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Catherine Cotton v. I. Michael Heyman, Secretary, the Smithsonian Institution
Citations: 63 F.3d 1115; 314 U.S. App. D.C. 161; 1995 U.S. App. LEXIS 16772; 1995 WL 405265Docket: 94-5014
Court: Court of Appeals for the D.C. Circuit; July 11, 1995; Federal Appellate Court
The case involves Catherine Cotton (appellee) against I. Michael Heyman, Secretary of The Smithsonian Institution (appellant), regarding an award of attorneys' fees under the Freedom of Information Act (FOIA). The Smithsonian appeals the district court’s ruling that it is an agency under FOIA and argues that the court incorrectly applied the public-benefit component of the four-part test for awarding attorneys' fees. Although the appellate court accepts the lower court's classification of the Smithsonian as an agency for the sake of this appeal, it concurs with the Smithsonian that the public-benefit prong was misapplied. Consequently, the appellate court reverses the fee award. The background reveals that Cotton filed a FOIA request on October 18, 1991, seeking documents related to her past employment with the Smithsonian’s museum shops to support her employment discrimination lawsuit. The Smithsonian denied her request, claiming it was not an agency under FOIA. Following a ruling from the district court on March 18, 1992, that the Smithsonian was indeed an agency, it was ordered to process the request and create a Vaughn index for withheld records. The Smithsonian complied and released some documents. Subsequent cross motions for summary judgment were filed regarding the withholding of additional documents under FOIA exemptions 6 and 7(C). The district court upheld the withholding under exemption 6 but not under 7(C) and denied the Smithsonian's motion for reconsideration, ultimately dismissing the case. The Smithsonian then filed a notice of appeal on July 27, 1992, but later moved to dismiss this appeal, which was granted. Plaintiff requested attorneys' fees after prevailing in a FOIA case, which the Smithsonian opposed, arguing that the plaintiff did not qualify for such fees under the established four-part test. On December 14, 1993, the district court granted the fee request, leading to an appeal by the Smithsonian, which included the assertion that it is an agency under FOIA. FOIA permits the assessment of reasonable attorney fees to prevailing plaintiffs, considering factors such as public benefit, commercial benefit to the plaintiff, interest in the records, and the government's basis for withholding information. If the government has a correct legal basis for withholding records, a plaintiff is not entitled to fees. The Smithsonian argued for a de novo review of its agency status, claiming that if the lower court erred, it would negate the fee award. The plaintiff countered that the issue was moot because the Smithsonian released all non-exempt documents and should have sought a stay to preserve its appeal rights. Additionally, the plaintiff contended the appeal was untimely, having been filed over 60 days after the district court's final order. The court found that the issue of the Smithsonian's agency status should not be reviewed de novo and, while mootness and timeliness arguments were not determinative, the matter was precluded by the doctrine of direct estoppel. The plaintiff's assertion that the Smithsonian's release of non-exempt documents renders the issue moot holds some validity only concerning the original merits proceeding. The Smithsonian could have sought a stay to withhold documents pending appellate review, but since all relevant documents have been released, the appellate court cannot provide relief. The mootness argument does not apply in the current context, which focuses on the Smithsonian's agency status in relation to attorney fees rather than document disclosure. Thus, the release of documents during the merits phase is irrelevant to the mootness claim. Additionally, the plaintiff's argument regarding the timeliness of the Smithsonian's appeal is unfounded. The Smithsonian could not appeal its FOIA status after receiving a favorable ruling on the documents. The general rule prevents a party from appealing a favorable judgment, and since the district court upheld the Smithsonian's position that the documents fell under a FOIA exemption, there was no basis for appeal. The plaintiff's reliance on the Budinich case is misplaced; in Budinich, the appellant unnecessarily delayed an appeal after a favorable verdict, which is not analogous to the Smithsonian's situation, where the agency status could directly impact attorney fees. While the plaintiff's arguments lack merit, the doctrine of issue preclusion necessitates that the Smithsonian's agency status, previously determined by the district court, cannot be revisited during the attorney fees proceedings. Issue preclusion prevents relitigation of specific issues already decided between the same parties. The Smithsonian contends it should not be bound by an unfavorable district court ruling, arguing it was a prevailing party unable to appeal due to settled law, which states that a prevailing party lacks standing for appeal on unfavorable findings. The underlying rationale is that without appellate review, such findings are not definitive for future litigation. However, the court finds this argument unpersuasive, noting the Smithsonian's inability to appeal stemmed from its voluntary release of non-exempt documents post-ruling, which effectively mooted the agency issue. The Smithsonian's failure to seek a stay to retain the documents until appeal conclusion