarding an

entitled the Use of Existing Authority and the attachment itself. This material is

deliberative, nor is it protected by the attorney client privilege. Material protected

deliberative process privilege mustbe personal or subjective, not simply a straightf

explanation[] of legal authority. See Coastal States, 617 F.2d at 868. Much like

memorandum at issue in Coastal, these emails and attachments are more akin to a

opinion. Id.

Additionally, Bates Numbers 940-943 and 956-959 are not protected by the a

privilege. The attorney client privilege extends to communications in which an at

counsel is sought on a legal matter. Id. at 862. The privilege is, however, narrow

and is limited to those situations in which its purpose will be served. Id. Like the

Coastal, the material withheld here does not contain private information concerning

Id. Instead it appears to be a neutral, objective analysis of legal authority. Id.

Bates Numbers 869 and 871 are emails from the Chairman of the Board and

Case 1:10 cv 00751 ABJ Document 19 Filed 08/31/11 Page 17



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AIG and commercial paper and the memorandum itself. Like Bates Numbers 10

material appears to be more of a factual nature and does not reflect the give and take

deliberative process. See Public Citizen, 598 F.3d at 876. The Board also fails to

by specific and detailed proof how release of a memorandum regarding AIG and c

paper would harm the Boards decisionmaking process. See Judicial Watch, Inc.,

2d at 263 (material that was simply compiled and involved little or no judgment a

deliberative); see alsoMead Data, 566 F.2d at 258.

Additionally, the Board claims FOIA Exemption 4 as to Bates Numbers 893

911-912. However, the Boards Vaughn Index makes no Exemption 4 claim. Plain

whether the Board withheld information pursuant to Exemption 4 for which it has n

Bates Number 903 is an email from the Board requesting information about

Treasury. In other words, Bates Number 903 is nothing more than a communicatio

which is clearly not deliberative as it does not reflect the give and take of the deliber

See Public Citizen, 598 F.3d at 876. Additionally, Bates Number 903 suffers from

VaughnIndex descriptions. The description column asserts the document is an e

for information. Moreover, the document itself reflects this description. However

of exemption column asserts the document is a memorandum.

Bates Number 955 is an email described as an exchange about a directive to

statement on AIG. Simply engaging in an email discussion is not enough to rende

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Bates Numbers 964 and 965 are a draft AIG resolution and the correspondin

Boards reliance on the draft label is misplaced. Drafts are not presumptively p

Judicial Watch, Inc., 297 F. Supp. 2d at 261; see also Arthur Anderson & Co. v. IRS,

257 (D.C. Cir. 1982). By failing to demonstrate whether the material was ever form

informally adopted orwas used in the agencys dealings with the public, the Board

its burden. Coastal States, 617 F.2d at 866 (predecisional status can be lost if th

formally or informally adopted or is used in the agencys dealings with the public);

Wilderness Socy v. United States DOI, 344 F. Supp. 2d 1, 13 (D.D.C. 2004) ([O]n

adopts a policy, formally or informally, the contents of some documents, including

documents, would destroy any predecisional aspect of drafts.).

Bates Number 1119-20 is an email forwarding documents used the previous d

nothing deliberative about an email forwarding documents. Similarly, there is no e

give and take of the deliberative process. See Public Citizen, 598 F.3d at 876.

Bates Number 1121-1123 is an attachment entitled Proposal to Reissue Stab

Business for AIG. The Board fails to demonstrate whether the material was ever f

informally adopted orwas used in the agencys dealings with the public. See Forma

889 F.2d at 1124; see alsoCoastal States, 617 F.2d at 866. Moreover, Bates Numb

contains an Exemption 4 claim that is not accounted for in the Boards Vaughn Inde

questions whether information improperly withheld pursuant to Exemption 4 was se

g



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Like Bates Numbers 892-893, 898-899 and 911-912, this material appears to be mo

nature and does not reflect the give and take of the deliberative process. See Public

F.3d at 876. The Board also fails to demonstrate by specific and detailed proof how

memorandum regarding AIG and commercial paper would harm the Boards deci

process. See Judicial Watch, Inc., 297 F. Supp. 2d at 263 (material that was simply

and involved little or no judgment at all was not deliberative); see alsoMead Dat

258.

