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Case TitleSTEIN v. UNITED STATES SECURITIES AND EXCHANGE COMMISSION
DistrictDistrict of Columbia
CityWashington, DC
Case Number1:2015cv01560
Date Filed2015-09-23
Date Closed2019-02-22
JudgeJudge John D. Bates
PlaintiffMITCHELL J. STEIN
Case DescriptionMitchell Stein, a federal prisoner, submitted a FOIA request to the Securities and Exchange Commission for records related to two actions the SEC had taken against Stein and Heart Tronics, a company with which he was associated. The SEC denied Stein's request on the basis of Exemption 7(A) (interference with ongoing investigation or proceedings). Stein appealed the agency's decision, but after hearing nothing further from the agency, he filed suit.
Complaint issues: Failure to respond within statutory time limit, Litigation - Vaughn index, Litigation - Attorney's fees

DefendantUNITED STATES SECURITIES AND EXCHANGE COMMISSION
Documents
Docket
Complaint
Complaint attachment 1
Opinion/Order [24]
FOIA Project Annotation: In a case complicated by confusion about the existence of certain records, Judge John Bates has ruled that, for the most part, the SEC conducted an adequate search for records concerning the agency's enforcement action against Heart Tronics, Inc., a medical device manufacturing company, in which Mitchell Stein was convicted of securities fraud and mail fraud. Bates also found that the agency had properly invoked Exemption 7(A) (interference with ongoing investigation or proceeding) to withhold categories of records, because Stein's conviction was on appeal and the SEC was still prosecuting others involved with Heart Tronics. Bates agreed with the agency that Exemption 5 (privileges) applied to many of the records. After he was convicted, Stein submitted several FOIA requests for records involved in the litigation, including records listed on a privilege log submitted by the agency. The agency located 2,715 documents responsive to Stein's request for records identified in the agency's privilege log and withheld 1,800 emails. The agency did not provide Stein with any records he had already received as part of the enforcement action. Stein insisted that the SEC maintained a 200-million-file database which contained a number of unprivileged records that were not disclosed to him during the enforcement action or as a result of his FOIA requests. While Stein never adequately explained why he thought such a database existed, Bates concluded that he was referring to a database created and maintained by RenewData, a third-party e-discovery vendor hired by Heart Tronics' original counsel to help manage the discovery process during the SEC's investigation. Because Heart Tronics could no longer pay RenewData to store the database, its counsel turned over the records to the SEC. While the SEC never relied on these records, it told Bates that they were made available to Stein during the litigation. Bates expressed concern about whether or not Stein had been able to access all these records during the enforcement litigation. He observed that "the SEC seems to think that its open file discovery policy during the Heart Tronics litigation has satisfied its FOIA obligations and that it need not search for documents responsive to Stein's second category of requests, because there is nothing it could search for or produce that Stein has not already seen, excepting the documents on the privilege log. Were the Court certain that Stein already received all documents responsive to his FOIA request in the prior litigation, the Court might agree. If an agency can demonstrate that it has already searched for and actually produced all documents responsive to a plaintiff's FOIA request, FOIA surely does not require it to duplicate those efforts. But it is not clear here that this situation is so neat. . ." He pointed out that "while the SEC maintained an open file policy during the Heart Tronics litigation, it did not produce all of its records to Stein such that he now already has all of the SEC's records in his possession. The