American Small Business League v. United States Office of Management and Budget

Background

American Small Business League (ASBL) brought a Freedom of Information Act (FOIA) lawsuit against the United States Office of Management and Budget (OMB) and the United States Small Business Administration (SBA). ASBL said that it regularly makes FOIA requests as part of its mission to promote the interests of small businesses.

ASBL asserted one claim against OMB. It alleged that OMB had failed to conduct a reasonably diligent search for records concerning the total federal acquisition budget for fiscal years 2017, 2018, and 2019, and had wrongfully withheld responsive records. OMB had stated that it had no responsive records, and ASBL alleged that it had received no response to its administrative appeal.

ASBL’s claims against SBA concerned three different FOIA requests. The requests sought records including information about SBA’s press office, telephone calls, emails concerning the Regional Regulatory Fairness Board, and communications concerning specified people and organizations. SBA told ASBL that it would not process the requests without payment of fees because ASBL did not qualify for a fee waiver. ASBL alleged that it was entitled to a waiver because disclosure would serve the public interest and also challenged SBA’s assessment of fees before responding to the requests.

Motion and legal standard

OMB and SBA moved to sever the claims against the two agencies. Severance means separating claims into different lawsuits. They argued that ASBL had improperly joined the agencies as defendants under Federal Rule of Civil Procedure 20(a)(2), which permits multiple defendants in one case only when the claims arise from the same transaction, occurrence, or series of occurrences and involve at least one common legal or factual question.

The court explained that, if permissive joinder is not proper, it may separate the parties under Rule 21 so long as doing so does not substantially prejudice a party. The court has broad discretion in deciding whether to sever claims.

Analysis

The court found that ASBL’s claims against OMB and SBA did not arise from the same transaction or occurrence. The claims involved separate agencies, unrelated factual bases, different FOIA requests, different agency responses, and different alleged violations. ASBL’s OMB claim concerned the agency’s search for and withholding of records, while its SBA claims challenged the agency’s refusal to grant fee waivers.

The court rejected ASBL’s argument that the claims were related because the requests were made as part of ASBL’s broader effort to verify SBA’s representations about federal contracting goals. The court also distinguished the cases ASBL cited, finding that those cases involved more closely related requests or a common course of conduct. Here, the court found no case-management benefit from keeping the claims under one case caption and concluded that separation would promote judicial efficiency without prejudicing ASBL.

Because ASBL failed to satisfy the first requirement for permissive joinder, the court did not decide whether the claims also shared a common legal or factual question.

Disposition

Judge Donna Ryu granted Defendants’ motion to sever. The claims against SBA were severed and ordered to proceed in a separate case, with SBA as the sole defendant. The clerk was ordered to open the new case without requiring an additional filing fee. ASBL was ordered to file a complaint in the new case containing only its claims against SBA within seven days of the order. SBA was ordered to respond within 14 days after that filing, and OMB was ordered to answer the complaint in the existing case within 14 days of the order. The court also scheduled case-management conferences in both cases for July 21, 2021.