Bates Number 1134 is an email attachment entitled AIG Summary 16 Sept

This description is legally vague and insufficient. It is the Boards burden to desc

document or portion thereof withheld, and for each withholding it must discuss the

of disclosing the sought-after information. King, 830 F.2d at 223-24.

ii. Specific challenges to the Boards claims of FOIA exemptions wi

respect to the Lehman Brothers-related records.

Bates Number BOG-FOIA 10-267-000348 - 353 (348-353)5 is a spreadsh

counterparties exposure to Lehman brothers. The Board claims that the withheld m

exempt as commercially sensitive and supervisory information and continues to

record under FOIA Exemption 4. It further claims that the information was involun

As stated above, for an agency to satisfy its burden of withholding records under FOI

4, an agency must demonstrate that disclosure will (1) impair the government's abili

necessary information in the future; or (2) cause substantial harm to the competitive p



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points. In fact, Bates Number 105-110, the document to which the Board refers the

Plaintiff in its Vaughn Index, was a similar document and was not withheld in full.

was harmless enough in Bates Number 105-110 to produce in part. There is no dif

See Public Citizen Health Research Groupv. FDA, 704 F.2d 1280, 1291 (D.C. Cir. 1

requirement to demonstrate actual competition and the likelihood ofsubstantial com

injury.) (quoting Gulf & Western Industries v. United States, 615 F.2d 527, 530 (D.C

The Board also claims FOIA Exemption 8 for the withheld material based on

that the material contains supervisory information. The Boards Vaughn Index a

information was obtained from supervised financial entities, but its referral to Bates

105-110 calls this assertion into question. The Board partially produced Bates Num

and it begs the question why it released this material and not Bates Number 348 3

apparent from the face of Bates Number 105-110 whether the information is from su

financial entities or simply about supervised financial entities. Financial informati

by the Board for its own internal purpose is not protected by FOIA Exemption 8.

Bates Number 373 is an email discussing three options for Lehman. This

vague and insufficient to satisfy the Boards burden of proof. SeeKing v. Dept. of

F.2d at 223-24. Additionally, the Board fails to demonstrate with specificity how p

material on the three options will chill interagency communications. See Mead D

at 258 (D.C. Cir. 1977); see also Senate of Puerto Rico, 823 F.2d at 585 (affirming



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Board states that the document is labeled confidential. The Boards assertion of co

however, has no bearing in a deliberative process inquiry. The Board fails to demo

whether the material withheld is subjective and personal or more of a factual nature

Watch, Inc., 297 F. Supp. 2d at 262; see alsoPetroleum Info., 976 F.2d at 1434. It is

burden to clearly articulate the nature of the material withheld and not simply rely o

confidential labels or boilerplate language. See Judicial Watch, 297 F. Supp. 2d

(material that was simply compiled and involved little or no judgment at all wa

deliberative).

Bates Number 425-428 is a document outlining a Board/FRBNY meeting r

Lehman. The Board fails to clarify whether information discussed at the meeting w

adopted as policy. See Arthur Andersen, 679 F.2d at 258(subjecting to disclosure

"adopted formally or informally, as the agency position on an issue").

Bates Numbers 616-621 are emails regarding a draft Lehman timeline and

corresponding timeline. McKinley challenges the deliberative nature of this materi

As clearly seen on Bates Number 618, the email is factually based, not based on opi

subjective or personal. See alsoPetroleum Info., 976 F.2d at 1434;Mapother, 3 F.3

The subject matter does not reflect the give and take of the deliberative process. N

Board demonstrate by specific and detailed proof how the release of a draft Lehman

would harm the Boards decisionmaking process. See Judicial Watch, Inc, 297 F. S



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concerns Lehmans situation in markets overseas. Based on this description, it is u

whether the material withheld is of a personal and subjective nature or merely a factu

of the overseas markets. SeePetroleum Info., 976 F.2d at 1434; see also Mapother

1539-40; andJudicial Watch, Inc., 297 F. Supp. 2d at 263.

