United States District of Columbia Circuit Court of Appeals
Reports
McCREADY v. NICHOLSON, 465 F.3d 1 (D.C. Cir. 2006) Sheila
Clarke McCREADY and E. Robert McCready, Jr., Appellants v.
R. James NICHOLSON, in his capacity as Secretary of the
United States Department of Veterans Affairs, Appellee.
No. 04-5425. United States Court of Appeals, District of
Columbia Circuit. Argued October 31, 2005. Decided
September 19, 2006. Page 2
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Appeal from the United States District Court for the
District of Columbia (No. 01cv02219).
Joseph G. Cosby argued the cause for appellants. With him
on the briefs was Richard H. Gordin.
Lisa S. Goldfluss, Assistant U.S. Attorney, argued the
cause for appellee. With her on the brief were Kenneth L.
Wainstein, U.S. Attorney, and Michael J. Ryan, Assistant
U.S. Attorney. R. Craig Lawrence, Assistant U.S. Attorney,
entered an appearance.
Before: SENTELLE, GARLAND and GRIFFITH, Circuit Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.
GRIFFITH, Circuit Judge.
Appellant Sheila McCready claims that her employer, the
United States Department of Veterans Affairs (“VA”),
violated various provisions of the Privacy Act, 5 U.S.C.
§ 552a, in investigating allegations of misconduct
in her office. McCready alleges that the VA, in the course
of its investigation, created records about her that were
filled with inaccuracies, and that she is entitled under
the Privacy Act to review and amend those records. She also
alleges that the VA improperly disclosed those records to
the media and public, and illegally used them to take
adverse action against her. The District Court granted
summary judgment in favor of the VA on all twelve of
McCready’s claims, eight of which, McCready argues on
appeal, should have survived the VA’s summary judgment
motion. For the reasons below, we affirm the District
Court’s judgment in part, reverse in part, and remand for
further proceedings.
I.
In June 1999, the VA’s Inspector General, in response to a
confidential complaint of fiscal mismanagement and
operational abuse, began an audit of the VA’s Office of
Congressional Affairs (the “Office”) and McCready, who had
been the head of the Office since July 1998. On October 21,
1999, the Secretary of the VA relieved McCready of her
responsibilities and reassigned her to the Office of the
Secretary. McCready would later be reassigned on November
22, 1999, to the Office of the Under Secretary for Veterans
Health Administration. The Inspector General’s audit
produced three documents that have become the subject of
this litigation: (1) a “Draft Audit Report,” issued only to
the Assistant Secretary for Policy and Planning in October
1999;[fn1] (2) a “Final Audit Report,” issued on January 7,
2000, to various VA officials, the Office of Management and
Budget, the General Accounting Office,[fn2] and various
Congressional committees; and (3) an “Addendum Audit
Report,” issued on March 22, 2000, to the same recipients
as the Final Audit Report (collectively, the “Inspector
General’s Reports”). The Inspector General’s Office posted
the Final Audit Report and the Addendum Audit Report on its
website in spring 2000.
On January 19, 2000, twelve days after the Final Audit
Report was released, the Assistant Secretary for Personnel
Management, Edward Powell, sent a memorandum to the
Secretary of the VA (the “Powell Page 5 Memorandum”),
discussing McCready’s financial management of the Office.
That very day, the Associated Press published an article
highly critical of McCready’s management. A short time
later, on February 11, 2000, the Associated Press published
a second article about McCready’s performance. This second
article quoted verbatim from Powell’s private memorandum to
the Secretary.
McCready wrote a memorandum to the General Counsel of the
VA on March 17, 2000, responding to the Final Audit
Report’s allegations. McCready similarly responded to the
Addendum Report on March 23, 2000. The Secretary of the VA
asked the General Counsel’s Office and the Office of the
Assistant Secretary for Human Resources and Administration
to determine whether the Inspector General’s Reports
“provide[] a basis for an adverse or other action against”
McCready. The General Counsel and Assistant Secretary
examined the Inspector General’s charges and McCready’s
responses, and made a recommendation to the Secretary on
July 17, 2000 (the “General Counsel’s Review”). The VA
completely redacted that recommendation from the copy of
the memorandum it provided to McCready, but the Secretary
of the VA wrote to McCready three days later that “[a]fter
reviewing [McCready’s] point-by-point response to the
[Inspector General’s] audit,” he “concluded that no
disciplinary action is warranted” and “[t]he matter is
closed.”
