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11/26/2018

FTC v. Vylah Tec: Magistrate Orders FL AG to Produce 30(b)(6) Witness for Second Time

Court cites improper behavior and objections in first depositions, allows for new deposition in ongoing “Cupo Case”

A Federal District Court ruled partially in favor of Cause of Action Institute’s motion for sanctions against the state of Florida, instructing a Florida assistant attorney general to re-appear for the second time at a new deposition due to the improper and invalid objections made during the first deposition.

“Nobody is above the law. Even lawyers working at the Florida Attorney General’s Office who appear as witnesses in depositions must follow the same rules as any other witness,” said Cynthia Crawford, senior counsel at Cause of Action Institute. “This case boils down to government officials who aggressively used their powers to unfairly crackdown on a family business by using questionable techniques and procedures and then tried to stonewall questions about the case they have brought. We hope the government will be more forthcoming and cooperative in the second deposition as we seek to defend our client and resolve this dispute.”

In August 2018, a Federal Court denied Florida’s motion for a protective order in which it tried to prevent Cause of Action from examining Florida’s role in the raid and prosecution of Vylah Tec LLC. In September, a senior assistant attorney general was selected to sit as the “30(b)(6)” witness for the state of Florida.

The Court ruled that the Florida Office of Attorney General “improperly instructed [the witness] not to answer numerous other questions posed by defense counsel.” In some instances, the Florida Office of Attorney General refused to cite a reason for their objection, as required. The Court also noted that instructions to the witness not to answer on the basis that “the document speaks for itself,” were improper.

As a result, the Court granted the defense a new deposition on limited topics, instructing the State to re-appear.

Parties have until Friday, Dec. 14, 2018, to hold a new deposition.

 

The Vylah Tec case demonstrates the vast power of the federal government and the ability of the Federal Trade Commission (FTC) to use a court order obtained in secret to deny a family-run company due process by swooping in and seizing assets—including the money they need to hire a lawyer and mount a defense. Cause of Action Institute firmly believes a prosperous society allows all individuals, entrepreneurs, and companies an opportunity to succeed, but far too often when facing the FTC, companies or individuals have their livelihoods threatened and must defend themselves against a regulatory authority with near endless resources and no motive to render justice.

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11/14/2018

CoA Institute opens government-wide investigation into agency implementation of the FOIA’s “foreseeable harm” standard

Cause of Action Institute (CoA Institute) launched an investigation last week into the Administration’s implementation of the Freedom of Information Act’s (FOIA) “foreseeable harm” standard.  That provision, which was added to the statute with passage of the FOIA Improvement Act of 2016, is designed to ensure that federal agencies only withhold requested records when they “reasonably foresee” that disclosure would harm an interest protected by a statutory exemption.  This “foreseeable harm” standard builds upon the so-called “presumption of openness,” which was introduced on a discretionary basis by the Obama White House.

Among other things, the FOIA Improvement Act of 2016 amended the FOIA to codify the “foreseeable harm” standard and require agencies to go beyond mere formulaic justifications for redacting records. Congress thus raised the standard by which an agency must evaluate its withholdings.  It is no longer enough that an agency make a case for the technical application of an exemption; it must instead articulate precise reasons why specific records, or portions of records, could be reasonably foreseen to harm a cognizable interest.  The unambiguous language of the “foreseeable harm” standard manifests Congress’s intent to require something more of an agency when it defends its withholding.

CoA Institute’s latest investigative efforts are particularly necessary given the complete failure of the Department of Justice Office of Information Policy (OIP)—which is tasked with providing guidance to the rest of the Executive Branch on proper administration of the FOIA—to publish any government-wide directives on the proper interpretation and implementation of the “foreseeable harm” standard.  Moreover, individual agencies have failed to proactively disclose any policies they may have developed, and federal courts have been slow to grapple substantively with the import of the new standard.

