Bioscience Advisors, Inc. v. United States Securities and Exchange Commission

Background

Bioscience Advisors, Inc. tracks Securities and Exchange Commission filings submitted with requests for confidential treatment. After those confidentiality orders expire, the company requests unredacted exhibits from the SEC under the Freedom of Information Act and uses the information in a commercial database concerning the biopharmaceutical industry.

The case concerns a 2020 records-disposition schedule approved by the National Archives and Records Administration and adopted by the SEC. The schedule authorized disposal of temporary materials supporting certain confidential-treatment requests three years after the entry of a confidential-treatment order.

Bioscience asserted four claims: two challenges under the Administrative Procedure Act to NARA’s approval and the SEC’s adoption of the schedule; a claim that NARA’s approval did not comply with the Federal Records Act; a claim that the Archivist and SEC Chair failed to take action concerning allegedly unlawful destruction of records; and a claim that the SEC violated the Freedom of Information Act by denying requested records.

The defendants moved to dismiss all four claims under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legally recognized claim.

Court’s analysis and rulings

First claim: Administrative Procedure Act challenge

The first claim alleged that NARA’s approval and the SEC’s adoption of the 2020 Schedule were arbitrary and capricious. The court expressed some doubt about whether Bioscience could ultimately succeed, but declined to decide that question before the full administrative record was presented. The court therefore denied the motion to dismiss the first claim.

Second claim: Federal Records Act compliance

The second claim alleged that the schedule violated the Federal Records Act because it allowed destruction of records that still had value, including commercial or market value. The defendants argued that commercial value was not enough and that the Federal Records Act focused on records documenting government activity.

The court held that the complaint plausibly stated a claim at the motion-to-dismiss stage. It reasoned that commercial or market value did not categorically exclude records from protection under the Federal Records Act and that the statute did not provide an exclusive list of values supporting continued preservation. The court denied the motion to dismiss the second claim.

Third claim: Enforcement action concerning allegedly destroyed records

The third claim alleged that the SEC Chair and the Archivist failed to notify or seek assistance from the Attorney General concerning the alleged unlawful destruction of records. The defendants argued that Bioscience had already received all allegedly destroyed documents and that the claim was therefore moot. Mootness means that a court can no longer grant meaningful relief because the dispute has ended.

The court rejected that argument at this stage. The complaint alleged that the SEC Chair and Archivist had not requested assistance from the Attorney General, and the defendants had not shown that such a request could not lead to recovery of additional documents. The court concluded that Bioscience sufficiently pleaded the claim and denied the motion to dismiss the third claim.

Fourth claim: Freedom of Information Act requests

The fourth claim alleged that the SEC improperly denied an unspecified number of Freedom of Information Act requests. The complaint identified one example involving access to original contracts but did not identify the other requests, the dates or recipients of those requests, or the agency’s responses with sufficient detail.

The court granted the motion to dismiss the fourth claim. Because it could not conclude that amendment would be futile, the court dismissed the claim with leave to amend. Bioscience was given 21 days from the filing of the order to file an amended complaint addressing the pleading deficiencies.

Disposition

Judge Haywood S. Gilliam, Jr. granted in part and denied in part the defendants’ motion to dismiss. The motion was denied as to the first, second, and third causes of action and granted as to the fourth cause of action. The court also ordered the parties to appear at a case-management conference to discuss an expedited summary-judgment briefing schedule.