Bradley Waterman v. IRS

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 12, 2022 Decided February 21, 2023

No. 21-5258

BRADLEY S. WATERMAN,

APPELLANT

v.

INTERNAL REVENUE SERVICE,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:16-cv-01823)

David C. Vladeck argued the cause and filed the briefs for

appellant.

Julie Ciamporcero Avetta, Attorney, U.S. Department of

Justice, argued the cause for appellee. With her on the brief

was Jennifer M. Rubin, Attorney.

Before: WALKER, Circuit Judge, and ROGERS and TATEL,

Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

ROGERS.

2

Opinion concurring in part and dissenting in part filed by

Circuit Judge WALKER.

ROGERS, Senior Circuit Judge: The Secretary of the

Treasury is empowered to “regulate the practice of

representatives of persons before the Department of the

Treasury.” 31 U.S.C. § 330. Pursuant to this authority, the

Office of Professional Responsibility (“OPR”) investigates

allegations of practitioner misconduct before the Internal

Revenue Service (“IRS”). 31 C.F.R. § 10.1. Bradley

Waterman sued the IRS under the Freedom of Information Act

(“FOIA”), 5 U.S.C. § 552, seeking disclosure of documents

relating to the OPR’s investigation of a misconduct report on

him. The district court ruled that the four documents were

protected from disclosure by FOIA Exemption 5’s deliberative

process privilege and granted summary judgment to the IRS.

Waterman contends that the withheld documents are

nondeliberative and therefore unprotected by Exemption 5.

For the following reasons, we affirm in part and reverse in part.

I.

“The fundamental principle animating FOIA is public

access to government documents.” Valencia-Lucena v. U.S.

Coast Guard, 180 F.3d 321, 325 (D.C. Cir. 1999). FOIA

requires federal agencies, “upon any request for records,” to

“make the records promptly available to any person.” 5 U.S.C.

§ 552(a)(3). While the Act “reflects a general philosophy of

full agency disclosure,” Pub. Citizen, Inc. v. Off. of Mgmt. &

Budget, 598 F.3d 865, 869 (D.C. Cir. 2010) (internal quotation

marks omitted), Congress also realized that “legitimate

governmental and private interests could be harmed by release

of certain types of information,” AquAlliance v. U.S. Bureau of

Reclamation, 856 F.3d 101, 102 (D.C. Cir. 2017) (quoting

Dep’t of Just. v. Julian, 486 U.S. 1, 8 (1988)). Consequently,

3

FOIA exempts nine categories of documents from “the

government’s otherwise broad duty of disclosure.” Id. at 103.

Exemption 5 shields from disclosure “inter-agency or

intra-agency memorandums or letters that would not be

available by law to a party other than an agency in litigation

with the agency.” 5 U.S.C. § 552(b)(5). The exemption

incorporates the deliberative process privilege, which protects

“documents reflecting advisory opinions, recommendations

and deliberations comprising part of a process by which

government decisions and policies are formulated.” NLRB v.

Sears, Roebuck & Co., 421 U.S. 132, 150 (1975) (internal

quotation marks omitted). To properly invoke Exemption 5, an

agency must show that withheld documents are “both

predecisional and deliberative.” U.S. Fish & Wildlife Serv. v.

Sierra Club, 141 S. Ct. 777, 788 (2021). A document is

predecisional if it was “generated before the agency’s final

decision on the matter” and deliberative if it was “prepared to

help the agency formulate its position.” Id. at 786.

The “ultimate purpose” of the deliberative process

privilege is “to prevent injury to the quality of agency

decisions.” Sears, 421 U.S. at 151. It reflects the view that if

agencies were “to operate in a fishbowl, the frank exchange of

ideas and opinions would cease and the quality of

administrative decisions would consequently suffer.” Dudman

Commc’ns Corp. v. Dep’t of the Air Force, 815 F.2d 1565,

1567 (D.C. Cir. 1987) (internal quotation marks and citation

omitted). The privilege also serves “to protect against

confusing the issues and misleading the public by

dissemination of documents suggesting reasons and rationales

for a course of action which were not in fact the ultimate

reasons for the agency’s action.” Coastal States Gas Corp. v.

Dep’t of Energy, 617 F.2d 854, 866 (D.C. Cir. 1980).

