Canadian Commercial Corp. v. Dept. of Air Force

• Decision Date: 29 January 2008
• Docket Number: No. 06-5310.,06-5310.
• Citation: 514 F.3d 37
• Parties: CANADIAN COMMERCIAL CORPORATION and Orenda Aerospace Corporation, Appellees v. DEPARTMENT OF the AIR FORCE, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

514 F.3d 37

CANADIAN COMMERCIAL CORPORATION and Orenda Aerospace Corporation, Appellees v. DEPARTMENT OF the AIR FORCE, Appellant.

No. 06-5310.

United States Court of Appeals, District of Columbia Circuit.

Argued October 25, 2007.

Decided January 29, 2008.

Appeal from the United States District Court for the District of Columbia, (No. 04cv01189).

Oliver W. McDaniel, Assistant U.S. Attorney, argued the cause for appellant. With him on the briefs were Jeffrey A. Taylor, U.S. Attorney, and Michael J. Ryan, Assistant U.S. Attorney. R. Craig Lawrence, Assistant U.S. Attorney, entered an appearance.

Kristen E. Ittig argued the cause for appellees. With her on the brief was Stuart W. Turner.

Before: GINSBURG, Chief Judge, and TATEL and BROWN, Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG.

Concurring opinion filed by Circuit Judge TATEL.

GINSBURG, Chief Judge:

Canadian Commercial Corporation and Orenda Aerospace Corporation (hereinafter collectively CCC) brought this "reverse" Freedom of Information Act case to prevent the Air Force from releasing lineitem pricing information in CCC's contract to provide services to the Air Force. The district court enjoined the release and, for the reasons set forth below, we affirm its judgment.

I. Background

The facts are fully set forth in the thorough opinion of the district court. 442 F.Supp.2d 15, 17-27 (2006). To summarize briefly, in 2002 CCC and the Air Force signed a three-year contract, which the Air Force had the option to extend for up to four more years, for CCC to repair, overhaul and modify J85 turbojet engines. In 2003 Sabreliner, which had bid unsuccessfully for the job, filed a FOIA request for a copy of the contract. CCC objected, contending the line-item prices as well as certain hourly labor rates listed in the contract constituted trade secrets. After the Air Force issued a Decision Letter in which it rejected CCC's contentions, CCC filed suit in the district court to enjoin disclosure of the information. Id. at 22. Applying our decision in McDonnell Douglas Corp. v. Air Force, 375 F.3d 1182 (2004), that court entered a summary judgment holding the decision of the Air Force was arbitrary and capricious insofar as it concluded the line-item prices were not trade secrets; the court enjoined the Air Force from disclosing those prices, 442 F.Supp.2d at 41, but not the hourly labor rates. Id. at 37 n. 10. The Air Force alone appealed to this court.

II. Analysis

We review the district court's grant of summary judgment de novo. McDonnell Douglas v. Air Force, 375 F.3d at 1186. The underlying Decision Letter issued by the Air Force must be set aside if and only if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A).

Exemption 4 of the Freedom of Information Act protects "matters that are ... trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4). Commercial or financial information obtained from a person involuntarily "is `confidential' for purposes of the exemption if disclosure [would either] ... impair the Government's ability to obtain necessary information in the future; or ... cause substantial harm to the competitive position of the person from whom the information was obtained." Nat'l Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C.Cir.1974); see also Critical Mass Energy Project v. NRC, 975 F.2d 871, 880 (D.C.Cir.1992) (en banc) (adhering to National Parks with regard to commercial or financial information involuntarily submitted to the Government). We have long held the Trade Secrets Act, 18 U.S.C. § 1905, a criminal statute that prohibits Government personnel from disclosing several types of confidential information unless "authorized by law," is "at least coextensive with ... Exemption 4 of FOIA." CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1151 (D.C.Cir.1987). The upshot is that, unless another statute or a regulation authorizes disclosure of the information, the Trade Secrets Act requires each agency to withhold any information it may withhold under Exemption 4 of the FOIA. Bartholdi Cable Co., Inc. v. FCC, 114 F.3d 274, 281 (D.C.Cir.1997). A person whose information is about to be disclosed pursuant to a FOIA request may file a "reverse-FOIA action" and seek to enjoin the Government from disclosing it. See Chrysler Corp. v. Brown, 441 U.S. 281, 317-18, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979).

