American Small Business League v. Department of Defense

Background

American Small Business League, a nonprofit organization that promotes small-business interests, brought this Freedom of Information Act case against the United States Department of Defense and the United States Department of Justice. Lockheed Martin Corporation participated as a defendant-intervenor. The League sought records concerning the Defense Department’s Comprehensive Subcontracting Plan Test Program, including records involving Lockheed Martin, Sikorsky Aircraft Corporation, and GE Aviation System’s small-business subcontracting relationships, strategies, and goals. The request covered more than 2,000 pages, as well as GE’s 2014 comprehensive subcontracting plan.

The Defense Contract Management Agency manages the voluntary Test Program and conducts annual “640 compliance reviews” of participating contractors. The reviews contain descriptions and ratings concerning compliance and performance. The defendants and Lockheed Martin withheld the requested material under Exemption 4 of the Freedom of Information Act, which protects certain confidential commercial or financial information obtained from a person.

A prior order had found factual disputes under the former standard for Exemption 4 and had set a trial on whether disclosure would cause substantial competitive harm. After the Supreme Court rejected that competitive-harm test in Food Marketing Institute v. Argus Leader Media, the defendants renewed their request for summary judgment. The court also allowed limited additional discovery and reviewed selected documents privately.

Legal standard and analysis

Summary judgment is appropriate when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. In a Freedom of Information Act case, the government generally bears the burden of showing that requested information falls within an exemption and must release reasonably separable nonexempt portions.

The court explained that, under Food Marketing Institute, commercial or financial information is confidential at least when its owner customarily and actually treats it as private and provides it to the government under an assurance of privacy. The Supreme Court had not decided whether an assurance must always be shown, but the court assumed that requirement applied here.

The court distinguished between information created by the companies and information created by the government. Government evaluations, ratings, assessments, and recommendations about a contractor’s compliance or performance were not information that belonged to the companies and therefore were not confidential under Exemption 4. The government-generated material had to be disclosed.

By contrast, the companies’ submissions included subcontracting goals, dollar amounts, policies, initiatives, supplier names, contracts, award data, and detailed information about their efforts and performance. Lockheed Martin and Sikorsky provided evidence that they protected this information through confidentiality agreements, restrictive markings, secure systems, and limited access. The court concluded that the record did not show a genuine factual dispute about whether most of these detailed company-originated materials were customarily and actually kept private.

The court also found an implied assurance of privacy. It relied on the companies’ voluntary participation in the Test Program, the government’s requests for increasingly detailed information, secure portals, confidential markings, secure audit facilities, the government’s handling of the information, and the anonymized way related information was reported publicly and to Congress. The court held that written assurances or express promises were not required.

The court rejected the argument that the 2016 Freedom of Information Act amendment’s “foreseeable harm” requirement restored the former competitive-harm test. It reasoned that disclosure would destroy the private nature of information that was confidential under the Supreme Court’s interpretation, and that the amendment could not be used to revive the rejected test.

The court separately considered segregability—the requirement to release reasonably separable nonexempt portions of otherwise protected records. The defendants had withheld twelve documents in full and asserted that the public information in them was minimal and inseparably mixed with exempt material. The court found that assertion unsupported by evidence, and its private review confirmed that the information was not minimal or inseparably mixed, particularly because government-originated information was not exempt.

Ruling

The court granted in part and denied in part the defendants’ motion for summary judgment. It ordered the defendants to release updated redacted versions of all documents at issue—more than 2,000 pages—including all government evaluations and assessments. It also required redacted versions of the twelve documents that had been withheld in full. The court vacated the bench trial scheduled for December 9, and required release by January 6, 2020.

The opinion’s footnote concerning GE’s 2014 comprehensive subcontracting plan is partially corrupted in the provided text. It states that the League did not address the defendants’ arguments about GE’s information, but the specific disposition of that portion of the motion cannot be determined reliably from the text provided. Judge William Alsup signed the order.