Junk v. Board Of Governors Of The Federal Reserve System.

Background

During the 2008 financial crisis, the Board authorized the Federal Reserve Bank of New York to create three Maiden Lane limited liability companies. The Federal Reserve Bank later loaned money to those entities, which used the loans to purchase assets from certain financial institutions. The entities were closed out in August 2012.

On April 3, 2018, Junk submitted a Freedom of Information Act request to the Board for records from the three Maiden Lane entities containing CUSIP number 40431LAR9. A CUSIP number is a nine-character code used to identify most financial instruments. The Board initially said that the Federal Reserve Bank of New York, rather than the Board, maintained the relevant records. After Junk appealed, the Board said it had not located responsive information and that any such records would be records of the Federal Reserve Bank of New York.

In an earlier round of this case, the court required the Board to conduct the requested search. While an appeal was pending, the Board asked the Federal Reserve Bank of New York to perform the search. Zachary Taylor, who was responsible for managing and disposing of the remaining Maiden Lane assets, supervised the search. He and a staff member searched transaction-data spreadsheets using the requested CUSIP number. The spreadsheets list every CUSIP number that is or was associated with a Maiden Lane entity transaction. The searches found no results, and the spreadsheet for Maiden Lane II did not list the requested number among the eight residual securities identified by Junk.

The Second Circuit sent the case back for consideration of whether the search was adequate, whether Junk was entitled to disclosure, and whether he was entitled to other relief, including attorney’s fees.

Motions and arguments

The Board moved for summary judgment, a ruling entered when the material facts do not require a trial, arguing that its search was reasonable and had found no responsive records. Junk filed a cross-motion for summary judgment. He also challenged the search and sought discovery about the Federal Reserve Bank’s data systems, including how information from one system mapped to another.

Under the Freedom of Information Act, the agency must show that its search was reasonably designed to find the requested records. The search does not have to be perfect or locate every existing document. Agency declarations describing a thorough search generally receive a presumption of good faith. Once the agency meets its burden, a requester seeking discovery must show bad faith sufficient to undermine those declarations.

Court’s analysis

The court found that searching the transaction-data spreadsheets for 40431LAR9 was reasonably calculated to find the requested records, if they existed. Because the spreadsheets contained every CUSIP number associated with a Maiden Lane entity transaction, the absence of the requested number supported the Board’s conclusion that neither the Board nor the Federal Reserve Bank of New York possessed records from the Maiden Lane entities containing that number.

The court rejected Junk’s argument that the search was inadequate because the Maiden Lane entities had received more than $70 billion in loans. The record custodians reasonably identified the spreadsheets as the systems likely to contain responsive information, and the size of the loans did not make that decision unreasonable. The court also rejected Junk’s argument that the search improperly looked for a security owned by a Maiden Lane entity rather than records containing the CUSIP number. The spreadsheets listed every CUSIP number associated with a Maiden Lane transaction.

The court further rejected Junk’s argument concerning preservation of records. It found no basis in the record to conclude that the Board or the Federal Reserve Bank of New York had failed to preserve responsive records. Finally, the court denied Junk’s request for discovery because he had not shown bad faith sufficient to challenge the Board’s declarations.

Disposition

The court granted the Board’s August 17, 2020 motion for summary judgment. It denied Junk’s September 17 cross-motion for summary judgment. The opinion also states that Junk’s request for discovery was denied.