Artesian Indus. v. DEPT. OF HEALTH & HUMAN SERV.

• Decision Date: 28 October 1986
• Docket Number: Civ. A. No. 86-1416.
• Citation: 646 F. Supp. 1004
• Parties: ARTESIAN INDUSTRIES, INC., Plaintiff, v. DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.
• Court: U.S. District Court — District of Columbia

646 F. Supp. 1004

ARTESIAN INDUSTRIES, INC., Plaintiff, v. DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.

Civ. A. No. 86-1416.

United States District Court, District of Columbia.

October 28, 1986.

James V. Dick and Paul E. Gutermann, Washington, D.C., for plaintiff.

George Williams, Asst. U.S. Atty., Washington, D.C., for defendants.

MEMORANDUM-ORDER

GASCH, District Judge.

I. Introduction

Before the Court are cross-motions for summary judgment. The plaintiff, Artesian Industries, Incorporated ("Artesian or the company"), moves the Court to grant judgment on its reverse Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, action to block a proposed release of information it submitted to the defendant, Department of Health and Human Services ("HHS").¹ HHS moves the Court to affirm the agency's decision to release the information in dispute.

II. Facts

In October of 1984, the National Institute for Occupational Safety ("NIOSH"), a subdivision of HHS, initiated a review of the Vitreous China Plant owned by Artesian. As part of the review, NIOSH requested that Artesian produce the medical files of all its employees working in that plant. In addition to the files which NIOSH requested, Artesian inadvertently included an interoffice memorandum ("Artesian memorandum or memorandum") marked "CONFIDENTIAL" discussing the effects of the dust conditions at the Vitreous China Plant on its workers.²

On December 16, 1985, Mr. Larry Bassin sent NIOSH a letter requesting a copy of the Artesian memorandum on the basis of the FOIA. Relying solely on Mr. Bassin's letter, NIOSH made a preliminary decision to release the document. On January 27, 1986, HHS notified Artesian of Mr. Bassin's request and the agency's decision to grant it. However, before releasing the document, HHS offered Artesian the opportunity to provide an "appropriate rationale" for denying disclosure.

On February 13, 1986, Artesian filed a timely reply to HHS' request in which the company argued that its memorandum was exempt from the FOIA on the ground that it contained commercial information obtained from a person and was privileged or confidential. 5 U.S.C. § 552(b)(4). HHS was persuaded by Artesian's response and notified Mr. Bassin on February 21, 1986 that the memorandum was exempt from disclosure under the FOIA and would not be released.

Subsequently, on March 3, 1986, Mr. Bassin appealed HHS' denial of his FOIA request to the Assistant Secretary for Health. The Assistant Secretary reversed the decision again, this time in favor of Mr. Bassin, concluding that the memorandum contained neither privileged nor confidential information and holding that Exemption 4 of the FOIA was inapplicable.

HHS notified Artesian of this reversal on May 12, 1986. The agency advised Artesian that it would disclose the memorandum immediately. This suit followed.

III. Legal Issues

The range of legal issues presented by this case are fairly narrow. First, the Court must decide the appropriate scope of review for this appeal from an agency determination. Second, the Court must evaluate Artesian's claim that disclosure of the memorandum violates the policies and prerequisites underlying the FOIA. Finally, the Court must address Artesian's conclusion that their memorandum is without the FOIA's reach on the basis of Exemption 4.

A. Proper Scope of Review

The Administrative Procedure Act ("APA") governs this Court's review of HHS's decision.³ Factually, this review must be based on the administrative record developed by HHS. See 5 U.S.C. § 706 (1982). However, contrary to the parties' interpretation of the APA, the Court is not bound to set aside the agency judgment only if HHS' decision was "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law" ("arbitrary and capricious"). 5 U.S.C. § 706(2)(A) (1982).

Based on the express language of the APA, the arbitrary and capricious standard applies only to "actions, findings and conclusions," id., by an agency, excluding any questions of law.⁴ The APA explicitly empowers reviewing courts to decide "all relevant questions of law," 5 U.S.C. § 706 (1982), and the United States Court of Appeals for the District of Columbia Circuit has construed this language to mean what it says — questions of law are to be decided by courts, not agencies. See NOW, supra, 736 F.2d at 734-35.⁵

B. Policies and Prerequisites of the FOIA

Artesian argues that the Court ought to disallow release of its memorandum on two bases: (1) that the FOIA's central purposes would not be served by disclosure and (2) that the FOIA only applies when "agency records" are at issue and no such records are at issue here.

