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SEARS, ROEBUCK & CO. v. GSA

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA


September 10, 1974

SEARS, ROEBUCK AND CO., Plaintiff,
v.
GENERAL SERVICES ADMINISTRATION, ARTHUR F. SAMPSON, E. E. MITCHELL, PHILIP J. DAVIS, PETER J. BRENNAN, Defendants, and THE COUNCIL ON ECONOMIC PRIORITIES, Intervenor

The opinion of the court was delivered by: BRYANT

MEMORANDUM AND ORDER

 In this action plaintiff Sears, Roebuck and Company ("Sears") seeks to prevent the disclosure to intervenor Council on Economic Priorities ("CEP" or "intervenor") of EEO-1 forms and affirmative action plans ("AAP's") submitted by nineteen Sears branches to defendant General Services Administration ("GSA" or "agency") and to the Office of Federal Contract Compliance, Department of Labor ("OFCC"), pursuant to Executive Order No. 11,246, 30 F.R. 12319 (1965), as amended by Executive Order No. 11,375, 32 F.R. 14303 (1967), and regulations promulgated thereunder, 41 C.F.R. § 60-2.1 et seq. (Revised Order 4) and 41 C.F.R. § 60-60.1 et seq. (Revised Order 14). *fn1"

 During the summer of 1973, CEP formally requested from defendant GSA copies of plaintiff's EEO-1's and AAP's, pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552. Subsequent to that request, plaintiff sought to persuade GSA and OFCC not to disclose those materials. Plaintiff's representatives met and corresponded with defendants from September to December, 1973. At plaintiff's request, release was delayed so that the Freedom of Information Act Committee of the Department of Justice could be consulted. That committee agreed with defendants that the Freedom of Information Act and OFCC disclosure regulations, 41 C.F.R. § 60-40.1 et seq., require defendants to disclose the material sought by CEP.

 Plaintiff was repeatedly offered the opportunity to review the requested materials and justify why any particular portion should be withheld under 41 C.F.R. § 60-40.3. *fn2" No disclosure was to be made until December 10, 1973, to allow plaintiff to avail itself of that opportunity. Throughout this period plaintiff maintained that the requested documents should remain undisclosed in their entirety, and neither specified sensitive portions nor offered to do so.

 On December 6, 1973, Sears filed the instant action to enjoin defendants from disclosing EEO-1's, AAP's, and related documents. Sears withdrew its motions for preliminary injunctive relief after defendants stipulated that they would not release any material, absent ten day notice to Sears, pending resolution of this suit. The court granted CEP's motion to intervene on December 26, 1973.

 On February 4, 1974, plaintiff and defendants applied for a temporary restraining order to enjoin publication and compel return by CEP of an EEO-1 form inadvertently sent to CEP by GSA. This attempted prior restraint of CEP, a party not bound by GSA's stipulation not to disclose, was denied by the court.

 Defendant has moved to dismiss, and plaintiff, defendants, and intervenor have each moved for summary judgment. Discovery has been stayed by stipulation pending this court's disposition of the pending motions. *fn3"

 JURISDICTION

 At the threshold this court faces the question of jurisdiction. It is clear that the FOIA itself does not confer jurisdiction. The Act was intended to promote disclosure, not to discourage it. Its exemptions provide categories of information which the government is not required to disclose, but it does not in its terms bar voluntary disclosure by the government of information in those categories. *fn4" And it provides a right to de novo court review for those who are denied information, not for those who would suppress it. Sears is not within the class of intended beneficiaries of the Act, and we do not read into the Act an implied private right of action by those who would prevent disclosure. *fn5"

 The Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq., however, confers jurisdiction upon this court to consider Sears' claim. In its motion to dismiss the government appears to argue that APA jurisdiction is denied either by the exemption in 5 U.S.C. § 701(a)(2) for "agency action . . . committed to agency discretion by law," or by sovereign immunity. Both objections fail. The agency discretion exemption has been read narrowly to apply only when there is "no law" that can be applied by the court in its review of the agency. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971). A decision to release information is no less susceptible to court review than a decision to deny disclosure; indeed courts in this circuit have expended great amounts of energy dealing with FOIA cases. And it is settled in this circuit that the APA is a waiver of sovereign immunity. *fn6" Thus it seems clear that an agency decision to release data submitted to the agency by a private party is an "agency action" adversely affecting that private party and entitling that party to judicial review. *fn7"

 Accordingly, we need not decide whether jurisdiction is conferred by any other statutes.

