UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ____________________________________ ) ZIMMER BIOMET ) HOLDINGS, INC., ) ) Plaintiff, ) ) v. ) Civil Action No. 22-2966 (ABJ) ) INTERNAL REVENUE ) SERVICE, ) ) Defendant. ) ____________________________________)

MEMORANDUM OPINION AND ORDER

In this case brought under the Freedom of Information Act (“FOIA”),

et

seq., plaintiff Zimmer Biomet Holdings, Inc. (“Zimmer”) has filed a complaint against defendant

Internal Revenue Service (“IRS”), a government agency. See Compl. ¶¶ 3–4 [Dkt. # 1]. Zimmer

seeks an order compelling IRS to produce various documents concerning three tax examinations

conducted by the agency. Compl. ¶¶ 5–7. One of the documents requested is a 63-page Appeals

Case Memorandum, created in relation to IRS’s examination of Zimmer’s filings for the 2008-

2009 tax period. Compl. ¶ 5. Defendant partially denied Zimmer’s request for this document; of

the memorandum’s 63 pages, IRS disclosed 35 pages in full and redacted portions of the remaining

28 pages pursuant to FOIA Exemption 5. Compl. ¶¶ 17–20. While the remainder of the FOIA

action is still ongoing, plaintiff has filed a motion for partial summary judgment objecting to the

redactions in this one document and seeking the disclosure of the Appeals Case Memorandum in

its entirety. See Pl.’s Mot. for Partial Summ. J. [Dkt. # 18]. Because the Appeals Case Memorandum was both deliberative and predecisional, and

plaintiff does not meet its burden to establish express waiver of the deliberative process privilege,

the Court will GRANT IRS’s cross-motion for partial summary judgment and DENY plaintiff’s

motion.

BACKGROUND

Plaintiff Zimmer was the subject of an examination (i.e., an audit) conducted by defendant

IRS covering Zimmer’s 2008-2009 tax years. Compl. ¶ 5; Def.’s Opp. to Pl.’s Partial Mot. for

Summ. J. [Dkt. # 25] (“Def.’s Opp.”) at 6. At the conclusion of the audit, IRS’s examination team

proposed seven adjustments to plaintiff’s tax liabilities, outlined in a Schedule of Adjustments.

See Mem. in Supp. of Pl.’s Mot. for Partial Summ. J. [Dkt. # 18-1] (“Pl.’s Mot.”) at 2; Att. 3 to

Ex. 1 to Pl.’s Opp. to Cross-Mot. [Dkt. # 27-3] (“Redacted ACM”) at 4. Three of the issues listed

in the Schedule of Adjustments were computational in nature and involved the IRC 199 deduction,

Foreign Tax Credit, and a General Business Credit. Redacted ACM at 4. The four remaining

“significant” issues involved (1) a Cost Sharing Arrangement (CSA)/Buy-In Payment, (2) an

accuracy-related penalty related to Issue 1, (3) Quarterly/Annual CSA Payments, and (4) a

Research & Experimental (R&E) Credit.

at 4–5.

Of those four, Issues 1 and 2 were the most significant. See Redacted ACM at 2, 5. With

respect to Issue 1, the IRS examination team concluded plaintiff should be “deemed to receive (or

pay)” approximately $1.259 billion in a CSA buy-in payment from a subsidiary. See Redacted

ACM at 2, 8. With respect to Issue 2, the IRS examination team imposed an approximately $174

million “Accuracy Related Penalty” due to plaintiff’s failure to report the CSA buy-in payment

correctly.

2 Plaintiff appealed the proposed adjustments through the IRS’s Independent Office of

Appeals (“IRS Appeals”). See Pl.’s Mot. at 2. As a result of the appeals process, the parties

entered into a Closing Agreement on October 18, 2017, which covered a portion of the issues

related to plaintiffs 2008-2009 tax liability. 1 Pl.’s Mot. at 7; Def.’s Opp. at 1. Notably, the IRS

Appeals team conceded Issues 1 and 2 in favor of plaintiff in full, adjusting those figures to zero

as part of the agreement. See Redacted ACM at 2. The Appeals team also adjusted the R&E

Credit. See

However, three issues related to plaintiff’s 2008-2009 tax liability remained

unsettled. Def.’s Reply in Supp. of Cross-Mot. [Dkt. # 29] (“Def.’s Reply”) at 10.