resulted in a loss of the opportunity to contest the ruling on that issue. The appeal is specifically regarding the fee award, not the orders related to the processing of the FOIA request. The Smithsonian's notice of appeal concerning the December 14, 1993 fee award was timely filed on January 13, 1994, and if reversible error is found, the court can deny attorneys' fees. The Smithsonian forfeited the chance to dispute the legal conclusion that it is an agency, as this was decided in the merits proceeding it voluntarily mooted. However, it retains the right to argue the reasonableness of its position regarding agency status, which underpinned its decision to withhold documents. The district court had applied a four-prong balancing test to determine the entitlement to attorneys' fees under FOIA, finding substantial public benefit due to the ruling that the Smithsonian is an agency subject to FOIA, which would enhance public access to information. The court focused on the precedential value of its holding rather than the specific value of the documents released. The district court improperly interpreted the public-benefit requirement of the Freedom of Information Act (FOIA), applying it too broadly. The appellate court conducted a de novo review, emphasizing that a public benefit must be more specific than merely increasing public knowledge. Citing Fenster v. Brown, the court clarified that a public benefit justifies attorney's fees only when it enhances the public's ability to make informed political choices, necessitating an assessment of the specific documents involved. The plaintiff's reliance on Halperin v. Dep't of State was deemed incorrect; while Halperin discussed the status of a "prevailing party," it did not address the public-benefit element essential for fee awards. The district court's assumption of a public benefit based solely on the potential release of information was rejected as speculative and inconsistent with FOIA's structure, which balances public interest against privacy and other concerns. Moreover, no evidence was presented that the release of the two documents would aid the public in making vital political decisions, as the plaintiff sought them primarily to support her employment discrimination claim. The district court inadequately considered the closely related factors of commercial benefit and the plaintiff’s interests, which generally discourage fee awards when disclosure serves personal motives. Additionally, the court failed to evaluate the reasonableness of the government's position, incorrectly concluding that the perceived public benefit warranted an award of attorney's fees without a thorough analysis of all relevant criteria. The court determined that it would independently assess the reasonableness of the government's position in a Freedom of Information Act (FOIA) case due to a misapplication of the public-benefit prong. The government needs a "colorable basis in law" to be considered reasonable in its opposition to a FOIA claim, and it must not have acted obstinately. The Smithsonian's stance regarding its agency status under FOIA was found to be reasonable. Historically, FOIA relied on the Administrative Procedure Act's (APA) definition of "agency," which included various governmental entities. In 1974, Congress expanded FOIA’s definition to cover additional executive and regulatory entities, thus broadening its scope. The court has not established strict rules for defining an agency under FOIA, instead opting for a fact-specific functional approach. This method requires examining each organizational arrangement in its specific context due to the diverse nature of government operations. The functional approach was first applied in *Soucie v. David*, where the court evaluated whether the Office of Science and Technology (OST) qualified as an agency. The OST had evaluative and advisory roles within the Executive Office of the President, and while its advisory function alone would not confer agency status, its independent evaluative function did. Prior to the 1974 FOIA amendments, the agency status of initial review groups (IRGs) was assessed in Washington Research Project, Inc. v. Department of Health, Education, and Welfare, where it was determined that IRGs, consisting of nongovernmental consultants evaluating research proposals for the National Institute of Mental Health, did not qualify as agencies because they made only recommendations and lacked the authority to make binding decisions. Following the amendments, in Rocap v. Indiek, the Federal Home Loan Mortgage Company (FHMLC) was classified as a government-controlled corporation under FOIA, due to substantial federal oversight, despite the absence of a federal funding requirement for agency status. The court also rejected the necessity of Civil Service Commission jurisdiction for an entity to be considered an agency. The Defense Nuclear Facilities Safety Board was later also deemed an agency under FOIA in Energy Research Found., based on its investigative powers and formal evaluations of Energy Department standards. In the current case, the plaintiff argues that the Smithsonian Institution qualifies as an agency due to its federal charter, a workforce comprising 70% federal employees subject to civil service laws, the authority to designate special police, and its receipt of federal and non-federal funds, alongside its responsibilities for scientific research oversight. The Smithsonian Institution, despite being federally chartered and receiving federal funds, may argue it does not qualify as an agency under the Freedom of Information Act (FOIA). The