Bates Number 771-772 is an email regarding a draft memo on communicat

The email was improperly redacted. Not only does the email appear to contain factu

personal material, but the parties to the email do not share the prototypical subordin

relationship. See Coastal States, 617 F.2d at 868 (predecisional documents are mo

from a subordinate to a superior official); see also Vaughn, 523 F.2d at 1146.

Bates Number 774-783 is the attachment to Bates Number 771-772. The B

demonstrate how a memorandum outlining a plan for communications is part of the

deliberative process. Moreover, the communications plan was for relaying inform

Lehman developments. The Board has failed to satisfy its burden of proof that thi

record was used in its decisionmaking process.

Lastly, Bates Number 782 was redacted pursuant to FOIA Exemptions 4 and

neither exemption is accounted for in the Boards Vaughn Index. Rather, Bates Nu

grouped with the communications memorandum, Bates Number 774-783, and the B

only the deliberative process privilege. Bates Number 782 should be produced in i

the Board has failed to properly justify withholding the redacted material.



24/177

(predecisional status can be lost if the material is formally or informally adopted or

agencys dealings with the public).

Bates Number 792 is an email described only as regarding FRBNY options

This description is too vague to satisfy the Boards burden of proving that the withh

deliberative. SeeKing, 830 F.2d at 223-24 (agency must describe each document o

thereof withheld).

Bates Number 799 is an email regarding State Streets Lehman exposure. T

asserts it withheld commercially sensitive and supervisory information. The Boa

the information was involuntarily given. Therefore, it must demonstrate that disclo

impair the government's ability to obtain necessary information in the future; or (2)

substantial harm to the competitive position of the person from whom the informati

obtained. Nat'l Parks & Conservation Ass'n, 498 F.2d at 770. The Board fails to d

either of these two points and provides only the boilerplate allegation of competitive

Public Citizen Health Research Group, 704 F.2d at 1291 (description of potential co

harm fails to demonstrate actual competition and the likelihood of substantial comp

injury.) (quoting Gulf & Western Industries v. United States, 615 F.2d 527, 530 (D.C

Bates Number 886-887 is described as draft speaking notes for a Financial

Meeting on resolving the Lehman issue. As with many of the Vaughn Index docu

Board relies too heavily on the draft characterization. In fact, in the description



25/177

Coastal States, 617 F.2d at 866; See also Wilderness Soc'y, 344 F. Supp. 2d at 13 (

agency adopts a policy, formally or informally, the contents of some documents, in

documents, would destroy any predecisional aspect of drafts.).

Bates Number 988 is an email from the Board Chairman to Vice Chairman K

bids for Lehmans asset management division. The document itself states that B

reports that Lehman has received bids for its asset mgt division. This material is n

subjective and does not reflect the give and take of the deliberative process. SeeAc

926 F.2d at 1195.

Bates Numbers 1047 and 1048 are emails between Board members and the T

Department regarding communicating updates on Lehman and a call on Lehman

counterparties. This material is not personal or subjective and does not reflect the

of the deliberative process. SeeAccess Reports, 926 F.2d at 1195.

Bates Number 1117 is an email providing a European perspective on the Le

situation. The Boards Vaughn Index asserts that this email contains internal del

However, from the document description provided by the Board, the material appea

factual nature and does not reflect the give and take of the deliberative process.

Bates Numbers 1151-152 is an email regarding an announcement on Lehm

material is not personal or subjective and does not reflect the give and take of the de

process. SeeAccess Reports, 926 F.2d at 1195. The Board also fails to explain w



26/177

Board Chairman. The document itself shows it to be the recitation of a bankruptcy

The author is simply reporting a conversation, not expressing any opinions on legal

matters. Therefore, this does not reflect any give and take of the deliberative proce

Access Reports, 926 F.2d at 1195.