An Appeals Case Memoranda (“ACM”) was created in relation to Zimmer’s appeal and

was finalized on December 3, 2018. 2 Def.’s Opp. at 6. Four days later, on December 7, 2018,

defendant sent a letter to plaintiff stating that IRS Appeals had approved the Closing Agreement

reached on October 18, 2017. Letter from Roxanne M. Sharp Rodjius, Appeals Team Case Leader,

Internal Revenue Service, to Mark Bilodeau, Director of U.S. Income Tax Defense, Zimmer

Biomet Holdings, Inc. (Dec. 7, 2018), Att. 2 to Ex. 1 to Pl.’s Opp. to Cross-Mot. [Dkt. # 27-2]

(“Settlement Letter”) at 1. Defendant then issued a Statutory Notice of Deficiency on December

21, 2018. See Def.’s Cross-Mot. for Partial Summ. J. [Dkt. # 26] (“Def.’s Cross-Mot.”) at 11; Aff.

of Mark Bilodeau, Ex. 1 to Pl.’s Partial Mot. for Summ. J. [Dkt. # 18-3] (“Bilodeau Aff.”) ¶ 8.

1 The Internal Revenue Code provides that “[t]he Secretary is authorized to enter into an agreement in writing with any person relating to the liability of such person (or of the person or estate for whom he acts) in respect of any internal revenue tax for any taxable period.”

.

2 An ACM “[a]ddress[es] the taxpayer’s position, the government’s position, and Appeals’ analysis and final determination.” IRM 8.6.2.2(8) (Aug. 17, 2017). The ACM is an Appeals Technical Employee’s “summary of the issue(s) and recommended resolution.” IRM. 8.6.2.2 (Mar. 16, 2015).

3 The Notice reflected the IRS’ position on the remaining disputed issues related to plaintiff’s 2008-

2009 tax liabilities. Bilodeau Aff. ¶ 9.

On March 17, 2020, the parties participated in a telephone conference to discuss separate

ongoing audits for plaintiff’s 2010-2012 and 2013-2015 tax periods. Compl. ¶ 9. According to

plaintiff, IRS team members stated that the examination team “relied on the contents of the 2008-

2009 [ACM] to reach conclusions with respect to a transfer pricing issue in the 2010-2012 taxable

years.” Compl. ¶ 10. A member of the examination team allegedly stated her belief that plaintiff

had received a copy of the ACM. Compl. ¶ 12. Plaintiff requested a copy that day, but upon

receiving no response, plaintiff submitted a FOIA request on April 24, 2020. Compl. ¶¶ 13–14.

In the request, counsel for plaintiff sought the following:

The final Appeals Case Memorandum (ACM) prepared in connection with the 2008 and 2009 taxable years. The ACM is described in IRM 8.6.2.2 (08- 17-2017) and 8.7.11.14 (10-26-2007). The request for the ACM includes but is not limited to all narrative sections, attachments, forms, schedules of adjustment, and any other attachments to the ACM.

Compl. ¶ 14.

Defendant responded to plaintiff’s FOIA request on August 28, 2020, disclosing 35 pages

in full and 28 pages in part. Compl. ¶¶ 17–18. Defendant invoked the deliberative process

privilege under FOIA Exemption 5 to justify its withholding of the material. Compl. ¶ 20. On

November 25, 2020, plaintiff agency appealed the decision to withhold the redacted material, but

its appeal was denied. Compl. ¶¶ 21, 24. This litigation followed to compel production of that

document, among others.

Although document production for other portions of plaintiff’s FOIA requests remains

ongoing, see, e.g., Min. Order (June 21, 2024), plaintiff has filed a motion for partial summary

judgment to resolve the dispute surrounding the ACM. It argues that the deliberative process

4 privilege codified in Exemption 5 does not apply, and even if it did, the defendant waived the

privilege in the March 17, 2020 phone call. See Pl.’s Mot. at 1. Defendant has opposed plaintiff’s

motion and filed its own cross-motion for summary judgment, arguing the redactions were proper

pursuant not only to Exemption 5, but also Exemption 3. 3 See Def.’s Opp. at 2. Plaintiff has

opposed defendant’s cross-motion, and the matter is fully briefed. See Pl.’s Opp. to Def.’s Cross-

Mot. for Partial Summ. J. [Dkt. # 27] (“Pl.’s Opp. to Cross-Mot.”); Def.’s Reply.

