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

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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

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(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.