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[NOT YET SCHEDULED FOR ORAL ARGUMENT]

IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT _________ No. 12-5267 _________ VERN McKINLEY Plaintiff-Appellant, v. FEDERAL HOUSING FINANCE AGENCY Defendant-Appellee. __________ ON APPEAL FROM THE U.S. DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________ REPLY BRIEF OF APPELLANT VERN McKINLEY __________ Paul J. Orfanedes Michael Bekesha JUDICIAL WATCH, INC. 425 Third Street, S.W., Suite 800 Washington, DC 20024 (202) 646-5172 Counsel for Plaintiff-Appellant

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TABLE OF CONTENTS TABLE OF CONTENTS ............................................................................................i TABLE OF AUTHORITIES .................................................................................... ii GLOSSARY OF ABBREVIATIONS ..................................................................... iii SUMMARY OF THE ARGUMENT ........................................................................ 1 ARGUMENT ............................................................................................................. 3 I. McKinley Is Eligible For an Award of Attorneys Fees and Other Litigation Costs .................................................................... 3 McKinley Is Entitled to an Award of Attorneys Fees and Other Litigation Costs .................................................................... 5 McKinleys Request for $15,852.50 in Attorneys Fees and Other Litigation Costs Was Reasonable....................................... 11

II.

III.

CONCLUSION ........................................................................................................ 12 CERTIFICATE OF COMPLIANCE ....................................................................... 13

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TABLE OF AUTHORITIES CASES * Brayton v. Office of the U.S. Trade Representative, 641 F.3d 521 (D.C. Cir. 2011)......................................................................... 1 Burka v. U.S. Department of Health & Human Services, 142 F.3d 1286 (D.C. Cir. 1998)....................................................................... 5 Cotton v. Heyman, 63 F.3d 1115 (D.C. Cir. 1995) .................................................... 6 Cuneo v. Rumsfeld, 553 F.2d 1360 (D.C. Cir. 1977) ............................................... 10 * Davy v. Central Intelligence Agency, 550 F.3d 1155 (D.C. Cir. 2008)....................................................................... 9 * Edmonds v. Federal Bureau of Investigation, 417 F.3d 1319 (D.C. Cir. 2005)....................................................................... 4 Fenster v. Brown, 617 F.2d 740 (D.C. Cir. 1979) ..................................................... 9 LaSalle Extension University v. Federal Trade Commission, 627 F.2d 481(D.C. Cir. 1980) .......................................................................... 1 Mobley v. Department of Homeland Security, 2012 U.S. Dist. LEXIS 174162 (D.D.C. Dec. 10, 2012) ................................ 4 Union of Concerned Scientists v. U.S. Nuclear Regulatory Commission, 824 F.2d 1219 (D.C. Cir. 1987)....................................................................... 4 STATUTES 5 U.S.C. 552(a)(4)(E)(ii)(II) ................................................................................... 3 12 U.S.C. 4617(a)(3) ........................................................................................... 6-7 * Authorities upon which Plaintiff-Appellant chiefly relies are marked with asterisks. ii

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GLOSSARY OF ABBREVIATIONS The District Court Fannie Mae FHFA Freddie Mac FOIA JA McKinley The U.S. District Court for the District of Columbia Federal National Mortgage Association Federal Housing Finance Agency Federal Home Loan Mortgage Corporation Freedom of Information Act Joint Appendix Plaintiff-Appellant Vern McKinley

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SUMMARY OF THE ARGUMENT The U.S. District Court for the District of Columbia (the District Court) determined that Appellant Vern McKinley (McKinley) was not eligible for or entitled to an award of attorneys fees and other litigation costs. In doing so, the court ignored well-established precedent of this Circuit. The Freedom of Information Act (FOIA) allows for an award of attorneys fees and other litigation costs to a prevailing plaintiff for two purposes: (1) to encourage Freedom of Information Act suits that benefit the public interest and (2) to serve as compensation for enduring an agencys unreasonable obduracy in refusing to comply with the Freedom of Information Acts requirements. LaSalle Extension University v. Federal Trade Commission, 627 F.2d 481, 484 (D.C. Cir. 1980). To obtain an award, the requestor must demonstrate that (1) he has substantially prevailed and is thus eligible for an award; and (2) he is entitled to an award under a balancing of relevant factors. See Brayton v. Office of the U.S. Trade Representative, 641 F.3d 521, 524 (D.C. Cir. 2011). The District Court incorrectly concluded that McKinley was not eligible for an award of fees. In doing so, the District Court did not apply the correct legal standard. The record clearly shows that the District Court indisputably ordered the Federal Housing Finance Authority (FHFA) to conduct a segregability analysis and produce additional information to McKinley. FHFA complied. Therefore, 1