On February 9, 2024, the Court ordered defendant to provide a copy of the ACM without

redactions to assist the Court in making a responsible de novo determination, see Min. Order (Feb.

9, 2024), and the Court has reviewed the document in camera.

STANDARD OF REVIEW

In a FOIA case, the district court reviews the agency’s decisions de novo and “the burden

is on the agency to sustain its action.”

(a)(4)(B); Mil. Audit Project v. Casey,

(D.C. Cir. 1981). “[T]he vast majority of FOIA cases can be resolved on

summary judgment.” Brayton v. Office of U.S. Trade Rep.,

(D.C. Cir. 2011).

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). The party seeking summary judgment “bears the initial responsibility of informing the

district court of the basis for its motion, and identifying those portions of the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,

3 Defendant’s asserts Exemption 3 “only for two redactions on the very first page of the 2008-2009 ACM.” Def.’s Cross-Mot. at 5 n.2. Defendant at times also asserts Exemption 7, see Def.’s Cross-Mot. at 5, but in its most recent reply states “[it] has not invoked [Exemption] 7(E) here.” Def.’s Reply at 7. For the purposes of this opinion, this Court will consider only defendant’s invocations of Exemptions 3 and 5.

5 which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v.

Catrett,

(1986) (internal quotation marks omitted). To defeat summary

judgment, the non-moving party must “designate specific facts showing that there is a genuine

issue for trial.”

(internal quotation marks omitted).

The mere existence of a factual dispute is insufficient to preclude summary judgment.

Anderson v. Liberty Lobby, Inc.,

, 247–48 (1986). A dispute is “genuine” only if a

reasonable factfinder could find for the non-moving party; a fact is “material” only if it is capable

of affecting the outcome of the litigation.

; Laningham v. U.S. Navy,

(D.C. Cir. 1987). In the FOIA context, “the sufficiency of the agency’s identification or

retrieval procedure” must be “genuinely in issue” in order for summary judgment to be

inappropriate. Weisberg v. U.S. Dep’t of Just.,

, 371 n.54 (D.C. Cir. 1980), quoting

Founding Church of Scientology v. Nat’l Sec. Agency,

(D.C. Cir. 1979) (internal

quotation marks omitted). In assessing a party’s motion, the court must “view the facts and draw

reasonable inferences ‘in the light most favorable to the party opposing the summary judgment

motion.’” Scott v. Harris,

(2007) (alterations omitted), quoting United States

v. Diebold, Inc.,

(1962) (per curiam).

“Summary judgment may be granted on the basis of agency affidavits” in FOIA cases when

those affidavits “contain reasonable specificity of detail rather than merely conclusory statements,”

and when “they are not called into question by contradictory evidence in the record or by evidence

of agency bad faith.” Judicial Watch, Inc. v. U.S. Secret Serv.,

(D.C. Cir. 2013),

quoting Consumer Fed’n of Am. v. Dep’t of Agric.,

(D.C. Cir. 2006). However,

a plaintiff cannot rebut the good faith presumption afforded to an agency’s supporting affidavits

through “purely speculative claims about the existence and discoverability of other documents.”

6 SafeCard Servs., Inc. v. SEC,

(D.C. Cir. 1991), quoting Ground Saucer

Watch, Inc. v. CIA,

(D.C. Cir. 1981).

ANALYSIS

FOIA requires the release of government records upon request. Its purpose is “to ensure

an informed citizenry, vital to the functioning of a democratic society, needed to check against

corruption and to hold the governors accountable to the governed.” NLRB v. Robbins Tire &

Rubber Co.,

(1978). At the same time, Congress recognized “that legitimate

governmental and private interests could be harmed by release of certain types of information and

provided nine specific Exemptions under which disclosure could be refused.” FBI v. Abramson,

(1982); see also Ctr. for Nat’l Sec. Studies v. U.S. Dep’t of Just.,

(D.C. Cir. 2003) (“FOIA represents a balance struck by Congress between the public’s right

to know and the government’s legitimate interest in keeping certain information confidential.”),

citing John Doe Agency v. John Doe Corp.,

(1989). The Supreme Court has

instructed that “FOIA Exemptions are to be narrowly construed.” Abramson,

.

