Burnside-Ott Aviation Training Center v. United States, 82-0105-Civ.

• Decision Date: 26 June 1985
• Docket Number: No. 82-0105-Civ.,82-0105-Civ.
• Citation: 617 F. Supp. 279
• Parties: BURNSIDE-OTT AVIATION TRAINING CENTER, INC., Plaintiff, v. UNITED STATES of America, et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

617 F. Supp. 279

BURNSIDE-OTT AVIATION TRAINING CENTER, INC., Plaintiff, v. UNITED STATES of America, et al., Defendants.

No. 82-0105-Civ.

United States District Court, S.D. Florida, S.D.

June 26, 1985.

COPYRIGHT MATERIAL OMITTED

Bradford Swing, Arky, Freed, Stearns, Watson, Greer, Weaver & Harris, P.A., Miami, Fla., for plaintiff.

Susan Riley, U.S. Dept. of Justice — Civ. Div., Washington, D.C., for defendants.

MEMORANDUM OPINION

NESBITT, District Judge.

This is a suit brought by Burnside-Ott Aviation Training Center, Inc., (Burnside-Ott) seeking an injunction to prevent the Department of the Navy from releasing to the public a technical proposal submitted by Burnside-Ott in response to a Request for Proposal to supply the Naval Air Training Command with helicopter maintenance services.

The Defendants are the United States of America, the Department of the Navy, John F. Lehman, Jr., sued in his official capacity as Secretary of the Navy, and Naval Commander Gary A. Mastrandrea, sued in his official capacity as Contracting Officer for the Naval Supply Center at Charleston, South Carolina.

In January of 1981 the Navy solicited bids for helicopter maintenance services at the Naval Air Station at Whitney Field, Milton, Florida. On July 30, 1981 Burnside-Ott's bid was revised to include its best and final offer. The solicitation for bids included a statement that the data furnished in response thereto "shall not be disclosed outside the government." Burnside-Ott submitted the successful bid and was awarded the contract on September 29, 1981.

Shortly after the contract was awarded, Burnside-Ott was notified by the Navy that the information in Burnside-Ott's technical proposal and best and final offer would be released to certain of Burnside-Ott's competitors in the bidding process, pursuant to requests by such competitors under the Freedom of Information Act.

This action was brought pursuant to 28 U.S.C. § 1331, federal question jurisdiction, 5 U.S.C. § 702, the right of judicial review provided by the Administrative Procedures Act (APA), 28 U.S.C. §§ 2201-2202, the Declaratory Judgment Act, and 28 U.S.C. § 1651, the All Writs Act.

Shortly after commencement of this action the Court ordered that the technical proposal and best and final offer not be released during a 30 day period in which the defendants were to reevaluate their decision concerning the disclosure. A second order extended the time period by 60 days. Since that time, by agreement among themselves, the parties have continued to abide by the non-disclosure order.

The parties further agreed to submit the case to the Court upon the administrative record, supplemented by briefs, affidavits and oral argument. Burnside-Ott submitted affidavits in support of its demand for declaratory judgment and permanent injunction. The Defendants, however, now oppose the use of affidavits and argue that they are entitled to summary judgment upon the basis of the administrative record alone. The first issue, therefore, is whether this Court may lawfully consider facts outside the administrative record.

The Court has jurisdiction over this case pursuant to 28 U.S.C. § 1331, which provides jurisdiction over all civil actions arising under the Constitution, laws, or treaties of the United States. This section has been held to provide a jurisdictional basis for a reverse Freedom of Information suit such as this, in which a company having supplied information to the government seeks to prevent disclosure of that information to third parties. Chrysler Corp. v. Brown, 441 U.S. 281, 317 n. 47, 99 S.Ct. 1705, 1725 n. 47, 60 L.Ed.2d 208 (1977). The scope of judicial review in such cases is determined by the Administrative Procedure Act (APA) at 5 U.S.C. § 706. Id. at 317, 99 S.Ct. at 1725.

The Freedom of Information Act (FOIA) provides no procedures to be utilized by a party seeking to prevent disclosure of information. It is strictly a disclosure statute. Id. at 292, 99 S.Ct. at 1712. Since neither the FOIA nor the APA required the Department of the Navy to hold a hearing or make formal findings on the administrative record when passing on Burnside-Ott's request for nondisclosure, the appropriate standard for judicial review is whether the Navy's decision was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). The Court may not use the substantial evidence test applicable to a review of findings made upon a hearing record, 5 U.S.C. § 706(2)(E), or hold a de novo hearing to determine whether the administrative action was unwarranted by the facts, 5 U.S.C. § 706(2)(F). Camp v. Pitts, 411 U.S. 138, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973).

