CAREER GUIDANCE FOUNDATION v. INTERNAL REVENUE SERVICE, (S.D.Cal. 2002)

JEFFREY T. MILLER, U.S. District Judge.

This action was brought by Career Guidance Foundation ("plaintiff") pursuant to the Freedom of Information Act ("FOIA"). After obtaining the information it sought from the IRS, plaintiff dismissed this action. Plaintiff now seeks an award of attorney's fees. The court finds this mailer suitable for submission without oral argument pursuant to Local Rule 7.1 (d.1). For the reasons set forth below, the motion for attorney's fees is denied.

BACKGROUND

Prior to December 1998, plaintiff was involved in an ongoing audit with defendant Internal Revenue Service ("IRS"). On December 10, 1998, plaintiff filed a FOIA request for certain records relating to plaintiff with respect to plaintiff's 1996 tax year. In response, the IRS produced over 1500 pages of material responsive to plaintiff's request. Although the cover letter accompanying the material stated that 1595 pages were being produced, apparently only 1545 pages were sent to plaintiff. The IRS refused to produce 2 pages of documents pursuant to exemption 5 of the FOIA and withheld a Discriminant Function score from one page pursuant to FOIA exemption (b)(3) in conjunction with 26 U.S.C. § 6103 (b)(2) and (b)(7)(E). The IRS also redacted certain information from some of the pages provided because the information was outside the purview of plaintiff's FOIA request.

Plaintiff filed an administrative appeal with the IRS on May 18, 1999, appealing the denial of the two pages and noting that not all of the 1595 pages had been provided. The IRS did not respond to that appeal. Plaintiff filed this action on January 19, 2001.

After this action was filed, the IRS produced the two pages that were originally withheld. The IRS also produced all of the 1595 pages originally purportedly produced as well as some additional pages, which brought the total to 1621 pages plus the two pages originally withheld. Plaintiff then requested dismissal of this action.

ANALYSIS

A district court has discretion to award attorney's fees to a litigant who substantially prevails in a suit brought pursuant to the FOR. See 5 U.S.C. § 552 (a)(4)(E). To be eligible for such an award the plaintiff must demonstrate that "(1) the filing of the action could reasonably have been regarded as necessary to obtain the information; and (2) the filing of the action had a substantial causative effect on the delivery of the information." Church of Scientology of California v. United States Postal Service, 700 F.2d 486, 489 (9th Cir. 1983) (emphasis in original). If the district court determines the plaintiff is eligible for an award of fees, it must consider four factors in determining whether an award is appropriate: "(1) the benefit to the public, if any, deriving from the case; (2) the commercial benefit to the complainant; (3) the nature of the complainant's interest in the records sought; and (4) whether the government's withholding of the records sought had a reasonable basis in law." Id. at 492.

In Church of Scientology, the Ninth Circuit remanded the action to the district court to make factual determinations regarding the above factors. Although it did not apply these factors itself, it gave the district court guidance as to how the factors should be applied by analyzing cases from other courts applying these factors. In particular, it cited with approval the Eighth Circuit case of Ginter v. IRS, 648 F.2d 469 (8th Cir. 1981), which the court finds highly instructive here on the issue of whether plaintiff is eligible for an award of attorney's fees.

In Ginter, the court concluded that plaintiffs suit was not reasonably necessary because at the time the plaintiff filed the action, the IRS had been unable to locate the requested information and was in the process of conducting a special search for the information. The IRS never informed the plaintiff that it would not produce the requested material. The court in Ginter also concluded that the lawsuit did not have a substantial causative effect on the production of the requested materials as only part of the requested information was received after the filing of the lawsuit and the delay in production was due in part to the plaintiff's vaguely drawn request and the government's inability to locate the materials.

Here, as in Ginter, with the exception of two pages the IRS never informed plaintiff that it would not produce the requested material. In fact, prior to the filing of this action, the IRS produced over 1500 pages of material responsive to plaintiff's request. Although 50 pages purportedly provided to plaintiff were not actually provided, it appears on this record that the IRS's failure to provide all 1595 pages originally represented to be responsive to the request was the result of oversight and nothing else. Thus, unlike in a case where the government has refused to provide information sought by the plaintiff, there is no basis here for finding that the filing of this lawsuit was necessary m order for plaintiff to obtain the information it sought. Although plaintiff contends that this lawsuit was necessary because the IRS simply ignored its administrative appeal, plaintiff has failed to present any evidence that it contacted the IRS after the filing of the appeal to determine whether the appeal had been received and the status of the appeal. A simple phone call, rater than the filing of this lawsuit, might have been all that was needed to resolve this matter, particularly given that the IRS voluntarily, albeit belatedly, turned over the documents that were the subject of the appeal.