 SUMMARY JUDGMENT

 All parties have moved for summary judgment. Additionally, Sears has asked for further discovery in the event that its motion for summary judgment is denied, such discovery being needed for Sears to augment its oppositions to defendants' and intervenor's motions. Sears' discovery requests relate to its claims under several exemptions of the FOIA, and will be discussed when we consider those claims, below.

 The Freedom of Information Act does not confer jurisdiction over this action, nor do its exemptions make non-disclosure mandatory. But the policies behind those exemptions provide a sound basis for determining whether release of the documents in question would be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. *fn8" Those policies will be applied.

 The Freedom of Information Act is designed to encourage disclosure.

 As the Supreme Court said in Environmental Protection Agency v. Mink, 410 U.S. 73, 80, 35 L. Ed. 2d 119, 93 S. Ct. 827 (1973),

 

"Without question, the Act is broadly conceived. It seeks to permit access to official information long shielded unnecessarily from public view and attempts to create a judicially enforceable public right to secure such information from possibly unwilling official hands."

 Section 552(b) of the Act lists categories of information that are exempt from its coverage. In construing these exemptions, the court must do so narrowly and resolve ambiguities in favor of disclosure. *fn9" Sears claims that its EEO-1's and AAP's in their entirety should not be disclosable by GSA because of the law and policy articulated in exemptions 5 U.S.C. § 552(b)(3) (exempted by statute) and (b)(7) (investigatory files), and that, in the alternative, portions of those documents should be nondisclosable under exemptions (b)(4) (trade secrets and confidential commercial data) and (b)(6) (personnel records).

 Exemption (b)(3)

 Exemption (b)(3) applies to material "specifically exempted from disclosure by statute." Sears argues that Section 709(e) of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-8(e), *fn10" should bar disclosure of its EEO-1 reports. Those reports are sent to the Joint Reporting Committee (JRC), which forwards copies to the appropriate federal compliancy agency for Executive Order No. 11,246 -- in this case the Department of Labor (OFCC) -- and to the Equal Employment Opportunity Commission (EEOC). Sears argues that the JRC is in reality an agent or alter ego of the EEOC because it is composed of personnel from EEOC and funded by the EEOC. Hence disclosure by the JRC, or by any agency receiving information from the JRC, *fn11" is barred by Section 709(e).

 The difficulty with this argument is that § 709(e) is a criminal statute and must therefore be narrowly read, particularly in light of the requirement of exemption (b)(3) that material be "specifically exempt." And § 709(e), in its terms, applies only to "any officer or employee of the Commission," making public "information obtained by the Commission pursuant to its authority under this section." *fn12" The documents in question were obtained under the authority not of § 709, but of Executive Orders 11,246 and 11,375. *fn13" And they were collected not by the EEOC, but by the OFCC, which has a function separate and distinct from that of the EEOC.

 Nor, for the purposes of this statute, are members of JRC "employees" of EEOC. The OFCC could require reporting forms that differ from EEO-1's, and could route them through separate channels. That it does not do so is for reasons of convenience of both contractor and agency, rather than as a bureaucratic subterfuge. The JRC is a mere collection house that collects documents for and distributes them to the authorized agencies. To the extent that JRC collects information for OFCC pursuant to Executive Order 11,246, it must be deemed an agent of OFCC, not EEOC. *fn14"

 Sears' precise claim was raised, and overruled, in Legal Aid Society of Alameda County v. Shultz, 349 F. Supp. 771, at 775-76 (N.D. Cal. 1972). There, plaintiffs sought release of EEO-1's and AAP's from a government agency that opposed disclosure. The court held that disclosure was compelled by the FOIA, despite § 709(e) *fn15" A fortiori, when GSA/OFCC desires to disclose, we hold that § 709(e) does not bar disclosure. *fn16"

 We also note that AAP's, which include EEO-1's, *fn17" are required under 41 C.F.R. § 60-2.1 et seq., and not by the EEOC at all. Hence, regardless of whether § 709(e) is read to bar disclosure of EEO-1's by GSA/OFCC, it cannot bar disclosure of AAP's, which include the data in EEO-1's.

