Dorsey & Whitney LLP v. United States Postal Service

Background

Dorsey & Whitney LLP submitted a Freedom of Information Act (FOIA) request to the United States Postal Service (USPS) on April 16, 2018. The request sought information about Negotiated Service Agreements—agreements providing lower rates or more favorable terms—between USPS and Fujian Zongteng Network Technology Co., Limited; Enumber, Inc.; and US Elogistics Service Corporation.

USPS issued a “Glomar response,” meaning it refused to confirm or deny whether responsive records existed. Dorsey filed an administrative appeal, which USPS denied, and then filed this lawsuit, alleging that the Glomar response violated FOIA.

The parties filed cross-motions for summary judgment, a procedure allowing judgment without a trial when no genuine dispute of material fact exists and one side is entitled to judgment under the law. Magistrate Judge Becky R. Thorson recommended granting Dorsey’s motion and denying USPS’s motion. USPS objected to that recommendation.

Legal framework

FOIA generally provides public access to government records, subject to nine exemptions that must be narrowly construed. The agency bears the burden of showing that an exemption applies.

USPS relied on FOIA Exemption 3, which covers information specifically protected from disclosure by another statute. The statute at issue, 39 U.S.C. § 410(c)(2), allows USPS to withhold commercial information that would not be publicly disclosed under good business practices.

The court explained that, in some circumstances, even acknowledging that records exist can cause the harm protected by an exemption. In those circumstances, an agency may use a Glomar response. Because Dorsey and USPS disagreed about whether the existence of the agreements was covered by the good-business exception, the court independently reviewed USPS’s decision rather than applying a more limited review.

Analysis

The court rejected USPS’s objection to the standard of review. It also rejected USPS’s argument that the existence of the agreements would not be disclosed under good business practices.

USPS submitted declarations from Senior Vice President Dennis Nicoski. He stated that acknowledging an agreement could give another company a competitive advantage, potentially violate nondisclosure agreements, reduce USPS revenue by encouraging other customers to seek similar agreements, and reveal valuable information to competitors.

Dorsey presented evidence that USPS publicly discusses the availability and existence of such agreements and other beneficial partnerships. The evidence included USPS website and manual materials, statements about partnerships, notifications to the Postal Regulatory Commission, an Office of Inspector General audit report, news articles, and a FedEx press release.

The court held that the relevant question was whether the existence of the agreements—not their specific prices or terms—is publicly disclosed under good business practices. The record supported Dorsey’s position that the existence of such agreements and other beneficial partnerships is publicly disclosed. The court also found that USPS’s general distinction between competitive and noncompetitive markets did not meet its burden to establish that the FOIA exemption applied.

Because USPS did not establish that its Glomar response was justified under the good-business exception, the court overruled USPS’s objections concerning that issue. The court treated USPS’s objection to the recommendation’s “actual harm” analysis as moot because the good-business-exception ruling resolved both summary-judgment motions. The court found no clear error in the unchallenged portions of the recommendation.

Disposition

Judge Wilhelmina M. Wright overruled USPS’s objections and adopted the May 9, 2019 Report and Recommendation. The court denied USPS’s motion for summary judgment and granted Dorsey’s motion for summary judgment as to the Glomar response issued by USPS. The order directed that judgment be entered accordingly.