As noted above, the IRS initially refused to produce two pages and withheld a Discriminant Function score from one page pursuant to enumerated exceptions.

Moreover, the only evidence in the record supports a finding that the filing of this action was not the impetus for the IRS producing the additional pages. Specifically, the IRS has presented the declaration of Deborah Lambert-Dean, an attorney with the IRS, who states that the IRS was "preparing to release additional material when the instant litigation was received" in the IRS's Los Angeles Disclosure Office. Furthermore, although more than 1595 pages were produced to plaintiff after the filing of this lawsuit, there is no basis for finding that the additional pages were provided as a result of this lawsuit given that these additional pages were not requested in the context of this lawsuit.

In sum, plaintiff has failed to present any evidence that it was necessary for plaintiff to file this action and that the filing of this action had a substantial causative effect on the delivery of the information subsequently provided. Thus, the court concludes that plaintiff is ineligible for an award of fees.

Even assuming that plaintiff is eligible for attorney's fees, the court concludes that plaintiff is not entitled to such fees. Again, factors to consider in determining whether a party is eligible for fees is: "(1) the benefit to the public, if any, deriving from the case; (2) the commercial benefit to the complainant; (3) the nature of the complainant's interest in the records sought; and (4) whether the government's withholding of the records sought had a reasonable basis in law." Church of Scientology, 700 F.2d. at 492.

The court concludes that the public benefit factor does not weigh in favor of an award of fees. Here, the information sought by plaintiff is only relevant to plaintiff. Moreover, plaintiff failed to obtain a ruling in this case that could benefit the public. Cf. Church of Scientology, 700 F.2d at 493 (first factor weighed in favor of award of fees because plaintiff obtained a Ninth Circuit ruling that the government may not withhold certain information pursuant to a particular FOR exception, which holding benefitted the public). Although plaintiff contends that "[r]equiring the IRS to comply with the disclosure laws provides an obvious benefit to the public," Motion 6:17-18, as noted above, this action was resolved by the parties without any court intervention. The court did not enter any orders requiring that the IRS provide the requested information and almost all of the information initially requested by plaintiff was voluntarily provided by the IRS prior to the filing of this suit. The court cannot conclude that this action served to check the actions of the IRS such that the public will receive any type of benefit from this lawsuit.

The second and third factors "have been construed together" but have also been construed separately. See Church of Scientology, 700 F.2d at 494. In sum, courts have concluded that a party is less entitled to attorney's fees where there is sufficient private commercial incentive for the bringing of the action. Plaintiff admits that at the time it requested the information at issue, it was involved in an ongoing audit with the IRS and had a personal need for the information. Given that plaintiff was seeking this information solely for its own benefit and had a financial incentive for seeking such information, the second and third factors weigh in favor of the denial of attorney's fees.

As for the last factor, with the exception of the two pages specifically withheld by the IRS pursuant to two enumerated exceptions, it does not appear that the missing 50 pages were consciously withheld by the IRS. Moreover, although pages in addition to the 50 missing pages were later discovered to be responsive to plaintiffs request, these pages were voluntarily produced, and there is no basis in the record for finding that they were consciously withheld at the time of the original production of documents. The parties have failed to address the issue of whether the IRS had a reasonable basis in law for withholding the two pages that were originally withheld. However, even if it did not, in light of the many pages that were originally produced and in light of the fact that it appears that non-production of the remaining documents was the result of an oversight, the court cannot say that overall the IRS' withholding of the records sought by this appeal did not have a reasonable basis in law. Thus, this factor does not weigh in favor of an award of attorney's fees.

CONCLUSION

For the reasons set forth above, the court concludes that plaintiff is not eligible for an award of attorney's fees and, even if plaintiff was eligible, it would not be entitled to such fees. Thus, plaintiffs motion for attorney's fees and costs is denied.

IT IS SO ORDERED.