[00:00:00] Speaker 01: Case number 21-5168, Thomas A. Montgomery and Beth W. Montgomery, at balance, versus internal revenue service. [00:00:09] Speaker 01: Ms. [00:00:09] Speaker 01: Boylan for the at balance, Ms. [00:00:11] Speaker 01: Bringer for the appellee. [00:00:13] Speaker 03: Ms. [00:00:13] Speaker 03: Boylan, good morning. [00:00:15] Speaker 03: Good morning, Judge Henderson. [00:00:18] Speaker 04: Proceed, please. [00:00:20] Speaker 04: Thank you, and may it please the court. [00:00:23] Speaker 04: This case is about the Montgomery's right to receive responses to their FOIA requests that comply with the law [00:00:30] Speaker 04: FOIA exemptions are to be narrowly construed, yet with respect to requests one through five in exemption seven D, the district court held that the IRS must assert Glomar in all situations where an informant is involved. [00:00:44] Speaker 04: The district court made clear this was required even in a first party request, even if the identity of an informant is not actually at risk, even though the non-existence of records does not implicate a harm cognizable under exemption seven D, [00:00:59] Speaker 04: and even if there are in fact no responsive records. [00:01:03] Speaker 04: FOIA mandates broad disclosure and no exemption supports the wholesale withholding of all information from a first party requester based on speculation that a response may indicate that potential existence of an informant in some other FOIA case. [00:01:19] Speaker 04: Three decades of precedent interpreting 7D make this clear. [00:01:23] Speaker 04: 7D by its express language protects only the identity of an informant [00:01:29] Speaker 04: And after Landano, the agency must establish to establish assurances were provided to a particular informant. [00:01:37] Speaker 04: And those assurances must be established publicly in order to enable the requester to challenge the claimed exemption. [00:01:44] Speaker 04: Following Landano, assurances of confidentiality cannot be assumed. [00:01:51] Speaker 04: The district court further aired here and allowing the IRS to make its case entirely in secret in-camera declarations [00:01:58] Speaker 04: as to both whether an informant in fact exists. [00:02:01] Speaker 04: And if so, whether there were specific assurances given to that informant. [00:02:06] Speaker 04: 7D is not available to protect the potential existence of an informant. [00:02:11] Speaker 04: Congress did provide an exemption that would allow what the IRS seeks here, which is to protect the mere existence of an informant through Glomar. [00:02:19] Speaker 04: And that exemption is C2, which the IRS admits is not applicable here. [00:02:24] Speaker 04: Benevides established that C2 expressly authorizes Glomar [00:02:28] Speaker 04: but this exemption, like all FOIA exemptions, is very limited. [00:02:33] Speaker 04: LOMAR under C2 is proper only where there is a third-party request that identifies the informant by name or identification number, and the informant's existence has not been previously disclosed. [00:02:47] Speaker 04: The limitation of C2 for only third-party requests makes sense. [00:02:52] Speaker 04: Antonelli, a Seventh Circuit case, explained the difference between first and third-party requests. [00:02:58] Speaker 04: It's about balancing the rights of the requester versus the rights of the informant. [00:03:03] Speaker 04: In a third party request where the informant is identified, Glomar makes sense because if the agency either admits or denies that informant's existence, redacting the person's name fails to protect whether that person is or is not an informant. [00:03:20] Speaker 04: In a first party request, such as the Montgomery's, the identity of an informant can be withheld. [00:03:28] Speaker 04: If allowed to stand, the district court's opinion has effectively enacted a new FOIA exemption that authorizes any agency to assert Glomar whenever a potential informant is involved, even in a first party request. [00:03:42] Speaker 04: According to the district court, potential speculative harm is all that the agency needs to allege, and that speculative harm doesn't even have to relate directly to the FOIA request and issue. [00:03:54] Speaker 04: This violates FOIA, [00:03:56] Speaker 04: and the district court's opinion should be reversed for this reason alone. [00:04:00] Speaker 04: The facts of the Montgomery's case further demonstrate the district court's error. [00:04:06] Speaker 04: The IRS claims in its brief that it has to be able to protect every piece of the jigsaw puzzle that could potentially identify a confidential source. [00:04:15] Speaker 04: But IRS informants were at issue in Life Extension and Millhouse. [00:04:20] Speaker 04: And there the IRS not only