 Sears also argues that the documents sought were furnished to the government under express and implied promises of confidentiality, and that disclosure should therefore be barred by 44 U.S.C. § 3508(a), 18 U.S.C. § 1905, *fn18" and the court's equitable discretion.

 Neither statute, however, "specifically exempts" documents from disclosure. Section 3508(a) merely provides that applicable law follows documents as they travel from one agency to another. We have already decided that transfer from JRC to GSA/OFCC is not to be construed as transfer from EEOC to GSA/OFCC. Under the relevant Disclosure Rules, 41 C.F.R. § 60-40.1 et seq., disclosure of EEO-1's and AAP's by GSA/OFCC is authorized by law.

 Section 1905, similarly, does not expand the prohibitions of other statutes.

 

" 18 U.S.C. § 1905 is a criminal statute prohibiting unauthorized disclosure of any information by a federal employee. There is nothing in the section which prevents the operation of the Information Act. It does not fall within the ambit of Exemption (3). M.A. Schapiro v. S.E.C., 339 F. Supp. 467 (D.D.C. 1972); Frankel v. S.E.C., 336 F. Supp. 675 (S.D.N.Y. 1971), rev'd on other grounds 460 F.2d 813 (2d Cir.), cert. denied, 409 U.S. 889, 34 L. Ed. 2d 146, 93 S. Ct. 125 (1972)."

 Robertson v. Butterfield, 498 F.2d 1031, 1033 n.6 (D.C. Cir. 1974).

 Nor can Sears argue that since the government promised confidentiality, the court should exercise its equitable discretion and refuse to order disclosure. It is well settled in this circuit "that a District Court has no equitable jurisdiction to permit withholding of information which does not fall within one of the exemptions of the Act." *fn19" "Nor can a promise of confidentiality in and of itself defeat the right of disclosure." *fn20"

 Hence we hold that disclosure of EEO-1's and AAP's by GSA/OFCC to CEP is not barred by 5 U.S.C. § 552(b)(3).

 Exemption (b)(7)

 Exemption (b)(7) applies to "investigatory files compiled for law enforcement purposes . . ." Sears argues that EEO-1's and AAP's are gathered as part of compliance procedures under the Civil Rights Act and Executive Orders and are likely to become part of litigation files used in any actions now pending or which may be brought against Sears for non-compliance. In addition, Sears claims that under amendments to Revised Order No. 14, 41 C.F.R. § 60-60.4(d), 39 F.R. 5632, "such information is now expressly 'to be considered part of an investigatory file compiled for law enforcement purposes within the meaning of 5 U.S.C. § 552(b)(7) and . . . shall be treated as exempt from mandatory disclosure under the Freedom of Information Act during the compliance review.'"

 The purposes behind exemption (b)(7) are:

 

[1] to prevent the premature disclosure of the results of an investigation so that the Government can present its strongest case in court, and

 

[2] to keep confidential the procedures by which the agency conducted its investigation and by which it has obtained information.

 Aspin v. Department of Defense, 160 U.S. App. D.C. 231, 491 F.2d 24 at 29 (D.C. Cir. 1973), quoting Frankel v. Securities and Exchange Commission, 460 F.2d 813, at 817 (2d Cir. 1972). Disclosure will clearly not prejudice the government's case in court since Sears, the potential litigant, already knows the contents of the documents in question. More important, exemption (b)(7) is clearly designed to protect interests of the government only. In this case GSA and OFCC, by their willingness to release the material, have waived those protections. We hold that Sears has no standing to assert an interest of the government when the government has explicitly waived that interest and that exemption (b)(7) gives Sears no interest of its own in non-disclosure.