4

Waterman is a tax controversy attorney who regularly

represents clients before the IRS. In 2012, Waterman’s client

approached the Tax Exempt Bonds office of the IRS to resolve

its potential liability under Treasury regulations resulting from

the use of a tax-accounting method known as “loan swapping.”

When no settlement was reached, the office began an audit of

the bonds issued by Waterman’s client. Internal Revenue

Agent Michael Marchetti conducted the audit. Marchetti

prepared a Suspected Practitioner Misconduct Report, which

was filed with the OPR on March 17, 2014. The Report alleged

that Waterman had unreasonably delayed the prompt

disposition of the client’s case before the IRS in violation of its

rules of practice. Two memoranda — one authored by

Marchetti and the other by his supervisor, Chelsea Kelly —

were attached to the Report in support of Marchetti’s

allegations.

On September 10, 2014, Waterman was notified by the

OPR that it had received allegations that his conduct had

violated the IRS’s rules of practice and that, upon review, the

OPR had determined that the Report did not “warrant further

investigation or action.” Specifically, the letter stated that he

was suspected of violating Subpart B of § 10.23 of the

Regulations Governing Practice Before the IRS, which

prohibits practitioner conduct that “unreasonably delay[s] the

prompt disposition of any matter before the Internal Revenue

Service.” While the OPR had decided against taking further

action, the letter noted that “the conduct alleged, if true, does

constitute a technical violation of provision Circular 230 §

10.23,” and so urged Waterman to “modify [his] future conduct

accordingly.” The letter also advised him that the OPR would

retain the administrative file containing the allegations against

him for 25 years and that those allegations could be considered

as “cumulative conduct” in any future investigation.

5

Failing to obtain a copy of Marchetti’s Misconduct Report

in his correspondence with the OPR, on January 7, 2016,

Waterman filed a FOIA request with the IRS seeking access to

the Misconduct Report and “all documents prepared in

connection or otherwise relating” to it. In response, the IRS

conducted a search and located fifty-four pages of relevant

material of which it released thirty-four pages. Invoking FOIA

Exemptions 3 and 5, the IRS withheld four documents, twenty

pages in full and two pages in part. The IRS denied

Waterman’s internal appeal concerning the four withheld

documents.

After Waterman sued the IRS under FOIA to compel

disclosure of the withheld documents, Waterman v. IRS

(Waterman I), 288 F. Supp. 3d 206 (D.D.C. 2018), the IRS

located more responsive documents and released portions of

previously withheld documents. Four documents (sixteen

pages) remain in dispute. On cross-motions for summary

judgment, the IRS maintained, inter alia, that the withheld

documents were properly exempt from disclosure under FOIA

Exemption 5’s deliberative process privilege, supported by

affidavits by agency personnel and a Vaughn index, see

Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973). As relevant,

IRS attorney Elizabeth Rawlins’s declaration sets forth the

IRS’s “rationale for partial and full withholdings,” and

augments the Vaughn index’s description of the withheld

documents. The district court granted summary judgment to

the IRS, ruling that the withholdings were justified under

Exemption 5. Waterman I, 288 F. Supp. 3d at 209.

Upon Waterman’s appeal, this court remanded for the

district court to enter a finding on whether portions of the

withheld documents were “reasonably segregable.” Waterman

v. IRS, (Waterman II), 755 F. App’x 26, 27-28 (D.C. Cir. 2019).

The parties agreed on remand to in camera review of the

6

documents. After reviewing the documents in camera, the

district court again granted summary judgment for the IRS,

finding that the IRS had released all reasonably segregable

information and reaffirming that the documents had properly

been withheld under Exemption 5. Waterman v. IRS, No. 16-

1823, 2021 WL 4262722, at *3–5 (D.D.C. Sept. 20, 2021).

II.

This court’s review of the district court’s grant of summary

judgment is de novo. Reps. Comm. for Freedom of the Press v.

FBI, 3 F.4th 350, 361 (D.C. Cir. 2021). To prevail on summary

judgment, the IRS must demonstrate that it adequately

searched for records responsive to Waterman’s FOIA request

and that the withheld documents are protected by Exemption 5

because they are predecisional and deliberative. Id. at 362. It

can meet this burden “by submitting a Vaughn index, along

with affidavits from agency employees that describe the

justifications for nondisclosure with reasonably specific detail,

demonstrate that the information withheld logically falls within

the claimed exemption, and are not controverted by either

contrary evidence in the record nor by evidence of agency bad

faith.” Am. Immigr. Laws. Ass’n v. Exec. Off. Immigr. Rev.,

830 F.3d 667, 673 (D.C. Cir. 2016) (citing Vaughn, 484 F.2d

at 820) (internal quotation marks omitted).