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based on the plain meaning of the statute as well as the precedent of this Court, McKinley substantially prevailed in this lawsuit. In addition, the District Court abused its discretion when it determined that McKinley was not entitled to an award of fees. McKinley demonstrated that the public benefited from the litigation and that he requested the records for academic, not commercial, interests. The record clearly shows that the information produced pursuant to the District Courts order added to the fund of information available to the public concerning the placement of Fannie Mae and Freddie Mac into conservatorship. In addition, the evidence demonstrated that McKinleys interest in the requested records was to obtain information and share it with the public as part of his scholarship. McKinley indisputably is the type of FOIA requester that Congress contemplated when it sought to lower the often insurmountable barriers presented by court costs and attorneys fees to the average person. Moreover, McKinleys request for $15,852.50 in attorneys fees and other litigation costs was reasonable. He had to pursue the litigation to its end in order to obtain records responsive to his FOIA request because FHFA failed to satisfy its obligations under FOIA at the outset. For all these reasons, the District Courts ruling should be reversed.

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ARGUMENT I. McKinley Is Eligible For an Award of Attorneys Fees and Other Litigation Costs. The District Court incorrectly determined that McKinley was not eligible for an award of attorneys fees and other litigation costs. Based on the plain meaning of the statute as well as the precedent of this Court, a plaintiff is eligible for an award if he can demonstrate that he obtained relief through a judicial order. 5 U.S.C. 552(a)(4)(E)(ii)(II). McKinley indisputably obtained relief through a judicial order. In its August 26, 2011 Order, the District Court ordered that, by no later than September 5, 2011, defendant shall identify and disclose to plaintiff any portion of Document [Numbers] 2 and 3 that is reasonably segregable from the material therein that is protected by the deliberative process. August 26, 2011 Order at 2 (Joint Appendix (JA) 15). Subsequently, pursuant to the District Courts order, FHFA released previously-withheld material contained in the two documents. As required by the District Court, FHFA performed a segregability analysis and released to Plaintiff all reasonably segregable non-privileged information from the two contested documents. September 16, 2011 Joint Status Report at 1 (JA 18). FHFA mistakenly contends that the District Court properly took into account the amount of information released by FHFA when it determined whether 3

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McKinley was eligible for a fees award. See Response Brief for the Appellee (Response Brief) at 12-13. However, as McKinley demonstrated in his opening brief, this Court has squarely held that the scope of ordered relief is irrelevant to the determination of whether the FOIA requester has substantially prevailed. Edmonds v. Federal Bureau of Investigation, 417 F.3d 1319, 1327 (D.C. Cir. 2005) (holding that the degree of the plaintiffs success in relation to the other goals of the lawsuit is not a factor critical to eligibility for a fee award at all); see also Union of Concerned Scientists v. U.S. Nuclear Regulatory Commission, 824 F.2d 1219, 1226 (D.C. Cir. 1987) (stating that with respect to eligibility for a fee award, sheer volume of release is not determinative.). Moreover, the case relied upon by FHFA only strengthens McKinleys argument. In Mobley v. Department of Homeland Security, the District Court concluded that the plaintiffs were not eligible for an award of attorneys fees because they had sought the production of responsive records and, in the end, the defendant produced no responsive records. 2012 U.S. Dist. LEXIS 174162, *14 (D.D.C. Dec. 10, 2012). The Court explained, To give meaning to the language used in the statute, a FOIA plaintiff must obtain the essential elements of the relief that it seeks in its complaint in order to substantially prevail. Id. Unlike the plaintiffs in Mobley, McKinley obtained the exact relief he sought in his Complaint: the production of previously withheld, responsive records. Complaint 4

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at 3-4 (JA 7-8) (WHEREFORE, Plaintiff respectfully requests that the Court: (1) order Defendant to . . . produce any and all non-exempt records . . . (2) enjoin Defendant from continuing to withhold any and all non-exempt records . . . ). Therefore, based on the plain meaning of the statute and the well-established precedent of this Court, McKinley substantially prevailed because the District Court ordered FHFA to produce records, and McKinley, therefore, is eligible for an award of attorneys fees. II. McKinley Is Entitled to an Award of Attorneys Fees and Other Litigation Costs. The District Court abused its discretion when it determined that McKinley was not entitled to an award of attorneys fees and other litigation costs. To determine whether McKinley was entitled to an award, the District Court considered the following four factors: (1) the public benefit derived from the case; (2) the commercial benefit to the plaintiff; (3) the nature of the plaintiffs interest in the records; and (4) whether the Government had a reasonable basis for withholding requested information. Burka v. U.S. Department of Health & Human Services, 142 F.3d 1286, 1288 (D.C. Cir. 1998) (internal citations and quotations omitted). However, in reaching its finding, the District Court misapplied each factor. First, the District Court focused on the quantity of information released instead of the quality of the information obtained by McKinley. As McKinley 5

