Shermco Industries, Inc. v. Sec. of US Air Force
| Decision Date | 02 May 1978 |
| Docket Number | No. CA3-77-1495-F.,CA3-77-1495-F. |
| Citation | 452 F. Supp. 306 |
| Parties | SHERMCO INDUSTRIES, INC. and Peter A. Sherman v. SECRETARY OF the UNITED STATES AIR FORCE. |
| Court | U.S. District Court — Northern District of Texas |
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C. Thomas Wesner, Jr., Wesner, Wylie & Pleasant, Dallas, Tex., for plaintiffs.
Kenneth J. Mighell, U. S. Atty. by Stafford Hutchinson, Asst. U. S. Atty., Dallas, Tex., for defendant.
This is a suit for release of documents under the Freedom of Information Act, 5 U.S.C. § 552(a)(4)(B) (the "FOIA") and the Privacy Act, 5 U.S.C. § 522a(g)(5) (the "PA"). Shermco Industries, Inc. ("Shermco") was a contractor overhauling defendant's airborne generators for the first two years of a five year contract. Defendant terminated this contract during the third year, and solicited offers by requests for proposals from a number of contractors, including Shermco. Defendant determined on October 14, 1976, that Tayko Industries, Inc. ("Tayko") was the low acceptable offeror and Shermco filed a protest on October 22, 1976 with the Comptroller General of the General Accounting Office ("GAO") complaining of the proposed award to Tayko.
Shermco's protest alleges that: (1) the five year policy contract was wrongfully terminated by Defendant; (2) the contract was terminated because Defendant concluded that Plaintiffs lacked integrity, rather than the stated reason for the termination; (3) Tayko lacks capacity, credit and capability to perform the contract; and, (4) Tayko's offer was not the lowest bid. The GAO has deferred a ruling on the protest until this case has been resolved.
On January 11, 1978, Plaintiffs wrote to Ralph W. Munch, a contracting officer with the Department of the Air Force at McClellan Air Force Base in California. Plaintiffs requested information under ASPR2-408 (32 C.F.R. 2:41) on Tayko's original bids. That section provides that offerors not selected for a contract award are to be provided with "the government's evaluation debriefing of the significant factors contained in their proposals." Plaintiffs' First Request for Documents; ASPR2-508.5; 32 C.F.R. 3:74.1 This First Request was denied (First Response) in a letter dated January 18, 1977 by Ralph Munch because "award of the requirement has not been made to date due to the filing of the protest prior to award, and any information relating to the prices of any offerors cannot be disclosed at this point in time" citing ASPR3-508.4(b) which provides for a debriefing after contract award.
On February 23, 1977, the Secretary of the Air Force (SAF) responded to Shermco's protest of the contract award to Tayko. (SAF Response sent to GAO). The last page of the Response indicated that ten documents were attached and therefore furnished to the GAO. These documents, however, were not sent to the Plaintiffs.
On March 4, 1977, the Plaintiffs wrote to Lt. Col. Thurmond L. Johnson, U.S.A.F., in Washington, D.C., requesting discovery of the documents attached to the Defendant's Response filed with the GAO. Second Request. On March 14, 1977, Lt. Col. Johnson denied Plaintiffs' request because "(n)ormally, on protests before award against negotiated procurements, submission of documents identified in the protest file `contents' would not serve our best interest." Johnson also stated that any further request for this information should be made to the contracting officer at McClellan Air Force Base in California. Second Response.
On May 5th, 1977, Plaintiffs made simultaneous requests under the FOIA and the PA for the documents attached to the Defendant's Response to the GAO and "all written instruments and tangible things in your possession or to which you have access within the Air Force which directly or indirectly relate to any quality problems aleged (sic) as the reason for your refusal to continue with the follow-on contract to Shermco Industries, Inc." One request was sent to Lt. Col. Thurmond L. Johnson (Third Request); the other request was sent to the contracting officer at McClellan Air Force Base in California (Fourth Request).
The Air Force replied to the Third Request on May 16, 1977. The letter stated that the FOIA and the PA requests had been incorrectly sent to Washington and that Defendant was rerouting Plaintiffs' request to McClellan Air Force Base in California. Third Response.
Headquarters, Air Force Logistics Command, Wright Patterson Air Force Base (Ohio) sent a letter to Plaintiffs dated May 20, 1977 stating that: (1) the information requested by Plaintiffs May 5th, 1977 was not entirely releasable; (2) Plaintiffs would be notified in another letter of the cost of obtaining the releasable documents; (3) the procedure for appealing this decision was to direct a request for reconsideration to the Secretary of the Air Force, Wright Patterson Air Force Base (Ohio) within 45 days from May 20, 1977. Fourth Response.