RenewData materials were only 'made available' to him for review in Washington, D.C. during the discovery period. As discovery in Heart Tronics has now ended, and that case is on appeal, Stein presumably no longer has access to these materials, and the Court is not convinced that the fact that Stein once had a chance to examine these materials is sufficient to satisfy FOIA." Bates observed that at this point "because Stein no longer has access to the RenewData materials, the onus is on the agency to search this set of materials for documents responsive to Stein's second category of requests, or else explain to the Court why those materials are unlikely to contain responsive documents." As to the mysterious 200-million-file database that Stein alluded to, Bates assumed he was referring to the RenewData materials. He indicated that "the SEC has also stated that it never had access to the actual database (if there was one) hosted by RenewData, thus, if Stein is referring to a greater 'database' of documents hosted by RenewData but never provided to the SEC, the SEC has no obligation to produce documents outside its custody or control at the time of the FOIA request." Stein also argued that the SEC had invoked a Glomar response by failing to identify in its Vaughn index what records were responsive to which portions of his requests. Calling this claim "misguided," Bates noted that "the agency is not obligated to identify in the Vaughn index which documents are specifically responsive to which categories of Stein's requests. The purpose of the Vaughn index, together with any declarations an agency may submit in support of its withholding decisions, is to provide the court with enough information about the withheld documents for the court to determine whether the claimed exemptions were appropriately applied." Stein contended that Exemption 7(A) no longer applied because the civil and criminal investigations against him were separate. But Bates pointed out that "the SEC is not arguing that release of the privileged documents would interfere with DOJ's criminal case against him; instead, the agency is crystal clear that release of the documents could interfere with the ongoing civil enforcement actions against Stein and at least one of his co-defendants in the Heart Tronics litigation." He noted that "because the work product, internal communications, and deliberative documents that Stein seeks essentially provide a road map for the SEC's case in the Heart Tronics litigation, they are likely to give Stein insight into the way the investigation and the SEC's legal strategies developed that he and [his co-defendant] would not otherwise have, which could make re-litigating the [cases] �" or possibly even pursuing them on appeal�"difficult." The SEC relied primarily on the attorney work-product privilege to withhold records under Exemption 5. Bates agreed that most of the privilege claims were appropriate, although he rejected several others. Finding that the agency had sufficiently explained its segregability analysis, Bates observed that "an agency withholding documents under Exemption 7(A) does not need to justify its segregability determinations document by document, as the exemption allows agencies to justify withholding based on categories of documents." He noted that "the SEC need not demonstrate segregability with respect to those documents that are also withheld as attorney work product under Exemption 5, because where 'a document is fully protected as work product, then segregability is not required.'"
Issues: Exemption 5 - Privileges - Attorney work-product privilege, Adequacy - Search, Exemption 7(A) - Categorical exemption
Opinion/Order [42]
