American Small Business League v. Department of Defense

Background

American Small Business League brought this Freedom of Information Act (FOIA) action against the United States Department of Defense and the United States Department of Justice. Lockheed Martin Corporation was a defendant-intervenor. The League sought documents concerning Lockheed Martin, Sikorsky Aircraft Corporation, and GE Aviation’s involvement with the Department of Defense’s Comprehensive Subcontracting Plan Test Program.

The defendants sought to withhold the information under FOIA Exemption 4, which protects trade secrets and certain privileged or confidential commercial or financial information. An earlier order had found factual disputes about whether disclosure would cause competitive harm and had denied both sides’ earlier summary-judgment motions on that issue.

Effect of the Supreme Court’s Decision

After the earlier order, the Supreme Court decided Food Marketing Institute v. Argus Leader Media. The Supreme Court rejected the competitive-harm test previously used by the Ninth Circuit and held that commercial or financial information is confidential under Exemption 4, at least where its owner customarily and actually treats it as private and provides it to the government under an assurance of privacy.

The defendants then filed another motion for summary judgment addressing whether the information was confidential under that standard. Their supporting declarations stated that the relevant companies customarily and actually kept the information private. The League sought discovery under Federal Rule of Civil Procedure 56(d), which allows a court to permit discovery when a party opposing summary judgment shows by declaration or affidavit that it cannot yet present facts needed to oppose the motion.

Reasons for Allowing Discovery

The League sought to depose several declarants and company or Department of Defense representatives. The defendants argued that discovery in FOIA cases is usually limited and characterized the request as a fishing expedition based on speculation that the declarations were untruthful.

The court nevertheless found that limited discovery was warranted. It focused on statements by Susannah L. Raheb, a Lockheed Martin Senior Manager for Supplier Diversity and Regulatory Compliance. Raheb stated that Lockheed Martin kept certain compliance reports and related information private, but also stated that the company sometimes publicized positive performance evaluations and related details. The League identified press releases that disclosed supplier names and performance ratings. The court concluded that these selective disclosures undercut the assertion that the information was customarily treated as confidential.

The court also found tension between Raheb’s statement that supplier names were kept private to prevent competitors from targeting suppliers and the company’s practice of publicly identifying exemplary suppliers to attract additional suppliers. The court held that these discrepancies provided a sufficient basis for limited discovery under Rule 56(d).

Ruling and Case Status

The court’s order states that the League’s motion was GRANTED to the following extent: the League could take up to three depositions. The League was required to file a supplemental brief by October 18 at noon; the defendants could respond by October 25 at noon; and each side’s briefs were limited to five pages, with attachments, exhibits, and declarations limited to 50 pages.

The defendants’ motion for summary judgment on the Exemption 4 issue was HELD IN ABEYANCE pending discovery and was scheduled to be heard on November 14 at 8:00 a.m. The order did not decide whether the requested information was ultimately exempt from disclosure. Judge William Alsup also vacated the hearing previously scheduled for September 18.