confirmed the existence of informants and records, [00:04:24] Speaker 04: but didn't even assert Glomar. [00:04:27] Speaker 04: These two cases were cited by the district court, but they're not even mentioned in the IRS's brief. [00:04:33] Speaker 04: The IRS did assert Glomar and Sea Shepherd and made a similar jigsaw puzzle argument there that failed. [00:04:40] Speaker 04: The IRS brief tries to distinguish that case by saying there were unique circumstances given that the IRS had previously admitted the existence of an informant and responsive records. [00:04:51] Speaker 04: Basically because the cat was already out of the bag, [00:04:54] Speaker 04: response didn't undercut its jigsaw puzzle argument. [00:04:57] Speaker 04: But the Montgomery's case is the same as Sea Shepherd, just in reverse. [00:05:02] Speaker 04: The IRS brief confirms it's no informant admission. [00:05:07] Speaker 04: And the IRS's Ziegler declaration unequivocally swears at JA 335 that Mr. Ziegler saw, quote, no indication that any responsive records had been located [00:05:20] Speaker 04: including to requested items one to five, close quote. [00:05:25] Speaker 04: If the jigsaw puzzle isn't at risk where the IRS admits there is an informant and responsive records, the jigsaw puzzle likewise can't be at risk where the IRS admits there is neither an informant nor responsive records. [00:05:42] Speaker 04: Further, because the IRS admits that it previously acknowledged there is no source here, [00:05:49] Speaker 04: If no source exists, it's impossible for there to be a confidential source as required by 7D, because a confidential source is merely a subset of the broader category of source. [00:06:04] Speaker 04: Without even the possibility of a confidential source, there is no basis for a Glomar response under 7D. [00:06:12] Speaker 04: A Glomar response here can't be proper for this reason as well. [00:06:17] Speaker 04: And this case is particularly egregious. [00:06:20] Speaker 04: Request one through five seek pre-printed publicly available IRS forms that are not protected by any FOIA exemption. [00:06:31] Speaker 04: Mr. and Mrs. Montgomery's names are not protected when the Montgomery's filed the FOIA request. [00:06:38] Speaker 04: If the requested IRS forms naming the Montgomery's somehow exist in spite of the IRS's no informant [00:06:46] Speaker 04: and no document acknowledgements, then at the very least those must be produced. [00:06:55] Speaker 04: The IRS also claimed Glomar based on exemptions 70 and three. [00:06:59] Speaker 04: It made one argument for those exemptions that it also made for 7D. [00:07:06] Speaker 04: And that is that it's very effective whistleblower program will somehow be damaged and tax administration seriously impaired. [00:07:15] Speaker 02: Let me ask, in cases where there is no informant and no records of an informant, do you think that the IRS can issue a Glowmore response? [00:07:36] Speaker 04: I think in a third party request situation, yes, I think that's what C2 allows for. [00:07:42] Speaker 04: In a first party request, [00:07:44] Speaker 04: I do not think that that's the case. [00:07:47] Speaker 04: And there has been no first party FOIA request that we have found under 7D where a Glomar response has been allowed for a first party request. [00:07:59] Speaker 04: Where it only names the Montgomery's. [00:08:02] Speaker 04: In our instance, the Montgomery's did not name any informant by identification number or by name. [00:08:10] Speaker 02: Well, if a conspiracy only has two people and one of them is the defendant in a criminal case, if it's the practice of the agency to not issue a global response when there's no informant and no records of an informant, [00:08:33] Speaker 02: then the defendant could always seek a FOIA request seeking documents about an informant and records of an informant. [00:08:44] Speaker 02: And if the agency says Glomar, thanks. [00:08:53] Speaker 02: Thank you, Judge. [00:08:54] Speaker 02: Then the defendant is going to know that there was an informant and the defendant is going to know who the informant was because there's only one possible informant. [00:09:05] Speaker 04: I don't believe that's the case, Your Honor. [00:09:07] Speaker 04: I think that is based on speculation. [00:09:10] Speaker 04: No one knows if the informant exists or who it is unless the agency confirms that information. [00:09:17] Speaker 00: Why under the hypothetical you just heard is it speculative at all? [00:09:23] Speaker 00: If you've got a circumstance in which there is a limited number of conspirators and they are able to surmise that there is an informant, then they know the informant is, or at least they can narrow it down. [00:09:39] Speaker 04: They can narrow it