Ayuda, Inc. v. FTC, No. 13-1266, 2014 WL 4829574 (D.D.C. Sept. 30, 2014) (Contreras, J.)

Ayuda, Inc. v. FTC, No. 13-1266, 2014 WL 4829574 (D.D.C. Sept. 30, 2014) (Contreras, J.)

Re: Request for information from online repository containing millions of consumer complaints about alleged illegal business activity

Disposition: Granting in part and denying in part defendant's motion for summary judgment; denying plaintiff's motion for summary judgment

• Procedural Considerations, Administrative Appeals:  The court holds that "though Plaintiffs technically failed to make a proper FOIA request and exhaust administrative remedies, their error 'presents no risk of undermining the purposes and policies underlying the exhaustion requirement, namely, to prevent premature interference with agency processes, to give the parties and the courts [the] benefit of the agency's experience and expertise and to compile an adequate record for review.'"  The court finds that "[i]t is undisputed that Plaintiffs did not include the 'Company Address, Zip Code Extension' data field in the three FOIA requests at issue", but "by raising the question in the appeal along with the other requested zip code fields, Plaintiffs afforded the FTC sufficient opportunity to evaluate the 'Company Address, Zip Code Extension' field—an opportunity, in fact, it appears the FTC took given the language of the response letter."  Additionally, "the Court notes the futility and inefficiency of requiring Plaintiffs to restart the FOIA process from the beginning as to this one field."
   
• Exemption 6:  "[T]he Court is satisfied that—based on the evidence provided by the FTC, the lack of allegations of bad faith, and the lack of contradictory evidence provided by Plaintiffs—the agency has demonstrated a real, and not merely speculative, possibility of personal identifying information in the form of names, addresses, telephone numbers, and email addresses existing in the Company Information Fields."  The court first finds that defendants submitted statistical data which "revealed a very real possibility of personal identifying information appearing in the Company Information Fields."  The court then turns to the privacy interests at stake and determines "that consumers who are victims, and consequently also are whistleblowers and witnesses, face potential backlash if identified in the form of embarrassment, becoming a 'mark' for similar schemes in the future, and retribution from the alleged wrongdoer—all of which constitute unwanted privacy intrusions that extend beyond merely having a name and address published."  Additionally, "those individuals accused of wrongdoing also have a substantial privacy interest in their names and addresses not being disclosed."  "The Court also rejects Plaintiffs' argument that consumers who submit complaints through the FTC's website have a reduced expectation of privacy in general."  Regarding the public interest at stake the court finds that "[t]hough unintentionally, Plaintiffs demonstrate the potential for abusing personal identifying information."  The court finds that plaintiff's "proposed benefit . . . demonstrates the very privacy interest at stake if personal identifying information about an accused individual wrongdoer is released—namely that people will use this information to identify the individual and then make judgments and alter their behavior in regard to the accused based on unverified complaints held by a federal agency."  "This benefit, moreover, clearly is not the type recognized under FOIA Exemption 6."  Additionally, the court finds that "[p]laintiffs provide no explanation for why personal identifying information about the individuals who file complaints or who are the subjects of complaints while acting in their personal capacity is required to [monitor the FTC's actions], rather than simply relying on the non-sensitive information from the other data fields that the FTC has agreed to release."  "Having found that the Comment Fields may contain personal identifying information, the Court further concludes that this information is effectively similar to that found in the Company Information Fields such that it implicates the same substantial privacy interest because it likewise can be used to identify the victim or the accused."  "Thus, applying the same balancing of interests performed in the context of the Company Information Fields, the Court again finds that this information must be withheld under Exemption 6."

However, "[b]ecause the agency provides no evidence suggesting that disclosure of the five-digit zip code actually or potentially affects the likelihood that the complainant will be identified, the Court cannot conclude that such information implicates a substantial privacy interest."
 

• Exemption 7, Threshold:  "[T]he Court finds that a sufficient nexus exists between the Consumer Sentinel database and the FTC's law enforcement activities such that the records qualify for purposes of Exemption 7(C)."  The court relates that "the FTC explains that the database is used to assist the agency in identifying subjects for investigations, as well as for tracking the overall number of complaints and the percentage of law enforcement actions the agency takes targeting the subjects of those complaints."

• Exemption 7(C):  "[T]he Court concludes that, for similar considerations as were discussed … in the context of Exemption 6, the privacy interests at stake easily outweigh the limited public benefits of disclosure offered by Plaintiffs."  Additionally, "the Court finds that complaints received through the FTC's telephone line may contain personal identifying information about alleged individual wrongdoers to the same degree as complaints filed on the FTC's website."

• Procedural Requirements, "Reasonably Segregable" Obligations:  The court holds that "based on the FTC's 'explanation as to why such a search would be unreasonably burdensome,' . . . and absent any contrary argument on Plaintiffs' part, the Court must conclude that performing a manual review of the Consumer Sentinel database complaints for exempt personal identifying information would impose an unreasonable burden on the FTC well beyond what FOIA requires from an agency."  The court notes that "[t]he FTC estimates that completing the manual redaction process for the withheld data fields across all twenty million Consumer Sentinel database complaints would take more than 8,000 hours."  The court notes that "the FTC does not argue that it cannot search for and retrieve the Consumer Sentinel database records, that it cannot physically segregate exempt information, or that making redactions would result in records with no remaining informational value."  "Instead, the agency's argument for non-disclosure focuses only on the burden of manually identifying and redacting the exempt information across the already retrieved twenty million responsive records within the Consumer Sentinel database."  "Thus, based on the unique facts of this case, the question before the Court becomes whether the FTC can withhold the entire universe of information contained in the data fields when only a small percentage of that information is exempt but redacting the exempt information requires an unreasonably burdensome manual review."  The court finds that "[t]he facts and equities of this case . . . compel the Court to conclude that the FTC properly withheld the entire universe of information given the burden of removing the subset of exempt information."

• Exemption 3:  The court notes that "[t]he FTC invokes FOIA Exemption 3, in conjunction with Section 21(f) of the FTC Act, see 15 U.S.C. § 57b–2(f)(2)(A)(i) & (ii), to categorically withhold entire complaints provided by the Canadian Anti–Fraud Centre or furnished through the Ecommerce.gov website."  The court relates that "Section 21(f), Subsection (i) of the FTC Act provides that the agency is not required to disclose under FOIA 'any material obtained from a foreign law enforcement agency or other foreign government agency, if the foreign law enforcement agency or other foreign government agency has requested confidential treatment, or has precluded such disclosure under other use limitations, as a condition of providing the material.'"  "[G]iven the unambiguous language of the agreement, the Court finds that the Canadian Anti–Fraud Centre indeed has requested such treatment."

• Litigation Considerations, Vaughn Index/Declaration:  "[T]he Court denies Plaintiffs' hearsay objection because the declarations satisfy the requirements of FOIA and Rule 56."  The court finds that the declarants "clearly attest that the statements in the declarations are based on personal knowledge acquired through the performance of their official duties with the FTC."

• Fees and Fee Waivers, Fees:  The court holds that "[p]laintiffs . . . provide no explanation suggesting why the processing cost must directly correlate with the quantity of data fields to be produced" as plaintiffs contend, and, additionally, "provide no admissible evidence rebutting the FTC's motion for summary judgment."