FOIA Project Annotation: Judge John Bates has ruled that because Mitchell Stein's appeals in the Ninth and Eleventh Circuit pertaining to his conviction and sentencing for securities and wire fraud connected to his work at Heart Tronics, Inc., a medical device company, are still pending, the SEC may still claim Exemption 7(A) (ongoing law enforcement investigation or proceeding) until those appeals are resolved. As part of the government's investigation of Heart Tronics, Stein was convicted in the Southern District of Florida. Stein appealed his conviction to the Eleventh Circuit, which affirmed the conviction but remanded his case to the district court for resentencing. After resentencing, Stein once again appealed to the Eleventh Circuit, where his appeal is still pending. Stein was also found liable in a civil enforcement action brought by the SEC in California. He appealed that decision to the Ninth Circuit and asked the Ninth Circuit to stay his petition until his Eleventh Circuit appeal was resolved. In 2015, Stein submitted a FOIA request to the SEC for the privilege log in the Heart Tronics litigation and information relating to the investigation of individuals whose identities Stein was accused of fabricating to further his alleged crimes. The SEC withheld the privilege log under Exemption 7(A) and told Stein that the information about fabricated individuals had already been disclosed to him. Stein filed an administrative appeal but after his appeal was denied he filed suit. In an earlier ruling, Bates found the privilege log was protected by Exemption 7(A) but noted that the agency had not yet shown that it searched two hard-drives and a number of boxes of hard-copy documents for information about fabricated individuals. Because the Ninth Circuit had now affirmed the district court's decision in the civil case, Stein challenged the continuing validity of the agency's Exemption 7(A) claim. Bates ruled that the Exemption 7(A) claim could continue. He noted that "because the potential for interference remains even when a case is on appeal, the SEC is permitted to withhold law enforcement records 'until all reasonably foreseeable proceedings stemming from that investigation are closed.' Here, it is undisputed that the SEC's civil enforcement action in Heart Tronics remains ongoing in the Ninth Circuit. And although Stein contends that the SEC failed to show how disclosure would interfere with the civil proceeding, the Court determined the agency met that burden in its previous opinion." Bates found that the Eleventh Circuit appeal also qualified as an ongoing proceeding for purposes of Exemption 7(A). He pointed out that "because the SEC's civil case and the United States' criminal case are predicated on virtually identical alleged conduct " and indeed may have been developed along 'parallel' investigations using documents 'shared under mutual access agreements' " disclosure of the relevant privilege log documents reasonably could be expected to interfere with the civil proceedings. . ." He added that "should Stein succeed in vacating and ultimately reversing his conviction, there is therefore a possibility that the civil judgment in Heart Tronics will be partially vacated, generating further litigation." Bates then addressed the agency's search for information about fabricated individuals. Stein argued that the agency had not shown that it searched scanned documents from 21 boxes. Finding the agency's search was adequate, Bates noted that "it is undisputed that the SEC searched those same boxes in responsive records located therein."
Issues: Exemption 7(A) - Interference with ongoing investigation
User-contributed Documents
 
Docket Events (Hide)
Date FiledDoc #Docket Text

2015-09-231COMPLAINT against UNITED STATES SECURITIES AND EXCHANGE COMMISSION ( Filing fee $ 400, receipt number 4616073724) filed by MITCHELL J. STEIN. (Attachments: # 1 Civil Cover Sheet)(td) (Entered: 09/29/2015)
2015-09-23SUMMONS (3) Issued as to UNITED STATES SECURITIES AND EXCHANGE COMMISSION, U.S. Attorney and U.S. Attorney General (td) (Entered: 09/29/2015)
2015-10-132RETURN OF SERVICE/AFFIDAVIT of Summons and Complaint Executed. UNITED STATES SECURITIES AND EXCHANGE COMMISSION served on 9/28/2015 (Harris, David) (Entered: 10/13/2015)
2015-10-133RETURN OF SERVICE/AFFIDAVIT of Summons and Complaint Executed as to the United States Attorney. Date of Service Upon United States Attorney on 9/29/2015. Answer due for ALL FEDERAL DEFENDANTS by 10/29/2015. (Harris, David) (Entered: 10/13/2015)
