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National Security Counselors v. Central Intelligence Agency

United States Court of Appeals, District of Columbia Circuit

January 15, 2016

NATIONAL SECURITY COUNSELORS, APPELLANT
v.
CENTRAL INTELLIGENCE AGENCY AND UNITED STATES DEPARTMENT OF DEFENSE, APPELLEES

Argued: September 15, 2015.

Page 23

Appeal from the United States District Court for the District of Columbia. (No. 1:11-cv-00442).

Bradley P. Moss argued the cause for appellant. With him on the briefs was Kelly B. McClanahan.

Mark W. Pennak, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the brief were Benjamin C. Mizer, Acting Assistant Attorney General, and Leonard Schaitman, Attorney.

Before: TATEL and PILLARD, Circuit Judges, and EDWARDS, Senior Circuit Judge. OPINION filed by Circuit Judge PILLARD.

OPINION

Page 24

Pillard, Circuit Judge.

An individual who litigates pro se is ineligible for attorney's fees under the Freedom of Information Act (FOIA); the same is not ordinarily true of an organization that represents itself. This appeal asks whether a particularly small nonprofit corporation that represented itself is barred from recovering attorney's fees under FOIA for the same reasons that render a pro se individual ineligible.

Congress sought to encourage meritorious FOIA litigation by making any " complainant" who substantially prevails eligible to recover reasonable attorney's fees. 5 U.S.C. § 552(a)(4)(E)(i). Courts have recognized an exception from FOIA fee eligibility--which we have described as " narrow" --barring attorney's fees for legal work by any individual who successfully represents himself pro se. See Baker & Hostetler LLP v. U.S. Dep't of Commerce, 473 F.3d 312, 324-25, 374 U.S.App.D.C. 172 (D.C. Cir. 2006) (citing Kay v. Ehrler, 499 U.S. 432, 437-38, 111 S.Ct. 1435, 113 L.Ed.2d 486 (1991)); Burka v. U.S. Dep't of Health & Human Servs., 142 F.3d 1286, 1288-89, 330 U.S.App.D.C. 59 (D.C. Cir. 1998). That exception is consistent with the broad statutory text of FOIA's fee provision because the statutory reference to " attorney" fees contemplates an agency relationship that no individual can have with her-or himself. See Burka, 142 F.3d at 1288 (citing Kay, 499 U.S. at 435-36). It is the agency relationship between a lawyer and client that serves fee-shifting's goal of enlarging access to independent, objective legal advice. Id. Thus, although pro se individuals sometimes

Page 25

prevail, they are ineligible for attorney's fees.

The district court held National Security Counselors, Inc. (NSC), a small, nonprofit corporation registered in Virginia, ineligible for fees. A lawyer who was one of the firm's three co-founders and serves as its Executive Director represented NSC in litigation to obtain, under FOIA, documents that the government initially withheld. The court emphasized that the attorney does virtually all of NSC's work, including the legal work for which it seeks fees in this case. It therefore treated NSC as " a one-man operation" ineligible for fees under the pro se litigant exception. Nat'l Sec. Counselors v. CIA, 15 F.Supp.3d 88, 93 (D.D.C. 2014).

The district court failed to account correctly for NSC's status as a nonprofit corporation. The Supreme Court has drawn a clear distinction between an " organization, which is always represented by counsel," and a pro se individual. Kay, 499 U.S. at 436 n.7. We have drawn the same line between organizations and individuals and held that " an organization remains eligible for attorney's fees even when it represents itself in litigation." Baker, 473 F.3d at 315 (fees under FOIA); accord Bond v. Blum, 317 F.3d 385, 399-400 (4th Cir. 2003) (fees under 17 U.S.C. § 505); Gold, Weems, Bruser, Sues & Rundell v. Metal Sales Mfg. Corp. ( Gold), 236 F.3d 214, 218-19 (5th Cir. 2000) (fees under the Louisiana Open Account Statute). In keeping with Kay, Baker, and the decisions of our sister circuits, we hold that a corporation with a legal identity distinct from the attorney who represents it in litigation is eligible to recover attorney's fees under FOIA. Because NSC is such a corporation, it is not barred by the pro se litigant exception.

I.

NSC is a tax-exempt, nonprofit Virginia corporation. In 2009, Kelly B. McClanahan co-founded NSC with Bradley P. Moss and Sean Heare. The record sheds light on the firm's leadership and organizational structure. NSC operated initially as a tax-exempt, public-interest nonprofit association. It was established to serve four primary objectives:

[1] to lawfully acquire from the government material related to national security matters and distribute it to the public, [2] to use this material in the creation of original publications discussing the respective subjects, [3] to advocate for intelligent reform in the national security and information and privacy arenas, and [4] to provide a low-cost alternative to certain deserving clients involved in security law or information and privacy law-related proceedings.

J.A. 26 (quoting http://nationalsecuritylaw.org ).

In January 2011, the organization took the further step of incorporating under Virginia law. Since then, it has conducted its activities as a nonprofit corporation under the name National Security Counselors, Inc. Virginia law imposes governance obligations on nonprofit corporations like NSC. Anyone acting as a director to such a corporation owes a duty of loyalty to the interests of the corporation and must guard against conflicts of interest. See Byelick v. Vivadelli, 79 F.Supp.2d 610, 623 (E.D. Va. 1999); see also Dodge v. Trs. of Randolph-Macon Woman's Coll., 276 Va. 10, 661 S.E.2d 805, 809 (Va. 2008) (applying corporate directors' duties to directors of nonstock charitable corporation). A director must discharge all directorial duties " in accordance with his [or her] good faith business judgment of the best interests of the corporation." Va. Code § 13.1-870(A); see also Lake Monticello

Page 26

Owners' Ass'n v. Lake, 250 Va. 565, 463 S.E.2d 652, 656 (Va. 1995). Virginia law subjects a nonprofit corporation like NSC to corporate recordkeeping requirements related to meetings, accounting, membership, articles of ...


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