With regard to the first contention, the plaintiff argues that the overarching purpose of the FOIA is to provide citizens with access to the information that government agencies use in making their decisions. Only when such information is available will citizens have the opportunity to acquire the knowledge necessary to evaluate the government's decision. See McGehee v. CIA, 697 F.2d 1095, 1108-09 (D.C.Cir. 1983), modified in other respects on reh'g, 711 F.2d 1076 (1983). Artesian argues that disclosure of its memorandum would not be in keeping with this policy objective. The company reasons that because HHS did not request the memorandum, the information in the document cannot be of the sort relied upon by the agency when it makes decisions. As such, disclosure of this information will not enlighten the populace as to HHS' decisionmaking process and will not further the goals of the FOIA.

Artesian's argument is specious. The fact that NIOSH did not specifically request Artesian's memorandum does not entail the conclusion that the agency did not preserve the document because of its subsequently determined informational value. NIOSH's original document request asked for all the medical files of the employees at Artesion's Vitreous China plant. The agency was obviously concerned with the health of the workers at that plant. The Artesian memorandum directly addresses this topic. Thus, it is not reasonable to posit that the memorandum had no informational value to NIOSH and therefore would not enlighten citizens as to the decisionmaking process of the agency.

Additionally, Artesian's argument impermissibly places the burden of proof on HHS; Artesian would require HHS to prove that disclosure would further citizens' understanding of the decisionmaking process. In fact, the burden of proof is on Artesian. The Supreme Court has stated on numerous occasions that the primary objective of the FOIA is disclosure. See Chrysler Corporation, supra, 441 U.S. at 290, 99 S.Ct. at 1711; Department of the Air Force v. Rose, 425 U.S. 352, 361, 96 S.Ct. 1592, 1599, 48 L.Ed.2d 11 (1976). Contrary to this objective, Artesian wishes to inhibit disclosure. The party seeking to avoid disclosue bears the burden of proving that circumstances justify nondisclosure. 5 U.S.C. § 552(a)(3); See National Parks and Conservation Association v. Kleppe, 547 F.2d 673, 679 n. 20 (D.C.Cir.1976).

Artesian argues next that its memorandum is not an "agency record" within the meaning of the FOIA and therefore may not be disclosed under the Act. This argument presumes that Artesian can rely on the FOIA to block HHS' decision to disclose the memorandum. This presumption is incorrect. The Supreme Court has denoted the FOIA a disclosure statute, not a withholding statute. Chrysler Corporation, supra, 441 U.S. at 294, 99 S.Ct. at 1713. The FOIA states in pertinent part that,

the district court of the United States ... has jurisdiction to enjoin the agency from withholding agency records and to order the production of any agency records improperly withheld....

5 U.S.C. § 552(a)(4)(B) (1982) (emphasis added). Section 552(a)(4)(B) expressly limits itself to situations where a court may enjoin an agency from "withholding" a document. Thus, the statute is inapplicable where, as here, a party wishes to enjoin an agency from disclosing a document. By its own terms, and upon the ruling of the Supreme Court, the FOIA seems inapplicable to Artesian's claim that its memorandum cannot be disclosed.⁶

C. Exemption 4

The FOIA does not apply to 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) (1982) (Exemption 4). The United States Court of Appeals for the District of Columbia Circuit has construed this exception as having three requirements: (1) the information to be disclosed must be either commercial or financial, (2) the information must be obtained from a person and (3) the information must be privileged or confidential. National Parks and Conservation Association v. Morton, 498 F.2d 765, 766 (D.C.Cir.1974). HHS concedes that the document at issue contains commercial information and that Artesian is a person under the FOIA, 5 U.S.C. § 551(2) (1982). Accordingly, the only issue for the Court is whether the Artesian memorandum is privileged or confidential.

1. Privilege

In the District of Columbia, the attorney-client privilege applies when,

(1) the communication from attorney to client is confidential, and (2) the communication is based on confidential information provided by the client.

Schlefer v. United States, 702 F.2d 233, 245 (D.C.Cir.1983). Artesian bears the burden of proving that this privilege applies since the party seeking to avoid disclosure must prove that circumstances justify nondisclosure. 5 U.S.C. § 552(a)(3); Kleppe, supra, 547 F.2d at 679 n. 20.

As stated in Schlefer, the attorney-client privilege only arises when an attorney's purportedly privileged communication is based on confidential information provided by the client. See Schlefer v. United States, 702 F.2d at 245. Although Artesian believes that its memorandum "indicates plainly" that the advice of counsel stated in only one portion of the document is based on the...