2015-10-134RETURN OF SERVICE/AFFIDAVIT of Summons and Complaint Executed on United States Attorney General. Date of Service Upon United States Attorney General 9/28/2015. (Harris, David) (Entered: 10/13/2015)
2015-10-295NOTICE of Appearance by William Smith Greig on behalf of UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Attachments: # 1 Certificate of Service)(Greig, William) (Entered: 10/29/2015)
2015-10-296ANSWER to 1 Complaint by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Certificate of Service)(Greig, William) (Entered: 10/29/2015)
2015-10-307ORDER directing parties to confer and to submit a proposed briefing schedule for the filing of dispositive motions by not later than November 27, 2015. See text of order for details. Signed by Judge John D. Bates on 10/30/2015. (lcjdb2) (Entered: 10/30/2015)
2015-10-31Set/Reset Deadlines: The parties are to submit a proposed briefing schedule for the filing of dispositive motions by 11/27/2015. (jth) (Entered: 10/31/2015)
2015-11-278PROPOSED BRIEFING SCHEDULE (Stipulation Regarding Proposed Briefing Schedule) by MITCHELL J. STEIN. (Harris, David) (Entered: 11/27/2015)
2015-11-30MINUTE ORDER: Upon consideration of 8 the parties' joint proposed briefing schedule, and the entire record herein, it is hereby ORDERED that the parties shall file any motions for summary judgment by not later than March 14, 2016; any corresponding oppositions by not later than April 4, 2016; and any corresponding replies by not later than April 18, 2016. Signed by Judge John D. Bates on 11/30/2015. (lcjdb2) (Entered: 11/30/2015)
2015-11-30Set/Reset Deadlines: Summary Judgment motions due by 3/14/2016. Response to Motion for Summary Judgment due by 4/4/2016. Reply to Motion for Summary Judgment due by 4/18/2016. (tb) (Entered: 11/30/2015)
2016-03-049STIPULATION Regarding Proposed Revised Briefing Schedule by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Certificate of Service)(Greig, William) (Entered: 03/04/2016)
2016-03-04MINUTE ORDER: Upon consideration of 9 the parties' proposed revised briefing schedule, and the entire record herein, it is hereby ORDERED that the parties shall file any motions for summary judgment by not later than April 11, 2016; any corresponding oppositions by not later than May 2, 2016; and any corresponding replies by not later than May 16, 2016. Signed by Judge John D. Bates on 3/4/2016. (lcjdb2) (Entered: 03/04/2016)
2016-03-07Set/Reset Deadlines: Summary Judgment motion due by 4/11/2016. Response to Motion for Summary Judgment due by 5/2/2016. Reply to Motion for Summary Judgment due by 5/16/2016. (tb) (Entered: 03/07/2016)
2016-04-1110MOTION for Summary Judgment by UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Attachments: # 1 Memorandum in Support, # 2 Exhibit Declaration of Kenneth Donnelly, # 3 Exhibit Decision of the Office of the General Counsel, # 4 Exhibit Vaughn Index, # 5 Statement of Facts Statement of Material Facts Not in Genuine Dispute, # 6 Text of Proposed Order)(Greig, William) (Entered: 04/11/2016)
2016-04-1111MOTION for Summary Judgment by MITCHELL J. STEIN (Attachments: # 1 Declaration of Mitchell J. Stein, # 2 Appendix (of cited out-of-state cases), # 3 Text of Proposed Order)(Harris, David) (Entered: 04/11/2016)
2016-04-1112MOTION to Take Judicial Notice by MITCHELL J. STEIN (Attachments: # 1 Text of Proposed Order)(Harris, David) (Entered: 04/11/2016)
2016-05-0213Memorandum in opposition to re 11 MOTION for Summary Judgment filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Exhibit SEC v. Heart Tronics, Dkt. 193-3, # 2 Exhibit SEC v. Heart Tronics, Dkt. 193-5)(Greig, William) (Entered: 05/02/2016)
2016-05-0214RESPONSE re 10 MOTION for Summary Judgment filed by MITCHELL J. STEIN. (Attachments: # 1 Affidavit of Mitchell Stein, # 2 Statement of Genuine Issues, # 3 Text of Proposed Order)(Harris, David) (Entered: 05/02/2016)
2016-05-0215MOTION to Take Judicial Notice by MITCHELL J. STEIN (Attachments: # 1 Text of Proposed Order)(Harris, David) (Entered: 05/03/2016)