Based on records obtained from prior FOIA productions or publicly available sources, CoA Institute has identified passing references to agency-specific guidance on the “foreseeable harm” standard at three agencies, including the (1) Environmental Protection Agency, (2) U.S. Fish and Wildlife Service, and the (3) National Oceanic and Atmospheric Administration.  The actual substance of such guidance remains undisclosed.  But the records requested by CoA Institute in a recent batch of twenty-five FOIA requests should provide helpful insight into the administration of the FOIA and the “foreseeable harm” standard at these three agencies and many others.

Government accountably is a core pillar of our constitutional democracy.  And because the FOIA process is an integral vehicle for maintaining transparency, it is essential that we understand how agencies are upholding their statutory obligations, or whether they are politicizing the FOIA process by keeping information secret and out of public hands. CoA Institute will continue to track and publicize the responses to its requests as they are received.

The following agencies are part of CoA Institute’s “foreseeable harm” standard investigation:

  1. Department of State
  2. Department of the Treasury
  3. Internal Revenue Service
  4. Department of Defense
  5. Department of Justice
  6. Department of the Interior
  7. Department of Agriculture
  8. Department of Commerce
  9. Department of Labor
  10. Department of Health & Human Services
  11. Department of Transportation
  12. Department of Energy
  13. Department of Education
  14. Department of Veterans Affairs
  15. Department of Homeland Security
  16. White House Office of Management and Budget
  17. General Services Administration
  18. Small Business Administration
  19. Office of Personnel Management
  20. Council of Inspectors General on Integrity & Efficiency
  21. Federal Trade Commission
  22. Amtrak
  23. Administrative Conference of the United States
  24. Environmental Protection Agency
  25. Presidio Trust

A copy of the FOIA request directed to the Department of Defense, which is substantially similar to all the other requests, can be seen below:

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Ryan P. Mulvey is Counsel at Cause of Action Institute.

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11/13/2018

HUD Emails Reveal Significant Agency Confusion Regarding 2013/2014 Multi-Billion Dollar Mortgage Settlements

More than three years ago, Cause of Action Institute (CoA Institute) filed a Freedom of Information Act (FOIA) request for information related to the U.S. Department of Housing and Urban Development’s (HUD) involvement in the 2013/2014 multibillion-dollar mortgage settlements between the U.S. Department of Justice (DOJ) and Bank of America, J.P. Morgan Chase, and Citigroup. The settlements, drafted by a number of government agencies including HUD, were intended to make the banks pay compensation for their alleged involvement in faulty residential mortgage securities practices that contributed to the 2008 financial crisis.

The agreements included “consumer-relief provisions” that required or permitted banks to provide billions of dollars in “donations” to government-approved third parties in lieu of paying funds to the U.S. Treasury. CoA Institute was suspicious of how this money would be given out, and we suspected favored special interest groups from the Obama-era were lobbying high-level HUD officials and seeking hand-outs. In 2016, CoA Institute filed a complaint after HUD failed to produce records responsive to our 2015 FOIA request, and in late 2016, the agency began producing responsive documents. As CoA Institute explained in a 2017 blog post, many of the early communications produced show evidence of the behavior we’re most concerned with. However, the most recent productions reveal an additional troublesome fact – there was a significant amount of uncertainty among influential HUD officials regarding the details of the agreements that led to HUD employees scrambling to answer settlement-related questions posed by popular media outlets.

The following screenshots are excerpts of internal HUD email communications regarding an inquiry from Fox News in 2015, about a year after the settlements were finalized. A Fox News reporter questioned whether La Raza and NeighborWorks America, both intermediaries[1], were “HUD-approved” and eligible to receive funding under the terms set forth in the settlements. Despite being responsible for providing the list of eligible beneficiaries for consumer-relief donations, HUD officials reveal in these communications a significant amount of uncertainty, confusion, and disagreement regarding what organizations are eligible to receive such donations. Specifically, they struggled to determine whether intermediaries and housing counseling agencies or solely housing counseling agencies were entitled to receive the funding. The screenshots included below are only pieces of the full email thread that continued for many pages as HUD personnel went back and forth with each other in an attempt to find answers.