down. [00:09:41] Speaker 00: That's not speculation. [00:09:43] Speaker 00: That's understanding of humanity in numbers. [00:09:47] Speaker 04: Well, they may be able to narrow it down, Your Honor, but FOIA exemptions are supposed to be narrowly construed, and it protects the identity. [00:09:55] Speaker 04: And there's no telling how many people that other co-conspirator may have spoken to or divulged information to. [00:10:02] Speaker 00: They're narrowly construed as a nice general rule, but they still have to be construed. [00:10:09] Speaker 00: The saying narrowly doesn't answer the question. [00:10:12] Speaker 00: It just gives you a guide as to how you go at it. [00:10:15] Speaker 00: But if the hypothetical exists that was posed to you, why do you say that speculative? [00:10:21] Speaker 00: Everybody knows that that would be endangering the identity of the informant. [00:10:29] Speaker 04: I see I'm into my rebuttal time. [00:10:32] Speaker 04: I'd like me to continue answering. [00:10:35] Speaker 00: No, that's okay. [00:10:42] Speaker 03: Judge Santel, do you want her to answer it? [00:10:44] Speaker 00: No, that's okay. [00:10:45] Speaker 03: Oh, all right. [00:10:46] Speaker 00: Just let it go. [00:10:47] Speaker 03: All right. [00:10:47] Speaker 03: At this point, we'll give you a minute or so and reply. [00:10:52] Speaker 03: Ms. [00:10:52] Speaker 03: Bringer, good morning. [00:10:55] Speaker 01: Good morning and may it please the court. [00:10:56] Speaker 01: My name is Nora Bringer and I represent the Internal Revenue Service in this appeal. [00:11:01] Speaker 01: In the early 2000s, Thomas and Beth Montgomery actively participated in creating and carrying out the tax shelters that were held to be shams in Beemont and Southgate. [00:11:11] Speaker 01: which held invalid more than a billion dollars in sham losses. [00:11:15] Speaker 01: That background of this FOIA dispute shows the stakes can be high for tax violations. [00:11:20] Speaker 01: And when people contact the IRS to share information about potential tax violations, the IRS has a responsibility and a duty to protect them. [00:11:29] Speaker 01: The IRS, like other federal law enforcement agencies, has a strong interest expressed in its policies, in treasury regulations, and in declarations submitted in this case. [00:11:38] Speaker 01: in protecting whistleblowers' confidentiality and in protecting the continued voluntary flow of information to the IRS, which are exactly the kinds of concerns that prompted Congress to expand Exemption 70's protection in 1986. [00:11:52] Speaker 01: The Montgomery's raised a number of issues in their appeal, and I'd like to begin with the Glomar issue. [00:11:57] Speaker 01: As an initial matter, there's no procedural bar to the Glomar response. [00:12:02] Speaker 01: The court findings and the IRS testimony in Beemont and Southgate do not preclude the Glomar assertion here through collateral estoppel, traditional estoppel, or the official acknowledgement doctrine. [00:12:14] Speaker 01: The core problem with each of these arguments is that this case doesn't concern the same issue as anything considered or decided in Beemont or Southgate. [00:12:23] Speaker 01: Here, Thomas and Beth Montgomery want to know if the IRS has any of five whistleblower forms for certain years that reference them regarding any tax issue, not just what was at issue in Beaman or Southgate. [00:12:38] Speaker 01: The district court observed correctly that the existence of records and the existence of an informant in those earlier cases simply aren't the same thing. [00:12:48] Speaker 01: The Montgomery's also contend that a mistaken reference in [00:12:53] Speaker 01: An IRS letter during the administrative processing of the Montgomery square request was an official acknowledgement, but that letter does not meet the requirements for official acknowledgement with this which this quarter said are strictly applied that letter. [00:13:11] Speaker 01: specifically did not pinpoint any agency record that both matched the plaintiff's request and has been publicly and officially acknowledged by the agency. [00:13:21] Speaker 01: In the Wolf v. CIA in 2007, this court held that Glomar was waived only for specific records that were identified in the congressional testimony at issue here. [00:13:31] Speaker 01: In this case, no specific records were identified. [00:13:35] Speaker 01: And accordingly, that letter does not overcome the IRS's Glomar assertion here. [00:13:42] Speaker 01: The district court correctly upheld the Glomar response on the merits. [00:13:46] Speaker 01: The same standards apply in Glomar cases as in other FOIA cases. [00:13:51] Speaker 01: The same general exemption review standards apply to a Glomar assertion as would apply