2016-05-1616REPLY to opposition to motion re 10 MOTION for Summary Judgment filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Exhibit, # 2 Exhibit)(Greig, William) (Entered: 05/16/2016)
2016-05-1617REPLY to opposition to motion re 11 MOTION for Summary Judgment filed by MITCHELL J. STEIN. (Attachments: # 1 Declaration of Mitchell Stein, # 2 Declaration of David Harris, # 3 Declaration of Rasika Reichardt)(Harris, David) (Entered: 05/16/2016)
2016-05-1618MOTION to Take Judicial Notice by MITCHELL J. STEIN (Attachments: # 1 Text of Proposed Order)(Harris, David) (Entered: 05/16/2016)
2017-02-27MINUTE ORDER: Upon consideration of the briefs and record in this case, the parties are hereby ORDERED to file supplemental briefs updating the Court on the status of the criminal case against Stein in the Southern District of Florida and the Eleventh Circuit, as well as the enforcement action against Heart Tronics in the Central District of California and the Ninth Circuit. In addition, the declaration of Kenneth Donnelly submitted by the SEC identifies six documents that the SEC has agreed to produce in full to the plaintiff. The Court would like an update as to whether those documents have been produced. The parties may also update the Court on any other developments relevant to this dispute. The supplemental briefs shall not exceed 7 pages and shall be filed by not later than March 6, 2017 at 5 p.m. SO ORDERED. Signed by Judge John D. Bates on 2/27/17. (lcjdb2) (Entered: 02/27/2017)
2017-02-27Set/Reset Deadlines: Supplemental briefs due by 3/6/2017. (tb) (Entered: 02/27/2017)
2017-03-01Set/Reset Deadlines: Supplemental Memorandum due by 5:00 p.m. on 3/6/2017. (tb) (Entered: 03/01/2017)
2017-03-0619SUPPLEMENTAL MEMORANDUM to re 10 MOTION for Summary Judgment filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Greig, William) (Entered: 03/06/2017)
2017-03-0620SUPPLEMENTAL MEMORANDUM to re Order,,, dated February 27, 2017 filed by MITCHELL J. STEIN. (Harris, David) (Entered: 03/06/2017)
2017-03-0621MOTION to Take Judicial Notice by MITCHELL J. STEIN (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Text of Proposed Order)(Harris, David) (Entered: 03/06/2017)
2017-03-0922Order granting in part and denying in part 12 15 18 21 plaintiff's motions for judicial notice. See text for details. Signed by Judge John D. Bates on 3/9/17. (lcjdb2) (Entered: 03/09/2017)
2017-07-2423ORDER granting in part and denying in part 10 the government's motion for summary judgment, and denying 11 plaintiff's motion for summary judgment. See text of order and accompanying memorandum opinion for details. Signed by Judge John D. Bates on 7/24/17. (lcjdb2) (Entered: 07/24/2017)
2017-07-2424MEMORANDUM AND OPINION granting in part and denying in part 10 the government's motion for summary judgment, and denying 11 plaintiff's motion for summary judgment. See text of opinion and accompanying order for details. Signed by Judge John D. Bates on 7/24/17. (lcjdb2) (Entered: 07/24/2017)
2017-07-25Set/Reset Deadlines: Proposed Briefing Schedule due by 8/4/2017. (tb) (Entered: 07/25/2017)
2017-08-0425PROPOSED BRIEFING SCHEDULE re 23 Order on Motion for Summary Judgment,,, and Agreed Proposed Schedule re Numbered Items in Order by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Text of Proposed Order, # 2 Certificate of Service)(Greig, William) (Entered: 08/04/2017)
2017-08-0826ORDER setting schedule for further proceedings. See text for details. Signed by Judge John D. Bates on 8/8/17. (lcjdb2) (Entered: 08/08/2017)
2017-08-08Set/Reset Deadlines: Renewed Summary Judgment motion due by 4/3/2018. Response to Motion for Summary Judgment due by 4/24/2018. Reply to Motion for Summary Judgment due by 5/8/2018. Vaughn Index due by 10/3/2017. (tb) (Entered: 08/08/2017)
2017-08-1827AFFIDAVIT re 26 Order -- Declaration of Carin Cozza -- by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Certificate of Service)(Greig, William) (Entered: 08/18/2017)