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demonstrated in his opening brief, the information released pursuant to the District Courts August 26, 2011 Order was not previously available to the public. In addition, the information added to the fund of information available to the public about the decision to place Fannie Mae and Freddie Mac into conservatorship. Also, McKinley disseminated that information to the public. Importantly, McKinley specifically demonstrated how the information released as a result of this lawsuit added to the fund of information available to the public. The information contained in the two responsive records released pursuant to the District Courts August 26, 2011 Order illustrates what factors the government analyzed when making its decision to place Fannie Mae and Freddie Mac into conservatorship. In response, FHFA asserts that the new revelations are not particularly enlightening. Response Brief at 17. However, the focus of the public benefit prong of the entitlement analysis is not what a government agency thinks is enlightening or important; it is whether such information may be used by the public in making vital political choices. See Cotton v. Heyman, 63 F.3d 1115, 1120 (D.C. Cir. 1995). With respect to the specific information, Document 2 reveals some of the grounds FHFA considered when it was determining whether to place Fannie Mae and Freddie Mac under receivership or into conservatorship. Under its statutory

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authority, FHFA could have appointed a conservator or receiver for Fannie Mae and Freddie Mac for any of the following reasons: (A) Assets insufficient for obligations; (B) Substantial dissipation; (C) Unsafe or unsound condition; (D) Cease and desist orders; (E) Concealment; (F) Inability to meet obligations; (G) Losses; (H) Violations of law; (I) Consent; (J) Undercapitalization; (K) Critical undercapitalization; or (L) Money laundering. 12 U.S.C. 4617(a)(3). Prior to this litigation, FHFA had not disclosed what justifications were analyzed when deciding whether to place Fannie Mae and Freddie Mac under a receivership or into conservatorship. Therefore, the previously withheld portions of Document Number 2 revealed to the public that, if FHFA placed the entities under receivership, it would have done so solely based on the unsafe or unsound condition ground. FHFA may not have found such revelation enlightening because it was the agency making the decision, but, to the general public, such information likely added to the fund of information available to the public. Similarly, it may be interesting to the public that one of the factors FHFA weighed when deciding how to prevent a financial catastrophe was public perception. Obviously, whether the government takes action because it is 7

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financially necessary or because it may improve favorability ratings is important for the public to know when making vital political choices. In addition, the previously undisclosed portions of Document 2 revealed that the government thought receivership would be Labor Intensive. Again, the public may have an interest in knowing whether the government made a decision based on whether or not it would be hard to do. Moreover, the portions of Document Number 3 that were produced pursuant to the District Courts August 26, 2011 Order reveal that FHFA only began its analysis of the potential impact of Fannie Mae and Freddie Mac on the entire financial landscape three weeks before they were placed in conservatorship. Although FHFA may not think such information is important, the public may view such a revelation as confirmation that the government was asleep at the wheel during the financial crisis. Because McKinley adequately demonstrated that the released information was not previously available to the public and that it was important new information about how the government made its decision to place Fannie Mae and Freddie Mac into conservatorship, the District Court erroneously determined that the first entitlement factor did not favor McKinley. Second, the District Court abused its discretion when it concluded that McKinley had a commercial motive for pursuing this litigation. In his opening brief, McKinley demonstrated that McKinleys objective in this litigation was to 8

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obtain information under FOIA about what the government was up to with respect to placing Fannie Mae and Freddie Mac into conservatorship and to share such information with the public as part of his scholarship or news gathering role. Davy v. Central Intelligence Agency, 550 F.3d 1155, 1162 (D.C. Cir. 2008). In other words, McKinley was the quintessential average person [who requested] information under FOIA. Id. In response, FHFA asserts that McKinley plainly has a commercial interest in the information requested in this case. Response Brief at 18-19. Yet, FHFA does not justify its assertion with any facts. Similarly, FHFA contends that McKinley had a private incentive because he is not a journalist or non-profit organization. Id. at 19. Whether a FOIA requester is a journalist or non-profit organization is not, and cannot be, the standard. McKinley does not own a financial interest in Fannie Mae or Freddie Mac. Nor does he consult on issues related to the two entities. He has no financial incentive or personal interest in the information he sought. See Fenster v. Brown, 617 F.2d 740, 744 (D.C. Cir. 1979). As the record reflects, McKinley is a regulatory policy expert who has written several articles about the entities and has authored a book on the financial crisis of 2008. See Declaration of Michael Bekesha (Bekesha Decl.) at 2-6 (JA 21-22). McKinley sought to increase the public fund of knowledge about FHFAs decision to place Fannie Mae and Freddie Mac into conservatorship, a matter of public concern. McKinley 9