Waterman contends that the withheld documents contain

only factual information and are therefore nondeliberative

records falling outside the scope of Exemption 5. Waterman

does not dispute that the withheld documents were

predecisional as to the OPR’s determination that disciplinary

proceedings were not warranted. Nor does he contest the

adequacy of the IRS’s search for responsive records. He also

acknowledges that the FOIA Improvement Act of 2016 does

not apply to his request, which was filed before the law took

7

effect. Pub. L. No. 114-185, 130 Stat. 538 (2016) (codified at

5 U.S.C. § 552(a)(8)(A)(i)).

“Purely factual material usually cannot be withheld under

Exemption 5 unless it reflects an exercise of discretion and

judgment calls.” Ancient Coin Collectors Guild v. U.S. Dep’t

of State, 641 F.3d 504, 513 (D.C. Cir. 2011) (internal quotation

marks omitted). The court has recognized that the fact-opinion

line “must not be applied mechanically.” Mapother v. Dep’t of

Just., 3 F.3d 1533, 1537 (D.C. Cir. 1993). Rather, the

legitimacy of withholding turns on “whether the selection or

organization of facts is part of an agency’s deliberative

process.” Ancient Coin Collectors, 641 F.3d at 513.

This court has consistently held that the deliberative

process privilege protects documents reflecting agency

officials’ selection and organization of facts to help the agency

formulate its position. In Montrose Chemical Corp. of

California v. Train, 491 F.2d 63, 65 (D.C. Cir. 1974), the court

affirmed the withholding of factual summaries of an

administrative record prepared by aides for the Administrator

of the Environmental Protection Agency to use in “his

consideration of [a] case.” In determining “what record

evidence would be important to the Administrator in making

his decision,” the court reasoned “the assistants were making

an evaluation of the relative significance of the facts recited in

the record,” which required them to “exercis[e] some kind of

judgment,” id. at 68, and, consequently, disclosure of the

summaries would expose the agency’s deliberative process, id.

at 68, 70-71. Applying Montrose’s logic, the court has

affirmed the withholding of “factual summaries . . . culled . . .

from the much larger universe of facts presented to it,” which

“reflect[ed] an exercise of judgment as to what issues are most

relevant,” Ancient Coin Collectors, 641 F.3d at 513 (internal

quotation marks omitted), an agency’s draft account of

8

historical events, Nat’l Sec. Archive v. CIA, 752 F.3d 460, 463-

64 (D.C. Cir. 2014), and factual information contained in a

legal opinion prepared by one agency for another, Elec.

Frontier Found. v. Dep’t of Just., 739 F.3d 1, 12–13 (D.C. Cir.

2014).

Conversely, agencies are obligated to disclose purely

factual records that do not reflect any judgment calls as to

which facts to include. For example, in Reporters Committee,

3 F.4th at 365–66, agency comments “on the accuracy of purely

factual statements in [a] draft report” were not deliberative

because this “fact-checking exercise . . . did not call for

judgment or the candid exchange of ideas.” Likewise, a list of

agencies that do not submit materials for clearance by the

Office of Management and Budget was presented with “no

commentary whatsoever” and was therefore not protected by

Exemption 5. Pub. Citizen, 598 F.3d at 876. Nor was a report

containing factual summaries “prepared only to inform the

Attorney General of facts which he in turn would make

available to members of Congress,” rather than to facilitate his

own decision-making. Playboy Enters. v. Dep’t of Just., 677

F.2d 931, 936 (D.C. Cir. 1982).

Here, the first group of documents withheld by the IRS

comprises the “Marchetti Memo” and the “Kelly Memo.” The

former was authored by Internal Revenue Agent Marchetti,

who audited the bonds issued by Waterman’s client, and the

latter by Kelly, Marchetti’s supervisor. Both memoranda were

attached to Marchetti’s Suspected Practitioner Misconduct

Report. While the IRS has already disclosed the Misconduct

Report and a two-page Explanation of Suspected Misconduct,

which summarizes the allegations in the Misconduct Report, it

has withheld the memoranda in full under Exemption 5.

