United States Court of Appeals, District of Columbia Circuit
Argued December 8, 2014
Appeal from the United States District Court for the District of Columbia. (No. 1:13-cv-00435).
Mark H. Lynch argued the cause for appellant. With him on the briefs were James M. Garland, Mark W. Mosier, Ashley M. Sprague, and Jaclyn E. Martí nez Resly.
Sarah E. Hancur, Senior Counsel, Securities and Exchange Commission, argued the cause for appellee Securities and Exchange Commission. With her on the brief were Melinda Hardy and Thomas J. Karr, Assistants General Counsel.
Adina H. Rosenbaum argued the cause for appellee National Security Archive. With her on the brief was Michael T. Kirkpatrick. Jeffrey S. Gutman entered an appearance.
Before: GRIFFITH, KAVANAUGH, and WILKINS, Circuit.
Griffith, Circuit Judge.
Pursuant to the Freedom of Information Act, the National Security Archive requested investigative materials that the Securities and Exchange Commission had gathered involving payments made to paramilitary groups in Colombia by a subsidiary of Chiquita Brands International. Chiquita requested that the Commission deny the Archive's request, arguing that releasing the records at this point in time would deprive the company of a fair trial in pending multi-district litigation in Florida. Neither the Commission nor the district court hearing this reverse-FOIA action thought release would deprive Chiquita of a fair trial. We agree with them.
A familiar brand in American households, Chiquita produces, markets, and distributes bananas and other produce worldwide. During the time relevant to this appeal, Chiquita worked in Colombia through a subsidiary known as Banadex.
In 2001, Chiquita reached a cease-and-desist settlement with the Securities and Exchange Commission regarding charges that Banadex violated the Securities Exchange Act of 1934 by failing to accurately record certain payments made to local officials in Colombia. In 2007, following further investigation of Banadex by the Justice Department (DOJ), Chiquita pled guilty in the United States District Court for the District of Columbia to a single felony count under 50 U.S.C. § 1705(b) (2006) and 31 C.F.R. § 594.204 of engaging in unauthorized transactions with Autodefensas Unidas de Colombia (AUC), a group that the federal government had designated as a global terrorist organization. During the course of the DOJ's investigation, Chiquita acknowledged that Banadex had made the payments demanded by AUC but insisted the company did so only to protect its Colombian employees from being kidnapped, injured, and murdered. Chiquita produced thousands of documents related to those payments to investigators from the DOJ and the Commission, requesting that the Commission treat the records it received confidentially and not release them under the Freedom of Information Act (FOIA). See 17 C.F.R. § 200.83 (detailing the SEC's confidential treatment procedures). In 2011, the DOJ released over 5,500 pages of these documents to the National Security Archive (Archive) under FOIA. The collection, which is available to the public on the Archive's website, includes notes, memoranda, and internal communications regarding Banadex's payments to AUC and other armed groups in Colombia.
The Archive describes itself as a non-profit library located at George Washington University in Washington, D.C., that, among other things, collects and publishes declassified documents related to U.S. national security. In 2000, the Archive initiated its Colombia Documentation Project--a campaign that has led to the filing of nearly 3,000 FOIA requests with various federal agencies for documents related to issues involving the United States and Colombia, such as narcotics trafficking, drug cartels, and paramilitary groups.
The Archive filed two FOIA requests with the SEC in November 2008 seeking documents related to the federal investigations of Banadex that led to the cease-and-desist settlement and the guilty plea, as well as any documents from 1989 onward in the SEC's possession relating to the company's finances. The Commission identified approximately twenty-three boxes of responsive documents that Chiquita had submitted, including forms describing the date and amount of payments made to paramilitary groups, as well as the identities of those who authorized the payments; accounting memoranda prepared by Banadex employees; receipts, ledgers, and spreadsheets documenting the payments; legal documents, internal reports, auditors' notes, and other internal correspondence analyzing and discussing the payments; and transcripts of depositions taken of Chiquita's employees. This appeal involves those documents the Commission identified that relate to Banadex's payments to AUC and other such groups, some of which appear to be similar to the records already released to the Archive by the DOJ in 2011.
When the Commission receives a FOIA request and determines that the documents requested should be released, its regulations require the Commission to send notice of this decision to the confidential treatment requestor that originally produced the documents to the Commission and asked that they not be released under FOIA (Chiquita, in this case). 17 C.F.R. § 200.83(d)(1). The requestor must then submit a written statement to the Commission's Office of Freedom of Information and Privacy Act Operations (or Office of FOIA Services) substantiating the original confidential treatment request and explaining " why the information should be withheld from access" under FOIA. Id. § 200.83(d)(2)(i). The Office then issues a preliminary decision to grant or reject the request. Id. § 200.83(e)(1). A requestor that disagrees with the preliminary decision of the Office may submit supplemental arguments and request a final decision. Id. An adverse final decision can be appealed to the Commission's General Counsel, whose decision is reviewable in federal court. Id. § 200.83(e)(3), (5).
Chiquita is now embroiled in multi-district litigation in the United States District Court for the Southern District of Florida brought by Colombian citizens who allege that Chiquita and some of its former officers should be held liable for making payments to paramilitary organizations such as AUC that tortured and murdered the plaintiffs and their families. These plaintiffs originally raised federal claims under the Alien Tort Statute and the Torture Victim Protection Act, as well as claims under state and Colombian law. Since 2008, discovery has been stayed while the parties litigated jurisdictional issues that the district court certified for interlocutory review. Although the federal claims against Chiquita have been dismissed as a result of that interlocutory appeal, Cardona v. Chiquita Brands Int'l, Inc., 760 F.3d 1185 (11th Cir. 2014), other claims remain pending. Chiquita and its fellow defendants have filed motions to dismiss and discovery remains stayed until those motions are resolved. See Order Granting Pls.' Emergency Mot. for Leave to Take Depositions 5, No. 0:08-01916-KAM (S.D. Fla. April 7, 2015) (Dkt. No. 759); see id. at 18-19 (partially lifting the discovery stay to permit the parties to engage in certain limited discovery).
When told of the Archive's FOIA request, Chiquita invoked FOIA Exemption 7(B) in its plea to the Commission's Office of ...