Burnside-Ott argues that the Defendants have abused their discretion under the FOIA in that they have wrongly determined that the technical proposal and best and final offer in question do not constitute "trade secrets and commercial or financial information obtained from a person and privileged or confidential," which are exempted from disclosure under the Act by 5 U.S.C. § 552(b)(4). More specifically, it argues that the proposed disclosure is in violation of the Trade Secrets Act, 18 U.S.C. § 1905, the contract between itself and the Navy, Department of Defense Regulations, and public policy, and that it would constitute an unlawful interference with a property interest of Burnside-Ott, in violation of the Fifth Amendment.

In support of these claims, Burnside-Ott has submitted the affidavits of its own President and the Director of its Division of Military Aviation. These affidavits provide a comprehensive view of Burnside-Ott's version of the relevant facts and policy considerations. Burnside-Ott contends that refusal by the Court to consider these affidavits would deprive it of all semblance of due process, since it was allegedly afforded no opportunity to participate in the decision making process at the administrative level.

The final agency action from which review is sought in this Court is a letter dated January 26, 1982, from the Defendant Commander G.A. Mastrandrea to Donald L. Burnside. (The Department of the Navy is an "agency" within the meaning of the APA. 5 U.S.C. § 551(1).) The letter states that the Navy will reevaluate its position as required by a Court Order and asks that Burnside-Ott furnish the reasons, page by page and section by section, why it considers the information intended to be released by the Navy to be trade secrets or information the release of which would cause substantial competitive harm to Burnside-Ott. The letter reiterates the types of information from the technical proposal and best and final offer which the Navy does not intend to release, having previously furnished Burnside-Ott with a complete copy of those portions of the documents which it does intend to release.

Burnside-Ott responded to this letter by stating reasons why it believes that virtually the entire technical proposal and best and final offer should be held within the exemption of 5 U.S.C. § 552(b)(4).

The Defendants take the position that in view of Burnside-Ott's position no further reevaluation by them is possible or required, thus making the January 26, 1982 letter the final agency action.

The lengthy correspondence between the parties belies the contention of the Plaintiff that it had no opportunity to participate in the decision making process at the administrative level. Although the opportunity to state detailed opposition to disclosure postdated the filing of this lawsuit, it preceded the final agency action from which judicial review is sought.

A threshold issue was a "stipulation" by the parties that the parties could submit affidavits. Burnside-Ott and the Defendants agree as to the standard of review but not as to the scope of review. Burnside-Ott urges the Court to conduct a limited de novo review by examining the affidavits of Burnside-Ott's Chief Executive Officer and Director of the Division of Military Aviation. They recite in detail why the proposal is confidential, their unsuccessful attempts to obtain their competitor's proposals and the "reasons" why the agency decided to release the proposals. Consideration by this Court of affidavits provided by the Plaintiff would constitute the de novo review of the agency decision foreclosed by Camp v. Pitts, 411 U.S. 138, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973) and Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). These cases contemplate review solely upon the basis of the administrative record. The only exception to this rule in a case to be determined under the arbitrary and capricious standard of 5 U.S.C. § 706(2)(A) is that if the agency has so completely failed to explain its action that effective judicial review cannot be had, then the agency may be required to submit affidavits or testimony providing "such additional explanation of the reasons for the agency decision as may prove necessary." Camp v. Pitts, supra, 411 U.S. at 138, 93 S.Ct. at 1241; Citizens to Preserve Overton Park, Inc. v. Volpe, supra, 401 U.S. at 420-21, 91 S.Ct. at 825-26.

In this case, of course, it is Burnside-Ott rather than the agency which is seeking the admission of affidavits.

In a concurring opinion in NOW, Washington, D.C. Chapter v. Social Security Administration, 736 F.2d 727 (D.C. Cir.1984) (Spottswood, J., Robinson, III, J. concurring), Judges Spottswood and Robinson, III stated that an agency's decision to release material pursuant to the FOIA is adjudicatory in nature and therefore, if the agency fails to afford adequate opportunity to be heard to a person opposing disclosure, then Camp v. Pitts, supra, and Citizens to Preserve Overton Park, Inc. v. Volpe, supra, permit the application of 5 U.S.C. § 706(2)(F); this section allows the reviewing court to consider whether the findings and conclusions of the agency are so unwarranted by the facts as to permit...