precedent established in Rocap suggests that such factors alone do not determine agency status, and this reasoning could extend to the Smithsonian as an "independent establishment." The institution's capability to hire its own police force is likened to practices at private museums, thus having limited relevance to agency status. Furthermore, the Smithsonian's discretion in allocating resources does not equate to the "substantial independent authority" needed for agency classification. Additionally, it points out that it is not listed as a governmental corporation under 31 U.S.C. Sec. 9101 and that its enabling statute (20 U.S.C. Sec. 41) refers to it as an "establishment," not a corporation. The conclusion states that there is no public benefit in releasing the Smithsonian’s documents and that its legal stance is reasonable, negating the need for a review of other factors like the plaintiff's commercial benefit or interest. Consequently, the award of attorneys' fees to the plaintiff is reversed. Furthermore, the district court's finding on the Smithsonian's agency status applies only to the parties involved, allowing the Smithsonian to contest this status in future cases. The court also clarifies that it will not re-evaluate the Smithsonian's agency status but rather finds the issue precluded by direct estoppel. The plaintiff's mootness argument regarding the release of certain documents is deemed irrelevant to the current inquiry about attorneys' fees, as the case focuses on the Smithsonian's agency classification rather than document disclosure. Plaintiff's mootness argument is undermined by the fact that the Smithsonian released its non-exempt documents during the merits phase, rendering the issue irrelevant. Additionally, the plaintiff's timeliness argument is ineffective because the Smithsonian could not appeal its FOIA status after receiving a favorable judgment on the remaining documents, as established in Showtime Networks, Inc. v. FCC, where a party cannot appeal a favorable ruling. The district court upheld the Smithsonian's claim that the documents were exempt from FOIA, and since the adverse ruling was mooted, there was no basis for an appeal. The plaintiff's reliance on Budinich is misplaced; the case involved an appellant who delayed an appeal until after a related attorneys' fees proceeding, which is not analogous to the Smithsonian's situation where the agency's status could affect fee awards. The doctrine of issue preclusion prevents relitigation of issues decided in prior proceedings, and the district court had already determined that the Smithsonian was a FOIA agency, which cannot be revisited in the attorneys' fees phase. While the Smithsonian contends that it should not be bound by the original ruling due to its inability to appeal as a prevailing party, the legal principle maintains that a prevailing party cannot challenge unfavorable findings later. This lack of opportunity for appellate review means those findings are not conclusive in subsequent litigation. Despite recognizing this legal nuance, the court dismisses the Smithsonian's argument as irrelevant to the proceedings. The Smithsonian could not appeal the agency issue from the original proceeding due to its status as a prevailing party and its voluntary release of non-exempt documents to the plaintiff post-preliminary ruling. By doing so, the Smithsonian effectively mooted the agency issue, thereby failing to preserve its right to appeal. Had it sought a stay to retain the documents pending appellate review, the court might have addressed the merits of the agency issue. The failure to appeal parts of the proceeding can lead to issue preclusion, impacting the ability to appeal remaining issues if the common issue was not preserved. The Smithsonian's release of the non-exempt documents made the subsequent attorneys' fees proceeding foreseeable, and it cannot contest the consequences of its decision. The current appeal pertains solely to the fee award, not to the orders regarding the processing of the FOIA request for non-exempt documents or the denial of the plaintiff's request for other documents. The appeal regarding the fee award is timely, filed within the appropriate timeframe, and the court retains the authority to provide relief if reversible error is found. The Smithsonian lost its opportunity to challenge the district court's conclusion that it is an agency, as that issue was resolved in a preceding merits decision that the Smithsonian voluntarily mooted. However, it retains the right to argue the reasonableness of its position regarding agency status and the withholding of documents, even if it forfeited the right to appeal the correctness of that position. In reviewing the district court's December 14, 1993 decision, the Smithsonian contends that the court erred in its legal application of the public-benefit prong of the attorneys' fees determination under FOIA, asserting that the significant public benefit derived from the case was overstated. The court emphasized the precedential value of its ruling that the Smithsonian is an agency subject to FOIA, rather than assessing the value of the specific documents released. The appeal court holds that the district court misapplied the public-benefit prong, and this misinterpretation warrants de novo review, as it concerns a matter of law. Congress did not intend for a broadly defined public benefit when amending FOIA to permit attorney's fees for those who substantially prevail under 5 U.S.C. Sec. 552(a)(4)E. The public-benefit criterion requires that a plaintiff's victory should likely enhance public access to