To prevail in a FOIA action, an agency must first demonstrate that it has made “a good

faith effort to conduct a search for the requested records, using methods which can be reasonably

expected to produce the information requested.” 4 Oglesby v. U.S. Dep’t of Army,

(D.C. Cir. 1990). Second, the agency must show that “materials that are withheld . . . fall within

a FOIA statutory Exemption.” Leadership Conf. on Civil Rights v. Gonzales,

(D.D.C. 2005). Any “reasonably segregable” information in a responsive record must be

4 Because plaintiff has filed only a partial motion for summary judgment with respect to a single document and production remains ongoing, threshold issues that ordinarily must be determined in a FOIA case – such as the adequacy of defendant’s search for responsive records – are not yet ripe, have not been briefed, and will not be addressed in this opinion. 7 released,

(b), and “non-exempt portions of a document must be disclosed unless

they are inextricably intertwined with exempt portions.” Mead Data Ctr., Inc. v. U.S. Dep’t of Air

Force,

(D.C. Cir. 1977).

In 2016, Congress added language to FOIA, mandating that “an agency shall withhold

information under this section only if the agency reasonably foresees that disclosure would harm

an interest protected by [the] Exemption. . . . or disclosure is prohibited by law.”

(a)(8)(A)(i). As the D.C. Circuit has explained, “Congress added the distinct

foreseeable harm requirement to foreclose the withholding of material unless the agency can

‘articulate both the nature of the harm [from release] and the link between the specified harm and

specific information contained in the material withheld.’” Reps. Comm. for Freedom of the Press

v. FBI,

(D.C. Cir. 2021), quoting H.R. Rep. No. 114-391, at 9 (2016). “In that

way, the foreseeable harm requirement imposes an independent and meaningful burden on

agencies.”

(brackets and internal quotation marks omitted).

I. Defendant’s Assertion of Exemption 5 Was Appropriate.

Exemption 5 permits agencies to withhold “inter-agency or intra-agency memorandums or

letters which would not be available by law to a party other than an agency in litigation with the

agency.”

(b)(5); Dep’t of Interior & Bureau of Indian Affairs v. Klamath Water

Users Protective Ass’n,

(2001). A document may be properly withheld under

Exemption 5 only if (1) its source is a government agency, and (2) it falls “within the ambit of a

privilege against discovery under judicial standards that would govern litigation against the agency

that holds it.” Klamath,

. The Exemption encompasses “protections traditionally

afforded certain documents pursuant to evidentiary privileges in the civil discovery context,”

including the executive “deliberative process” privilege. Tax’n with Representation Fund v. IRS,

8

(D.C. Cir. 1981). FOIA “places the burden on the agency to sustain the

lawfulness of specific withholdings in litigation.” Nat. Res. Def. Council, Inc. v. Nuclear

Regulatory Comm’n,

(D.C. Cir. 2000).

“The deliberative process privilege rests on the obvious realization that officials will not

communicate candidly among themselves if each remark is a potential item of discovery,” and its

purpose “is to enhance ‘the quality of agency decisions’ by protecting open and frank discussion

among those who make them within the Government.” Klamath, 532 U.S. at 8–9 (citations

omitted), quoting NLRB v. Sears, Roebuck & Co.,

(1975). To accomplish that

goal, “[t]he deliberative process privilege protects agency documents that are both predecisional

and deliberative.” Judicial Watch, Inc. v. FDA,

(D.C. Cir. 2006), citing Coastal

States Gas Corp. v. Dep’t of Energy,

(D.C. Cir. 1980).

Whether a document is predecisional “turns centrally on whether agency communications

precede a final decision,” whereas the deliberative prong “focuses on whether the substance of the

documents ‘reflects the give-and-take of the consultative process.’” Campaign Legal Ctr. v. Dep’t

of Justice,

(D.C. Cir. 2022), quoting Reporters Comm. for Freedom of the Press v.

FBI,

(D.C. Cir. 2021). Moreover, to satisfy the deliberative prong, the

government must “explain the role it played in administrative decisionmaking – the ‘who, what,

where, and how’ of internal governmental deliberations.”

quoting Judicial Watch, Inc. v. U.S.