In two recent reverse-FOIA cases, we held the Air Force was arbitrary and capricious in concluding disclosure of lineitem pricing information in a government contract would not cause "substantial competitive harm" to the contractor. McDonnell Douglas v. Air Force, 375 F.3d at 1190; McDonnell Douglas Corp. v. NASA, 180 F.3d 303, 307 (D.C.Cir.1999). The Air Force nevertheless contends we have never decided whether line-item pricing information is subject to Exemption 4 in the first place, and proposes we hold such information categorically excluded from Exemption 4 and therefore subject to disclosure.

Contrary to the contention of the Air Force, it is the law of this circuit that line-item prices do come within Exemption 4. In McDonnell Douglas v. Air Force we stated:

We recoil ... from the implication ... of a per se rule (or at least a strong presumption) that all constituent pricing information—as opposed to the bid price itself—is to be disclosed; such a rule would be squarely at odds with the protection we have always understood Exemption 4 to provide for such pricing information.

375 F.3d at 1192. Similarly, in McDonnell Douglas v. NASA, after noting "McDonnell Douglas has shown ... that it is likely to suffer substantial competitive harm" if NASA releases its pricing information, we stated that "under present law, whatever may be the desirable policy course, appellant has every right to insist that its line item prices be withheld as confidential." 180 F.3d at 307. We reaffirm today what we have held twice before: Constituent or line-item pricing information in a Government contract falls within Exemption 4 of the FOIA if its disclosure would "impair the government's ability to obtain necessary information in the future" or "cause substantial harm to the competitive position of the person from whom the information was obtained." Nat'l Parks, 498 F.2d at 770.

Even if the law of the circuit were unsettled, we would not find the arguments advanced by the Air Force convincing. Its primary contention is that the Congress must not have intended Exemption 4 to cover line-item prices in Government contracts because the FOIA was intended to broaden the array of information to which citizens have access and the Air Force regularly disclosed such pricing information prior to enactment of that statute indeed, we are told, it was then required to do so under its procurement regulations.

Our interpretation of the FOIA would not necessarily be affected even if the Air Force could document these assertions of historical fact. Although the general purpose of the FOIA was indeed to make it easier for the public "to be informed about what [its] government is up to," Dep't of Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 773, 109 S.Ct. 1468, 103 L.Ed.2d 774 (1989) (internal quotation marks omitted), it does not follow that a specific exemption in the FOIA may not be understood to have diminished public access to a particular type of information if that is what its terms require.

Furthermore, in the Decision Letter here under review, the Air Force provided no empirical support for its historical assertions. Instead, it cited inconclusive passages from the legislative history of the FOIA, a House Report written years before its enactment, and procurement regulations that were superseded by the Federal Acquisition Regulation in 1984. In its brief, the Air Force blithely explains away its dearth of historical support with the non-sequitur that "[b]y 1962, the disclosure of contract unit prices was the norm. Consequently, the administrative record does not discuss this issue." As the district court correctly summed up the situation:

Quite simply, the record is devoid of any evidence that the Air Force has actually disclosed this type of information, as it claims, on a consistent basis.... Instead of merely asserting an alleged disclosure practice based on a novel interpretation of the history of procurement regulations and FOIA, the Air Force needed to provide evidence of other situations in which similar information has been routinely released. The Court need not accept the Air Force's conclusory statement of what its practice has been, or of what it believes the law allows, without any evidence or support that the practice has actually been followed.

442 F.Supp.2d at 30-31 (citation omitted). With respect to this passage, the Air Force claims the district court improperly shifted the burden of persuasion to it, but that is not correct. The court imposed only the burden of production upon the Air Force as the party in possession of the evidence about its own practices. See McDonnell Douglas v. Air Force, 375 F.3d at 1191 & n. 5. The burden of persuasion properly remained with the plaintiff.

The Air Force marshals two district court cases endorsing its proposed per se rule of disclosure of pricing data, Brownstein Zeidman and Schomer v. Air Force, 781 F.Supp. 31, 33 (D.D.C.1991), and AT & T Info. Sys., Inc. v. Gen. Servs. Admin., 627 F.Supp. 1396, 1403 (D.D.C.1986), rev'd on other grounds, 810 F.2d 1233 (D.C.Cir. 1987) (per curiam), but both antedate our decisions in McDonnell Douglas v. NASA and McDonnell Douglas v. Air Force. The Air Force also cites three cases from other circuits but they are inapposite to its point. R & W Flammann GmbH v. United States, 339 F.3d 1320, 1323 (Fed.Cir. 2003), concerned only whether information that had already been disclosed to the...