Vaughn Index ¶¶ 15–16.

9

The IRS’s system for “regulat[ing] the practice of

representatives,” 31 U.S.C. § 330, depends on Internal

Revenue Agents, like Marchetti, to ferret out suspected

misconduct and marshal “facts and reasons” to initiate an

investigation by the OPR, 31 C.F.R. § 10.53; see id. § 10.1.

The IRS avers that the Marchetti Memo sets forth “actions and

statements” by Waterman in his “interactions with IRS

personnel over a period of several months” that Marchetti

“believed made the [OPR] referral appropriate.” Rawlins Decl.

¶¶ 17(b), 19(b). In camera review has revealed two passages,

appearing on pages 5 and 6 of the memorandum, that reflect

Marchetti’s evaluation of particular conduct he viewed as

evincing Waterman’s “intent to not cooperate with the

disposition of the matter[]” and his failure to “negotiate[] with

[the] IRS in good faith,” J.A. 120-21, which is punctuated with

references to the IRS’s internal strategy in its audit of

Waterman’s client. As to those portions, Marchetti exercised

his judgment to select and organize facts to support a

discretionary agency decision by the OPR, much like the

agency employees in Montrose and other cases in which this

court has affirmed the nondisclosure of factual material under

Exemption 5. See, e.g., Montrose, 491 F.2d at 68.; Ancient

Coin Collectors, 641 F.3d at 513-14; Mapother, 3 F.3d at

1537–38. So too here.

But the remainder of the Marchetti Memo, which is a

chronological collection of Waterman’s statements over the

course of the audit, falls outside the scope of Exemption 5. The

IRS’s affidavit provides no indication that Marchetti exercised

his judgment to “separate[e] the pertinent from the

impertinent,” Montrose, 491 F.2d at 68, nor that he omitted a

“known datum” in creating the chronology, Mapother, 3 F.3d

at 1540. Exemption 5 does not protect such a “comprehensive

collection of the essential facts.” Id. Because it is “reasonably

segregable” from Marchetti’s evaluative commentary, 5 U.S.C.

10

§ 552(b), the chronological portion of the Marchetti Memo is

subject to disclosure. See Pub. Citizen, 598 F.3d at 876; Reps.

Comm., 3 F.4th at 366; Playboy Enters., 677 F.2d at 936-37.

That is not because Marchetti’s factual summary is organized

chronologically, as our dissenting colleague assumes, Dis. Op.

6, but rather because the IRS’s submissions fail even to indicate

that any factual material pertaining to Marchetti’s interactions

with Waterman has been left out, much less identify “the chaff”

from which “the wheat” supposedly has been separated,

Montrose, 491 F.2d at 71; Ancient Coin Collectors, 641 F.3d at

513-14. “To justify summary judgment, a declaration must

provide detailed and specific information demonstrating ‘that

material withheld is logically within the domain of the

exemption claimed,’” and “conclusory,” “vague,” or

“sweeping” assertions of privilege will not do. Campbell v.

U.S. Dep’t of Just., 164 F.3d 20, 30 (D.C. Cir. 1998) (quoting

King v. U.S. Dep’t of Just., 830 F.2d 210, 217 (D.C. Cir. 1987);

Hayden v. Nat’l Sec. Agency, 608 F.2d 1381, 1387 (D.C. Cir.

1979)).

The entirety of the Kelly Memo falls outside Exemption

5’s protection. The IRS avers that the three-page memorandum

of December 23, 2013, “summariz[es] a telephone

conversation []Kelly held on that date” with Waterman and that

“the memorandum sets forth part of the factual basis” that

Kelly “believed made the referral appropriate.” Rawlins Decl.

¶¶ 17(a), 19(a). This bare assertion provides no indication that

Kelly selected particular facts from the telephone conversation

in support of the misconduct referral. If the entirety of the

telephone conversation supplied “part of the factual basis” for

the misconduct referral, then there was no occasion for Kelly

to “winnow down” factual material by “making an evaluation

of the relative significance of the facts,” Montrose, 491 F.2d at

68. Nor does recording statements made in a telephone

conversation by itself “call for judgment.” Reps. Comm., 3

11

F.4th at 366. Our dissenting colleague surmises from the fact

that Kelly “chose to include” the summary that must have

involved a decision to include particular facts from the

telephone conversation while excluding others. Dis. Op. 6-7.