Bates Number 1164 is an email providing an update on the developments r

Lehman. This material is clearly not personal or subjective, but rather factual. A

not reflect the give and take of the deliberative process. SeeIn re Sealed Case, 121

Bates Number 1172 is an email from the Board Chairman offering to make ph

names of people to call, as well as a summary of a call to another Board member. F

content of Bates Number 1172 is not deliberative. An offer to assist with phone ca

not deliberative and an email summarizing a conversation does not reflect any give a

deliberative process. SeeAccess Reports, 926 F.2d at 1195. The author is simply

conversation, not expressing any opinions on legal or policy matters.

The Board asserts that Bates Number 1172 is also exempt as commercially

information. The Board claims the material was supplied voluntarily by foreign b

supervisory agencies and is not customarily disclosed to the public. The Boards V

contains conflicting descriptions of the material. In the description of document(s)

Board asserts that the document is an offer to assist with phone calls and a response c

names of people to call. The claim(s) of exemption column asserts that the mate



27/177

III. Conclusion.

For the foregoing reasons, the Board has failed to satisfy its burdens under F

Board failed to conduct proper searches for Board records located at FRBNY and the

conduct searches reasonably calculated to uncover all relevant documents. Moreov

continues to withhold 17 records that are readily available to the public at

http://fcic.law.stanford.edu/resource. Finally, the Board has failed to satisfy its bur

with respect to its claims of exemptions of the material it continues to withhold. Th

McKinley respectfully requests that the Boards motions for summary judgment be

Plaintiffs cross-motion for summary judgment be granted, and that the Court order

conduct searches reasonably calculated to uncover all relevant documents, to produc

withheld records that are publicly available, and produce all non-exempt, segregable



/s/ Michael BekeshaMichael Bekesha (D.C. Bar NJUDICIAL WATCH, INC.425 Third Street, S.W., Suite 8Washington, DC 20024(202) 646-5172

Attorneys for Plaintiff



28/177



VERN McKINLEY, ))

Plaintiff, ) Case No. 10:0751 (ABJ)

)

v. ))

BOARD OF GOVERNORS OF )THE FEDERAL RESERVE SYSTEM, ))

)

Defendant. )

____________________________________)

PLAINTIFFS RESPONSE TO DEFENDANTS STATEMENT OF MATERI

AND PLAINTIFFS STATEMENTOF MATERIAL FACTS NOT IN DI

Plaintiff Vern McKinley, by counsel and pursuant to LcvR 56.1, respectfully

following response to Defendants Statement of Material Facts Not in Dispute. Pla

respectfully submits his own Statement of Material Facts Not in Dispute in support

cross-motion for summary judgment:

I. McKinleys Response to the Boards Statement of Material Facts Not in

A. General Objection

As an initial matter, McKinley objects to the Board of Governors of the Fed

System (the Board)s statement for failing to comply with Local Civil Rule 7(h)(1

failure to comply with the requirement to file a proper statement of material facts in

opposing a motion for summary judgment may be fatal to the delinquent partys pos



29/177

2004); Smith Property Holdings, 4411 Connecticut L.L.C. v. U.S., 311 F. Supp. 2d

(D.D.C. 2004);Robertson v. American Airlines, 239 F. Supp.2d 5, 8-9 (D.D.C. 2002

The statement of material facts submitted by the Board contains an improper

and legal argument and does nothing to assist the court in isolating the material fac

distinguishing disputed from undisputed facts, and identifying the pertinent parts of

nor does it provide the non-movant an opportunity fairly to contest the movants ca

Robertson, 239 F. Supp. 2d at 9 (citations omitted). It appears as though the Board s

pasted entire paragraphs from its declarations into the statement rather than parsing o

material it asserts is not in dispute.

B. Particular Responses

1. Undisputed.2. McKinley disputes that the Board has satisfied its burden of demonst

conducted an adequate search for documents responsive to the AIG Request. McK

knowledge to confirm or deny the description of Project Collect. SeeJudicial Watch

and Drug Admin., 449 F.3d 141, 145 (D.C. Cir. 2006) (noting the asymmetrical dis

knowledge between a FOIA requester and an agency in FOIA cases).

3. McKinley lacks knowledge to confirm or deny what the Project Collcontains. SeeJudicial Watch, Inc. v. Food and Drug Admin., 449 F.3d 141, 145 (D

(noting the asymmetrical distribution of knowledge between a FOIA requester and



30/177

asymmetrical distribution of knowledge between a FOIA requester and an agency

cases).

