Law360, New York (May 16, 2011) -- The U.S. Supreme Court on Monday declined to take up a case over whether the Freedom of Information Act forces federal agencies to turn over all records controlled by third parties, or only those controlled as part of records-management contracts.

By denying a petition for a writ of certiorari filed by the American Small Business League, the Supreme Court let stand a Ninth Circuit opinion that found the U.S. Small Business Administration did not have to turn over the cell phone records of its chief spokesman, Mike Stamler.

As is customary, the high court denied the petition without comment.

The ASBL alleged that Stamler and the rest of the SBA's press office worked to cover up federal investigations revealing the agency awarded billions of dollars in small business contracts to large companies.

Lloyd Chapman, the group's president, told Law360 that Stamler's phone records were probably so damaging that the government would do anything to withhold them.

“I suspect that Mr. Stamler, you'll probably think I'm a conspiracy theorist, but I think he probably works for the Pentagon and not the SBA, because the policies that the SBA comes up with affect the Pentagon more than any other agency,” Chapman said.

He added that other government agencies would likely use this case to claim that certain records aren't in their possession and that they therefore can't release them.

Chapman said he would now try to request Stamler's phone records for the last week or month — rather than the last two years — to try to get the issue back in the courts.

He also said he has 15 more FOIA cases on his desk ready to be filed.

For its part, the SBA declined to comment on the Supreme Court's refusal to hear the case.

In October, the ASBL lost an appeal at the Ninth Circuit, which ruled that FOIA does not compel agencies to turn over all records controlled by third parties, only those controlled as part of records-management contracts.

“Absent agency control, the records were not 'agency records' subject to FOIA disclosure,” the appeals court said.

Though the SBA gave Chapman's group some corrupted files on a floppy disk, it never released call records from Stamler's government-issued BlackBerry phone, according to the initial complaint, filed in March 2009 in a California district court.

In July 2009, the district court ruled that the agency didn't have to give up the call records because they were controlled by Verizon Wireless, not the SBA.

“Thus, the only question is whether the SBA was nevertheless obligated to try to obtain the records from Verizon. It is not so obligated under FOIA,” the court said.

The district court referred to a prior Supreme Court finding that because Congress had not wanted to force agencies to create or retain documents, agencies should not have to “retrieve documents which have escaped its possession.”

The ASBL argued that FOIA applied to third parties when they had entered into contracts with the federal government. Because Verizon provided cell phone service to the agency under a contract, its records should be susceptible to a FOIA request, the group said.

But the district court was unpersuaded, as was the appeals court, which said that the statute expressly differentiated between government contracts and government contracts entered into for the purpose of record-keeping.

The “ASBL nevertheless contends that the comma separating 'government contract' from 'for the purposes of records management' means that the statute covers all records maintained for an agency by a government contractor, no matter the purpose of the contract between them. This reading, however, contravenes the statute’s plain language,” the appeals court said.

The ASBL is represented in this matter by Robert E. Belshaw of Gutierrez & Associates.

The Small Business Administration is represented by Acting U.S. Solicitor General Neal Kumar Katyal.

The case is American Small Business League v. U.S. Small Business Administration, case number 10-1157, in the U.S. Supreme Court.

--Additional reporting by Ian Thoms. Editing by Jonathan Jacobson.