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From Securities Regulation Daily, July 17, 2015

Chiquita slips on FOIA appeal

By Anne Sherry, J.D.

The SEC may provide the National Security Archive with materials the agency gathered involving a Chiquita affiliate’s payments to paramilitary groups in Colombia. Chiquita had asked for confidential treatment, arguing that the documents’ release would interfere with the fairness of the multidistrict litigation pending against the company, in which discovery has not yet begun. The D.C. Circuit, however, construed Exemption 7(B) of the Freedom of Information Act as examining the overall fairness of the proceeding, not just one phase of the litigation (Chiquita Brands International Inc. v. SEC, July 17, 2015, Griffith, T.).

Background. The Archive’s FOIA request has been in limbo since November 2008. Chiquita requested confidential treatment under FOIA Exemption 7(B), which protects information compiled for law enforcement purposes if production would affect the “right to a fair trial or an impartial adjudication.” The SEC denied Chiquita’s request and subsequent appeal. Chiquita then brought action against the SEC in the district court in D.C., alleging that the SEC violated the Administrative Procedure Act (APA).

The D.C. court granted the SEC summary judgment, finding that the pending litigation satisfied the exemption’s requirement that a trial be pending or imminent, but that Chiquita failed to show how disclosure of the documents would interfere with the fairness of the proceedings. Chiquita appealed to the D.C. Circuit, which granted an injunction barring the documents’ release pending its decision.

Exemption. The appeals court began by examining the text of Exemption 7(B). The use of the word “trial” denotes the ultimate determination, so that the exemption comes into play only when it is probable that the release of law enforcement records will seriously interfere with the fairness of “that final step.” Chiquita’s argument that the exemption’s reference to an “impartial adjudication” applies to a decision made at any point in the proceeding, including discovery, failed to override the fact that FOIA defers to the APA’s definition of “adjudication” as the “agency process for the formulation of an order.” The company could not rely on this phrase to bolster its arguments about the fairness of the private litigation against it.

Chiquita also misconstrued the court’s Washington Post decision by relying on a sentence noting the possibility that “disclosure through FOIA would furnish access to a document not available under the discovery rules and thus would confer an unfair advantage on one of the parties.” This observation must be read in the context of the particular report and circumstances at issue in that case. The document at issue in Washington Post was protected by privilege and so would not have been otherwise discoverable, and nowhere did the court say that Exemption 7(B) always forbids the release of records that are not yet available to litigants through discovery. The SEC properly applied the standard and reasonably concluded that the disclosure of the records would not seriously interfere with the fairness of the proceedings.

The case is No. 14-5030.

Attorneys: Mark H. Lynch (Covington & Burling LLP) for Chiquita Brands International Inc. Sarah E. Hancur for the SEC.

Companies: Chiquita Brands International Inc.

MainStory: TopStory Enforcement PublicCompanyReportingDisclosure DistrictofColumbiaNews

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