The IRS’s affidavits present no basis for that inference, and in

camera review has revealed no hint of Kelly’s “evaluative

commentary,” Pub. Citizen, 598 F.3d at 876, or “editorial

judgment,” Dudman, 815 F.2d at 1568. “The judicial role” is

not to fill the logical gaps in the agency’s submissions but to

“enforce that congressionally determined balance” embodied

by FOIA’s “handful of specified exemptions.” Milner v. Dep't

of Navy, 562 U.S. 562, 571 n.5 (2011). Because the IRS has

failed to meet its burden to demonstrate that the memorandum

logically falls within the scope of Exemption 5, the Kelly

Memo must be disclosed.

The distinctions between the Kelly Memo and the

protected portion of the Marchetti Memo come into sharper

focus when considered in light of the court’s decision in

Mapother, where the question was whether Exemption 5

protected a report that informed the Attorney General’s

decision to bar the President of Austria from entering the

United States due to his participation in Nazi war crimes. 3

F.3d at 1535. In preparing the Waldheim Report, Justice

Department staff “compiled source materials . . . and composed

[a] document” detailing Waldheim’s wartime activities. Id. at

1536. The court concluded that the “great bulk” of the

Waldheim Report was protected by the deliberative process

privilege because the task required “[t]he staff . . . to cull the

relevant documents, extract pertinent facts, organize them to

suit a specific purpose, and to identify the significant issues

they encountered along the way.” Id. at 1535, 1538. By

contrast, the court concluded that Exemption 5 did not protect

a chronology that was “neither more nor less than a

comprehensive collection of the essential facts of Mr.

12

Waldheim’s military career.” Id. at 1540. Like the portions of

the Mapother Report covered by Exemption 5, the Marchetti

Memo is shielded from disclosure insofar as it reflects its

author’s selection and organization of facts to aid the OPR’s

determination of the misconduct referral. The protected

portion of the Marchetti Memo provides an evaluative

commentary on Waterman’s “statements and actions” over “a

period of several months,” while the Kelly Memo is essentially

a same-day transcript of a single telephone conversation. In

camera review has revealed “neither more nor less than a

comprehensive” recounting of the telephone conversation, that

reflects “no point of view,” id., placing the Kelly Memo

beyond the scope of the deliberative process privilege.

The second group of withheld documents comprises the

“Brown Memo” and a partially redacted printout from the

OPR’s electronic Case and Correspondence Management

System (“CCMS”). Prepared by OPR analyst Kevin Brown

and addressed to a section manager in the Legal Analysis

Branch, the Brown Memo was written for the purpose of

recording his analysis of the disciplinary referral. Rawlins

Decl. ¶¶ 17(c), 19(c). The IRS withheld the Brown Memo in

full under Exemption 5, along with a portion of a four-page

printout from CCMS that tracks the progression of the OPR’s

administrative file in the Waterman matter. Vaughn Index ¶ 5;

Rawlins Decl. ¶¶ 17(d), 20. The redacted portion displays a

notation by Brown providing “a concise summary” of the

“same information” contained in his memorandum. Rawlins

Decl. ¶¶ 17(d), 20.

Both are shielded from disclosure by the deliberative

process privilege. The IRS avers that the Brown Memo

“summarize[s] the facts alleged, identif[ies] the violations

alleged, and recommend[s] further predecisional agency

actions.” Id. ¶ 17(c). Its affidavits make sufficiently clear that

13

Brown “extract[ed] pertinent facts” surrounding the alleged

misconduct by Waterman and, in view of the relevant

disciplinary standard, “organize[d] them to suit a specific

purpose”: to make a recommendation on whether to further

investigate Waterman or institute disciplinary proceedings.

Mapother, 3 F.3d at 1538. Such an analysis involves an

“exercise of judgment as to what issues are most relevant,”

Ancient Coin Collectors, 641 F.3d at 513, bringing the Brown

Memo within the scope of Exemption 5. Because it is an

abbreviated statement of Brown’s analysis, the redacted

portion of the CCMS printout is also protected by Exemption

5. Rawlins Decl. ¶ 20.

Finally, in March 2018, the IRS issued an email “Alert”

through its newswire service that “highlight[ed]” a

modification in the method by which the OPR notifies tax

practitioners of misconduct allegations filed against them.

