The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
DANIEL L. JUNK, :
:
Plaintiff, : 19 Civ. 385 (DLC)
:
-v- : OPINION AND ORDER
:
BOARD OF GOVERNORS OF THE FEDERAL :
RESERVE SYSTEM, :
:
Defendant. :
:
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APPEARANCES:
For Plaintiff:
Frank J. Dito, Jr.
Law Offices of Frank J. Dito, Jr.
1610 Richmond Road
Staten Island, NY 10304
(718)701-2776
For Defendant:
Monica Pilar Folch
United States Attorney’s Office
Southern District of New York
86 Chambers Street, Third Floor
New York, NY 10007
(212)637-6559
DENISE COTE, District Judge:
On August 17, 2020, the Board of Governors of the Federal
Reserve System (“the Board”) moved for summary judgment on
plaintiff Daniel Junk’s action brought pursuant to the Freedom
of Information Act (“FOIA”). Junk has filed a cross-motion for
summary judgment. For the following reasons, the Board’s motion
is granted.
Background
The following facts are undisputed. During the 2008
financial crisis, the Board authorized the Federal Reserve Bank
of New York (“FRBNY”) to create three Maiden Lane LLCs. The
FRBNY subsequently issued loans to the Maiden Lane LLCs, which
the LLCs used to purchase assets from certain financial
institutions. The FRBNY closed out the Maiden Lane LLCs in
August 2012 and, “as part of the close-out procedures for Maiden
Lane II LLC . . . sold eight residual securities that had been
factored to zero and consequently dropped from the portfolio
holdings report.”
On April 3, 2018, Junk requested from the Board “any
records from Maiden Lane LLC and Maiden Lane II LLC and Maiden
Lane III LLC containing the Committee on Uniform Security
Identification Procedures (“CUSIP”) nine-digit, alphanumeric
CUSIP number 40431LAR9.”1 On June 6, the Board denied Junk’s
request that it conduct a search, asserting that it was the
FRBNY and not the Board that “maintains the records related to
Maiden Lane LLC, Maiden Lane II LLC, and Maiden Lane III LLC.”
1 CUSIPs are 9–character alphanumeric codes created by the U.S.
Treasury to identify most financial instruments. See United
States v. Corsey, 723 F.3d 366, 369 (2d Cir. 2013).
On June 25, Junk appealed the denial. His letter suggested
that CUSIP number 40431LAR9 belonged to one of the eight
residual securities sold as part of the close-out of Maiden Lane
II LLC. Junk’s letter states,
My request for information is for any records related to a
residual security – CUSIP number 40431LAR9. On August 22,
2012, the New York Fed sold eight residual securities that
had been factored to zero and consequently dropped from the
portfolio holdings report published by the New York Fed.
Those residual securities were not reported on as a result.
The Board responded to Junk’s appeal in a letter on January 22,
2019, stating that the Board “did not locate any information
responsive to [Junk’s] request” and that the records Junk
sought, “if any exist, would be records of the [FRBNY].”
Junk filed this FOIA action on January 14, 2019, seeking
disclosure and release of the records he sought from the Board.
An Opinion of August 29 addressed the parties’ 2019 cross
motions for summary judgment and required the Board to conduct
the requested search, finding that the records Junk sought from
the Board were the Board’s records under prong one, but not
prong two, of the federal regulations defining “agency records”.
See Junk v. Bd. of Governors of Fed. Reserve Sys., 404 F. Supp.
3d 794 (S.D.N.Y. 2019). The Court then ordered the Clerk of
Court to close the case.
Junk appealed to the Second Circuit.2 While the appeal was
pending, the Board asked the FRBNY to conduct the search Junk
had requested. The search was supervised and conducted by
Zachary Taylor, Vice President of discount window and collateral
markets at FRBNY. Taylor had assumed primary responsibility in
March 2012 for management and disposition of all remaining
Maiden Lane assets and continues to hold that responsibility
today. Taylor was personally involved in creating three
“transaction data spreadsheets” that list “every CUSIP number
that is, or ever was associated with a Maiden Lane Entity
transaction.” The FRBNY publicly maintains these spreadsheets
on a website.3
Taylor asked a staff member to search the transaction data
spreadsheets “for each Maiden Lane Entity using the keyword
‘40431LAR9,’” which uncovered no results. Taylor then conducted
his own search of the spreadsheets and similarly uncovered no
results. Taylor notes that the Maiden Lane II LLC spreadsheet
lists the eight residual securities referenced by Junk in his
June 25, 2018 letter to the Board, as well as the CUSIP numbers
2 The Board also filed an appeal, but that appeal was dismissed
when the Board failed to perfect the appeal.
3 The Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010 specifically required the Board to publish on its
website certain information about the Maiden Lane LLCs. See
Dodd-Frank Wall Street Reform and Consumer Protection Act,
Pub.L. No. 111–203, 124 Stat. 1376 § 1109(c) (2010).
associated with each of the eight securities. Those eight
residual securities “do not include CUSIP number 40431LAR9.”
On June 24, 2020, the Second Circuit remanded this action
with instructions to consider the adequacy of the search that
the Board had recently conducted, whether Junk was entitled to
disclosure of the requested documents, and whether Junk was
entitled to any other relief, including attorney’s fees. Junk
v. Bd. of Governors of Fed. Reserve Sys., No. 19-3125 (L), 2020
WL 5834852 (2d Cir. June 24, 2020).