2017-10-0328AFFIDAVIT re 26 Order SEC Supplemental Filing Attaching Declaration of Rachel Nonaka by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Declaration of Rachel Nonaka, # 2 Certificate of Service)(Greig, William) (Entered: 10/03/2017)
2018-02-0229AFFIDAVIT re 26 Order SEC Supplemental Filing Attaching Declarations of Timothy Milloff and Carin Cozza by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Declaration of Timothy Milloff, # 2 Declaration of Carin Cozza, # 3 Certificate of Service)(Greig, William) (Entered: 02/02/2018)
2018-04-0330Joint MOTION to Continue Briefing Schedule for Renewed Summary Judgment Motions by MITCHELL J. STEIN (Attachments: # 1 Text of Proposed Order)(Harris, David) (Entered: 04/03/2018)
2018-04-04MINUTE ORDER: Upon consideration of 30 the parties' joint motion to extend the briefing schedule, and the entire record herein, it is hereby ORDERED that the motion is GRANTED nunc pro tunc; it is further ORDERED that any renewed motions for summary judgment shall be filed by not later than April 17, 2018, any oppositions shall be filed by not later than May 8, 2018, and any replies shall be filed by not later than May 22, 2018. SO ORDERED. Signed by Judge John D. Bates on 4/4/2018. (lcjdb2) (Entered: 04/04/2018)
2018-04-04Set/Reset Deadlines: Renewed Motions for Summary Judgment due by 4/17/18; Oppositions to Renewed Motions for Summary Judgment due by 5/8/18; Replies to Renewed Motions for Summary Judgment due by 5/22/18. (kk) (Entered: 04/04/2018)
2018-04-1731MOTION for Summary Judgment by UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Attachments: # 1 Certificate of Service)(Greig, William) (Entered: 04/17/2018)
2018-04-1732MOTION for Partial Summary Judgment by MITCHELL J. STEIN (Attachments: # 1 Statement of Material Facts as to which there is no Genuine Issue, # 2 Text of Proposed Order)(Harris, David) (Entered: 04/17/2018)
2018-05-0833RESPONSE re 31 MOTION for Summary Judgment filed by MITCHELL J. STEIN. (Attachments: # 1 Statement of Genuine Issues)(Harris, David) (Entered: 05/08/2018)
2018-05-0834Memorandum in opposition to re 32 MOTION for Partial Summary Judgment filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Certificate of Service)(Greig, William) (Entered: 05/08/2018)
2018-05-1535NOTICE of Change of Contact Information by MITCHELL J. STEIN (Harris, David) (Entered: 05/15/2018)
2018-05-2236REPLY to opposition to motion re 31 MOTION for Summary Judgment filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Declaration Declaration of Amber Barss, # 2 Certificate of Service)(Greig, William) (Entered: 05/22/2018)
2018-05-2237REPLY to opposition to motion re 32 MOTION for Summary Judgment filed by MITCHELL J. STEIN. (Harris, David) Modified to add correct linkage on 5/23/2018 (ztd). (Entered: 05/22/2018)
2018-10-2638Upon consideration of 31 defendant's renewed motion for summary judgment and 32 plaintiff's motion for partial summary judgment, and the entire record herein, it is hereby ORDERED that the parties file supplemental materials. See text of Order for details. Signed by Judge John D. Bates on 10/26/2018. (lcjdb2) (Entered: 10/26/2018)
2018-10-30Set/Reset Deadlines: Supplemental Brief due by 11/26/2018. Supplemental Declarations due by 11/26/2018. Response due by 12/17/2018 (tb) (Entered: 10/30/2018)
2018-11-2639SUPPLEMENTAL MEMORANDUM to re 31 MOTION for Summary Judgment filed by UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (Attachments: # 1 Exhibit Declaration of Rachel Nonaka, # 2 Certificate of Service)(Greig, William) (Entered: 11/26/2018)
2018-12-1540RESPONSE re 39 Supplemental Memorandum, filed by MITCHELL J. STEIN. (Attachments: # 1 Exhibit A)(Harris, David) (Entered: 12/15/2018)
2019-02-1941ORDER granting 31 the government's motion for summary judgment, and denying 32 plaintiff's motion for partial summary judgment. See text of Order and accompanying memorandum opinion for details. Signed by Judge John D. Bates on 2/19/2019. (lcjdb2) (Entered: 02/19/2019)
2019-02-1942MEMORANDUM OPINION. Signed by Judge John D. Bates on 2/19/2019. (lcjdb2) (Entered: 02/19/2019)
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