5. McKinley lacks knowledge to confirm or deny whether such an evenSeeJudicial Watch, Inc. v. Food and Drug Admin., 449 F.3d 141, 145 (D.C. Cir. 200


cases).

6. McKinley disputes that the Board has responded in full to the AIG Reit has failed to conduct a proper search of the Boards records located at FRBNY to

records responsive to McKinleys requests, regardless of whether such records reach

officials, or staff of the Board. The remainder of the paragraph is undisputed.

7. Undisputed.8. Undisputed.9. Undisputed.10. McKinley disputes that the Board has satisfied its burden of demonst

conducted an adequate search for documents responsive to the Lehman Request. M

knowledge to confirm or deny the description of Project Collect. SeeJudicial Watch

and Drug Admin., 449 F.3d 141, 145 (D.C. Cir. 2006) (noting the asymmetrical dis

knowledge between a FOIA requester and an agency in FOIA cases).

11. McKinley lacks knowledge to confirm or deny whether such an even



31/177



cases).

13. McKinley disputes that the Board has responded in full to the Lehmabecause it has failed to conduct a proper search of the Boards records located at FR

discover records responsive to McKinleys requests, regardless of whether such reco

members, officials, or staff of the Board. The remainder of the paragraph is undisp

14. Undisputed.15. Undisputed.16. McKinley lacks knowledge to confirm or deny whether such an even

SeeJudicial Watch, Inc. v. Food and Drug Admin., 449 F.3d 141, 145 (D.C. Cir. 200


cases).



cases).




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cases).



cases).



cases).



cases).





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cases).



cases).



cases).



cases).



cases).




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cases).



cases).



cases).



cases).





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cases).



cases).



cases).



cases).



cases).




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cases).



cases).



cases).

II. Plaintiffs Statement of Material Facts Not in Dispute.

1. Pursuant to the Fraud Enforcement and Recovery Act (Public Law 1

Financial Crisis Inquiry Commission (FCIC) delivered its report to the President,

the American people on January 27, 2011.

2. Pursuant to statute, the operations of the FCIC concluded on Februar

3. On February 13, 2011, all information available on the FCICs webs

the Rock Center for Corporate Governance at Stanford University and the Robert Cr



37/177

5. A non-redacted version of BOG-FOIA-10-251-000169170 is publ

http://fcic.law.stanford.edu/resource .



7. A non-redacted version of BOG-FOIA-10-267-00001020 is public















http://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resource


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19. A non-redacted version of BOG-FOIA-10-267-000925 is publically


20. A non-redacted version of BOG-FOIA-10-267-001171 is publically




/s/ Michael Bekesha

Michael Bekesha (D.C. Bar N

JUDICIAL WATCH, INC.

425 Third Street, S.W., Suite 80Washington, DC 20024

(202) 646-5172

Attorneys for Plaintiff

Case 1:10-cv-00751-ABJ Document 19-1 Filed 08/31/11 Page 1
http://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resourcehttp://fcic.law.stanford.edu/resource


39/177



VERN McKINLEY, ))

Plaintiff, ) Case No. 10:0751 (ABJ)

)

v. ))

BOARD OF GOVERNORS OF )

THE FEDERAL RESERVE SYSTEM, )

))

Defendant. )

____________________________________)

[PROPOSED] ORDER

Upon consideration of Plaintiff=s Cross-Motion for Summary Judgment, any

thereto, and the entire record herein, it is hereby ORDERED that:

1. Plaintiff=s Cross-Motion for Summary Judgment is granted.

SO ORDERED.

Dated: _______________________________The Hon. Amy Berman Jackson, U.S.D



40/177



VERN McKINLEY, ))

Plaintiff, ) Case No. 10:0751 (ABJ))

v. ))

BOARD OF GOVERNORS OF )THE FEDERAL RESERVE SYSTEM, )

))

Defendant. )____________________________________)

DECLARATION OF MICHAEL BEKESHA

I, Michael Bekesha, declare as follows:

1. I am an attorney employed by Judicial Watch, Inc., counsel for the p

McKinley, in the above-captioned matter. I am over the age of eighteen and have p

knowledge of the matters set forth below.