Waterman’s view that the Alert undermines the IRS’s reliance

on Exemption 5 is unpersuasive.

The Alert deals not with the IRS’s FOIA disclosure

obligations but with its ability to release certain third-party tax

information pursuant to I.R.C. § 6103(l)(4)(A)(ii). There is no

textual support for Waterman’s contention that the Alert

precludes the IRS from invoking Exemption 5 to withhold

factual materials related to a disciplinary investigation by the

OPR. Even when there is an ongoing disciplinary proceeding

that triggers the statutory right of access under § 6103,

“[d]iscovery shall not be authorized if . . . [t]he material sought

is privileged or otherwise protected from disclosure by law.”

31 C.F.R. § 10.71(d)(6). The revised notification procedure

“highlight[ed]” by the Alert only augments a practitioner’s

ability to obtain nonprivileged material containing third-party

return information.

14

Yet Waterman takes the view that the pro-disclosure thrust

of the Alert demonstrates that withholding the contested

documents does not serve any legitimate purpose of Exemption

5. Because the OPR would have notified him of the factual

basis of the disciplinary proceedings had it chosen to pursue his

case, Waterman maintains, the authors of the documents did

not have an expectation of privacy to begin with and

consequently the quality of future agency decision-making

would not suffer were those documents disclosed. But this

incorrectly assumes that disclosure of the particular documents

underlying the initial disciplinary referral is the only means

through which he could have been apprised of the factual basis

of the disciplinary proceedings subsequently brought against

him. Had the OPR initiated a disciplinary proceeding, it would

have been required to provide Waterman with a “description of

the facts . . . that constitute the basis for the proceeding,” 31

C.F.R. §§ 10.60(c), 10.62(a), but it could have lawfully denied

him access to documents covered by the deliberative process

privilege, 31 C.F.R. § 10.71(d)(6).

Under these circumstances, withholding the contested

documents, with the exception of the Kelly Memo and the

unprotected portion of the Marchetti Memo, is consonant with

Exemption 5’s purposes. At least some of the

recommendations in the contested documents were not adopted

in the OPR’s ultimate determination, so disclosure of the

authors’ potentially mistaken recommendations might have a

chilling effect on their willingness to make such

recommendations. See, e.g., Sears, 421 U.S. at 150-51;

Dudman, 815 F.2d at 1569. Insofar as the OPR’s ultimate

determination departs from the course of action proposed by at

least some of the contested documents or from their reasoning,

release of those predecisional documents might well mislead

the public about the OPR’s view of Waterman’s conduct. See,

e.g., Coastal States, 617 F.2d at 866.

15

Accordingly, the court affirms in part the district court’s

grant of summary judgment to the IRS and reverses in part as

to the Marchetti Memo and the Kelly Memo.

WALKER, Circuit Judge, concurring in part and dissenting in

part:

An agency’s sound decisionmaking depends on “the

candid and frank exchange of ideas.” National Security

Archive v. CIA, 752 F.3d 460, 462 (D.C. Cir. 2014). But were

agencies “to operate in a fishbowl, the frank exchange of ideas

and opinions would cease and the quality of administrative

decisions would consequently suffer.” Id. (cleaned up). That’s

why the Freedom of Information Act’s disclosure requirements

do not extend to records that are pre-decisional and

deliberative.

In this case, the district court respected FOIA’s limits and

thereby protected the executive branch’s decisionmaking

process.

I would affirm.

I

A client hired Bradley Waterman to represent it before the

Internal Revenue Service. When the sides failed to reach a

settlement regarding the client’s tax liability, the IRS initiated

an audit.

Unbeknownst to Waterman, the IRS auditors, Michael

Marchetti and Chelsea Kelly, also filed a misconduct report

against him with the IRS’s Office of Professional

Responsibility. They suspected that Waterman had

“unreasonably delay[ed]” the case. 31 C.F.R. § 10.23.

Eventually, the Office sent Waterman a letter explaining that it

was not going to bring administrative charges against him. But

the letter urged Waterman to behave better, and it warned that

his conduct had been recorded in a file for use against him if

any future allegations arise.

2

Wishing to know more, Waterman asked the IRS to

disclose internal documents about his case. When the IRS

refused to disclose everything, Waterman sued. He claimed

that the Freedom of Information Act entitled him to the

documents. 5 U.S.C. § 552.