On February 8, 2001, McCready’s counsel requested that the
Inspector General correct several errors in the Final Audit
and Addendum Reports, expunge the entire reports in light
of those errors, or, in the alternative, incorporate
McCready’s response. The Inspector General denied that
request. McCready’s counsel appealed the Inspector
General’s decision to the VA’s General Counsel. Citing the
Privacy Act, McCready again wrote to the Inspector General
on March 29, 2001, and requested various documents relating
to the Inspector General’s audit. The Inspector General
responded that “records pertaining to [McCready] are not
maintained in a Privacy Act system of records” and
“therefore, we are processing [McCready’s] letter as a
[Freedom of Information Act] request.”
McCready also requested that various VA offices expunge the
Powell Memorandum. The Director of the VA’s Information
Management Service determined that five offices within the
VA maintained copies of the Powell Memorandum. The Office
of the General Counsel expunged the Powell Memorandum from
its files, but the other offices decided to retain it.
McCready wrote to the remaining four offices and asked them
to attach her response to the Powell Memorandum, or,
alternatively, correct the Memorandum based upon her
response, and inform anyone known to possess the Memorandum
of her response and any corrections. The Inspector General
agreed to include McCready’s response in its files.
McCready and her husband, Robert,[fn3] filed an
eleven-count complaint on October 26, 2001, and a
twelve-count amended complaint on January 24, 2002,
alleging that the VA improperly maintained, disclosed,
refused access to, and/or refused to amend the Inspector
General’s Reports, the Powell Memorandum, and the General
Counsel’s Review. In essence, McCready’s twelve counts
sought to compel the VA to correct alleged inaccuracies in
various documents, Page 6 notify all recipients (including
Congress) that the documents had been amended and that
McCready would not be subject to disciplinary action, and
require the VA to act in accordance with the Privacy Act.
McCready also sought damages, attorneys’ fees, and costs.
The VA requested, without objection from the plaintiffs,
that it be allowed to immediately file what the District
Court deemed “a preliminary motion for summary judgment
based on lack of subject matter jurisdiction.” The District
Court granted that request. Plaintiffs represent in their
brief, and the Government does not contest, that the
“parties agreed that the case would benefit from determining
several purely legal issues before engaging in discovery.”
Appellants’ Br. at 11. The Government filed its motion for
summary judgment based on lack of subject matter
jurisdiction, and, shortly thereafter, the Calendar
Committee of the District Court reassigned the matter to a
new district judge.
On the merits, the VA argued that the Privacy Act did not
provide the District Court subject matter jurisdiction
because the various documents were not maintained in a
“system of records,” as required by the Act. The VA also
argued that, pursuant to 5 U.S.C. § 552a(k)(2), the
Inspector General’s Reports were exempt from some of the
Privacy Act provisions at issue because they were
investigative materials compiled for law enforcement
purposes. Some of McCready’s claims also failed, the VA
contended, because McCready’s complaint did not establish
that any fact compiled by the VA was inaccurate, and that
McCready had not suffered an adverse effect or adverse
determination.
McCready opposed the VA’s motion, arguing that most of her
Privacy Act claims did not require proof of a system of
records. In any event, the Government’s declarations,
McCready contended, were too “conclusory” to support
summary judgment, as they did not, among other things,
identify the systems of records searched. McCready also
argued that she was “entitled to discovery to determine
whether the records at issue are in any `system of
records.'” In her view, the Government had not met its
burden to show that the Inspector General’s Reports
qualified for an exemption under the Privacy Act. Finally,
McCready contended there were material issues of fact
precluding summary judgment regarding whether the documents
at issue were accurate and whether McCready had suffered
adverse determinations.
McCready also invoked Federal Rule of Civil Procedure
56(f), arguing that several issues raised by the Government
went beyond pure issues of law and required discovery for
their resolution. Plaintiffs’ counsel filed an affidavit
identifying several issues needing discovery. The
Government argued in reply that discovery was not necessary.
McCready was permitted to file a sur-reply.
After receiving the parties’ briefs, the District Court sua
sponte ordered additional briefing. The existing briefs,
the Court determined, were “sufficient to allow the Court
to decide all issues except for allegations raised in Count
XI of the Complaint that the VA website and EDMS
[Electronic Data Management System],” a database used by the
VA, are “Privacy Act `systems of records.'” A declaration
provided by the Government, however, was “insufficient” to
decide that remaining issue. The District Court invited the
parties to file further “supporting materials” and address
“the arguments that the VA website and EDMS are Privacy Act
systems of records.” The Government argued that the
Inspector General’s website Page 7 was not a system of
records, and that although the “Powell Memorandum [is]
included in the EDMS System of Records,” it “is not . . .
retrievable” or “actually retrieved[] using any personal
identifier belonging to . . . McCready.” McCready contended
that the VA had now “admit[ted] that the EDMS system is a
Privacy Act system of records that includes the Powell
memorandum” and had previously even acknowledged in the
Federal Register that EDMS is a system of records subject to
the Privacy Act. The VA had only submitted one paragraph of
a declaration about the website at issue, which was
entirely conclusory and could not, in McCready’s view,
support summary judgment.