 In arguing that the amended Revised Order No. 14 includes EEO-1's and AAP's within exemption (b)(7), Sears has omitted crucial language from the order. That order, in pertinent part, reads:

 

[During] the conduct of a compliance review or while enforcement action against the contractor is in progress or contemplated within a reasonable time, all information obtained from a contractor under subpart B except information disclosable under §§ 60-40.2 and 60-40.3 of this title is to be considered part of an investigatory file compiled for law enforcement purposes within the meaning of 5 U.S.C. 552(b)(7), and such information obtained from a contractor under Subpart B shall be treated as exempt from mandatory disclosure under the Freedom of Information Act during the compliance review." (emphasis added)

 EEO-1 reports and AAP's are disclosable under §§ 60-40.2 and 60-40.3. Hence Revised Order No. 14 does not bring the documents in question within exemption (b)(7).

 In sum, then, disclosure of EEO-1's and AAP's is not barred by 5 U.S.C. § 552(b)(7). Accord, Legal Aid Society of Alameda County v. Shultz, 349 F. Supp. 771, 777 (N.D. Cal. 1972); Westinghouse Electric Corp. v. Schlesinger, 392 F. Supp. 1246 (E.D. Va. 1974), slip opinion p. 9.

 Exemptions (b)(4) and (b)(6)

 Having rejected Sears' claim that its EEO-1's and AAP's should enjoy blanket immunity from disclosure under 5 U.S.C. § 552(b)(3) and (7), we turn to Sears' claim for partial exemptions. Essentially, Sears argues that (b)(4), which applies to "trade secrets and commercial or financial information obtained from a person and privileged or confidential," and (b)(6), which applies to "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy," should bar disclosure of portions of the documents held by GSA/OFCC.

 In order to bring a matter (other than a trade secret) within this exemption, it must be shown that the information is (a) commercial or financial, (b) obtained from a person, and (c) privileged or confidential. Getman v. N.L.R.B., 146 U.S. App. D.C. 209, 450 F.2d 670, 673 (1971), quoting Consumers Union of United States, Inc. v. Veterans Administration, 301 F. Supp. 796, 802 (S.D.N.Y. 1969), appeal dismissed, 436 F.2d 1363 (2d Cir. 1971). It is apparent from the requirements of 41 C.F.R. § 60-2.1 et seq. that EEO-1's and AAP's are commercial information obtained from a person. Sears has made no claim of privilege aside from "confidentiality." Hence the issue narrows to whether the information is "confidential" within the meaning of exemption (b)(4).

 The leading case on exemption (b)(4) is National Parks and Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974). The Court of Appeals there said that:

 

"commercial or financial matter is 'confidential' for purposes of the exemption if disclosure of the information is likely to have either of the following effects: (1) to impair the Government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained. (Footnote omitted)."

 (At p. 770)

 In the present action, the government desires to release the documents, showing its lack of concern that such disclosure will impair its ability to obtain information in the future. Sears, of course, has no standing to raise that argument when the government has waived it. Thus the crux of the issue is whether disclosure of the various EEO-1's and AAP's contain "trade secrets" and whether their disclosure will "cause substantial harm to the competitive position of" Sears.

 It appears to the court that this aspect of the case is not yet ripe for summary judgment. Aside from a single affidavit filed by Sears and responsive affidavits filed by GSA and CEP, (as well as legal memoranda filed by all parties,) the record is incomplete on the question of whether disclosure will harm Sears' competitive position.

 In its motion for reconsideration intervenor requests further discovery and an evidentiary hearing to develop the facts necessary to decide this issue. *fn21" Such a process, however, would present administrative and judicial difficulties. Sears represented at oral argument that the documents in question would be "twelve inches thick." It is not clear what role intervenor could play in such a hearing, since the question at issue is whether it should have access to the documents in the first place. *fn22" And the court begins without any agency determination as to whether such documents should fit within the exemption. In light of other "reverse FOIA" suits which may be brought in the future, this burden should not fall totally on the court.

