Sulemane v. Lew et al

Cross MOTION for Summary Judgment

D.D.C.December 19, 2016

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) MOHAMED BACHIR SULEMANE ) Av Bernabe Tawe No. 786 ) Maputo, Mozambique ) ) Plaintiff, ) ) v. ) CIV. NO. 1:16-cv-1822 ) ) JACOB J. LEW ) PLAINTIFF’S in his official capacity as ) OPPOSITION TO Secretary of the Department of the Treasury ) DEFENDANTS’ MOTION 1500 Pennsylvania Avenue, NW ) TO DISMISS OR IN THE Washington, D.C. 20220 ) ALTERNATIVE, MOTION ) FOR SUMMARY JUDGMENT, Defendant, ) AND PLAINTIFF’S CROSS ) MOTION FOR SUMMARY and ) JUDGMENT ) THE UNITED STATES DEPARTMENT ) OF THE TREASURY, OFFICE OF FOREIGN ) ECF Case ASSETS CONTROL ) 1500 Pennsylvania Avenue, NW ) Treasury Annex ) ORAL ARGUMENT Washington, D.C. 20220 ) REQUESTED ) Defendant. ) ) _________________________________________ ) PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS, OR IN THE ALTERNATIVE, MOTION FOR SUMMARY JUDGMENT, AND CROSS MOTION FOR SUMMARY JUDGMENT Plaintiff Mohamed Bachir Sulemane, by and through undersigned counsel, respectfully files this Opposition to Defendants’ Motion to Dismiss, or in the alternative, Motion for Summary Judgment, and concurrently moves for summary judgment pursuant to Rule 56 of the Federal Rules Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 1 of 48 of Civil Procedure. Since the legal and factual issues underlying Plaintiff’s Opposition and Plaintiff’s Motion overlap substantially, Plaintiff is submitting a combined brief. Plaintiff has attached a Memorandum in Support. Respectfully submitted this 19th day of December, 2016 /s/ Erich C. Ferrari Erich C. Ferrari, Esq. Ferrari & Associates, P.C. 1455 Pennsylvania Ave., NW Suite 400 Washington, D.C. 20004 Telephone: (202) 280-6370 Fax: (877) 448-4885 Email: Ferrari@ferrariassociatespc.com DC Bar No. 978253 Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 2 of 48 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) MOHAMED BACHIR SULEMANE ) Av Bernabe Tawe No. 786 ) Maputo, Mozambique ) ) Plaintiff, ) ) v. ) CIV. NO. 1:16-cv-1822 ) ) JACOB J. LEW ) PLAINTIFF’S in his official capacity as ) MEMORANDUM IN Secretary of the Department of the Treasury ) SUPPORT OF HIS MOTION 1500 Pennsylvania Avenue, NW ) IN OPPOSITION TO Washington, D.C. 20220 ) DEFENDANTS’ MOTION TO ) DISMISS, OR IN THE Defendant, ) ALTERNATIVE, MOTION FOR ) SUMMARY JUDGMENT, AND and ) PLAINTIFF’S CROSS MOTION ) FOR SUMMARY JUDGMENT THE UNITED STATES DEPARTMENT ) OF THE TREASURY, OFFICE OF FOREIGN ) ASSETS CONTROL ) ECF Case 1500 Pennsylvania Avenue, NW ) Treasury Annex ) Washington, D.C. 20220 ) ORAL ARGUMENT ) REQUESTED Defendant. ) ) _________________________________________ ) PLAINTIFF’S MEMORANDUM IN SUPPORT OF HIS MOTION IN OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT, AND HIS CROSS MOTION FOR SUMMARY JUDGMENT Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 3 of 48 ii TABLE OF CONTENTS TABLE OF AUTHORITIES ……………………………………………………………………. iv INTRODUCTION ………………………………………………………………………….…… 1 STATUTORY BACKGROUND …………………………………………………….…………. 3 STATEMENT OF FACTS ……………………………………………………….……………... 6 ARGUMENT ……………………………………………………………………………………. 7 I. Legal Standards for Federal Rules of Civil Procedure 12(b)(1), 12(b)(6) and 56 …………………………………………………………........................... 7 II. OFAC’s Denial of Plaintiff’s Reconsideration Petition Was Arbitrary and Capricious …………………………………………………………...…… 12 A. OFAC’s Conclusion that Plaintiff continues to be Involved in Narcotics Trafficking and its Reliance on the Underlying Evidence in Support of the Conclusion Are Arbitrary and Capricious Action under the APA ……………………………….. 16 B. OFAC’s Conclusion that Plaintiff is Involved in Narcotics Related Money Laundering Activities is Arbitrary and Capricious Action Under the APA………...………………………………………………………………….... 20 C. OFAC’s Finding that it is Unable to Determine Whether Plaintiff and the Three Associated Businesses’ Customs and Tax Records from the Mozambique Customs Services and Revenue Authority is Authentic and Complete is Arbitrary and Capricious Action Under the APA………………………………………………. 23 D. OFAC’s Conclusion that Plaintiff’s Settlement Offer or Remedial Steps is Insufficient to Warrant the Removal of His Name and That of the Three Companies from the SDN List is Arbitrary and Capricious Action Under the APA ………………………………………………….……………………………….. 25 III. OFAC’s Failure to Provide Any Access to the Redacted Portions of the Administrative Record Deprived Plaintiff of Sufficient Notice of the Charges and Evidence Against Him and Violated the APA……………………………………………………………….…... 28 IV. Plaintiff’s Request for a Writ of Mandamus Should Not Be Dismissed for Lack of Jurisdiction ………………………………………………………………………..……. 35 V. The Circumstances in this Case Do Not Necessarily Warrant Remand to OFAC for Additional Investigation or Explanation………………………………………………… 37 Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 4 of 48 iii CONCLUSION ………………………………………………………………………………… 37 Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 5 of 48 iv TABLE OF AUTHORITIES CASES Page(s) 13th Regional Corp. v. U.S. Dept. of Interior, 654 F.2d 758 (D.C. Cir. 1980) ...…………….... 36 Aktieselskabet v. Fame Jeans, 525 F.3d 8 (D.C. Cir. 2008) ...………......……………………... 10 Al-Adahi v. Obama, 597 F.Supp.2d 38 (D.D.C. 2009) ………………………………………… 15 Al-Aqeel v. Paulson, 568 F.Supp. 2d 64 (D.D.C. 2008) …………………………...…... 30, 31, 32 *Al Haramain Islamic v. U.S. Dept. of Treasury, 585 F.Supp.2d 1233 (D. Or. 2008) ...................................................................... 13, 14, 15 *Al Haramain Islamic Foundation, Inc. v. U.S. Dept. of Treasury, 686 F.3d 965 (9th Cir. 2011) ………………………………………………………. 28, 33 Al Odah v. United States, 559 F.3d 539 (D.C. Cir. 2009) ........................................................... 15 Am. Hosp. Ass’n. v. Burwell, 812 F.3d 183 (D.C. Cir. 2016) …………………………….......... 35 American Bioscience, Inc. v. Thompson, 269 F.3d 1077 (D.C. Cir. 2001) …………………...... 10 Amerijet Int’l, Inc. v. Pistole, 753 F.3d 1343 (D.C. Cir. 2014) ................................................... 11 Bell v. Hood, 327 U.S. 678 (1946) ……………………………………………………………... 12 Bell Atlantic Co. v. Twombly, 550 U.S. 544 (2007) ……………………………………………. 10 Bowman Transp., Inc. v. Arkansas Best Freight System, Inc., 419 U.S. 281 (1974) ………...… 12 Browning v. Clinton, 292 F.3d 235 (D.C. Cir. 2002) ………………………………………..… 10 Burlington Truck Lines, Inc. v. United States, 371 U.S. 156 (1962) ………………………...… 11 Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971) …………………………..… 11 County of Los Angeles v. Shalala, 192 F.3d 1005 (D.C. Cir. 1999) …………………………… 10 Empress Cuban Exportadora v. U.S. Dept. of Treasury, 516 F.Supp.2d 43 (D.D.C. 2007) …………………...……………………………… 11, 12 FBME Bank Ltd. v. Lew, 125 F. Supp. 3d 109 (D.D.C. 2015) …………………………….. 31, 33 Gonzales v. Thomas, 547 U.S. 183 (2006) …………………………………………………….. 37 Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 6 of 48 v GrandLodge, 185 F. Supp. 2d 9 (D.D.C. 2001) ……………………………………………..… 12 Holy Land Found. For Relief Dev. v. Ashcroft, 333 F.3d 156 (D.C. Cir. 2003) ………. 10, 11, 37 Indian Nation of N.Y. v. County of Oneida, 414 U.S. 661 (1974) ……………………………... 37 In re City of New York, 607 F.3d 923 (2nd Cir. 2010) ………………………………… 30, 31, 32 In re Sealed Case, 856 F.2d 268 (D.C. Cir. 1988) …………………………………………….. 32 James Madison Ltd. v. Ludwig, 82 F.3d 1085 (D.C. Cir. 1996) ……………………………….. 10 Kadi v. Geithner, 42 F.Supp.3d 1 (D.D.C. 2012) ………………………………………….. 10, 13 *KindHearts for Charitable Humanitarian Dev. v. Geithner, 647 F. Supp. 2d 857 (N.D. Ohio 2010) …………………………………………….. 28, 34 KindHearts for Charitable Humanitarian v. Geithner, 710 F.Supp.2d 637 (N.D. Ohio 2010) ………………………………………………….. 35 Lind v. McHugh, Civil Action No. 10-2207 (RBW) (D.D.C. Aug. 7, 2014) …………………... 29 Macharia v. United States, 334 F.3d 61 (D.C. Cir. 2003) ……………………………………... 10 Marshall County Health Care Auth. v. Shalala, 988 F.2d 1221 (D.C. Cir. 1993) …………….. 10 Motor Vehicle Mfrs. Assn. of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) ……………………………………………………………... 11, 13, 25 *Parhat v. Gates, 532 F.3d 834 (D.C. Cir. 2008) ………………………………………….. 13, 15 Roberts v. United States, 176 U.S. 221 (1900) ………………………………………………… 36 Roelofs v. Secretary of the Air Force, 628 F.2d 594 (D.C. Cir. 1980) ………………………… 28 Steel Co. v. Citizen for Better Environment, 523 U.S. 83 (1998) ……………………… 12, 37, 38 Tourus Records v. DEA, 259 F.3d 731 (D.C. Cir. 2001) …………………………………... 28, 29 United States v. Marzook, 435 F.Supp.2d 708 (N.D. Ill. 2006) ………………………………... 16 University Medical Center of S. Nevada v. Shalala, 173 F.3d 438 (D.C. Cir. 1999) ………….. 10 Williams-Jones v. LaHood, 656 F.Supp.2d 63 (D.D.C. 2009) ………………………………… 10 Zevallos v. Obama, 10 F.Supp.3d 111 (D.D.C. 2014) …………………………………….. passim Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 7 of 48 vi Zevallos v. Obama, 793 F.3d 106, 113 (D.C. Cir. 2015) ………………………………………. 13 STATUTES *5 U.S.C. § 555(e) …………………………………………………………………………. passim *5 U.S.C. § 556(d) …………………………………………………………………………. passim 5 U.S.C. § 706(2)(a) …………………………………………………………………………….. 13 8 U.S.C. § 1534(e)(3) …………………………………………………………………………… 34 18 U.S.C. App. III. § 1 ……………………………………………………………………… 30, 31 18 U.S.C. App. III. § 6(c) …………………………...…………………………………………... 35 21 U.S.C. § 1901 ………………………………………………………………………………. 3, 4 21 U.S.C. § 1902 …………………………………………………………………………………. 4 21 U.S.C. § 1903(a) ……………………………………………………………………………… 5 21 U.S.C. § 1903(h) ……………………………………………………………………………… 5 21 U.S.C. § 1903(i) ………………………………………………………….……………... passim 21 U.S.C. § 1907 …………………………………………………………………………... 4, 6, 21 50 U.S.C. § 1806(f) ………………………………………………………………………........... 34 REGULATIONS AND ADMINISTRATIVE MATERIALS 31 C.F.R. § 501.807 ………………………………………………………………………... passim 31 C.F.R. § 598.313 ………………………………………………………………………............ 5 31 C.F.R. § 598.314 ……………………………………………………………………………… 5 31 C.F.R. § 598.803 ……………………………………………………………………………… 5 Delegation of Functions Under Subsection 804(h)(2)(A) of the Foreign Narcotics Kingpin Designation Act, 78 Fed. Reg. 33,943 (May 31, 2013) …………………………………………………….. 5 Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 8 of 48 vii LEGISLATIVE MATERIALS H.R. Rep. No. 106-457 (1999), 1999 U.S.C.C.A.N. 304 ………………………………………... 4 Pub. L. 114-198 § 801, 130 Stat. 755 (July 22, 2016) …………………………………………... 30 OTHER AUTHORITIES 5A Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1987) …………………………………. 