On December 31, 2003, the District Court granted the
Government’s motion for summary judgment. McCready v.
Principi, 297 F.Supp.2d 178 (D.D.C. 2003). McCready filed a
timely motion to amend the District Court’s judgment under
Federal Rule of Civil Procedure 59(e), arguing that “facts
. . . not available when the parties briefed the Motion for
Summary Judgment” demonstrate she was denied a bonus in
December 2003 based upon the Final Audit Report and
Addendum Report and thus that she had suffered an adverse
employment action, which she believed was relevant to her
Privacy Act claims. The District Court denied McCready’s
motion, holding that “the denial of a bonus in 2003 is not
new evidence that bears upon the current complaint” and is
instead “grounds for a distinct claim against the agency.”
McCready filed a timely notice of appeal, invoking our
jurisdiction under 28 U.S.C. § 1291 to review the
District Court’s final order granting summary judgment to
the VA and subsequent denial of her motion to amend. See
Fed.R.App.P. 4(a)(4).
We review the grant of summary judgment de novo, applying
the same standard as the district court. See, e.g., Maydak
v. United States, 363 F.3d 512, 515 (D.C. Cir. 2004).
Summary judgment may be granted only where “there is no
genuine issue as to any material fact and . . . the moving
party is entitled to a judgment as a matter of law.”
Fed.R.Civ.P. 56(c); see also Tao v. Freeh, 27 F.3d 635, 638
(D.C. Cir. 1994). A dispute over a material fact is
“genuine” if the evidence is “such that a reasonable jury
could return a verdict for the nonmoving party.” George v.
Leavitt, 407 F.3d 405, 410 (D.C. Cir. 2005) (quotation
marks omitted). At summary judgment, “all inferences must
be viewed in a light most favorable to the non-moving
party.” Tao, 27 F.3d at 638.
II.
The Privacy Act, 5 U.S.C. § 552a, seeks “to protect
the privacy of individuals identified in information
systems maintained by Federal agencies,” Pub.L. No. 93-579,
§ 2(a)(5), 88 Stat. 1896, 1896 (1974), because such
privacy “is directly affected by the collection,
maintenance, use, and dissemination of personal information
by Federal agencies,” id. § 2(a)(1). The Act
“represents the compromise reached by Congress between a
citizen’s right to correct inaccurate records and the
government’s need to assemble critical information for
responsible employment decision making.” Dickson v. Office
of Pers. Mgmt., 828 F.2d 32, 40 (D.C. Cir. 1987). In
furtherance of those goals, the Privacy Act “gives agencies
detailed instructions for managing their records and
provides for various sorts of civil relief to individuals
aggrieved by failures on the Government’s part to comply
with the requirements.” Doe v. Chao, 540 U.S. 614, 618, 124
S.Ct. 1204, 157 L.Ed.2d 1122 (2004). Put simply, the Act
“safeguards the public from unwarranted collection,
maintenance, use and dissemination of personal information
Page 8 contained in agency records . . . by allowing an
individual to participate in ensuring that his records are
accurate and properly used.” Bartel v. FAA, 725 F.2d 1403,
1407 (D.C. Cir. 1984).
The Act attempts to strike a balance between an
individual’s interest in correcting inaccurate information
and the burdens placed on agencies in locating such
information. To do so, it imposes a series of substantive
and procedural obligations on federal agencies regarding
records they maintain while simultaneously limiting what
records are subject to the Act. At issue in this case is
how those limitations apply to the Inspector General’s
Reports and the Powell Memorandum.
McCready’s claims implicate several subsections of the
Privacy Act, which we briefly summarize. Under subsection
(b) of the Act, 5 U.S.C. § 552a(b), agencies may not
“disclose any record which is contained in a system of
records” unless certain exceptions apply. Id. Even where an
agency makes a permissible disclosure from a system of
records, it must “keep an accurate accounting” of its
disclosure under subsection (c), id. § 552a(c).
Subsection (d) grants an individual the right to review and
make a copy of his “record or . . . any information
pertaining to him which is contained in the system.” Id.
§ 552a(d)(1). If an individual takes issue with the
accuracy of such a “record,” he may “request amendment of a
record pertaining to him.” Id. § 552a(d)(2). If the
agency refuses his request, he may “request a review of
such refusal.” Id. § 552a(d)(3). Following such
review, if the agency still refuses to amend the record,
the agency must “permit the individual to file . . . a
concise statement setting forth the reasons for his
disagreement with the refusal of the agency” and “notify
the individual of the provisions for judicial review of the
reviewing official’s determination.” Id. §
552a(d)(3).