Dep’t of Just.,

(D.C. Cir. 2021). To meet that burden, the government must

demonstrate 1) the “roles of the document drafters and recipients,” 2) the “nature of the withheld

content,” 3) the “stage within the broader deliberative process in which the withheld material

9 operates,” and 4) the “way in which the withheld material facilitated agency deliberation.” Id.;

Judicial Watch,

. 5

However, if a record falls within the coverage of the deliberative process privilege, that

privilege can be waived if “an agency chooses expressly to adopt or incorporate by reference an

intra-agency memorandum previously covered by Exemption 5 in what would otherwise be a final

opinion.” Sears, Roebuck & Co.,

; see also Judicial Watch, Inc. v. U.S. Dep’t of

Def.,

(D.C. Cir. 2017); Afshar v. Dep’t of State,

(D.C. Cir.

1983). “[V]ague or equivocal statements implying that a position presented in a deliberative

document has merit” are not enough to constitute a waiver of Exemption 5. Judicial Watch,

.

A. The 2008-2009 ACM was predecisional.

Plaintiff argues that Exemption 5 does not apply because the ACM postdates the October

18, 2017 Closing Agreement, which the parties entered into more than one year before the ACM

was finalized on December 3, 2018. Pl.’s Mot. at 5, 7. According to plaintiff, because the Closing

Agreement reflects the “final and conclusive” view of the dispute over plaintiff’s 2008-2009 tax

liability, the ACM was necessarily post-decisional. Id. at 5.

5 In Tax Analysis v. I.R.S., the D.C. Circuit held that Field Service Advice Memoranda (“FSAs”) were not protected by Exemption 5.

(D.C. Cir. 1997). However, FSAs are “issued by the Office of Chief Counsel for the IRS . . . and provide[] legal advice to the IRS, direct[] litigation in the Tax Court, and provide[] guidance and support for litigation in other courts.”

. FSAs thus represent “statements of a legal position” from the Chief Counsel to subordinates in the field.

. ACMs, on the other hand, contain recommendations from IRS personnel to superiors regarding resolutions of specific tax disputes. See IRM. 8.6.2.2.4 (08- 17-2017).

10 Defendant disagrees. It points to a letter from IRS Appeals Case Team Leader Roxanne

Sharp Rodjius to plaintiff dated December 7, 2018 – four days after the ACM was finalized –

notifying Zimmer that IRS Appeals approved the settlement. Def.’s Cross-Mot. at 11; Decl. of

Joy Gerdy Zogby, Ex. 2 to Def.’s Cross-Mot. for Partial Summ. J. [Dkt. # 26-2] (“Zogby

Decl.”) ¶ 30; see also Settlement Letter at 1. Defendant contends that the approval of the

settlement by IRS Appeals was “based at least in part” upon the content of the ACM, and,

therefore, that the document preceded the relevant decision. Def.’s Cross-Mot. at 17; Zogby Decl.

¶ 31. Plaintiff replies that the December 7, 2018 letter was not referring to the Closing Agreement,

but rather is “the acceptance of the settlement of a computational amount set forth in the offer of

settlement attached to that letter.” Pl.’s Opp. to Cross-Mot. at 37.

A review of the parties’ affidavits and exhibits reveals that there is no genuine dispute of

fact with respect to this issue. It is undisputed that the parties entered into a Closing Agreement

in October 2017. However, subsequent actions taken by IRS Appeals reveal that while the Closing

Agreement may have resolved some aspects of plaintiff’s 2008-2009 tax liability, it did not resolve

others. More importantly, based on the sworn affidavit submitted by IRS Attorney Joy Gerdy

Zogby, the creation of an ACM was a necessary predicate to the agency’s approval of those aspects

that were part of the settlement. See Zogby Decl. ¶ 31.