The IRS later released more information, but it maintained

that four documents could not be fully disclosed, including one

memo by Marchetti and another by Kelly. The district court

agreed with the IRS, holding that those documents fell within

FOIA’s exemption for records covered by the deliberative

process privilege. Id. § 552(b)(5).

Today the court concludes that the IRS was entitled to

withhold two of those documents. I concur with that part of its

opinion.

But I respectfully disagree with the court’s decision

regarding the Marchetti and Kelly memos. FOIA allows the

IRS to withhold them in their entirety.

II

FOIA requires the federal government to disclose many

types of records upon request — but not records that are pre-

decisional and deliberative. It expressly shields from

disclosure “inter-agency or intra-agency memorandums or

letters that would not be available by law to a party other than

an agency in litigation with the agency.” 5 U.S.C. § 552(b)(5).

FOIA thereby incorporates the “deliberative process privilege”

that is available to the government in civil litigation. United

States Fish & Wildlife Service v. Sierra Club, Inc., 141 S. Ct.

777, 785 (2021).

3

Whether a pre-decisional record is deliberative turns on

whether it was “prepared to help the agency formulate its

position” and “reflects the give-and-take of the consultative

process.” Reporters Committee for Freedom of the Press v.

FBI, 3 F.4th 350, 362 (D.C. Cir. 2021) (cleaned up). Generally,

facts must be disclosed while opinions are protected. Id. at 365.

But this distinction between facts and opinions cannot be

applied “mechanically.” Mapother v. DOJ, 3 F.3d 1533, 1537

(D.C. Cir. 1993). That’s because, for deliberative records, “the

selection of the facts thought to be relevant clearly involves the

formulation or exercise of policy-oriented judgment.” Id. at

1539 (cleaned up).

Two key factors inform whether the government must

disclose a pre-decisional factual summary.

First, we ask what purpose the factual summary served.

This factor matters the most. A factual summary need not be

disclosed if it was “prepared to aid an administrator in

resolution of a difficult, complex question” — as in Montrose

Chemical Corp. v. Train, 491 F.2d 63, 68 (D.C. Cir. 1974). But

FOIA requires a factual summary’s disclosure if it was meant

“to investigate the facts” and to “inform” an agency’s head

about “facts which he in turn would make available to members

of Congress” — as in Playboy Enterprises, Inc. v. DOJ, 677

F.2d 931, 935-36 (D.C. Cir. 1982) (cleaned up); see also id. at

936 (distinguishing Montrose because there the “summaries

were prepared for the sole purpose of assisting the

Administrator”).

Second, we ask if the authors of the factual summary

exercised judgment when deciding which facts to include. If

yes, that cuts against disclosure. See Ancient Coin Collectors

Guild v. U.S. Department of State, 641 F.3d 504, 513 (D.C. Cir.

2011) (the protected factual summaries came from a “much

4

larger universe of facts” and reflected a judgment about the

“most relevant” facts); Russell v. Department of the Air Force,

682 F.2d 1045, 1048 (D.C. Cir. 1982) (choice of what to

include in “histories” was deliberative); Montrose, 491 F.2d at

68 (assistants exercised “their judgment as to what record

evidence would be important to the Administrator”).

For both factors, Mapother v. DOJ is instructive. 3 F.3d

1533 (D.C. Cir. 1993). At issue was a government report about

a former Austrian president. Id. at 1535. Because the former

president had been accused of war crimes, the report

recommended that he be denied entry into the United States.

Id.

This court concluded that most of the pre-decisional report

was deliberative and thus protected against

disclosure — including a significant amount of pure facts. Id.

at 1537-40. Mapother reasoned that the protected facts had

been “assembled through an exercise of judgment in extracting

pertinent material from a vast number of documents for the

benefit of an official called upon to take discretionary action.”

Id. at 1539. Thus Mapother relied on the two key factors

described above: (1) an advisory purpose, and (2) the exercise

of discretion regarding which facts to include.

At the same time, Mapother required the government to

disclose a small part of the report — a comprehensive

“chronology” of the former president’s military service. Id. at

1540. The chronology differed from the rest of the report

because it “in no way betray[ed] the occasion that gave rise to

its compilation” and “reflect[ed] no point of view.” Id. Unlike

the rest of the report, “no known datum” had “been omitted”

from it. Id. In other words, (1) it reflected no advisory purpose,

and (2) its list of facts did not depend on choices made by its

authors.