to withholding any records themselves. [00:13:59] Speaker 01: And it's the same test that ultimately an agency's justification for invoking a FOIA exemption is sufficient if it appears logical or plausible. [00:14:09] Speaker 01: Now, Exemption 7D does not just protect the identity of a confidential informant. [00:14:15] Speaker 01: It protects information that could reasonably be expected to disclose the identity of a confidential source. [00:14:21] Speaker 01: And in enacting Exemption 7D, this court said in the Parker case that Congress sought to provide a broad exemption for law enforcement under FOIA. [00:14:31] Speaker 01: Now, Congress adopted the language in Exemption 7D explicitly from the protection that the National Security Act of 1947 affords to national security sources. [00:14:42] Speaker 01: And the accompanying Senate report to that expansion of Exemption 7D recognized that a confidential source's identity can be compromised when these small pieces of information are released and pieced together with other previously released knowledge and the requester's own personal knowledge. [00:15:00] Speaker 01: The confidential source exemption under 7D does not require complete and permanent secrecy. [00:15:07] Speaker 01: The Supreme Court rejected this argument in the London case. [00:15:11] Speaker 01: The court explained that it can't have been Congress's intent, that a source would be considered confidential for exemption 7D only if their identity would be disclosed to no one. [00:15:21] Speaker 01: There certainly are cases where the identity of a confidential source is disclosed, but that has not been the case here. [00:15:30] Speaker 01: Here, the Internal Revenue Service has not disclosed the existence or nonexistence of any records that are at issue in items one through five. [00:15:41] Speaker 01: The district court in describing its reasoning for upholding the Glomar response echoed this court's discussion of the protection of return information in the tax context in the Church of Scientology case, this court's on-bank decision in 1986. [00:16:00] Speaker 01: In that case, in the Church of Scientology case, this court explained that an agency assessment of the risk of disclosure, and this is a quote, is always problematic because the agency doesn't know what other information the requester has. [00:16:14] Speaker 01: In this case, the Montgomery specifically seek whistleblower forms that identify them. [00:16:19] Speaker 01: They don't simply seek their own records. [00:16:21] Speaker 01: they seek records of other people who may or may not have talked to the IRS about their tax issues. [00:16:28] Speaker 01: But the IRS does not know and cannot know with certainty how many people had knowledge of a particular individual's tax issues and whether that list of suspected moles is one person long, a few people long, or much larger. [00:16:41] Speaker 01: The IRS does not know and cannot know what other efforts have been made to identify a suspected whistleblower, although the facts in this case demonstrate [00:16:51] Speaker 01: there are taxpayers who are very motivated in finding out whether anyone has talked to the IRS about them. [00:16:58] Speaker 01: That only illustrates the importance of protecting information that could lead to the identification of any confidential informant. [00:17:08] Speaker 01: And even if one request would not be enough, as has been discussed in a number of FOIA cases, [00:17:14] Speaker 01: A requester could always submit a series of targeted requests to narrow the pool. [00:17:17] Speaker 01: So you know this request covers eight years. [00:17:21] Speaker 01: Perhaps a taxpayer worked with one group of financial advisors and a couple of those years in a different group and another couple of years, a series of targeted requests could narrow down the group even further. [00:17:33] Speaker 01: in trying to identify who may have talked to the IRS about an individual taxpayer. [00:17:40] Speaker 01: At the end of the day, the district court correctly held that the IRS met its burden to provide a logical and plausible explanation for its glomar response. [00:17:49] Speaker 01: And the Montgomery's have not provided any evidence to undermine the IRS's explanation. [00:17:56] Speaker 01: The district court's decision here is one in a long line of cases [00:18:03] Speaker 01: that are concerned about that jigsaw puzzle analysis. [00:18:07] Speaker 01: In the Gardel's case in 1982, this court used a jigsaw puzzle type analysis to uphold a Glomar response with respect to the entirety of the community at UCLA, even though this court recognized that it was an enormous school. [00:18:23] Speaker 01: And in the Gardel's case, this court was applying FOIA exemption three in conjunction