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achieved his goal by distributing the information produced pursuant to the District Courts August 26, 2011 Order on the internet for the public to see. Contrary to FHFAs assertion, the released records are not posted on McKinleys own web site; McKinley released the records on scribd.com, which (1) houses tens of millions written works, including best-selling books, magazines, research reports, recipes, presentations, and more[;] (2) makes those documents searchable (across the web and within the documents themselves), social, and easy to embed within websites and blogs[;] and (3) has been used more than 10 million times across the web by media companies like The New York Times, Forbes, Fortune; publishers such as Random House, Workman, Wiley, and Simon & Schuster; government organizations like the FCC, Sunlight Foundation, Red Cross; [and] businesses including Ford Motor Company and Accenture.1 Third, as demonstrated in his opening brief, the District Court erroneously gave the fourth factor of entitlement too much weight in its analysis. The fourth factor is only one factor of the entitlement analysis and should not be given any greater weight than the other three factors. Cuneo v. Rumsfeld, 553 F.2d 1360, 1366 (D.C. Cir. 1977) (Of course the reasonableness of the government's opposition does not preclude a recovery of costs and attorney fees. It is but one aspect of the decision left to the discretion of the trial court.). Therefore, because

See http://www.crunchbase.com/company/scribd. 10

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the first three factors clearly favored an award of attorneys fees, the District Court abused its discretion by finding that McKinley was not entitled to an award of attorneys fees and other litigation costs based on the fourth factor alone. III. McKinleys Request for $15,852.50 in Attorneys Fees and Other Litigation Costs Was Reasonable. FHFA asks that this Court conclude that McKinleys request for $15,852.50 in attorneys fees and other litigation costs was unreasonable and excessive. However, because the District Court found that McKinley was not eligible for and entitled to an award of attorneys fees, it did not rule on the reasonableness of the request. Therefore, if this Court were to agree with McKinley and reverse the District Courts ruling, this Court should remand the case to the District Court for further proceedings, which would include determining whether McKinleys request was reasonable. Nevertheless, McKinleys request for $15,852.50 in attorneys fees and other litigation costs was reasonable under the circumstances. FHFA does not dispute the reasonableness of the hourly rates of McKinleys counsel or the number of attorney hours expended on the case by his attorneys. Response Brief at 26. FHFA instead complains that McKinley seeks an award of attorneys fees and other litigation costs for the entire litigation. Id. Yet it was FHFA who failed to satisfy its obligations under FOIA prior to the filing of the Complaint by failing to respond to McKinleys FOIA request within the statutorily allotted time period. It 11

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was also FHFA who improperly withheld all responsive material under the attorney work product doctrine. In addition, it was FHFA who failed to conduct a segregability analysis. Had FHFA satisfied its burdens under FOIA at the outset and not waited until the Court ordered it to satisfy its burdens, McKinley would not have had to initiate and pursue the entire litigation. Therefore, McKinleys request for an award of $15,852.50 in attorneys fees and other litigation costs was reasonable. CONCLUSION For the reasons set forth in McKinleys opening brief and the additional reasons set forth above, McKinley respectfully requests that the Court reverse the District Courts order denying McKinleys Motion for Attorneys Fees and Other Litigation Costs and remand for further proceedings. Dated: February 12, 2013 Respectfully submitted, Paul J. Orfanedes /s/ Michael Bekesha Michael Bekesha JUDICIAL WATCH, INC. 425 Third Street, S.W., Suite 800 Washington, DC 20024 (202) 646-5172 Counsel for Plaintiff-Appellant

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CERTIFICATE OF COMPLIANCE The undersigned certifies that this brief complies with the type-volume limitations of Fed. R. App. P. 32(a)(7). The brief, excluding exempted portions, contains 2,635 words (using Microsoft Word 2010), and has been prepared in a proportional Times New Roman, 14-point font. /s/ Michael Bekesha

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CERTIFICATE OF SERVICE I hereby certify that on this 12th day of February 2013, I filed via the CM/ECF system the foregoing REPLY BRIEF OF APPELLANT VERN MCKINLEY with the Clerk of the Court. Participants in the case are registered CM/ECF users and service will be accomplished by the Appellate CM/ECF system. I also certify that I caused eight copies to be delivered to the Clerk of Court via hand delivery. /s/ Michael Bekesha