In order to maintain appropriate confidentiality of
personal information, subsection (e)(2) provides that
agencies “that maintain[] a system of records shall . . .
collect information to the greatest extent practicable
directly from the subject individual when the information
may result in adverse determinations.” Id. §
552a(e)(2). “[P]rior to disseminating any record about an
individual to any person other than an agency,” agencies
must under subsection (e)(6) “make reasonable efforts to
assure that such records are accurate, complete, timely, and
relevant for agency purposes.” Id. §
552a(e)(6).[fn4] Agencies must also “establish appropriate
. . . safeguards to insure the security and confidentiality
of records and to protect against any anticipated threats
or hazards to their security or integrity.” Id. §
552a(e)(10).
These subsections begin with qualifying language referring
to the Act’s system of records requirement: “any record
which is contained in a system of records,” id. §
552a(b) (emphasis added); “with respect to each system of
records under [an agency’s] control,” id. § 552a(c)
(emphasis added); and “[e]ach agency that maintains a
system of records,” id. § 552a(d), (e) (emphasis
added). Some provisions falling under these subsections
make explicit that an alleged violation requires that the
challenged record be within a system of records. See, e.g.,
id. § 552a(d)(1) (addressing a “request by any
individual to gain access to his record . . . which is
contained in the system”) (emphasis added); see Baker v.
Dep’t of Navy, 814 F.2d 1381, 1383-84 (9th Cir. 1987)
(subsection (d)(1) applies to a record within a system of
Page 9 records). Other provisions are less explicit. See,
e.g., 5 U.S.C. § 552a(e)(7) (addressing “record[s]
describing how any individual exercises rights guaranteed
by the First Amendment,” but not indicating whether such
records must be within a system of records) (emphasis
added); see Albright v. United States, 631 F.2d 915, 916-17
(D.C. Cir. 1980) (concluding that a record need not be
within a system of records to bring a claim under §
552a(e)(7)); Clarkson v. IRS, 678 F.2d 1368, 1375-76 (11th
Cir. 1982). The Government contends that all of McCready’s
claims require her to prove that the records she challenges
were within a system of records. McCready recognizes, as she
must, that we have held that subsections (e)(2) and (e)(10)
apply to records within a system of records. Maydak, 363
F.3d at 517-18. With the exception of two claims we discuss
below that were brought pursuant to one specific civil
remedy provision of the Act, 5 U.S.C. §
552a(g)(1)(C), McCready does not otherwise contest that the
provisions of the Act she invokes apply only to records
within a system of records.
The Act defines “record” in a relatively broad fashion:
“any item, collection, or grouping of information about an
individual that is maintained by an agency . . . that
contains his name, or the identifying number, symbol, or
other identifying particular assigned to the individual,
such as a finger or voice print or a photograph.” Id.
§ 552a(a)(4). That is, to be a “record,” an item
must contain “information that actually describes the
person in some way.” Tobey v. NLRB, 40 F.3d 469, 472 (D.C.
Cir. 1994).
A “system of records,” on the other hand, is defined more
narrowly under the Act: “a group of any records under the
control of any agency from which information is retrieved
by the name of the individual or by some identifying
number, symbol, or other identifying particular assigned to
the individual.” 5 U.S.C. § 552a(a)(5) (emphasis
added). The key limitation in the Act’s definition of
“system of records” is its use of “retrieved.” As the Fifth
Circuit has explained, “[t]his qualifying language in the
statute reflects a statutory compromise between affording
individuals access to those records relating directly to
them and protecting federal agencies from the burdensome
task of searching through agency records for mere mention
of an individual’s name.” Bettersworth v. FDIC, 248 F.3d
386, 391 (5th Cir. 2001).
The Act contains four provisions authorizing civil relief,
which the Supreme Court recently summarized as follows:
Subsection (g)(1) recognizes a civil action for agency
misconduct fitting within any of four categories (the
fourth . . . being a catchall), 5 U.S.C. §§
552a(g)(1)(A)-(D). . . . The first two categories cover
deficient management of records: subsection (g)(1)(A)
provides for the correction of any inaccurate or otherwise
improper material in a record, and subsection (g)(1)(B)
provides a right of access against any agency refusing to
allow an individual to inspect a record kept on him.
* * *
The two remaining categories deal with derelictions
having consequences beyond the statutory violations per
se. Subsection (g)(1)(C) describes an agency’s failure to
maintain an adequate record on an individual, when the
result is a determination “adverse” to that person.
Subsection (g)(1)(D) speaks of a violation when someone
suffers an “adverse effect” from any other failure to hew
to the terms of the Act. Page 10 Chao, 540 U.S. at
618-19, 124 S.Ct. 1204. McCready’s lawsuit implicates all
of these provisions.
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