with the National Security Act of 1947. [00:18:30] Speaker 01: Again, the source for [00:18:32] Speaker 01: the current standard and exemption 70. [00:18:35] Speaker 01: In that case, this court held that the affidavits were sufficient that said that the CAA needs and uses intelligence sources at American schools and that disclosing that such contexts were or were not made at UCLA could be pieced together by people looking to harm the United States. [00:18:53] Speaker 01: Here the IRS's affidavits did the same thing. [00:18:55] Speaker 01: The declaration submitted to the district court explained that the IRS needs and uses whistleblowers and the important information that they share with the agency [00:19:06] Speaker 01: And the IRS explained its concern that disclosing the existence of the civil record identifying the Montgomery's could be pieced together with other information. [00:19:17] Speaker 01: Now here, the IRS submitted a number of in-camera declarations to the district court. [00:19:23] Speaker 01: The district court, this court is held again and again, has broad discretion to accept in-camera declarations. [00:19:29] Speaker 01: This court recognized in Roth and in other cases that receiving in-camera information [00:19:35] Speaker 01: is necessary to protect the information that the agency is trying to protect from disclosure. [00:19:43] Speaker 01: In the Landano case, [00:19:45] Speaker 01: The Supreme Court said that it generally will be possible to establish factors such as the nature of the crime that was investigated and the source's relation to it. [00:19:55] Speaker 01: But the Supreme Court also said that to the extent that the government's proof may compromise legitimate interests, of course, the government can still attempt to meet its burden with in-camera affidavits. [00:20:06] Speaker 01: And accepting the in-camera submissions of the government here, the district court acted very well within its discretion. [00:20:16] Speaker 01: Does the court have any questions for me? [00:20:18] Speaker 01: It doesn't look like it. [00:20:21] Speaker 01: So thank you, counsel. [00:20:22] Speaker 03: Thank you very much. [00:20:26] Speaker 03: Ms. [00:20:26] Speaker 03: Boylan, why don't you take two minutes or one minute? [00:20:29] Speaker 03: I see one minute. [00:20:32] Speaker 04: Thank you, Judge Henderson. [00:20:34] Speaker 04: This case isn't about tax shelters, nonexistent sham losses, or, quote, snitches, unquote, as the district court and the IRS seem to believe. [00:20:43] Speaker 04: It's about FOIA's mandated disclosure except in very limited circumstances that the IRS has not established. [00:20:50] Speaker 04: Ms. [00:20:50] Speaker 04: Bringer indicated that there was no acknowledgement or the acknowledgement of informants was not broad, but it was. [00:20:58] Speaker 04: That acknowledgement covered any matter relating or involving Tom Montgomery. [00:21:03] Speaker 04: They were very broad. [00:21:05] Speaker 04: She also noted Gardel's and that UCLA was identified. [00:21:10] Speaker 04: That's right. [00:21:11] Speaker 04: It was identified. [00:21:12] Speaker 04: There has been no extension of Glomar to a first party case like the Montgomery's where they only name themselves in the foyer request. [00:21:21] Speaker 00: Why does it make any difference if it's a first party case? [00:21:25] Speaker 04: Because your honor, I think the Antonelli court really explained that. [00:21:29] Speaker 04: They said in a third party case where you've identified an informant, [00:21:35] Speaker 04: And again, seven D and three, the goal is to protect the identity of the informant, not the mere existence of an informant. [00:21:44] Speaker 04: In a third party case, the requester has named the informant either by name or a taxpayer or identification number. [00:21:53] Speaker 04: And in that instance, if the agency were to say they did or did not have records, they have confirmed the identity [00:22:03] Speaker 04: of that informant or non-informant. [00:22:06] Speaker 04: But they have done that. [00:22:08] Speaker 04: In a first party request, they don't. [00:22:11] Speaker 04: FOIA requires they produce as much as possible. [00:22:14] Speaker 04: And with these pre-printed IRS forms, if they mention the Montgomery's, if they want to redact... So if they're really wanting to protect the informant, there is more reason in a first party case, isn't it? [00:22:28] Speaker 04: I don't think so, Your Honor. [00:22:29] Speaker 04: And then why has there never been a first party case upholding a global response? [00:22:37] Speaker 03: Right. [00:22:37] Speaker 03: Thank you. [00:22:39] Speaker 04: Thank you, Your Honors. [00:22:40] Speaker 03: Madam Deputy, would you please call the next case?