 On the other hand, the agency involved, GSA/OFCC, has continually offered to consider specific objections under 41 C.F.R. § 60-40.3 made on the basis of (b)(4) and (b)(6) of the FOIA. Until now, Sears has refused to make such specifications, desiring instead to have its blanket claims decided judicially before proceeding to narrow its request. *fn23" Now that this court has rejected those blanket claims, it may be that Sears and GSA can reach an agreement regarding at least part of the material. The process should be made easier by intervenor's repeated disclaimer of interest in trade secrets. *fn24" Having had its day in court on its blanket claims, Sears should exhaust its administrative remedies on its narrower claims before seeking relief from this court. Hence we shall stay the remainder of our disposition pending agency review of Sears' claims under exemptions (b)(4) and (b)(6).

 Such review should be conducted in an expedited fashion in view of the amount of time already elapsed since intervenor first requested the documents, and the expedited treatment authorized by the FOIA. The court deems it appropriate that Sears submit its contentions to GSA within 30 days of the date of this order, and that the agency make its final decision (subject to this court's review), within another 60 days.

 Sears has argued that the agency's Disclosure Rules fail to provide Sears with a hearing, required by due process. Since those seeking disclosure under the FOIA are not entitled to such an agency hearing, and since the agency's decision will be reviewed in this court, we decline to order such a hearing.

 After the agency has reached its decision on Sears' specific claims, those decisions will be reviewed by this court. Where the agency agrees with Sears that the documentary portion in question contains material that should not be disclosed, the case will fit the more typical FOIA pattern in which the agency (GSA/OFCC) has refused disclosure and the information-seeker (intervenor CEP) has brought suit. Hence all such documentary portions should then be submitted to this court in camera, along with memoranda by Sears and the agency presenting their arguments for non-disclosure. Intervenor, at that time, will be given opportunity to respond appropriately. A hearing will be ordered if necessary.

 In instances where the agency disagrees with Sears' contentions, Sears may, if it wishes, bring to this court those documents for in camera inspection, together with supporting memoranda. The agency and intervenor will then be afforded opportunity to respond. Documents which Sears does not bring to the court's attention will be ordered released by the agency to intervenor. Of course, documents which Sears does not bring to the agency's attention within 30 days as falling under (b)(4) or (b)(6) should be released by the agency immediately.

 A few points are in order regarding the substance of Sears' burden under (b)(4). In its complaint, Sears argues that "disclosure will adversely affect the goodwill of Sears and further present opportunities for adverse publicity and unwarranted litigation, as the result of improper inferences and conclusions that may be drawn from such documents, with respect to plaintiff's equal employment opportunity position." (Paragraph 15.) In its Statement of Genuine Issue of Material Fact, Paragraph 17 amplifies the same fears of "irreparable harm." This fear of potential loss of goodwill is tenuous at best. It is just as likely that evidence of Sears' compliance with Executive Order 11,246 will enhance, not diminish Sears' corporate image. In any event, it is not actionable under the standards of National Parks.

 In the affidavit of Alfred A. Kuehn, *fn25" however, Sears alleges a different type of harm; disclosure, it is said, will allow Sears' competitors to compete more effectively with Sears by having access to "inside information." While the affidavit is limited to a discussion of the usefulness of statistical employee breakdowns, *fn26" it may be that Sears' AAP's also contain plans relating to "expansions, reductions, mergers," *fn27" other planned "major shifts or changes in his personnel requirements," *fn28" or information whose release "would constitute an unwarranted invasion of the privacy of an employee." *fn29" We believe that these are the factors that might lead to the "substantial harm to the competitive position," envisioned by National Parks, and these are the kind of factors which we will consider on review. *fn30"

  Accordingly, therefore, it is this 6th day of September, 1974,

 ORDERED that summary judgment be, and hereby is, granted in part for defendant and for intervenor, in accordance with this memorandum, and it is further

 ORDERED that further proceedings in this court be, and hereby are stayed to afford plaintiff an opportunity to exhaust its administrative remedies.


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