As IRS points out, plaintiff was notified via letter on December 7, 2018, that the parties’

settlement was approved. That letter begins, “Appeals approved the settlement we reached and

we will process and close your case.” Settlement Letter at 1. Defendant attached to the letter a

Form 870-AD, an IRS form entitled “Offer to Waive Restrictions on Assessment and Collection

of Tax Deficiency and to Accept Overassessment.” Settlement Letter at 2. In the relevant part,

the Form states:

11 This offer, when accepted by the Commissioner of Internal Revenue, will result in the waiver of restrictions on assessment and collection of the deficiency for 2009-09 set forth above, which deficiency is attributable to the resolution of specific issues enumerated in this Form 870-AD and the Appeals Audit Statement . . . dated March 20, 2018 and the Closing Agreement signed on behalf of the Taxpayer and Commissioner on October 18, 2017, and October 19, 2017, respectively (“Closing Agreement”) (the “Resolved Items”).

That form was signed on December 3, 2018, on behalf of the Commissioner of the IRS by the

Case Team Leader who oversaw the creation of the ACM.

Following the approval of the settlement, IRS issued a Statutory Notice of Deficiency on

December 21, 2018 – seventeen days after the ACM was finalized – that covered the remaining

issues not addressed in the Closing Agreement. See Def.’s Cross-Mot. at 17, citing Zogby

Decl. ¶ 33. The filing of this document enabled plaintiff to pursue litigation against defendant in

the tax courts, and plaintiff’s 2008-2009 tax liability did not reach a full and final resolution until

November 2021, nearly three years after the ACM was finalized. Def.’s Cross-Mot. at 11–12;

Bilodeau Aff. ¶ 9.

The language of the December 7, 2018 letter and the attached Form 870-AD, followed by

the filing of a Statutory Notice of deficiency two weeks later, support defendant’s contention that

IRS Appeals’ approval of the settlement came after the ACM was finalized on December 3, 2018,

12 rather than before. The creation of the ACM thus “precede[d] a final decision” on plaintiff’s 2008-

2009 tax liability and was, therefore, predecisional. 6 Campaign Legal Ctr.,

.

B. The 2008-2009 ACM was deliberative.

As indicated above, supra at 9–10, when the government invokes Exemption 5 to shield

documents from FOIA disclosure, it bears the burden of demonstrating 1) the “roles of the

document drafters and recipients,” 2) the “nature of the withheld content,” 3) the “stage within the

broader deliberative process in which the withheld material operates,” and 4) the “way in which

the withheld material facilitated agency deliberation.” Campaign Legal Ctr.,

.

Defendant has met this burden with this declaration and supporting documents.

The 2008-2009 ACM was drafted by members of the IRS Appeals team and relayed those

team members’ personal views regarding plaintiff’s tax liability, including the relative pros and

cons of various tax adjustments and potential litigation hazards associated with those adjustments.

See Zogby Decl., ¶¶ 17, 25–27. It was compiled and submitted from a subordinate, Appeals Case

Team Leader Roxanne Sharp Rodjius, to her superior, Appeals Team Manager Clarence H.

Phillips, for the purpose of recommending or not recommending the settlement of various tax

6 Even if the ACM did not predate the final IRS Appeals approval, defendant correctly notes that courts in this District have found that predecisional records are not limited to those created before a final decision is made, and that the court’s task depends on the context of the record relative to the agency’s decision. See, e.g., Khatchadourian v. Def. Intel. Agency,

, 91 (D.D.C. 2020); Conservation Force v. Jewell,

(D.D.C. 2014), aff’d, No. 15-5131,

(D.C. Cir. 2015); Sierra Club v. U.S. Dep’t of Interior,

(D.D.C. 2004).

13 disputes. 7 Zogby Decl. ¶¶ 19–20, 28. And, as described above, the ACM was a necessary

predicate to the ultimate settlement of plaintiff’s 2008-2009 tax dispute. Supra at 12–13.

Moreover, the Court conducted an in camera review to assist in its responsible decisionmaking,

and the redacted portions of the ACM do, in fact, involve IRS Appeals Team members’ personal

opinions and recommendations related to plaintiff’s tax adjustments.

In sum, the 2008-2009 ACM represents recommendations from subordinates to their

Appeals Team Manager – the very “core” of deliberative materials. Reporters Comm.,

.

