base line with the government. In come instances actual figures are supplied -- but in any event the underlying formulae upon which the defense contractor submits his bids and cost estimates are revealed and they provide significant insight and analysis of a company's financial operations. These data as viewed by the Court are specialized, tailored particularly to the operations of the reporting company and are important and sensitive financial information.
A further question of confidentiality is presented by the government and the amicus. They contend that to release the Statements would place the companies at a competitive disadvantage and would deter them from contracting with the Government. This assertion is not entirely groundless for if made available to the plaintiff they could likewise be made available to a business competitor.
The question of confidentiality is presented in another context. Following § 331.5 of 4 C.F.R. the contracts between the companies and the Board provided for the confidentiality of the Statements.
The Board obligated itself to refrain from disclosing the contents and the companies relied on that particular provision of their contract. An application of the principles of contract law would sustain this agreement between the parties. In this connection the House Reports, supra noted that ". . . where the Government has obligated itself in good faith not to disclose documents or information which it receives, it should be able to honor such obligations." And the Cost-Accounting Standards Board, after holding extensive hearings on the proposed regulations, considered ". . . that cost-accounting practices have never been made public, that companies have regarded and treated them as confidential, and that a company's competitive position would be damaged by public disclosure of its cost-accounting principles." 37 Fed.Reg. 4139 (1972). Again Sterling Drug is instructive for the court there concluded, 450 F.2d at 709, that information "which would customarily not be released to the public by the person from whom it was obtained" was within the purview of subsection (b)(4). This approach was also followed in Grumman Aircraft Engineering Corp. v. Renegotiation Board, 138 U.S.App.D.C. 147, 425 F.2d 578 (1970) where at 582 the Court observed that "the District Court must decide whether (the documents) contained . . . information which the contractor would not reveal to the public and therefore are exempt from disclosure." See also Benson v. General Services Administration, 289 F. Supp. 590, 594 (W.D.Wash.1969), aff'd., 415 F.2d, 878, 881 (9th Cir. 1969).
After full consideration of the points and authorities of the parties on their cross-motions for summary judgment, the memorandum of the amicus and an in camera inspection of the documents submitted, the Court concludes that the Disclosure Statements fall within the provisions of the subsection (b)(4) exemption of the Freedom of Information Act.
Accordingly, it is this 23rd day of August, 1973,
Ordered that the defendant's motion for summary judgment be and the same is hereby granted; and further
Ordered that the plaintiff's motion for summary judgment be and the same is hereby denied.
ON PLAINTIFF'S MOTION TO AMEND OR RECONSIDER (September 28, 1973)
In accordance with Rule 52(b) and 60(b), F.R.Civ.P., the plaintiff has timely filed a motion requesting the Court to amend and to reconsider its Memorandum Opinion and Order of August 23, 1973, and to direct the defendant to pursue the course suggested by the United States Court of Appeals for the District of Columbia, in a recently decided Freedom of Information Act opinion, Vaughn v. Rosen, 157 U.S. App. D.C. 340, 484 F.2d 820 1973.
At the time the Opinion and Order were entered in this proceeding while Vaughn had been decided, the Court did not consider that opinion. Having now considered that opinion together with a later companion decision, Cuneo v. Schlesinger, 157 U.S. App. D.C. 368, 484 F.2d 1086 (D.C.Cir.1973), the Court sees no reason to disturb or set aside the August 23rd Memorandum Opinion and Order.
In Vaughn, Judge Wilkey in a very careful and lucid manner discusses the annoying problems of procedure and proof which are inherent in litigation involving the Freedom of Information Act which often confront the plaintiff and the Court. And very appropriately he prescribed certain procedures which hopefully might facilitate a resolution of the issues presented and assist the Court in arriving at a decision compatible with the purposes of the Act. Three procedures were suggested by Judge Wilkey for testing the classification of claims to exemptions: (1) the government should be required to provide particularized and specific justification for exemption consisting of a relatively detailed analysis of the material in question but which would not compromise the secret nature of the information; (2) a system of itemizing and indexing the material should be required that would correlate statements made in the government's refusal justification with the material in question; (3) the services of a special master might be utilized to review the material and assess the government's exemption claim.
The plaintiff in Vaughn sought from the United States Civil Service Commission evaluations assessing the personnel policies of certain federal agencies and recommendations and policies adopted by those agencies and the Commission. The government claimed that the reports were exempt from disclosure under three provisions of the Act. In support of their position an affidavit of the Director of the Bureau of Personnel Management Evaluation was submitted which set forth in bare and conclusory terms that the evaluations were exempt from disclosure. The affidavit shed little light on the contents of the information sought and left that plaintiff virtually uninformed as to the character and nature of the requested material.
Such is not the case in this proceeding. At the outset Mr. Petkas through his counsel was familiar with the form which solicited specific cost-accounting information from defense contractors through direct inquiries and he was, therefore, not confronted with the problem presented by Vaughn. Thus it does not appear that Mr. Petkas can justly contend that he was unable to characterize and categorize the cost-accounting information. In rendering an opinion this Court chose not to rely upon any representations of the government or upon a conclusory affidavit but rather undertook an in camera inspection of the material in question and arrived at an independent judgment as to the claimed exemption. Before the in camera submissions were received, a hearing was held to solicit the views of and to reach an accord on the material to be examined. Further, the Disclosure Statements which were subject to the Court's inspection were not diverse in character but rather were all of a similar nature and were subject to the same exemption. This presents a striking contrast to the facts as presented in Vaughn.
While the Court did not have the benefit of Judge Wilkey's guidelines when this proceeding was decided, Vaughn appears to be distinguishable. Nor can it be argued that the procedures prescribed therein must necessarily be applied in all Freedom of Information Act litigation. In reviewing the in camera submissions and in reaching a final determination the Court gave full consideration to all pleadings submitted and the oral argument of counsel. The motion of the plaintiff is denied.