information necessary for making informed political choices. Evaluation of the specific documents in question is essential to comply with this requirement. The plaintiff's reliance on Halperin v. Dep’t of State is deemed misplaced because, while Halperin discussed the notion of a "prevailing party," it did not address whether the plaintiff was entitled to fees based on the public-benefit assessment. The district court's assumption that a public benefit exists from the potential release of information contradicts established precedents and FOIA’s framework, which includes exemptions necessitating a balance between public interest and governmental interests, such as privacy. In this case, there is no evidence that the release of the two non-exempt documents would aid the public in making crucial political decisions; the plaintiff sought these documents solely to advance her employment discrimination claim. The district court inadequately analyzed the second and third parts of the fee award test, which relate to the plaintiff's commercial benefit and interest—elements that, when tied to personal gain, typically disqualify a fee award. Additionally, the court did not assess the reasonableness of the government's position, erroneously assuming that the public benefit alone warranted the award of fees. It is stated that the government only needs a "colorable basis in law" for its position for the court to evaluate the reasonableness of that position in determining a FOIA plaintiff's eligibility for attorney's fees. A reasonable legal basis is required for the government's position, avoiding recalcitrance toward valid claims. The Smithsonian's stance on its agency status under the Freedom of Information Act (FOIA) is deemed reasonable. Prior to 1974, FOIA's agency definition was derived from the Administrative Procedure Act (APA), which defined an agency broadly as any U.S. government authority, with some exceptions. In 1974, FOIA was amended to expand this definition, explicitly including various government entities and agencies, thus broadening the coverage beyond the original APA definition. The courts have not established strict rules for determining agency status under FOIA, opting instead for a fact-specific functional approach to assess whether an entity qualifies. This method acknowledges the diversity of governmental organizational structures, requiring case-by-case examination. The functional approach was first articulated in *Soucie v. David*, where the Office of Science and Technology (OST) was evaluated for agency status. The court determined that although OST primarily advised the President, its independent evaluative role regarding federal programs conferred it agency status under FOIA. Thus, the presence of significant independent authority in specific functions is essential for agency classification. Agency status under the Freedom of Information Act (FOIA) has been evaluated in various contexts. In Washington Research Project, Inc. v. Department of Health, Education, and Welfare, it was determined that initial review groups (IRGs), which assessed research proposals for the National Institute of Mental Health and consisted of non-governmental consultants, did not qualify as agencies because they made only recommendations and lacked decision-making authority. Following the 1974 FOIA amendments, in Rocap v. Indiek, the Federal Home Loan Mortgage Corporation (FHMLC) was recognized as a government-controlled corporation under FOIA due to substantial federal oversight, irrespective of federal funding or Civil Service Commission jurisdiction. The functionalist approach was similarly applied to the Defense Nuclear Facilities Safety Board, which was deemed an agency because it conducted investigations and evaluated standards, activities associated with legislative powers granted to agencies by Congress. Arguments presented regarding the Smithsonian Institution's agency status include its federal charter, a workforce comprising 70% federal employees subject to civil service laws, authority to designate special police with arrest powers, and receipt of both federal and non-federal funding. Additionally, the Smithsonian has specific reporting obligations and influences research prioritization, further supporting the assertion of its agency status. The Smithsonian Institution holds plenary authority over scientific research in the Canal Zone Biological area. Although it is federally chartered and receives federal funds, these factors alone do not establish it as an agency under the Freedom of Information Act (FOIA), as established in Rocap, which focused on governmental corporations. The Smithsonian could reasonably argue that its independence in hiring security personnel and prioritizing research resources does not demonstrate substantial independent authority necessary for agency status. Moreover, it is not classified as a governmental corporation under 31 U.S.C. Sec. 9101, and its enabling statute at 20 U.S.C. Sec. 41 identifies it as an establishment, not a corporation. Thus, the Smithsonian’s position that it is not an agency under FOIA is deemed reasonable. The court concludes that there is no public benefit in releasing the Smithsonian's documents, which negates the need to assess other factors such as the plaintiff’s commercial benefit or interest. Consequently, the court reverses the award of attorneys' fees to the plaintiff. Furthermore, the district court's determination regarding the Smithsonian's status under FOIA is binding only between the involved parties and does not prevent the Smithsonian from relitigating the issue with other parties.