Most of the individuals included in these emails were not only senior HUD officials at the time of the correspondence, but they were also in similar, if not the same, positions at the time the settlements were drafted. Those individuals included: Michelle Aronowitz was the Deputy General Counsel for Enforcement and Fair Housing from October 2009 until January 2017; from about 2009 until 2017, Jacob Press was a legal counsel and worked in HUD’s congressional relations office; Edward Golding was a senior advisor until April 2015 when he became the Principal Deputy Assistant Secretary for Housing; Sarah Gerecke remains the Deputy Assistant Secretary at the Office of Housing Counseling, the same role she had when the settlements were drafted.

The confusion illustrated in these communications raises a number of questions, including why didn’t these prominent HUD officials know which types of organizations (e.g., intermediaries, housing counseling agencies, etc.) were eligible to receive funding? And, why did it take so long to determine which organizations were considered “HUD-approved housing counseling agencies”? These are questions that should have been resolved in 2013 when the settlements were being drafted rather than a year after they were finalized. This confusion further illustrates the disturbing nature of these agreements, which benefited a substantial number of third-party organizations at the expense of those harmed.

A complete copy of the most recent HUD production that contained these emails can be viewed here and here.

[1] HUD-Approved Intermediaries provide supportive housing counseling services through a network of affiliates or branches. Services include training, pass-through funding, technical assistance, and overseeing their networks to ensure services are satisfactory. In contrast, HUD-Approved Housing Counseling Agencies directly provide advice on buying a home, renting, defaults, foreclosures, and credit issues.

Libby Rudolf is a litigation support analyst at Cause of Action Institute.

 

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11/9/2018

FBI Records Show Former FBI Director James Comey’s Use of Personal Email

Cause of Action Institute has acquired former FBI Director James Comey’s work-related emails from his personal Gmail account. Garnered from the FBI through the first of rolling document productions in an ongoing Freedom of Information Act (FOIA) lawsuit, the email records start to shed light on the extent of Comey’s use of private email to conduct agency business.

The problems associated with using personal email for government work are obvious but those caught in the act often try to act like they had no idea they were doing anything wrong or justify their behavior as merely incidental. Cause of Action Institute (CoA Institute) has been at the forefront of shining a light on this behavior,  and first explored the issues raised by government employees using private email for official business in a 2012 journal article: “Gmail.gov: When Politics Gets Personal, Does the Public Have a Right to Know?”  In the six years since that article was published, CoA Institute’s investigations have demonstrated how the use of personal email or messaging apps for government business hinders transparency and accountability.

The ability to shroud government action in secrecy can also harm the economic rights of ordinary Americans. For example, small-scale family fishermen were harmed when the National Oceanic and Atmospheric Administration failed to search private accounts for email records related to onerous regulations that would devastate their business. Government overreach cannot be fought effectively if the process and enforcement are kept in the dark. That’s why CoA Institute is committed to holding the government accountable to transparency laws and has brought cases to uncover the private email use of officials such as former Secretary of State Colin Powell, former Secretary of State Hillary Clinton, and now, former FBI Director James Comey.

On June 14, 2018, after the Department of Justice (DOJ) Inspector General (IG) revealed “numerous instances in which Comey used a personal email account (a Gmail account) to conduct FBI business.” CoA Institute submitted FOIA requests to the Federal Bureau of Investigation (FBI) and the IG to obtain copies of that email correspondence.  After the agencies failed to respond to the requests in a timely fashion, CoA Institute filed a lawsuit on August 1, 2018 to bring transparency to Comey’s use of Gmail, which the IG had concluded was “inconsistent with the DOJ Policy Statement.”

The FBI provided its first rolling production late last week. You can read and download the documents here.

The FBI reviewed 526 pages, released only 156 pages, and withheld 370 pages in full. Notably, the FBI withheld seven emails under the FOIA’s law enforcement exemption, which applies only where the government can show that (1) a law enforcement proceeding is pending or prospective, and (2) release of information about that proceeding could reasonably be expected to cause some articulable harm. These withholdings are particularly troubling given that Director Comey told the IG he only used personal email “to word process an unclassified [document] that was going to be disseminated broadly, [such as a] public speech or public email to the whole organization.” And according to news reports, Comey “stressed that his personal email was never used for classified or sensitive work.”