In response to either Plaintiffs' Third Request, or Plaintiffs' forwarded Fourth Request, or under terms of the letter from Wright Patterson indicating that Plaintiffs would receive a statement of the costs involved in obtaining the releasable portions of the requested documents, the Plaintiffs received a letter from the Air Force, McClellan Air Force Base (California) dated May 27, 1977 indicating that (1) a portion of the information requested by Plaintiffs was releasable; and (2) the cost for securing these documents was $382.22. This was Plaintiffs' first response from McClellan Air Force Base (California).2
Plaintiffs, in a letter dated June 3, 1977, requested a detailed list of the releasable and withheld documents, and an itemized bill for reproducing the releasable documents. Fifth Request. On June 14, 1977, McClellan Air Force Base provided Plaintiffs with a list of 24 releasable items and 7 withheld items. The letter also indicated the charges for reproducing the items. Fifth Response.
Plaintiffs requested copies of certain documents, enclosed a check for $47.60 to cover reproduction costs and one hour of search time, and objected to the withholding of the 7 items. This letter of June 20, 1977 suggested that the Plaintiffs would be satisfied if the Air Force deleted references to bid amounts in the withheld documents and forwarded the sterilized versions to the Plaintiffs. Sixth Request.
Defendant responded to Plaintiffs' Sixth Request on June 28, 1977, by stating that (1) the check for $47.60 was returned as insufficient; (2) a copy of Plaintiffs' letter was being forwarded to HQ. AFLC/DADF, the denial authority for processing any appeals. Plaintiffs filed this suit against the Secretary of the Air Force (SAF) on November 10, 1977 alleging that (1) Defendant improperly failed to produce the documents in its files relating to any quality control problems of Shermco Industries, Inc.; (2) Defendant charged excessive amounts for search time and reproduction of documents when the requested documents were sent to the GAO by Defendant attached to its Response; and (3) Defendant arbitrarily and capriciously denied Plaintiffs access to the documents attached to the Defendant's Response in the GAO proceedings which Plaintiffs needed in order to prepare an answer to the allegations in Defendant's Response.
Defendant has answered by raising several alleged bars to Plaintiffs' suit. Defendant contends: (1) the PA does not cover the Plaintiffs because Plaintiffs lack standing under that Act and there is no "system of records" maintained on Plaintiff Sherman; (2) Plaintiffs have not exhausted their administrative remedies; and (3) Defendants are justified in withholding the 7 documents because the documents fall within certain exceptions to the FOIA. I will consider each of these issues in turn.
Defendant asserts that the Plaintiffs lack standing to sue in Federal Court because they are not "individuals" as defined in the Privacy Act, 5 U.S.C. § 552a(a)(2). The SAF also contends that it does not maintain a "system of records" on either of the Plaintiffs, as that term is defined in the Privacy Act 5 U.S.C. § 552a(a)(5) which Defendant contends is a prerequisite to relief under the Act. On these issues the FOIA is a tough act to follow.
An "individual" and only an "individual" may gain access under the Privacy Act to his record or to any information pertaining to him which is contained in a "system of records". 5 U.S.C. § 552a(d)(1). Plaintiffs are seeking release under this provision of the PA of 7 documents withheld by the Air Force.
The Privacy Act defines an "individual" as "a citizen of the United States or an alien lawfully admitted for permanent residence." 5 U.S.C. § 552a(a)(2). A Senate Report on the Privacy Act indicates that Congress, by using this definition, intended to distinguish between the "rights which are given to the citizen as an individual under this Act and the rights of proprietorships, businesses and corporations which are not intended to be covered by this Act." S.Rep. # 1183, 93 Cong., 2d Sess. 79 (1974); 4 U.S.Code Cong. and Admin.News, p. 6993 (1974).3 A "proprietorship" is a business which is owned by a person who has either the legal right and exclusive title, or dominion, or the ownership of that business. Black's Law Dictionary 1384 (Rev. 4th Ed. 1968); Holt v. Giles, 150 Tex. 351, 240 S.W.2d 991, 993 (1951); Louisville Planing Mill Co. v. Weir Sheet Iron Works, 199 Ky. 361, 251 S.W. 176, 177 (1923).
The Office of Management and Budget clarifies the scope of the term "individual" as outlined in the Senate Report in its guidelines on the Privacy Act. The guidelines state that Congress's definition of "individual" also created a distinction between "individuals acting in a personal capacity and individuals acting in an entrepreneurial capacity ..." O.M.B. Guidelines, 40 F.Reg. 28591 (1975).4
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