On August 17, the Board moved for summary judgment on the
ground that it had conducted a reasonable search for the
documents requested by Junk and had uncovered no responsive
records. Junk cross-moved for summary judgment on September 17.
The motions became fully submitted on October 1.
Discussion
“In order to prevail on a motion for summary judgment in
a FOIA case, the defending agency has the burden of showing that
its search was adequate.” Carney v. U.S. Dep't of Justice, 19
F.3d 807, 812 (2d Cir. 1994). “Affidavits or declarations
supplying facts indicating that the agency has conducted a
thorough search . . . are sufficient to sustain the agency's
burden” and “are accorded a presumption of good faith.” Id.
(citation omitted). “This presumption cannot be rebutted by
purely speculative claims about the existence and
discoverability of other documents.” Grand Cent. P'ship, Inc.
v. Cuomo, 166 F.3d 473, 489 (2d Cir. 1999) (citation omitted).
“[A]n agency's search need not be perfect, but rather need only
be reasonable.” Id.
“When a plaintiff questions the adequacy of the search an
agency made in order to satisfy its FOIA request, the factual
question it raises is whether the search was reasonably
calculated to discover the requested documents, not whether it
actually uncovered every document extant.” Id. (citation
omitted). See also Whitaker v. Dep't of Commerce, 970 F.3d 200,
206 n.26 (2d Cir. 2020). “[A] search is not inadequate merely
because it does not identify all responsive records.” New York
Times Co. v. U.S. Dep't of Justice, 756 F.3d 100, 124 (2d Cir.
2014).
Further, discovery relating to the agency's search
“generally is unnecessary if the agency's submissions are
adequate on their face.” Carney, 19 F.3d at 812. In order to
justify discovery once the agency has satisfied its burden, the
plaintiff must “make a showing of bad faith on the part of the
agency sufficient to impugn the agency's affidavits or
declarations[.]” Id.
The Board moves for summary judgment on the ground that it
conducted an adequate search of all records reasonably likely to
contain responsive information under either prong of 12 C.F.R. §
261.2(i)(1) and uncovered no responsive records. The Board has
shown that, with the assistance of FRBNY, it conducted an
adequate search.
The search of the spreadsheets using the keyword 40431LAR9
was reasonably calculated to discover the documents Junk
requested to the extent they existed. As Taylor explains, the
transactional data spreadsheets contain “every CUSIP number that
is, or ever was associated with a Maiden Lane Entity
transaction.” If records of the Maiden Lane LLCs’ transactions
contained CUSIP number 40431LAR9, that number would be listed in
the spreadsheets. When a search of those spreadsheets yielded
no results, it was reasonable for the Board to conclude that the
CUSIP number 40431LAR9 was not associated with the Maiden Lane
LLCs, and, as a result, that neither the Board nor the FRBNY
possessed records from the Maiden Lane LLCs containing the CUSIP
number 40431LAR9.
Junk makes several arguments in opposition to the Board’s
motion for summary judgment and in favor of his own cross-
motion. He attacks the adequacy of the Board’s search and seeks
discovery. None of Junk’s arguments succeed in defeating the
Board’s motion for summary judgment.
Junk first asserts that a search restricted to just three
spreadsheets raises a question of fact when the Maiden Lane
entities were loaned over $70 billion. As explained in the
declarations provided by Taylor and David Caperton, a Senior
Special Counsel in the Board’s Legal Division, the FRBNY made
reasonable decisions about which record systems were likely to
contain documents responsive to Junk’s request. Junk’s request
identified the records as associated with one of the Maiden Lane
entities and included a CUSIP number. The appropriate records
custodian identified the spreadsheets as the documents which
contain all CUSIP numbers for transactions associated with the
Maiden Lane entities and personally conducted the search. The
size of the Maiden Lane loans does not render those decisions
unreasonable or indicate that the search was inadequate.
Next, Junk argues that the Board’s search was inadequate
because the Board searched for a security “owned” by one of the
Maiden Lane entities when Junk requested records of the Board
“containing” the identified CUSIP number. Junk is mistaken. As
Taylor explains, the transactional data spreadsheets list every
CUSIP number that was ever “associated with a Maiden Lane Entity
transaction.”
Relying on caselaw addressing litigation holds in civil
litigation, Junk complains that the Board has not explained the
steps it has taken to preserve its records. The Board’s burden
here is to show that its search was reasonable. As explained
above, the Board has met this burden. In any event, there is no
basis to find on this record that the Board or the FRBNY failed
at any point to preserve records that would, if they existed, be
responsive to Junk’s request. The FRBNY created and still
maintains spreadsheets listing every CUSIP number associated
with a Maiden Lane transaction.
Finally, Junk argues that he should be given an opportunity
to take discovery. He seeks discovery to determine whether he
can assert that the Board’s search has been conducted in bad
faith. Specifically, he wants discovery of FRBNY’s data systems
and to investigate how data from one information system maps
data to another.
Junk’s request for discovery is denied. To justify
discovery, Junk “must make a showing of bad faith on the part of
the agency sufficient to impugn the agency's affidavits or
declarations”. Carney, 19 F.3d at 812. This Junk has not done.
CONCLUSION
The Board’s August 17, 2020 motion for summary judgment is
granted. Junk’s September 17 cross-motion for summary judgment
is denied.
Dated: New York, New York
November 18, 2020