The e-mails records released to CoA Institute show that Director Comey was aware that his use of personal email for government business would be seen as “embarrassing” to anyone who wasn’t aware of it previously.

The records also show that Director Comey used his Gmail to discuss the FBI’s investigation of Hillary Clinton’s email server. In other words, Comey was using a non-governmental email account while he was investigating Secretary Clinton for the same unlawful behavior.
In this case, as with nearly every instance, when public officials conduct business through unofficial channels, they are denying the public’s right to hold officials accountable through the most fundamentally sound principle of a healthy democracy: Transparency. Cause of Action Institute remains committed to holding government officials at all levels accountable and will continue to report on this case as the DOJ releases the more than 700 pages of Comey related emails that remain outstanding.

The full production can be found here.



FBI Production re Comey Gmails 10.31.18 (Text)

Other CoA Institute investigations of the use of personal email or messaging accounts for government business:

Documents Obtained by Cause of Action Show that Officials Worried About Hillary’s Emails But Took No Action (June 4, 2015)

Off-Grid Government: This Administration’s Pattern of Using Personal Email Accounts (December 22, 2015)

NOAA FOIA Response Suggests Refusal to Search Council Member Email Accounts for Records on At-Sea Monitoring Amendment (February 28, 2018)

CoA Institute Files Reply in Support of Motion to Order Enforcement Action in Colin Powell Email Case (May 4, 2018)

 

Kevin Schmidt is Director of Investigations for Cause of Action Institute. You can follow him on Twitter @KevinSchmidt8

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Media Contact: Matt Frendewey, matt.frendewey@causeofaction.org | 202-699-2018

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10/23/2018

CoA Institute Files Brief in Support of Effort to Make Georgia Legislature Comply with Open Records Act

Files 50-state survey with Georgia Appeals Court

Cause of Action Institute (CoA Institute) filed an amicus brief today in support of a lawsuit requiring Georgia’s legislature to comply with the state’s open records act. The brief includes a 50-state survey on whether other state legislatures are subject to open records laws. The results of the survey show that 38 states provide the public with access to legislative records, while only a small minority, 11 states, exclude their legislatures from public-disclosure laws. Of those that exclude their legislature, eight states do so in express statutory terms.

The brief is in support of a lawsuit brought by the Institute for Justice (IJ) after they sent a series of public records requests to offices of the Georgia legislature seeking access to information about the state’s licensure requirement for music therapists. Yes, you read that correctly, licensure requirements for music therapists. The legislature claimed it was categorically exempt from Georgia’s open records law, and the superior court agreed. The case is now before the Georgia Court of Appeals.

CoA Institute’s survey reveals three important trends that should inform the Court’s decision:

  • When a state’s open records law does not cover the legislature, it’s usually explicitly statutorily exempt. Georgia law does not explicitly exempt the legislature;
  • In the absence of an express exclusion, broad terms are commonly interpreted to include the legislature, either in whole or in part; and
  • When there is any remaining ambiguity, the presence of statutory exemptions concerning specific legislative offices or records implies that the legislature must be covered; Georgia has these exemptions.

When IJ filed its requests, and the court below issued its order, the Georgia Open Records Act included two exemptions for legislative records. The first of these provisions exempted records from a series of legislative offices: the Legislative and Congressional Reapportionment Office, the Senate Research Office, and the House Budget and Research Office. The second provision, which is still in force, exempts certain records from the Office of Legislative Counsel. These offices are all contained within the legislative branch. Neither exemption would make any sense if the General Assembly were not, by default, covered by the Open Records Act.

To accept Georgia’s position, as adopted by the court, would render the Act’s explicit, narrow exemptions mere surplusage, violating a core canon of statutory construction. Therefore, the Court of Appeals should recognize that the presence of the exemptions for certain legislative offices as means that the broader legislature must be covered. This interpretation would conform Georgia’s approach to the broad trends that Cause of Action Institute identified in the 50-state survey.

The full amicus brief is available here.

James Valvo is Counsel & Senior Policy Advisor at Cause of Action Institute. You can follow him on Twitter @JamesValvo.

