Case Detail
| Case Title | Highland Capital Management LP v. Internal Revenue Service | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| District | Northern District of Texas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| City | Dallas | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Case Number | 3:2017cv02906 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Date Filed | 2017-10-20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Date Closed | 2019-04-02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Judge | Senior Judge A. Joe Fish | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plaintiff | Highland Capital Management LP | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Case Description | Highland Capital Management submitted a FOIA request to the IRS for records concerning the facts or legal analysis behind a Chief Counsel Advice issued to Highland Capital Management. The agency acknowledged receipt of the request and took a 10-day extension. After hearing nothing further from the agency, Highland Capital Management filed suit. Complaint issues: Failure to respond within statutory time limit, Adequacy - Search, Litigation - Attorney's fees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Defendant | Internal Revenue Service | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Documents | Docket Complaint Complaint attachment 1 Opinion/Order [23] FOIA Project Annotation: A federal court in Texas has ruled that the IRS conducted an adequate search for records related to a Chief Counsel Advice that was issued by the IRS to Highland Capital Management and that the agency properly withheld the majority of records because their public availability was specifically determined by § 6110(a) as well as Exemption 3 (other statutes) but ordered an in camera inspection of some of its exemption claims made under Exemption 5 (privileges) after finding that the agency had failed to sufficiently justify its invocation of the exemption. The agency's initial search located 76 responsive pages. A subsequent search located another 283 pages and 11 pages of responsive emails were also found. The agency withheld most of the records under § 6110(a). Highland argued that the agency's search was inadequate because it had required multiple searches. The court, however, disagreed, noting that "the fact that the IRS conducted multiple searches indicates that the IRS was complying with its FOIA obligations in good faith. Ultimately, because the court concludes that the IRS's declarations show that it used reasonable search methodology, and because the court is unconvinced by Highland's arguments to the contrary, the court concludes that the IRS has satisfied its burden of showing it conducted an adequate search." The court approved the agency's use of § 6110(a) which provides that "the text of any written determination and background file document relating to such written determinations shall be open to public inspection at such place as the Secretary may by regulations proscribe." The court pointed out that "the term 'written determination' as used in the statute includes Chief Counsel Advice" as well as records related to such advice." The court explained that "as such, it is section 6110 â€" not the FOIA â€" that exclusively provides Highland with the means to obtain these records." The court added that "since Highland's complaint did not state a claim seeking relief under section 6110, the Court concludes that it lacks jurisdiction to compel the IRS to produce these withheld documents. Moreover, even if the court had jurisdiction, this court would not be the proper venue for an action under 26 U.S.C. § 6110," which establishes that such an action must be brought in the Tax Court or the District Court for the District of Columbia. The IRS had also cited § 6103 as an Exemption 3 statute. Although Highland argued the agency had not provided sufficient detail to support its Exemption 3 claims, the court noted that "it appears logical that emails between Chief Counsel Attorneys, collected with respect to the possible existence of liability for taxpayers other than Highland, would necessarily have third party tax information that should be withheld in part." The court found the agency's affidavits did not support its invocation of the attorney-client privilege and the deliberative process privilege. Finding that the agency had shown that the records it claimed were exempt under the deliberative process privilege were predecisional, the court observed that the agency had yet failed to show that they were deliberative. The court pointed out that "the IRS's declarations offer the court nothing more than opaque explanations as to how the withheld records contributed to the agency's deliberations, such as statements that the withheld records contain 'thoughts and rationale that may not have been reflected in the published CCA' or 'the deliberations of employees of the [IRS] or their counsel.' Precedent makes clear that the IRS must do more to establish that the deliberative process privilege applies to the withheld records."
Issues: Exemption 3 - Limited agency discretion, Exemption 5 - Privileges | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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