5

III

Marchetti and Kelly wrote their memos before the IRS

decided whether to charge Waterman. The memos are

deliberative because (1) their purpose was to help the IRS make

that decision and (2) the selection of facts within them reveals

how the agents exercised their judgment.

The first document is a nine-page memo written by

Marchetti detailing the factual basis for his belief that

Waterman violated IRS rules. By regulation, the IRS relies on

agents like Marchetti explaining their “facts and reasons” to

initiate misconduct investigations. 31 C.F.R. §§ 10.53(a), 10.1.

Marchetti’s memo about those “facts and reasons” formed the

core of the referral and was sent as an attachment to the Office

of Professional Responsibility. Its “sole purpose” was to

explain the basis for his referral so the Office could “make a

decision” on Waterman’s alleged misconduct. Playboy, 677

F.2d at 936 (citing Montrose, 491 F.2d at 65).

Moreover, Marchetti’s inclusion of specific actions and

statements by Waterman over the course of months reflects his

judgment as to which facts were “most relevant” to the referral.

Ancient Coin Collectors, 641 F.3d at 513. That will almost

inevitably be the case when months of frequent interactions

between investigators and an attorney are summarized in a

mere nine pages. To explain why he believed the Office should

investigate Waterman, Marchetti had to choose certain facts

over others, “separating the wheat from the chaff,” which is

“part of the deliberative process.” Montrose, 491 F.2d at 71;

see also Mapother, 3 F.3d at 1537-40. Indeed, tucked away in

6

the factual summaries are Marchetti’s opinions about

Waterman’s actions and motives. Montrose, 491 F.2d at 68.1

True, the Marchetti memo lists facts chronologically. But

that alone does not make the memo like the unprotected factual

chronology in Mapother, 3 F.3d at 1537-40. Instead, the

memo’s chronological order was essential to Marchetti’s

purpose and “point of view,” id. at 1540, regarding what “made

the referral appropriate,” JA 48. The sense of time underscored

Marchetti’s belief that for several months Waterman

“unreasonably delay[ed]” the proceedings in violation of IRS

rules. 31 C.F.R. § 10.23. So Marchetti’s selection and

organization of particular facts to support his referral decision

are “inextricably intertwined” with his opinions. Mead Data

Central, Inc. v. United States Department of the Air Force, 566

F.2d 242, 260 (D.C. Cir. 1977). As a result, disclosing the facts

would reveal the IRS’s deliberative process. Mapother, 3 F.3d

at 1537-40.

The second document, a three-page memo written by

Kelly summarizing a phone call with Waterman, is a closer

question. The “universe” of facts about the phone call is much

smaller than the months of interactions “culled” for Marchetti’s

memo. Ancient Coin Collectors, 641 F.3d at 513. Perhaps

there was little said on the call that was not summarized in the

memo.

But like Marchetti’s memo, Kelly’s memo formed part of

the basis for referring Waterman and was attached to the

misconduct report to assist the Office in its determination.

Montrose, 491 F.2d at 68. And Kelly’s decision to summarize

the phone call was itself an exercise in judgment regarding

1

Today’s court properly allows the IRS to redact those opinions from

the memo.

7

which facts she considered “pertinent” to the referral. Ancient

Coin Collectors, 641 F.3d at 513. After all, Kelly could have

entirely omitted a summary of the call from her referral. But

to persuade the Office to investigate Waterman, Kelly chose to

include it. That decision involved “an exercise of judgment in

extracting pertinent material . . . for the benefit of an official

called upon to take discretionary action.” Mapother, 3 F.3d at

1539.

To sum up, FOIA allows the IRS to withhold both memos

because (1) their purpose was to assist in a discretionary

decision (whether to further investigate Waterman) and

(2) their authors selected facts that reflected a point of view

(that Waterman should be investigated).

* * *

It’s easy to understand Waterman’s desire for the memos

he has requested. They include details of allegations against

him by employees of an agency that wields considerable power

over tax lawyers — and over the rest of us, for that matter. But

FOIA does not require disclosure of the records Waterman

wants to see. I therefore respectfully concur in part and dissent

in part.