2. Pursuant to the Fraud Enforcement and Recovery Act (Public Law 1

Financial Crisis Inquiry Commission (FCIC) delivered its report to the President,

the American people on January 27, 2011. The report covered 22 specific topics co

collapse of major financial institutions that failed or would have failed if not for exc

assistance from the government. Along with the report, it is my understanding that

Commission made available all records it reviewed and relied on while preparing th



41/177

archival FCIC website is located at http://fcic.law.stanford.edu.

4. Because the FCIC report covered the Board of Governors of the Fed

System (the Board)s authorization of the Federal Reserve Bank of New York (F

lend up to $85 billion to the American International Group (AIG) under section 1

Federal Reserve Act, I searched the database located at http://fcic.law.stanford.edu/

records found in the Index of Documents Withheld in Response to FOIA Request 2

Vern McKinley (AIG), dated June 7, 2011 (AIG Vaughn Index).

5. In searching the database located at http://fcic.law.stanford.edu/resou

three documents located in the AIG Vaughn Index.

6. Attached hereto as Exhibits 1-A, 1-B, and 1-C are the redacted versio

records produced to McKinley along with the non-redacted versions publically avai

http://fcic.law.stanford.edu/resource.

7. Attached hereto as Exhibit 1-A are the two versions of BOG-FOIA-10

97. The redacted version is a true and correct copy of what was produced to McK

Board. The non-redacted version is a true and correct copy which I downloaded fr


8. Attached hereto as Exhibit 1-B are the two versions of BOG-FOIA-10

170. The redacted version is a true and correct copy of what was produced to Mc




42/177


10. Because the FCIC report covered the Boards decision to take no actio

Lehman Brothers, I searched the database located at http://fcic.law.stanford.edu/res

records found in the Index of Documents Withheld in Response to FOIA Request 2

Vern McKinley (Lehman), dated June 1, 2011 (Lehman Vaughn Index).

11. In searching the database located at http://fcic.law.stanford.edu/resou

14 documents located in the Lehman Vaughn Index.

12. Attached hereto as Exhibits 2-A through 2-N are the redacted version

records produced to McKinley along with the non-redacted versions publically avai


13. Attached hereto as Exhibit 2-A are the two versions of BOG-FOIA-10




14. Attached hereto as Exhibit 2-B are the two versions of BOG-FOIA-10




15. Attached hereto as Exhibit 2-C are the two versions of BOG-FOIA-10



43/177




17. Attached hereto as Exhibit 2-E are the two versions of BOG-FOIA-10




18. Attached hereto as Exhibit 2-F are the two versions of BOG-FOIA-10




19. Attached hereto as Exhibit 2-G are the two versions of BOG-FOIA-10




20. Attached hereto as Exhibit 2-H are the two versions of BOG-FOIA-10






44/177

22. Attached hereto as Exhibit 2-J are the two versions of BOG-FOIA-10

The redacted version is a true and correct copy of what was produced to McKinley b

The non-redacted version is a true and correct copy which I downloaded from


23. Attached hereto as Exhibit 2-K are the two versions of BOG-FOIA-10




24. Attached hereto as Exhibit 2-L are the two versions of BOG-FOIA-10




25. Attached hereto as Exhibit 2-M are the two versions of

BOG-FOIA-10-267-000925. The redacted version is a true and correct copy of wh

produced to McKinley by the Board. The non-redacted version is a true and correct

downloaded from http://fcic.law.stanford.edu/resource.

26. Attached hereto as Exhibit 2-N are the two versions of

BOG-FOIA-10-267-001171. The redacted version is a true and correct copy of wh

produced to McKinley by the Board. The non-redacted version is a true and correct

Case 1:10-cv-00751-ABJ Document 19-2 Filed 08/31/11 Page 6 of 138


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8/4/2019 McKinley v. Board of Governors Plaintiff McKinley Cross-Motion for Summar