12 Merriam-Webster (Online ed. 2016) …………………………………………………………… 26 Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 9 of 48 1 INTRODUCTION On June 1, 2010, President Obama identified Mohamed Bachir Sulemane, the Plaintiff, as a significant foreign narcotics trafficker (SFNT) appropriate for sanctions under the Foreign Narcotics Kingpin Designation Act (Kingpin Act), 21 U.S.C. §§ 1901-1908.1 On the same day, OFAC added Plaintiff, and three businesses alleged to be owned or controlled by him, to the Specially Designated Nationals and Blocked Persons (SDN) List as Specially Designated Narcotics Traffickers (SDNTK),2 imposing blocking sanctions on Plaintiff and the businesses, including a block on all property and interests in property within U.S. jurisdiction in which such parties maintain an interest. Shortly thereafter, on November 30, 2010, Plaintiff filed a formal administrative request with OFAC seeking reconsideration of the designations in accordance with OFAC’s delisting procedures contained in 31 C.F.R. § 501.807. Nearly four (4) and a half years later, on April 2, 2015, OFAC denied Plaintiff’s request for reconsideration. Since his initial designation, and continuing since OFAC’s denial action, Plaintiff remains prohibited from engaging in virtually all transactions with U.S. persons,3 and has experienced a de facto prohibition on engaging in virtually all financial transactions outside of U.S. jurisdiction. Unable to engage in day-to-day financial transactions of either a personal or business nature, the welfare of Plaintiff and his family continues to be substantially prejudiced by OFAC’s actions. The unclassified and non-privileged evidence that OFAC provided to Plaintiff in support of the denial action is devoid of any reliable, relevant, or material evidence to support its actions, findings, conclusions, and the ultimate denial. At a time when fake and non-credible news sources 1 U.S. Department of the Treasury, Recent OFAC Actions, June 1, 2010, available at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20100601.aspx. 2 Id. 3 For purposes of the Kingpin Act’s implementing regulations, the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR), U.S. persons are defined as any United States citizen or national, permanent resident alien, an entity organized under the laws of the United States (including its foreign branches, or any person within the United States. 31 C.F.R. § 598.318. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 10 of 48 2 are believed by many to play a role in shaping contemporary politics,4 OFAC’s use of unreliable sources obtained from the Internet highlights the damage that such sources can cause, and fails to satisfy the minimal evidentiary standards of the Administrative Procedure Act (APA), 5 U.S.C. § 556(d). Furthermore, the evidence disclosed by OFAC provides no indicia of reliability as such reporting omits its sources, as well as specific details to support the allegations made against the Plaintiff. Reliance upon such information is deeply concerning and should not be allowed by this Court. As noted in Plaintiff’s Complaint, OFAC’s unclassified and non-privileged version of the administrative record was comprised of five (5) conclusions (herein referred to as “assessments”) that OFAC claims rebuts the five (5) general categories of arguments put forward by the Plaintiff in the reconsideration process, and which in totality support OFAC’s decision to deny the delisting request. As challenged in Counts I-IV of the Complaint, OFAC’s assessments, wherein OFAC reiterated or misinterpreted its own sources—often in haec verba—to support its ultimate denial action, were unreasonable agency action under the APA. As a result, reliance on all such individual pieces of evidence by OFAC, and the agency’s unreasonable interpretation of such evidence in formulating their five (5) assessments, fails to support the agency’s decision to deny the Plaintiff’s request for reconsideration, even when such information is viewed in the aggregate. In accordance with Count VII of the Complaint, and insofar as OFAC attempts to salvage its unreasonable agency actions, findings, and conclusion, by claiming that the denial decision is 4 See Catherine Maddux, Rise of ‘Fake News’ Spurs Angst in Internet Age, Voice of America (Nov. 29, 2016), available at, http://www.voanews.com/a/fake-news-spurs-angst-in-the-internet-age/3616571.html (Last visited Dec. 17, 2016); Barton Swaim, Who’s to blame for fake news? America’s real newsrooms, The Washington Post (Dec. 12, 2016), available at, https://www.washingtonpost.com/opinions/the-rise-of-fake-news-is-an-indictment-of- americas-real-newsrooms/2016/12/12/9ccd7ac2-be52-11e6-94ac- 3d324840106c_story.html?utm_term=.f38fd770358c (Last visited Dec. 17, 2016); Brian Stelter, The plague of fake news is getting worse—here’s how to protect yourself, CNN Money (Nov. 1, 2016), available at, http://money.cnn.com/2016/10/30/media/facebook-fake-news-plague/ (Last visited Dec. 17, 2016). Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 11 of 48 3 also supported by classified evidence and privileged law enforcement sensitive evidence—which it has noted will be provided to the Court ex parte and in camera—the agency also reveals that it has violated the APA’s sufficient notice requirement, 5 U.S.C. § 555(e), by failing to provide any such evidence or information to Plaintiff. Further, as Plaintiff lacks the ability to assess any such classified and privileged law enforcement sensitive evidence on his own, Plaintiff appeals to this Court to look for certain indicia of reliability in determining whether OFAC’s assessment of, or reliance on, all underlying evidence, for its actions, findings, and/or conclusions, were reasonable and in accordance with the requirements of the APA. Finally, this Court retains jurisdiction in creating the appropriate remedy for OFAC’s violations of the APA and Kingpin Act, including remand to the agency for further proceedings, mandamus, injunctive relief, declaratory judgment, and such other and further relieve as the Court deems just and proper. For the reasons set forth below, the Court should deny the Defendants’ motion to dismiss, or in the alternative for summary judgment, and should grant Plaintiff’s cross-motion for summary judgment on all counts. STATUTORY AND REGULATORY BACKGROUND The Kingpin Act is premised upon a Congressional finding that there is a “national emergency resulting from the activities of international narcotics traffickers and their organizations that threatens the national security, foreign policy, and economy of the United States.” 21 U.S.C. § 1901. The purpose of the Kingpin Act is as follows: The purpose of this chapter is to provide authority for the identification of, and application of sanctions on a worldwide basis to, significant foreign narcotics traffickers, their organizations, and the foreign persons who provide support to those significant foreign narcotics traffickers and their organizations, whose activities threaten the national security, foreign policy, and economy of the United States. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 12 of 48 4 21 U.S.C. § 1902 (emphasis added). Indeed, the policy underlying the Kingpin Act is directly related to the U.S. Government’s efforts to attack the sources of income and money laundering of significant narcotics traffickers that are the “most responsible.” H.R. Report No. 106-457, at 42 (Nov. 9, 1999), as reprinted in 1999 U.S.C.C.A.N. 304, 313. In sum, the Kingpin Act is intended to target significant drug kingpins as well as those involved in activities of money laundering, manufacturing narcotics, transporting narcotics and managing assets related thereto. Id. at 43 (emphasis added). The definitions of the Kingpin Act are instructive as to its intended application. The Kingpin Act defines a “foreign person” as “any citizen or national of a foreign state or entity not organized under the laws of the United States, but does not include a foreign state.” 21 U.S.C. § 1907(2). The Act defines a “significant foreign narcotics trafficker” (SFNT) as “any foreign person that plays a significant role in international narcotics trafficking” as determined by, and publicly identified by, the President. 21 U.S.C. § 1907(7) (emphasis added). The term “narcotics trafficking” extends to “any illicit activity to, manufacture, cultivate, produce, distribute, sell, finance, or transport narcotic drugs, controlled substances, or listed chemicals, or otherwise endeavor or attempt to do so, or to assist, abet, conspire, or collude with others to do so.” 21 U.S.C. § 1907(3). In accordance with 21 U.S.C. § 1901(a)(4) and (b), a SDNT must threaten the national security, foreign policy, and economy of the United States. The Kingpin Act authorizes the President to impose blocking sanctions on “any [SFNT] publicly identified” in an annual report that the President is mandated to submit to specific Congressional committees, or in additional reports to such committees for any foreign persons identified after the annual report as a SFNT. 21 U.S.C. §§ 1903(b), (h)(1), 1904(b)(1) (“…there are blocked as of such date, and any date thereafter, all such property and interests in property Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 13 of 48 5 within the United States, or within the possession or control of any United States person…”). The Secretary of the Treasury and the heads of several other federal agencies are entrusted by the Kingpin Act to provide the appropriate and necessary information to enable the President to submit reports identifying foreign persons as appropriate for sanctions pursuant to the Kingpin Act. 21 U.S.C. § 1903(a). On July 5, 2000, OFAC issued the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR), 31 C.F.R. Part 598, to implement the Kingpin Act. Persons designated pursuant to the Kingpin Act are identified by the FNKSR as specially designated narcotics traffickers (SDNTK). 31 C.F.R. §§ 598.313 & 598.314. Parties designated as SDNTKs are included on the SDN List maintained and administered by OFAC. Id. The Kingpin Act provides authority to the President to reconsider a SFNT designation, and the President has delegated that authority to the Secretary of the Treasury. 21 U.S.C. § 1903(h)(2)(A); 78 Fed. Reg. 33,943 (May 31, 2013). The Secretary of the Treasury has further delegated this authority to the Director of OFAC. 31 C.F.R. § 598.803. SDNTKs, as well as other Specially Designated Nationals and Blocked Persons, may petition OFAC for reconsideration of their designation and removal of their names from OFAC’s SDN List in accordance with OFAC’s procedures governing unblocking and delisting. 31 C.F.R. § 501.807. Specifically, blocked persons may either submit arguments or evidence that the person believes establishes that insufficient basis exists for the designation, or propose remedial steps on the person’s part, such as corporate reorganization, resignation of persons from positions in a blocked entity, or similar steps, which the person believes would negate the basis for designation. See 31 C.F.R. § 501.807(a). Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 14 of 48 6 The Kingpin Act provides that during a judicial review of an OFAC determination based on “classified information”—as that term is defined in section 1(a) of the Classified Information Procedures Act—such information may be submitted to the reviewing court ex parte and in camera. 21 U.S.C. § 1903(i). STATEMENT OF FACTS On June 1, 2010, President Obama identified Plaintiff, as a SFNT5 appropriate for sanctions under the Kingpin Act. A.R. 234-235. On the same day, OFAC added Plaintiff, and three businesses alleged to be associated with him, to the SDN List as SDNTKs,6 and imposed blocking sanctions on them, including a block on all property and interests in property within U.S. jurisdiction in which they maintained an interest. A.R. 472-455. As soon as those designations occurred, Plaintiff, his family, and businesses began to suffer substantial financial and economic harm. A.R. 510-544, 552-554. On November 30, 2010, Plaintiff filed a formal request for reconsideration of his designation pursuant to 31 C.F.R. § 501.807. A.R. 446, 509-544. In line with the delisting criteria outlined in that section, the request included arguments and evidence affirming that an insufficient basis existed for the designations, and to the extent that a credible basis existed for the designations, Plaintiff proposed remedial steps to negate such bases for the designations. Id. During the nearly four (4) and a half year period in which the request for reconsideration was pending, Plaintiff made numerous submissions to OFAC evidencing that an insufficient basis 5 The term “significant foreign narcotics trafficker” (SFNT) means a foreign person that plays a significant role in international narcotics trafficking, as set forth in 21 U.S.C. § 1907(7), that the President has determined to be appropriate for sanctions and has publically identified under 21 U.S.C. § 1903(b) or § 1903(h)(1) of the Kingpin Act. However, a “specially designated narcotics trafficker” (SDNTK) is an identifier used for persons on the Specially Designated Nationals and Blocked Persons List (SDN List) maintained by OFAC, including all foreign persons identified by the President as an SFNT, and other foreign persons deemed appropriate for sanctions by OFAC pursuant to the authority delegated to the Secretary of the Treasury under the Kingpin Act. 6 Id. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 15 of 48 7 existed for both the initial designation and for the continued designation A.R. 446-448. During the long request for reconsideration process, and even before filing a formal request for reconsideration in August 2010, Plaintiff also made numerous submissions proposing remedial steps on his part to negate any basis of his designation, in accordance with OFAC’s delisting procedures in 31 C.F.R. § 501.807. Id. and 463-0465. During that same period, OFAC failed to provide Plaintiff with a copy of the administrative record underlying the designations. Further, OFAC’s only substantive correspondence with Plaintiff was limited to two (2) questionnaires, and an uninformative meeting with Plaintiff’s counsel. A.R. 446-448. These questionnaires—issued on March 2, 2011 and March 6, 2012, respectively—requested Plaintiff to provide certain information relevant to OFAC’s consideration of Plaintiff’s request for reconsideration. A.R. 740-892, 945-1069, 1181-1195, 1201-1208, and 1212-1310. In a November 2013 meeting between OFAC and undersigned counsel, OFAC provided no new information concerning the basis of Plaintiff’s designation, and undersigned counsel was left to reiterate arguments that had been made in prior submissions. A.R. 1198-1200. Plaintiff made his final submission to OFAC on February 7, 2015, requesting a status update on the petition, proposing a settlement offer with the agency in accordance with 31 C.F.R. § 501.807, and seeking the agency’s guidance as to what information was necessary for a final decision to be made on his request for reconsideration after years of inaction by OFAC. A.R. 1323- 1332. In the same submission, Plaintiff also requested a copy of the unclassified portions of the administrative record, so that he could have a meaningful opportunity to respond to OFAC’s designation. Plaintiff also sought disclosure to undersigned counsel7 of any classified information supporting the continuance of the designation, or unclassified summaries of such evidence. Id. 7 At the time of such request undersigned counsel maintained a SECRET level security clearance. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 16 of 48 8 On April 2, 2015, OFAC denied Plaintiff’s request for reconsideration. In doing so, OFAC concluded that Plaintiff “continue[s] to meet the criteria under the Kingpin Act.” A.R. 1341-1343. Specifically, OFAC held that after reviewing all of the evidence before it, including law enforcement sensitive, diplomatic, classified, and open source information, it didn’t “find Mr. Sulemane’s claims that he has not engaged in narcotics trafficking to be credible,” and that “[m]ultiple sources indicate that he has engaged, and continues to engage, in narcotics trafficking.” Id. It was not until August 18, 2015, over four (4) months after OFAC’s April 2, 2015 denial letter, that the agency finally provided Plaintiff with the unclassified, non-privileged portions of the administrative records that it had relied upon in both the initial designations, as well as in its denial of Plaintiff’s request for reconsideration. A.R. 1344-1345. None of that information had been provided to Plaintiff throughout the reconsideration process, contrary to OFAC’s assertions in its April 2, 2015 decision. A.R. 1341-1343. On November 23, 2015, Plaintiff submitted a request for the full-disclosure of the redacted, but marked unclassified, portions of the administrative record, or alternatively an explanation from the agency as to why such portions were redacted. A.R. 1346-1348. On May 2, 2016 OFAC responded to Plaintiff’s November 23, 2015 request, acknowledging Plaintiff’s questioning of OFAC’s redaction of certain paragraphs and documents in the administrative record, and providing updated copies of the administrative record that included additional information and their related exhibits. A.R. 1349-1350. The evidentiary memorandum on Plaintiff’s reconsideration was organized by five (5) assessments (i.e. the agency’s reasoning and conclusion) of Plaintiff’s arguments and evidence in support of his petition. A.R. 442-466. The evidentiary memorandum in support of OFAC’s denial decision claimed that Plaintiff had put forth the following arguments challenging the designations Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 17 of 48 9 during the reconsideration process: 1) that Plaintiff had never been involved in narcotics trafficking and has had no financial relations with narcotics traffickers; 2) that Plaintiff and the three allegedly associated businesses had never been involved in any money laundering activity; 3) that the Maputo Shopping Centre is owned by Plaintiff’s sons and wife; 4) that certain September 2011 violations announced by the Government of Mozambique against Plaintiff are unrelated to narcotics trafficking; and 5) that Plaintiff proposed to OFAC several remedial steps in exchange for his removal and the removal of the three associated businesses from the SDN List. A.R. 449- 466. Based on these assessments, OFAC ultimately concluded that Plaintiff continues to meet the criteria of a SDNT pursuant to the Kingpin Act, and thus denied his request for reconsideration of his designation. A.R. 465-466. Plaintiff has brought suit to compel the rescission of his designation as an SDNT and to rescind all blocking notices, due to OFAC’s arbitrary and capricious agency actions, findings, and conclusions as set forth in Counts I-VI. As set forth in Count VII, Plaintiff also seeks to compel disclosure of classified and law enforcement sensitive portions of the administrative record to the extent that OFAC’s April 2, 2015 denial decision was based on such portions. In consideration of the fact that all relevant evidence and certain issues addressed herein are a matter of first impression for the Court, Defendants’ Motion to Dismiss, or in the alternative, Motion for Summary Judgment should be denied. Alternatively, the Court should grant Plaintiff’s requested relief as a matter of law pursuant to Rule 56. ARGUMENT I. Legal Standards for Federal Rules of Civil Procedure 12(b)(1), 12(b)(6) and 56 On deciding a motion to dismiss pursuant to Rule 12(b)(6), a court “must not make any judgment about the probability of the plaintiff's success, for a complaint may proceed even if it Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 18 of 48 10 appears that a recovery is very remote and unlikely.” Aktieselskabet v. Fame Jeans, 525 F.3d 8, 17 (D.C. Cir. 2008); see generally Bell Atlantic Co. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss, the facts alleged must state a facially plausible claim for relief and the court must accept as true all material factual allegations in the complaint. Twombly, 550 U.S. at 556. In resolving a Rule 12(b)(6) motion, “the court must treat the complaint’s factual allegations— including mixed questions of law and facts—as true and draw all reasonable inferences therefrom in the plaintiff’s favor.” Williams-Jones v. LaHood, 656 F.Supp.2d 63, 67 (D.D.C. 2009) (citing Macharia v. United States, 334 F.3d 61, 64, 67 (D.C. Cir. 2003); Holy Land Found. For Relief Dev. v. Ashcroft, 333 F.3d 156, 165 (D.C. Cir. 2003); Browning v. Clinton, 292 F.3d 235, 241 (D.C. Cir. 2002). As this Circuit has repeatedly recognized, when a party seeks review of agency action under the APA, the district judge sits as an appellate tribunal, and the entire case on review is a question of law. American Bioscience, Inc. v. Thompson, 269 F.3d 1077 (D.C. Cir. 2001) (citing Marshall County Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 (D.C. Cir. 1993); University Medical Center of S. Nevada v. Shalala, 173 F.3d 438, 440 n. 3 (D.C. Cir. 1999); James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1096 (D.C. Cir. 1996); County of Los Angeles v. Shalala, 192 F.3d 1005, 1011 (D.C. Cir. 1999). In an agency review context there is, “…no real distinction between questions presented in [a] Rule 12(b)(6) motion to dismiss and motion for summary judgment.” Id. (referencing Marshall County Health Care Auth., 988 F.2d at 1226). “Summary judgment thus serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review. Zevallos v. Obama, 10 F.Supp.3d 111, 117 (D.D.C. 2014) (quoting Kadi v. Geithner, 42 F.Supp.3d 1, 8 (D.D.C. 2012). Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 19 of 48 11 Although the scope of review under the APA for the arbitrary and capricious standard, upon which all of Plaintiff’s claims are based, “…is narrow and a court is not to substitute its judgment for that of the agency…the agency must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’” Motor Vehicle Mfrs. Assn. of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (citing Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962). An agency’s decision is entitled to a “presumption of regularity…[b]ut that presumption is not to shield [the agency’s] action from a thorough, probing, in-depth review.” Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415 (1971). Defendant’s contention that because its decision under the Kingpin Act implicates foreign affairs and national security, the deference it is due is even greater than ordinarily applies under the APA, does not deprive Plaintiff from the applicable review standard “…under the highly deferential ‘arbitrary and capricious’ standard” where the reviewing court must still “…review the agency record to determine whether the agency’s decision was supported by a rational basis. See Holy Land Foundation v. Ashcroft, 333 F.3d 156, 162 (D.C. Cir. 2003). Indeed, “[E]ven pursuant to this deferential standard of review, an agency must articulate an explanation for its action.” Amerijet Int’l, Inc. v. Pistole, 753 F.3d 1343, 1350 (D.C. Cir. 2014). When applying the “arbitrary and capricious” standard in making a determination to set aside agency action, findings, and/or conclusions, “…a court should ascertain whether the Agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Empressa Cuban Exportadora v. U.S. Dept. of Treasury, Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 20 of 48 12 516 F.Supp.2d 43, 53 (D.D.C. 2007). (quoting Bowman Transp., Inc. v. Arkansas Best Freight System, Inc., 419 U.S. 281, 286 (1974). With regard to Rule 12(b)(1), which Defendant claims is implicated by Plaintiff’s writ of mandamus request within its Reliefs Requested in the Complaint, “[b]ecause subject-matter jurisdiction focuses on the court’s power to hear the plaintiffs claim, a Rule 12(b)(1) motion imposes on the court an affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority.” GrandLodge, 185 F. Supp. 2d 9, 13 (D.D.C. 2001) (referencing 5A Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1987)). A district court has subject-matter jurisdiction if “…‘the right of the petitioners to recover under the complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another,...’ unless the claim “clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous.” Steel Co. v. Citizen for Better Environment, 523 U.S. 83, 89 (1998) (quoting Bell v. Hood, 327 U.S. 678, 682 (1946)). II. OFAC’s Denial of Plaintiff’s Reconsideration Petition Was Arbitrary and Capricious. Plaintiff’s Complaint challenges not only OFAC’s ultimate denial of Plaintiff’s Reconsideration Petition (Count VI), but also individually challenges as “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” four of OFAC’s five “findings” and “conclusions” within the administrative record (Count I-IV), as well as the agency’s “action” in relying upon certain evidence for arriving at such “findings” and “conclusions” (Count V). See 5 U.S.C. § 706(a)(2). Defendant’s Motion to Dismiss does not appear to take into account these individual challenges. Furthermore, Defendants claim that the unclassified, non-privileged evidence in the administrative record (hereinafter referred to as the “unclassified administrative Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 21 of 48 13 record”) “is sufficient to meet the highly deferential standard applicable here,” and argue in the alternative that to the extent this Court believes such evidence does not meet that standard, then such evidence, combined with the classified and privileged evidence enables them to meet the applicable standard. Defs.’ Mot. to Dismiss at 10-11. As set forth above, OFAC’s assessment of the evidence must have a rational connection with its “…action, findings, and conclusions…,” lest its actions be deemed arbitrary and capricious. See 5 U.S.C. § 706(2)(a). See also, Motor Vehicle Mfrs. Assn. of U.S., Inc., 463 U.S. at 43. However, in considering whether OFAC’s reasoning was arbitrary or capricious under the APA, the reviewing court should also “…evaluate the quality of the contents of the administrative record, including whether the objectionable material is sufficiently relevant and fair to be used.” Al Haramain Islamic v. U.S. Dept. of Treasury, 585 F.Supp.2d 1233, 1258 (D. Or. 2008). Defendants’ Motion to Dismiss claims that Plaintiff’s criticisms of OFAC’s reliance on its underlying sources in the unclassified administrative record are misplaced. Defs.’ Mot. to Dismiss at 16. However, Plaintiff does not challenge OFAC’s ability to rely on a broad range of evidence, and acknowledges that the Defendants have correctly cited to the D.C. Circuit’s previous approval of OFAC’s ability to rely on “…third hand accounts, press stories, material on the Internet, or other hearsay.” Zevallos v. Obama, 793 F.3d 106, 113 (D.C. Cir. 2015). However, Defendants take for granted that even hearsay evidence, “…must be presented in a form, or with sufficient additional information that permits the…court to assess its reliability.” Parhat v. Gates, 532 F.3d 834, 849 (D.C. Cir. 2008). Furthermore, in the context of OFAC designations, courts have noted that the APA bars reliance upon “irrelevant, immaterial, or unduly repetitious evidence.” Kadi, 42 F.Supp.3d at 12. See also Al Haramain Islamic, 585 F.Supp. at 1258 (quoting 5 U.S.C. § 556(d)). Moreover, hearsay evidence must “be probative and its use fundamentally fair.” Id. (quoting Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 22 of 48 14 Calhoun v. Bailar, 626, F.2d 145, 148 (9th Cir. 1980)). As set forth below, the evidence within the unclassified admin. record fails to satisfy the standards of admissibility codified in 5 U.S.C. §556(d) and is neither probative nor reliable. Given OFAC’s disclosures in this matter, Plaintiff can only challenge as arbitrary and capricious those un-redacted portions of the unclassified administrative record, which Defendants’ contend are sufficient to support OFAC’s decision. Defs.’ Mot. to Dismiss at 10. However, in order to salvage their arguments, Defendants either directly appeal or allude to support in the administrative record’s classified evidence and privileged law enforcement sensitive evidence in the event the Court finds the evidence in the unclassified administrative record insufficient. Specifically, Defendants’ repeatedly conclude that their underlying action (i.e. their assessment of, or reliance on, particular evidence) was reasonable either because of the “weight of other evidence in the record,” the “totality of evidence” that was before them, or because of the consideration of classified and law enforcement sensitive information gave them “more than sufficient grounds to deny Plaintiff’s request…” Defs.’ Mot. to Dismiss at 13, 14, and 16. Notwithstanding the foregoing, Plaintiff has had no opportunity to assess the quality of, or otherwise respond to such evidence, and appeals to this Court to look for certain indicia of reliability in determining whether OFAC’s assessment of, or reliance on, all of the underlying evidence was reasonable. In reviewing and evaluating all the contents of the administrative record, including any classified and privileged material that OFAC will submit to the Court ex parte and in camera, Plaintiff respectfully requests a determination as to whether all such material was “…sufficiently relevant and fair to be used” and in line with the evidentiary standards of the APA. Al Haramain Islamic, 585 F.Supp.2d at 1233; See also 5 U.S.C. § 556(d). In doing so, the D.C. Circuit and Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 23 of 48 15 other courts have noted that courts must evaluate whether the government’s documents “say who ‘reported’ or ‘said’ or ‘suspected’’ certain things and whether the government has provided ‘the underlying reporting upon which the documents’ bottom-line assertions are founded.” Id. (quoting Parhat v. Gates, 532 F.3d at 846.8 For example, in other cases invoking national security concerns and the government’s reliance on classified materials, the D.C. Circuit has rejected “government intelligence documents whose reliability could not be assessed because they lacked the underlying reporting upon which their assertions were founded, and emphasizing that hearsay evidence ‘must be presented in a form, or with sufficient additional information, that permits [the court] to assess its reliability.” Al-Adahi v. Obama, 597 F.Supp.2d 38, 46 (D.D.C. 2009) (quoting Parhat, 532 F.3d at 846-847, 849). Further, the D.C. Circuit has rejected “…the government’s contention that it can prevail by submitting documents that read as if they were indictments or civil complaints, and that simply assert as facts the elements required to prove that a detainee falls within the definition of enemy combatant.” Al Odah v. United States, 559 F.3d 539, 545 (D.C. Cir. 2009) (quoting Parhat, 532 F.3d at 850). Plaintiff respectfully requests this Court to keep such considerations in mind when evaluating the quality of the contents of the complete and un-redacted administrative record, particularly if the Court believes such classified and law enforcement sensitive information is necessary in order for OFAC establish sufficient grounds for their denial of Plaintiff’s request for reconsideration. Defs.’ Mot. to Dismiss at 1, 10, and 16. Furthermore, Plaintiff also requests that 8 In Parhat the D.C. Circuit held it could not assess the reliability of assertions in documents, which “repeatedly describe those activities and relationships as having “reportedly” occurred, as being “said to” or “reported to” have happened, and as things that “may” be true or are “suspected of” having taken place. In virtually every instance in the instant matter, the documents do not say who “reported” or “said” or “suspected” those things. Nor do they provide any of the underlying reporting upon which the documents bottom-line assertions are founded, nor any assessment of the reliability of that reporting. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 24 of 48 16 while reviewing the classified and law enforcement sensitive portions of the administrative record, that the Court keep in mind that the Plaintiff has never had access to such information, and that as a result, the Court should draw the appropriate adverse inferences against the Defendants. See United States v. Marzook, 435 F.Supp.2d 708, 750 (N.D. Ill. 2006). (holding that because the Defendant did not have access to certain information withheld by the Government pursuant to the Classified Information Procedures Act the court would draw appropriate adverse inferences against the government). A. OFAC’s Conclusion that Plaintiff Continues to be Involved in Narcotics Trafficking and its Reliance on the Underlying Evidence in Support of the Conclusion Are Arbitrary and Capricious Action Under the APA OFAC did not reasonably assess the unclassified non-privileged evidence in its first assessment, and therefore engaged in arbitrary and capricious agency action. Furthermore, OFAC’s mere reliance on such unclassified non-privileged evidence also constitutes arbitrary and capricious agency action, as the underlying evidence that OFAC assessed in support of this conclusion amounts to four sources in total, including an internet blog post and three articles as described below. A.R. 449-455. First, the Internet blog post, from Macau Blogs, was dated only one day after the June 1, 2010 identification, and OFAC’s assessment of this blog post plainly reads in a manner indicating that the agency relied upon it to evidence Plaintiff’s continued involvement in narcotics trafficking. Specifically, OFAC states “MBS [referring to SULEMANE] continued to run up successes that were not based on clean business deals but on drugs-connected dealings.” A.R. 449-450. Contrary to Defendants’ assertions, it is unreasonable to conclude nearly five (5) years after a person’s identification as a SFNT, that the person has continued involvement in narcotics trafficking based Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 25 of 48 17 on a source published only a day after his initial identification and whose reporting appears to be limited in reference to conduct that occurred prior to the initial identification.9 Furthermore, the blog post itself is unreliable, irrelevant, immaterial, and/or unduly repetitious, and as such is in contravention of the evidentiary standards of the APA, as it is limited to claims made against Plaintiff by its author without any references to support them, or any mention of the author’s own credentials to validate his credibility to make such claims. Further, OFAC fails to provide any assessment of the reliability of such reporting. Essentially, the author of the Macau Blogs post reports his own views with occasional reference to the SDNTK designation of Plaintiff, rather than reporting to any independent, credible facts. In order to salvage OFAC’s unreasonable use of, and reliance upon, this specific evidence, Defendants’ conclude in their Motion to Dismiss, that the activities the Macau Blogs post describes continued beyond his designation “in light of the totality of evidence that was before OFAC.” Defs.’ Mot. to Dismiss at 13. However, in consideration of other sources available in the unclassified administrative record, they do not. To the extent that the Defendants seek for the Court to find that such a conclusion is supported by the “totality of the evidence,” including that contained in the classified and privileged portions of the administrative record, Plaintiff appeals to this Court to determine whether such classified and privileged portions are sufficiently relevant and fair to be used, and in line with the evidentiary standards of the APA. 5 U.S.C. § 556(d). Next, the Savana and Verdade articles that OFAC relies upon in support of its denial are both based on reporting from another article published by the Mumbai Mirror. A.R. 455. As an 9 The Macau Blogs blog post appears to report solely on events preceding Plaintiff’s initial identification as a significant foreign narcotics trafficker by the President and on publications by the U.S. Government relating to Plaintiff’s June 1, 2010 identification; not any events that occurred afterwards. This is evidenced by the fact that it was published on June 2, 2010, one day after the identification action, and with several references to “mention[s]” by the White House. It is important to note that since Plaintiff was designated by the President, the White House made an announcement concerning Plaintiff’s designation. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 26 of 48 18 initial matter, the Mumbai Mirror article is unreliable, irrelevant, immaterial, and/or unduly repetitious, and in contravention of the evidentiary standards of the APA, as it fails to provide any dates for the allegations it makes against Plaintiff, any indication as to how Plaintiff was involved in narcotics trafficking activities, particularly since June 1, 2010, and contains little to no mention of who reported, said, or suspected the claims against Plaintiff. OFAC assessment of the Savana and Verdade articles relies on both articles’ citations to the Mumbai Mirror article, and the Verdade article’s references to reports from “the Kenyan and Indian media outlets.” Tellingly, OFAC itself notes the article does not identify these reports, and acknowledges that OFAC could not independently locate such reports. A.R. 455. These articles’ citations to the Mumbai Mirror article similarly render them unreliable, irrelevant, immaterial, and/or unduly repetitious, and in contravention of the evidentiary standards of the APA. Furthermore, the Verdade article’s additional references to uncorroborated Kenyan and Indian media outlets allegations against Plaintiff, are also unreliable, irrelevant, immaterial, and/or unduly repetitious because they fail mention who reported, said, or suspected the claims against Plaintiff, and how Plaintiff was involved in narcotics trafficking activities, particularly since June 1, 2010. Again, OFAC itself acknowledges that it could not verify the reliability of such allegations. Id. Despite these difficult facts, Defendants boldly assert that its failure to locate any reports corroborating the aforementioned articles does not undercut from what OFAC drew from the sum of the reporting: that Plaintiff’s kidnapping was linked to his rivalry with an international drug lord whom Plaintiff tried to eliminate with help from another SDNTK. However, this position is incredible and fails to render OFAC’s assessment of the articles reasonable—particularly insofar as OFAC relies on them to support the conclusion that Plaintiff continues to be involved in narcotics trafficking. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 27 of 48 19 First, neither of these articles sufficiently establish an alleged rivalry between Plaintiff and any international drug lords. As set forth in the Complaint, it cannot be discerned from a plain reading of the Mumbai Mirror article which individual is being referred to as Plaintiff’s alleged archrival, or any description as to the nature of such a rivalry. Compl. ¶ 58-61. A comparison of the Mumbai Mirror article and OFAC’s interpretation evidences that OFAC’s understanding of the article is incorrect, or is at best an interpretation of obscure allegations in a manner most favorable to a conclusion OFAC desires to reach. With both the Mumbai Mirror article, and OFAC’s interpretation of it, failing to provide a sufficient explanation as to how Plaintiff’s kidnapping was linked to any rivalries with international drug lords, the Verdade and Savana articles—which predominately rely on the same Mumbai Mirror article—also fail to establish how Plaintiff’s kidnapping was related to any such rivalry. Thus, OFAC’s assessment of both articles fails to establish a rational connection to OFAC’s conclusion that Plaintiff continues to engage in narcotics trafficking. Finally, even assuming arguendo that such a rivalry is established by these articles, it is difficult to discern how such a rivalry, or receiving help from an SFNT, supports the conclusion that Plaintiff is engaged in conduct which would meet the criteria for designation under the Kingpin Act. Defs.’ Mot. to Dismiss at 12. For the aforementioned reasons, OFAC’s reliance on, and assessment of, the Verdade, Savana, and Mumbai Mirror articles, to support its conclusion that Plaintiff continues to be involved in narcotics trafficking, is unreasonable agency action. Although Defendants’ attempt to salvage their misplaced reliance on the Mumbai Mirror article by again referring to “…other evidence of narcotics trafficking and money laundering in the administrative record…”, the unclassified administrative record fails to support such an assertion because of the aforementioned issues with the evidence. As such, Plaintiff is entitled to judgment in its favor on Count I of the Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 28 of 48 20 Complaint. In addition, to the extent that OFAC is referring to classified and privileged portions of the administrative record in support of this contention, Plaintiff appeals to this court to determine whether sufficiently relevant and fair to be relied upon, and in line with the evidentiary standards of the APA, 5 U.S.C. § 556(d). B. OFAC’s Conclusion that Plaintiff is Involved in Narcotics Related Money Laundering Activities is Arbitrary and Capricious Action under the APA. OFAC did not reasonably assess the unclassified, non-privileged evidence in support of its conclusion that Plaintiff is involved in narcotics trafficking related money laundering. Such a failure by the agency constitutes arbitrary and capricious agency action. Furthermore, OFAC’s reliance on such unclassified, non-privileged evidence also constitutes arbitrary and capricious agency action. A.R. 456. The underlying evidence that OFAC assessed in support of this conclusion amounts to two sources in total. First, OFAC cites to an Africa Monitor article to support its conclusion that Plaintiff is engaged in narcotics trafficking related money laundering. However, the Africa Monitor article cited by OFAC is unreliable, irrelevant, immaterial, and/or unduly repetitious, and in contravention of the evidentiary standards of the APA, because its allegations that Plaintiff admitted “without any reservations being involved in money laundering operations…,” makes no reference or indication as to when or where such an admission was made by Plaintiff, or to whom it was made. Although Defendants’ reject Plaintiff’s denial of such an admission, citing it as self-serving, neither the article itself, nor independent corroboration by OFAC as to who reported, said, or suspected such a statement by Plaintiff, makes it impossible to assess the reliability of such a claim. In addition, OFAC’s assessment of the article is misconstrued and misleading, and therefore unreasonable. In short, OFAC interprets the Africa Monitor to allege that information disclosed by sources close to Plaintiff (i.e. relatives) suggests that Plaintiff admits to being Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 29 of 48 21 involved in money laundering operations, whereas the article itself solely alleges that such sources noted that Plaintiff denies ever being directly involved in drug trafficking. Aside from the aforementioned issues of reliability, OFAC’s interpretation of the Africa Monitor article is unreasonable because it misstates the allegations of the article in order to support the conclusion that the agency seeks to reach—which is that Plaintiff is involved in narcotics trafficking related money laundering. However, assuming arguendo that such an assertion was true—that Plaintiff is involved in money laundering activities—OFAC’s assessment of the Africa Monitor does not indicate that such money laundering activities were linked to narcotics trafficking. Indeed, money laundering is a category of conduct that can be attributed to a large range of illicit conduct, of which the laundering of narcotics related proceeds is one. Thus, it does not follow that an allegation of money laundering is necessarily or inherently linked to narcotics trafficking activities as defined by the Kingpin Act. 21 U.S.C. § 1907(7). It is also unreasonable for OFAC to conclude nearly five (5) years after Plaintiff’s identification as a SFNT (i.e. June 1, 2010) that he continues to be involved in narcotics-related money laundering activities because of information contained in a source published only a month after the identification (i.e. July 6, 2010). It is clear that the Africa Monitor article’s failure to provide a date for the reported admission by Plaintiff undercuts OFAC’s reliance on it, and thereby renders its use unreasonable. Nevertheless, Defendants’ attempt to salvage OFAC’s unreasonable use of, and reliance upon, the Africa Monitor article by concluding that the article’s publication date and failure to provide a date for the reported admission by Plaintiff are reasonable when viewed “…in light of the totality of evidence that was before OFAC,” or “given the weight of the other evidence.” Defs.’ Mot. to Dismiss at 13-14. However, as indicated in the forthcoming discussion of the Mail & Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 30 of 48 22 Guardian article, and OFAC’s assessment of that article such a conclusion is unreasonable. To the extent that the evidence in classified and privileged portions of the administrative record are necessary to support OFAC’s conclusion, Plaintiff appeals to this Court to determine whether such evidence is sufficiently relevant and fair to be used, and in line with the evidentiary standards of the APA. 5 U.S.C. § 556(d). As alluded to in the previous paragraph, OFAC’s reliance on, and assessment of, reporting from The Mail & Guardian, to support a conclusion that Plaintiff is involved in narcotics-related money laundering activities, constitutes unreasonable agency action. As set forth in Plaintiff’s Complaint, The Mail & Guardian article cites a “belief” of a purported “anti-corruption campaigner” that: 1) Plaintiff laundered money sometime around 2008; 2) that the anti-corruption campaigner had no evidence to support such a belief, but was nonetheless suspicious; and 3) that when the anti-corruption campaigner renewed his investigation after Plaintiff’s designation, all he could establish was that it was difficult to figure out how Plaintiff was able to build a fortune, and that he does not expect Plaintiff to ever be brought to trial in Mozambique because the hearings might expose high level collaborators in government and politics. Compl. ¶ 70, 133-136. The relevant reporting of this specific article is unreliable, irrelevant, immaterial, and/or unduly repetitious, and in contravention of the evidentiary standards of the APA, as it merely amounts to one individual’s unsubstantiated belief—one which the individual himself acknowledges to be be unsubstantiated. Defendants fail to indicate how such belief is sufficient to be relied upon, or fair to be used. OFAC’s assessment of The Mail & Guardian article is also unreasonable because to conclude that a person is involved in narcotics trafficking