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10/18/2018

Cause of Action Institute Files Lawsuit Against Commerce Department for Failing to Release Tariff Exemption Material & Information

Washington, D.C. (Oct. 18, 2018) – Cause of Action Institute (CoA Institute), a government watchdog organization, today filed a lawsuit against the U.S. Department of Commerce for failing to turn over public documents related to trade tariffs and tariff exemptions. CoA Institute first launched the investigation into the tariff exemption process after it was reported that some of the largest steel and aluminum manufacturers in the country had successfully blocked every tariff exemption filed by smaller U.S manufacturing companies.

John Vecchione, president and CEO of CoA Institute, issued the following statement:

“Tariffs manipulate the free market by creating government-controlled barriers that harm hardworking Americans and putting the economic health of our country at risk. We now have a system where the Executive Branch has the power to pick winners and losers. Our investigation seeks to uncover the process by which tariff exemptions are approved and denied, ensure the tariff-exemption exclusion process is free of political and corporate influence, and seek to uncover any communication between government officials and the companies successfully blocking tariff exemptions.”

Background and timeline:

Attachments:

  • Complaint – Cause of Action Institute v. U.S. Department of Commerce, No. 18-2397. Tariff Exemptions
  • FOIA #1 – Request for work calendars of staff and leadership at the U.S. Department of Commerce that may create or influence tariff and tariff exemption policy
  • FOIA #2 – Employee records relating to tariff exemption process, guidance and employees involved in the decision-making process
  • FOIA #3 – Any and all communication between staff and leadership at the U.S. Department of Commerce and companies benefiting from tariffs and those filing tariff exemptions

See also:

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) non-profit working to enhance individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity by advocating for a transparent and accountable government.

Media Contact:
Matt Frendewey
matt.frendewey@causeofaction.org
202-699-2018

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10/15/2018

CoA Institute Calls on Inspectors General Council to Revise Proposed FOIA Regulations

Cause of Action Institute (CoA Institute) submitted a comment last week to the Council of Inspectors General on Integrity and Efficiency (CIGIE) concerning the agency’s interim final rule implementing revised Freedom of Information Act (FOIA) regulations. CoA Institute explained that the agency’s new rule could cause confusion by directing staff to interpret the FOIA statute and CIGIE’s implementing regulations in light of outdated fee guidelines published by the White House Office of Management and Budget (OMB).

OMB published its Uniform Freedom of Information Fee Schedule and Guidelines in 1987. Although FOIA requires an agency to promulgate its fee schedule in conformity with the OMB Guidelines, they are no longer authoritative because they conflict with the statutory text, as amended by Congress, and judicial authorities.  Indeed, over the past thirty years, OMB has made no effort to revise its fee guidelines.  The OMB Guidelines therefore should not be used as a reference point for proper administration of the FOIA.

One problematic aspect of the OMB Guidelines is the definition of a “representative of the news media.”  The current statutory definition of this fee category, which was introduced by the OPEN Government Act of 2007, differs significantly from the definition provided by OMB in 1987.  OMB’s definition, which incorporates an “organized and operated” standard, has long been one of the more contentious aspects of the OMB Guidelines.  In 2015, however, the D.C. Circuit issued a landmark decision in Cause of Action v. Federal Trade Commission clarifying that OMB’s definition had been superseded by Congress.

The OMB Guidelines also have been rendered obsolete by other jurisprudential developments.  For this reason, in 2016, the FOIA Advisory Committee and Archivist of the United States called on OMB to update its fee guidance.  CoA Institute filed a petition for rulemaking on the issue, too.  Last November, we filed a lawsuit to compel the agency to provide a response to that petition.  The lawsuit is still pending with respect to the fee guidelines, although the agency has agreed to update its own implementing regulations (and to abandon the “organized and operated” standard).  Until the OMB Guidelines have been revised to reflect modern circumstances and the actual text of the FOIA, however, no agency should direct its staff to consult them in any way as an authoritative guide to interpreting the law.

Ryan P. Mulvey is Counsel at Cause of Action Institute

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