C. Defendant has demonstrated foreseeable harm.

Plaintiff also contends defendant has not met its burden of showing that disclosure would

cause foreseeable harm pursuant to

(a)(8)(A)(i). See Pl.’s Opp. to Cross-Mot. at

40. Defendant argues disclosure “chill[s] future deliberations by both IRS Examination and IRS

Appeals employees because there would be a risk that their opinions, views, and analysis would

become public.” Def.’s Cross-Mot. at 21. According to IRS attorney Gerdy Zogby, “[i]f a

document like the ACM were made fully available to taxpayers, IRS Appeals teams would be less

able to engage in open and honest discussions about how to fulfill their mission of resolving cases.”

Zogby Decl. ¶ 50.

The D.C. Circuit addressed this issue in Coastal States. There, the Circuit held that

disclosure of a document is likely to adversely affect the purposes of Exemption 5 when the

7 Plaintiff argues that Appeals Case Team Leader Rodjius had authority to settle cases, and thus the implication that Rodjius was making a recommendation to her superior is false. Pl.’s Opp. to Cross-Mot. at 30. However, the first page of plaintiff’s attachment displays Rodjius’ signature, and, below that, a box labeled “Approved by” along with the digital signature of her supervisor, Phillips. Att. 3 to Ex. 1 to Pl.’s Opp. to Cross-Mot. [Dkt. # 27-2] at 1.

14 document is “so candid or personal in nature that public disclosure is likely in the future to stifle

honest and frank communication within the agency.” Coastal States,

.

The Court agrees with defendant. Here, as defendant points out, the ACM is a particularly

sensitive intra-agency document given that it “reflect[s] a marked difference of opinion between

IRS Exam and IRS Appeals regarding the proper amount of Plaintiff’s tax liabilities.” Def.’s Reply

at 18. Documents like the ACM at issue – which contains discussion among employees “so candid

or personal in nature that public disclosure is likely in the future to stifle honest and frank

communication within the agency,” Coastal States,

– are squarely the concern of

the deliberative process privilege, and the Court finds that defendant has sufficiently demonstrated

that disclosure would cause harm to internal functioning.

D. Defendant did not waive the deliberative process privilege.

Finally, plaintiff argues that defendant waived any application of the deliberative process

privilege under Exemption 5. It points to a March 17, 2020, teleconference during which a member

of the IRS examination team allegedly “affirmatively stated . . . that she had relied upon the

contents of the 2008-2009 ACM to prepare a write-up of issues” for a subsequent examination.

Pl.’s Mot. at 10; Bilodeau Aff. ¶ 11; Aff. of William F. Colgin, Ex. 2 to Pl.’s Partial Mot. for

Summ. J. [Dkt. # 18-4] (“Colgin Aff.”) at 7. Defendant disputes that plaintiff’s affidavits actually

support the manner in which plaintiff characterizes the teleconference call in its memorandum of

support. Def.’s Reply at 21. However, even assuming arguendo that the IRS examination team

did make the comments as plaintiff alleges, those comments are insufficient to demonstrate

defendant waived its deliberative process privilege.

The Circuit addressed this question in Common Cause v. IRS,

(D.C. Cir.

1981). There, the plaintiff filed a FOIA request to compel the IRS to produce internal documents

15 related to the agency’s decision not to implement a public disclosure policy.

. The

plaintiff argued, in part, that the IRS relinquished deliberative process protection when the agency

published a post-decision document referring to the reasons discussed in the privileged

memoranda.

. The Circuit held that “[s]uch casual allusion in a post-decisional document

to subject matter discussed in some pre-decisional, intra-agency memoranda is not the express

adoption or incorporation by reference [that] . . . would remove the protection of Exemption 5 if

the memorandum were the agency’s final opinion.’”

(internal quotation marks omitted).

The same principle can be applied here. According to plaintiff, the IRS employee on the

teleconference call did not “adopt” the contents of the ACM, but rather stated that she used the

ACM “to understand and develop the examination team’s position” on issues relating to a

subsequent tax period. Bilodeau Aff. ¶ 11; see Def.’s Cross-Mot. at 22. This type of affirmative

comment falls short of the “express[]” adoption required by Sears.

. Rather, an

oral acknowledgement that the Appeals Team relied on the contents of the ACM during a

teleconference meeting simply reaffirms its pre-decisional nature and falls squarely within the

category of “casual allusion[s]” insufficient to constitute waiver. Common Cause,

. Moreover, it is far from clear which portions of the ACM the IRS employee was referring

to. See Bilodeau Aff. ¶ 11; Def.’s Cross-Mot. at 22; Colgin Aff. ¶ 7. Ambiguity of this type

further supports the conclusion that the alleged statement falls well short of the express adoption

standard set by Sears.