money laundering as a result of one person’s belief—a belief that the declarant himself acknowledges there is no evidence to support— Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 31 of 48 23 is not based on reason, but conjecture. Further, contrary to Defendant’s claim that the anti- corruption campaigner also connected Plaintiff’s wealth to his drug trafficking—a point not made in OFAC’s assessment of the article—no such claim was made within The Mail & Guardian article. Indeed, the only assertion by the campaigner that could even be construed to support such a claim was the report that after renewing his investigations following the SDNTK designation “…all that he has been able to establish so far is that it is difficult to figure out how [Plaintiff], who is in his fifties, was able to build a fortune.” Not only does the Defendants’ interpretation of such a statement stretch credulity, OFAC itself never made such a finding, nor relied upon such reasoning in support of its denial. It is unclear why now Defendants seek to make such an incredible claim. For these reasons, OFAC’s conclusion that Plaintiff is involved in narcotics-related money laundering activities constitutes arbitrary and capricious agency action, as OFAC’s second assessment clearly offers an explanation for its decision that runs counter to the evidence before it. Plaintiff is entitled to judgment on Count II. C. OFAC’s Finding that it is Unable to Determine Whether Plaintiff and the Three Associated Businesses’ Customs and Tax Record from the Mozambique Customs Services and Revenue Authority is Authentic and Complete is Arbitrary and Capricious Action Under the APA Defendants misconstrue Plaintiff’s claim in Count III. In Count III, Plaintiff directly challenged OFAC’s finding that it was unable to determine the authenticity and completeness of records provided by Plaintiff—pursuant to OFAC’s own request, and in support of Plaintiff’s position that he had come into compliance with Mozambique’s customs and tax laws since the time of his SDNTK designation—was arbitrary and capricious agency action. Nonetheless, Defendants’ claim that OFAC’s decision on whether Plaintiff continues to meet the criteria for designation under the Kingpin Act, and not whether he is compliant with Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 32 of 48 24 customs and tax laws of a foreign nation, is at odds with Defendants’ overarching claim that “OFAC reasonably concluded…that the evidence before it established that Plaintiff engaged in and continues to engage in international narcotics trafficking and money laundering through his businesses and does so by evading customs inspections on his imported merchandise and bribing Mozambique government officials.” Defs.’ Mot. to Dismiss at 10. The unclassified administrative record provides no explanation for why OFAC was unable to determine whether the documents Plaintiff provided were authentic and complete, nor has OFAC provided any reason as to why they suspect the documents would be anything other than authentic and complete. Had they done so, such documents would negate OFAC’s assertion that Plaintiff continues to engage in international narcotics trafficking as suggested in its conclusion that the September 2011 violations announcement by the Government of Mozambique are related to Plaintiff’s involvement in narcotics trafficking, and that Plaintiff continues to engage in international narcotics trafficking by evading customs inspections on his imported merchandise and bribing Mozambique government officials. Moreover, Defendants also state that “…significant evidence in the record…” shows that Plaintiff continues to be involved in narcotics trafficking, and that such evidence “…includes evidence that not all of his imported merchandise is imported and scanned.” Defs.’ Mot. to Dismiss at 14-15. As set forth above, the unclassified administrative record is lacking any credible evidence, or assessment of such evidence, and therefore fails establish a rational connection to the agency’s conclusion that Plaintiff continues to be involved in narcotics trafficking. Indeed, OFAC sought to support its second assessment by again relying upon the Macau Blogs Internet blog post discussed above. However, OFAC’s reliance on this blog post is again unreliable, irrelevant, immaterial, and/or unduly repetitious, and in contravention of the evidentiary standards of the Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 33 of 48 25 APA, as it is limited to claims made against Plaintiff without any references to support them, or any mention of the author’s credentials to bolster the credibility of such claims. Furthermore, OFAC fails to provide any assessment of the reliability of such reporting. Also, OFAC’s relies upon the blog posts’ assertions that Plaintiff’s trucks contained imports that were not inspected or scanned to counter evidence provided by Plaintiff that since his designation he had come into compliance with Mozambique’s customs and tax laws. Such reliance is unreasonable given the fact that the blog post is dated only a day after the identification and only discusses alleged conduct that occurred prior to the identification. To the extent that Defendants attempt to disprove Count III based on evidence in the classified and privileged portions of the administrative record, Plaintiff appeals to this court to determine whether such information is sufficiently relevant and fair to be used, and in line with the evidentiary standards of the APA. 5 U.S.C. § 556(d). D. OFAC’s Conclusion that Plaintiff’s Settlement Offer or Remedial Steps Are Insufficient to Warrant the Removal of His Name and That of the Three Companies from the SDN List is Arbitrary and Capricious Action Under the APA. OFAC did not reasonably conclude that Plaintiff’s offer of settlement or remedial steps was insufficient to warrant removal of his designation. OFAC’s reasoning in support of such a conclusion was “…so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” Motor Vehicle Mfrs. Assn. of the United States, Inc., 463 U.S. at 43. In concluding that Plaintiff’s proposed settlement offer and remedial steps were insufficient to warrant the removal of his SDNTK designation, OFAC determined that such proposals were insufficient given Plaintiff’s identification as a significant foreign narcotics trafficker, and that his “offer of cooperation was a façade meant to cover up his narcotics trafficking activities and that he continued to meet the criteria as an [SDNTK].” A.R. 464. Such an explanation by OFAC is purely conclusory as the agency fails to provide any explanation as to why it believes the remedial Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 34 of 48 26 offer of cooperation was a façade meant to cover up any purported narcotics trafficking or money laundering activities by Plaintiff. Defendants attempt to defend this conclusory explanation by claiming that the conclusion was supported by other evidence of Plaintiff’s continued engagement in narcotics trafficking and money laundering activities, however, such conclusions are simply unsupported by the unclassified administrative record, and are not even provided for in OFAC’s relevant assessment. Second, OFAC’s reasoning in its fifth assessment conflicts with its own regulations, specifically 31 C.F.R. § 501.807. As Defendants note, OFAC’s regulations provide, in relevant part, that a designated person may “propose remedial steps on the person’s part, such as corporate reorganization, resignation of persons from positions in a blocked entity, or similar steps, which the person believes would negate the basis for designation.” 31 C.F.R. § 501.807(a). Plaintiff’s arguments in response to OFAC’s fifth assessment indicate that he made many such proposals during the course of the reconsideration request, including one that is missing from OFAC’s assessment. A.R. 463-464 and 1323-1338. However, OFAC’s assessment found the proposals to “…serve as a condition for his removal from the SDN List—as opposed to steps already put in place…” and that Plaintiff’s “removal from the SDN List could be considered after such remedial steps are implemented…” A.R. 464-465 A plain reading of § 501.807 demonstrates that it does not require, nor even suggest, that such “proposals” must first be “implemented” as OFAC suggests. A “proposal” is defined as “an act of putting forward or stating something for consideration,” which is very different in nature than the act of “implementation” which is defined as “carry out, accomplish; especially: to give practical effect to and ensure of actual fulfillment by concrete measures.” Proposal, Merriam- Webster (Online ed. 2016); Implement, Merriam-Webster (Online ed. 2016). Therefore, OFAC’s Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 35 of 48 27 reasoning conflicts with a plain reading of the regulation, and its interpretation of § 501.807 is therefore unreasonable. Although Defendants claim that Plaintiff’s proposal would not negate the basis for his designation due to his alleged continued significant role in international narcotics trafficking, the unclassified administrative record simply does not support such an assertion, nor is that assertion even provided for within OFAC’s fifth assessment. To the extent that Defendant’s seek to establish that such assertions are supported by the classified and privileged portions of the administrative record, Plaintiff appeals to this court to determine whether such classified and privileged portions are sufficiently relevant and fair to be used, and in line with APA standards. 5 U.S.C. § 556(d). *** In light of the foregoing, OFAC’s conclusions in its First, Second, and Fifth Assessment, and the agency’s finding within its Fourth Assessment were all arbitrary and capricious agency action, entitling Plaintiff to judgment on Counts I, II, III, IV, V, and VI. Moreover, Plaintiff is entitled to judgment on Count VI, if OFAC’s actions are found to be arbitrary and capricious with respect to the preceding Counts, because any evidence relied upon by OFAC, and any reasoning arising from that evidence as disclosed through the unclassified administrative record, would be unreliable and/or unreasonable—particularly, insofar as they relate to allegations that Plaintiff continues to engage in international narcotics trafficking as defined by the Kingpin Act. Therefore, such actions constitute arbitrary and capricious agency action. Nonetheless, to the extent that Defendants seek to rely upon evidence in the classified and privileged portions of the administrative record to support OFAC’s findings, conclusions, and/or overall denial action, Plaintiff respectfully requests this Court to determine whether such information is sufficiently relevant and fair to be used, and in line with the evidentiary standards Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 36 of 48 28 of the APA, and ultimately provides an inadequate explanation for the challenged actions, findings, and conclusions of OFAC. III. OFAC’s Failure to Provide Any Access to the Redacted Portions of the Administrative Record Deprived Plaintiff of Sufficient Notice of the Charges and Evidence Against Him Defendants claim throughout their Motion to Dismiss that the unclassified, non-privileged evidence in the administrative record alone is sufficient to meet the highly deferential standard applicable in this matter. Defs.’ Mot. to Dismiss at 1 and 10. However, as set forth above, such an assertion is unsupported by the unclassified administrative record. Defendants also argue in the alternative that OFAC’s decision is supported by classified evidence and privileged law enforcement sensitive evidence. Id. To the extent that this alternative argument is correct, Plaintiff’s right to sufficient notice of the charges and evidence against him was violated. Sufficient notice, as required by rudimentary procedural due process safeguards, “should give the deprived party an understanding of the allegations against it so that it has the opportunity to make a meaningful response.” KindHearts for Charitable Humanitarian Dev. v. Geithner, 647 F. Supp. 2d 857, 901 (N.D. Ohio 2010). See also, Al Haramain Islamic Foundation, Inc. v. U.S. Dept. of Treasury, 686 F.3d 965, 987 (9th Cir. 2011). “Courts have found that their duty to protect individual rights extends to requiring disclosure of classified information to give a party an ability to respond to allegations made against it.” Id. at 659 (collecting cases). “Without disclosure of classified information, the designated entity cannot possible know how to respond to OFAC’s concerns.” Al Haramain Islamic Foundation, Inc., 686 F.3d at 983. “A ‘fundamental’ requirement of administrative law is that an agency ‘set forth its reasons’ for decision; an agency’s failure to do so constitutes arbitrary and capricious agency action.” Tourus Records v. DEA, 259 F.3d 731, 736 (D.C. Cir. 2001) (quoting Roelofs v. Secretary of the Air Force, 628 F.2d 594, 599 (D.C. Cir. 1980). “This requirement is codified in the APA, [5 Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 37 of 48 29 U.S.C. § 555(e),] which requires an agency to provide ‘a brief statement of the grounds for denial’ whenever the agency ‘den[ies] in whole or in part…a written application, petition, or other request of an interested person made in connection with any agency proceeding,’ unless the agency is affirming a prior denial or…the denial is self-explanatory.” Lind v. McHugh, Civil Action No. 10- 2207 (RBW), 16 (D.D.C. Aug. 7, 2014). (quoting Id.). See also 5 U.S.C. § 555(e). “This requirement not only ensures the agency’s careful consideration of such requests, but also gives parties the opportunity to apprise the agency of any errors it may have made and, if the agency persists in its decision, facilitates judicial review.” Id. Defendants argue that even if the court were to disagree that the unclassified, non- privileged evidence in the administrative record alone is sufficient to support OFAC’s denial of Plaintiff’s delisting petition, that evidence—when combined with the classified and privileged evidence in the record—clearly establishes that the agency’s decision should be upheld. If this Court does indeed find that the classified and privileged evidence supports the agency’s decision, then OFAC deprived Plaintiff of an understanding of the allegations against him, and therefore denied him a meaningful opportunity to respond to the OFAC designation. In particular, any notice OFAC provided to Plaintiff related to the denial has not included any portion of the classified and law enforcement sensitive portions of the administrative record. Defs.’ Mot. to Dismiss at 17. Moreover, any notices from OFAC since the denial action, including any that would be deemed a “statement of the grounds of denial” as required by the APA, did not include any reference to classified or privileged evidence. Id. Furthermore, to the extent that the classified and privileged evidence in the administrative record establishes that the agency’s decision should be upheld, then the Zevallos decision upon which Defendants rely is easily distinguished. Much like in the instant matter, Zevallos involved Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 38 of 48 30 a judicial review of an SDNTK determination and a denial of Mr. Zevallos’ delisting petition. Although Defendants detail the notice that OFAC provided to the plaintiff in Zevallos, in that matter OFAC did not argue—as it has in this case—that the classified and privileged portions of the underlying administrative record would support its denial of the removal petition. Indeed, Zevallos took place prior to the enactment of the Kingpin Designation Improvement Act, and thus the reviewing court in Zevallos did not have the ability to review the classified information upon which the underlying SDNTK determination was made, nor did the Defendants in Zevallos make any attempt to argue that the classified or privileged information in the administrative record was necessary for OFAC to have sufficient grounds to deny Mr. Zevallos’ request for reconsideration. See Zevallos, 10 F. Supp. 3d at 111 (the Memorandum & Opinion upon which Defendants’ argument relies was entered on January 17, 2014). See also Pub. L. 114-198 § 801, 130 Stat. 755 (July 22, 2016). In sum, OFAC did not argue in Zevallos that its classified and/or privileged information within the administrative record supported its actions, findings, or conclusions, nor did the court review such evidence it during that case. Thus, the Zevallos decision upon which Defendants rely is distinguishable from the instant matter. With regards to the “law enforcement sensitive” evidence, Defendants argue that this Court can review such information ex parte and in camera by citing to the recently enacted § 1903(i) of the Kingpin Act and two prior court decisions. Defs.’ Mot. to Dismiss at 11. See 21 U.S.C. § 1903(i); Al-Aqeel v. Paulson, 568 F.Supp. 2d 64, 72-73 (D.D.C. 2008); In re City of New York, 607 F.3d 923, 944-45 (2nd Cir. 2010). However, the § 1903(i) of the Kingpin Act, solely permits this court to view “classified information,” as defined in section 1(a) of the Classified Information Procedures Act (“CIPA”). See 21 U.S.C. § 1903(i) (citing 18 U.S.C. App. III. § 1). CIPA does not Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 39 of 48 31 define “Classified Information” to include “law enforcement sensitive” information.10 Id. Furthermore, the two cases referenced by Defendants in support of the position that this court may review law enforcement sensitive information ex parte and in camera do not address whether the court may do so under 21 U.S.C. § 1903(i) as such cases arose from review of action taken under a different statute, IEEPA, and specifically involved a discovery dispute regarding law enforcement sensitive information, respectively. Al-Aqeel, 568 F.Supp. 2d at 72-73; In re City of New York, 607 F.3d at 944-45. Moreover, Al-Aqeel denoted the difference between judicial review of classified portions of the administrative record in that case, which was permitted by IEEPA, and the privileged and law enforcement sensitive materials within the record. Al-Aqeel, 568 F.Supp. 2d at 72 (denying plaintiff’s claim that “…because IEEPA provides for ex parte and in camera judicial review of classified portions of the record in a challenge to a designation under [IEEPA], he is therefore entitled to the non-classified portions of the record, including privileged and [law enforcement sensitive] materials”). However, should this court find the law enforcement sensitive information in the administrative record creates a sufficient record to establish the agency’s decision to deny Plaintiff’s reconsideration request, then Plaintiff’s right to sufficient notice under the APA was denied, since the Plaintiff was not provided such materials. The case cited by Defendants to support their claim that Plaintiff has no legal claim to law enforcement sensitive evidence—Al- Aqeel, In re City of New York, and FBME Bank Ltd. v. Lew, 125 F. Supp. 3d 109, 119-20 n.2 (D.D.C. 2015)—are all distinguishable. Defs.’ Mot. to Dismiss at 11. 10 CIPA defines the term “Classified Information” to mean any information or material that has been determined by the United States Government pursuant to an Executive order, statute, or regulation, to require protection against unauthorized disclosure for reasons of national security, and any restricted data, as defined in paragraph r. of section 11 of the Atomic Energy Act of 1954 (42 U.S.C. 2014) (y)). Defendants have not cited to any authority indicating how any of the law enforcement sensitive evidence relied upon require protection against unauthorized disclosure for reasons of national security, as determined by the United States Government pursuant to an Executive Order, statute, or regulation. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 40 of 48 32 In Al-Aqeel, the plaintiff challenging his designation by OFAC had not done so through OFAC’s administrative reconsideration process, as Plaintiff has here. The court in Al-Aqeel reasoned that had the plaintiff in that case gone through such process, he would have been entitled to request a hearing and to receive a written determination of his request for reconsideration. Al- Aqeel, 568 F.Supp. 2d at 71. Therefore, the court in Al-Aqeel did not address the scope of sufficient notice that would have been provided in such a written determination of a request for reconsideration pursuant to § 501.807, and to what extent if any, the plaintiff would have been able to access law enforcement sensitive materials. Id. In re City of New York is also distinguishable because it does not address the issue of obtaining law enforcement sensitive information in the context of an OFAC designation reconsideration request, but in a discovery dispute specifically concerning the law enforcement privilege for police field reports sought by protestors who were otherwise charged with minor and noncriminal offenses that were eventually dismissed. Accordingly, that case involved a much less compelling need for such information when compared to the continued blocking of all of Plaintiff’s financial assets and the severe prejudicial economic harm occurring to him on a day-to-day basis over a prolonged period of time. In re City of New York, 607 F.3d at 923-45. Even assuming arguendo that this Court finds reliance on that case persuasive, Plaintiff maintains that OFAC bears the burden of showing that the law enforcement privilege applies—a showing it has not made. Id. at 944. (referencing In re Sealed Case, 856 F.2d 268, 271-72 (D.C. Cir. 1988). Furthermore, the law enforcement privilege is qualified, not absolute, and the public interest in nondisclosure must be balanced against the need of a particular litigant for access to the privileged information. Id. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 41 of 48 33 Finally, the footnote from the FBME Bank Ltd. case that Defendant cites to concerned classified information—which as discussed above is distinguishable from law enforcement sensitive information—and Suspicious Activity Reports that are specifically prohibited from disclosure under the Bank Secrecy Act (as opposed to the law enforcement sensitive information at issue here which does not enjoy such a bar from disclosure under the Kingpin Act). FBME Bank Ltd., 125 F. Supp. 3d at 119-120. For these reasons, none of the aforementioned cases establishes that Plaintiff lacks a legal basis to claim access to law enforcement sensitive evidence contained in the administrative record. To be clear, Plaintiff only seeks access to such classified and privileged information that has been relied upon by OFAC to support the agency’s actions, findings, and conclusions in relation to its denial of Plaintiff’s request for reconsideration. Such access is necessary to afford Plaintiff his right to sufficient notice and a meaningful opportunity to respond to the OFAC designation. To the extent possible, OFAC must take reasonable measures to disclose classified information and privileged information upon which its actions, findings, and conclusions were based. As substantially discussed and suggested in the seminal case of Al Haramain—a case also involving, inter alia, issues surrounding the disclosure of classified information to an OFAC designated entity—several avenues exist for disclosure of such information that would not implicate OFAC’s national security concerns, nor cause an undue burden. Al Haramain Islamic Foundation, Inc., 686 F.3d at 982-984. Indeed, Plaintiff repeatedly informed OFAC of such avenues for disclosure, including through the disclosure of an unclassified summary. A.R. 1323- 1338. However, OFAC failed to disclose in any form, or through any avenue, classified or privileged information relied upon to support OFAC’s decision to deny Plaintiff’s request for reconsideration. Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 42 of 48 34 As noted by the Ninth Circuit in Al Haramain “…an unclassified summary, by definition, does not implicate national security because it is unclassified.” Id. at 983. Here, OFAC did not provide an unclassified summary of otherwise classified or privileged information. “Similarly, a lawyer for the designated entity who has the appropriate security clearance also does not implicate national security when viewing the classified material because, by definition, he or she has the appropriate security clearance.” Id. In Plaintiff’s February 7, 2015 Letter, not only was an unclassified summary of any classified information requested by Plaintiff, it was also detailed that Plaintiff’s counsel maintained the appropriate security clearance and had a legitimate need to know the information underlying Plaintiff’s designation in order to have a meaningful opportunity to respond to such information. A.R. 1323-1338. However, not only did OFAC fail to provide an unclassified summary of classified information or respond to Plaintiff’s counsel’s request to view the classified information, it also never provided any statement of reasoning explaining why such avenues were inappropriate. OFAC’s failure to do so is puzzling, particularly given that OFAC has provided unclassified summaries of classified information in similar instances. See KindHearts for Charitable Humanitarian Dev., Inc, 647 F.Supp.2d at 686 (noting that OFAC had provided “an unclassified three-page summary of classified evidence” to the entity under investigation). It also bears noting that several federal statues contemplate disclosure—or alternatives to the use as set forth in Al Haramain—of classified evidence. “For example, [the Foreign Surveillance Intelligence Act] allows a judge to “disclose to the aggrieved person, under appropriate security procedures and protective orders, portions of the application, order, or other [classified] materials relating to the surveillance[.] 50 U.S.C. § 1806(f); see also 8 U.S.C. § 1534(e)(3) (contemplating, in deportation proceedings, either provision of an adequate unclassified summary of the classified information or, if that is not possible, disclosure of the Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 43 of 48 35 necessary classified information to a “special attorney” who may examine the information without disclosure to his or her client). KindHearts for Charitable Humanitarian v. Geithner, 710 F.Supp.2d 637, 659 (N.D. Ohio 2010). Even the CIPA, upon which the Kingpin Act’s definition of “Classified Information” is based, provides for alternative procedures for the disclosure of such information. See 21 U.S.C. § 1903(i). See also 18 U.S.C. App. III. § 6(c). To the extent that OFAC’s action, findings, and conclusions, as set forth in Counts I-VI of the Complaint, were based on classified information and/or privileged evidence, OFAC has failed to provide sufficient notice as required by the APA. Accordingly, Plaintiff is entitled to judgment on Count VII. Several avenues of disclosure of such evidence—all of which OFAC was aware of—were available prior to OFAC’s decision to deny Plaintiff’s request for reconsideration. However, OFAC failed to disclosure such information pursuant to any of those avenues, and therefore violated the APA. IV. Plaintiff’s Request for a Writ of Mandamus Should Not Be Dismissed for Lack of Jurisdiction Contrary to Defendant’s assertions, Plaintiffs’ Complaint sufficiently demonstrates entitlement to mandamus relief, which was requested in Counts I-VII of the Complaint. Compl. at 43. “To show entitlement to mandamus, plaintiffs must demonstrate (1) a clear and indisputable right to relief, (2) that the government agency or official is violating a clear duty to act, and (3) that no adequate alternative remedy exists.” Am. Hosp. Ass’n. v. Burwell, 812 F.3d 183, 189 (D.C. Cir. 2016). As demonstrated in Counts I-VI of the Complaint, OFAC’s various action, findings, and conclusions were arbitrary and capricious. In short, OFAC failed to properly exercise its authority in revoking Plaintiff’s designation, in accordance with the revocation provisions of the Kingpin Act. See 21 U.S.C. § 1904(a). A revocation of Plaintiff’s designation is the only proper Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 44 of 48 36 remedy because with every passing day Plaintiff suffers irreparable prejudice to his financial interests as result of OFAC’s continued designation. As alleged in the Count VII of the Complaint, to the extent that the OFAC’s actions, findings, and/or conclusions were based on the classified and/or privileged information in the administrative record, OFAC’s failure to provide sufficient notice of such information entitles Plaintiff to mandamus relief. This is because OFAC is in clear violation of the APA’s notice requirements, 5 U.S.C. § 555(e), and OFAC’s failure to provide such information is in contravention of its clear duty to do so under the APA. Without access to such information, Plaintiff’s ability to apprise the agency of any errors it may have made in evaluating its reconsideration request, and in availing itself of its rights in the judicial review of its denial action, are prevented. The duty to provide such information is clearly defined under the APA, and the Supreme Court has previously “…concluded that it would ‘greatly impair…the value of this writ, if ,[e]very executive officer whose duty is plainly devolved upon him by statute might refuse to perform it, and when his refusal is brought before the court he might successfully plead that the performance of the duty involved the construction of a statute by him…’” 13th Regional Corp. v. U.S. Dept. of Interior, 654 F.2d 758, 769 (D.C. Cir. 1980) (citing Roberts v. United States, 176 U.S. 221, 231 (1900)). Therefore, Plaintiff’s Complaint sufficiently establishes the threshold criteria for mandamus, and his request for mandamus should not be dismissed for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). “Dismissal for lack of subject matter jurisdiction because of the inadequacy of the federal claim is proper only when the claim is so “insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 45 of 48 37 devoid of merits as not to involve a federal controversy.” Steel Co., 523 U.S. at 89. (quoting Oneida Indian Nation of N.Y. v. County of Oneida, 414 U.S. 661 (1974)). V. The Circumstances in this Case Do Not Necessarily Warrant Remand to OFAC for Additional Investigation or Explanation Defendants claim that the only proper remedy, in the event the Court were to determine OFAC’s decision was in error, would be remand to the agency for further proceedings consistent with the Court’s determination. Defs.’ Mot. to Dismiss at 20. Although in APA actions “the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation,” in this case there is no need for additional investigation or explanation by OFAC for its otherwise arbitrary and capricious action, findings, and conclusions. Gonzales v. Thomas, 547 U.S. 183, 186 (2006). OFAC’s actions, findings, and conclusions, as highlighted in the Counts I- VII of the Complaint, are unsupported by any reasonable bases. As there is no rational basis to support any of OFAC’s actions, findings, and conclusions, there is nothing left for OFAC to investigate or explain. In short, the unclassified administrative record which Defendants argue supports OFAC’s action, findings, and conclusions clearly fails to do so, and to the extent that the classified and privileged evidence does support them, then OFAC failed to provide sufficient notice to the Plaintiff. As a result, OFAC’s arbitrary and capricious conduct in this case evidences sufficiently rare circumstances for this Court to consider other forms of relief, including Plaintiff’s requested injunctive and mandamus relief. CONCLUSION Plaintiff’s Complaint has properly stated legal claims as required to withstand a motion to dismiss under Rule 12(b)(6). Holy Land, 219 F. Supp. at 75. Further, Defendants have not demonstrated that Plaintiff’s claims are “so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 46 of 48 38 controversy.” Steel Co., 523 U.S. at 89. In consideration of the Administrative Record and additional exhibits, Defendants have not met their burdens for dismissal or summary judgment under Rule 56. Despite the arguments set forth in Defendants’ Motion to Dismiss, or in the alternative, Motion for Summary Judgment, Plaintiff contends that the factual allegations set forth in his Complaint, along with the Administrative Record, demonstrate that sufficient claims have been stated for which this Court has jurisdiction to grant relief. Thus, Plaintiff’s Complaint should not be dismissed pursuant to Rules 12(b)(1), 12(b)(6), or 56, as sought by Defendants. Rather, this Court should deny Defendants’ Motion, or in the alternative, grant Plaintiff’s requested relief as a matter of law. Respectfully submitted this 19th day of December, 2016. /s/ Erich C. Ferrari Erich C. Ferrari, Esq. Ferrari & Associates, P.C. 1455 Pennsylvania Ave., NW Suite 400 Washington, D.C. 20004 Telephone: (202) 280-6370 Fax: (877) 448-4885 Email: Ferrari@ferrariassociatespc.com DC Bar No. 978253 Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 47 of 48 39 CERTIFICATE OF SERVICE I hereby certify that the foregoing Plaintiff’s Opposition to Defendants’ Motion to Dismiss, or in the alternative, Motion for Summary Judgment, and Cross Motion for Summary Judgment was served to all parties on the 19th day of December, 2016, via the ECF system. /s/ Erich C. Ferrari Erich C. Ferrari, Esq. Ferrari & Associates, P.C. 1455 Pennsylvania Ave., NW Suite 400 Washington, D.C. 20004 Telephone: (202) 280-6370 Fax: (877) 448-4885 Email: Ferrari@ferrariassociatespc.com DC Bar No. 978253 Attorney for Plaintiff Mohamed Bachir Sulemane Case 1:16-cv-01822-EGS Document 9 Filed 12/19/16 Page 48 of 48 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA __________________________________________ ) MOHAMED BACHIR SULEMANE ) ) Plaintiff, ) ) ) v. ) CIV. NO. 1:16-cv-1822 ) ) JACOB J. LEW, THE UNITED STATES ) DEPARTMENT OF THE TREASURY, ) OFFICE OF FOREIGN ASSETS CONTROL ) ) Defendants. ) __________________________________________) [PROPOSED] ORDER Upon consideration of Defendants’ Motion to Dismiss or, in the Alternative, for Summary Judgment and Plaintiffs’ Cross Motion for Summary Judgment, it is hereby ORDERED that the Defendants’ Motion is DENIED; and it is further ORDERED that Plaintiff’s Motion should be GRANTED. ___________________________________ ___________________________________ Date HONORABLE EMMET G. SULLIVAN United States District Judge Case 1:16-cv-01822-EGS Document 9-1 Filed 12/19/16 Page 1 of 1