.

16 Therefore, even accepting plaintiff’s description of the conversation as true, defendant

IRS’s comments on the March 17, 2020 teleconference are insufficient to constitute a waiver of

the deliberate process privilege. 8

II. Segregability

“Before approving the application of a FOIA exemption, the district court must make

specific findings of segregability regarding the documents to be withheld.” Sussman v. U.S.

Marshals Serv.,

(D.C. Cir. 2007) (collecting cases). An agency must release

“[a]ny reasonably segregable portion of a record,”

(b), unless the non-exempt

portions are “inextricably intertwined with exempt portions” of the record. Mead Data Ctr.,

; see also Johnson v. Exec. Office for U.S. Att’ys,

, 776 (D.C. Cir. 2002).

“In order to demonstrate that all reasonably segregable material has been released, the agency must

provide a ‘detailed justification’ for its non-segregability,” although “the agency is not required to

provide so much detail that the exempt material would be effectively

disclosed.” Johnson, 310 F.3d at 776, citing Mead Data Ctr.,

.

Just as with the exemption analysis, “[a]gencies are entitled to a presumption that they

complied with the obligation to disclose reasonably segregable material,” Sussman,

, citing Boyd v. Crim. Div. of U.S. Dep’t of Just.,

(D.C. Cir. 2007), and “[a]

8 Defendant additionally invokes FOIA Exemption 3, which authorizes agencies to withhold information that is “specifically exempted from disclosure by statute,”

(b)(3), to justify its withholdings. Def.’s Cross-Mot. at 2. It points to § 6103(e)(7) of the Internal Revenue Code, which provides that “return information” may only be inspected or disclosed if the information would not “seriously impair Federal tax administration.”

(e)(7).

The redactions for which defendant relies on Exemption 3 are co-extensive with those for which it relies on Exemption 5, except for three unchallenged, minor redactions appearing on the first page of the ACM. Therefore, because that the Court finds the challenged redactions covered by Exemption 5, it need not address defendant’s additional argument concerning Exemption 3. 17 court may rely on government affidavits that show with reasonable specificity why documents

withheld pursuant to a valid exemption cannot be further segregated.” Juarez v. U.S. Dep’t of

Just.,

(D.C. Cir. 2008), citing Armstrong v. Exec. Office of the President,

(D.C. Cir. 1996). A district court must make an express finding on segregability. Juarez,

, citing Morley v. CIA,

(D.C. Cir. 2007).

Plaintiff argues that defendant has failed to meet its segregability obligation because the

IRS affidavit supporting its cross-motion for summary judgment “fails to provide [the] Court with

sufficient information” to make a specific finding on segregability. Pl.’s Opp. at 33. It points to

a single statement offered in the affidavit, which reads in full:

To the extent that any factual or non-privileged material is being withheld, I believe it is so intertwined with the material protected by Exemption 5 deliberative process that such additional material cannot be released without releasing material protected by deliberative process.

Zogby Decl. ¶ 44.

The Court agrees with plaintiff that, in the abstract, such a conclusory statement, without

more, would not enable the Court to make the necessary factual findings regarding segregability.

IRS has nevertheless provided an index that describes the nature of and rationale for the relevant

withholdings, see Zogby Decl. ¶ 17, and the Court has had the opportunity to review the ACM in

camera. Considering defendant’s averments and descriptions in its declaration, and the Court’s

subsequent confirmation of those descriptions, the Court is satisfied that the agency has met its

segregability requirement. The Court will therefore grant defendant’s motion for summary

judgment on the issue of segregability.

CONCLUSION

For the foregoing reasons, the Court finds that defendant properly withheld the redacted

material in the ACM pursuant to FOIA Exemption 5. Defendant’s partial cross-motion for

18 summary judgment [Dkt. # 26] will therefore be GRANTED and plaintiff’s partial motion for

summary judgment [Dkt. # 18] will be DENIED.

SO ORDERED.

AMY BERMAN JACKSON United States District Judge

DATE: September 26, 2024

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