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METROPOLITAN LIFE INS. CO. v. USERY

December 6, 1976

METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff,
v.
W. J. USERY ET AL., Defendants. NATIONAL ORGANIZATION FOR WOMEN, Plaintiff, v. SOCIAL SECURITY ADMINISTRATION ET AL., Defendants



The opinion of the court was delivered by: GASCH

 In this action three insurance companies, the John Hancock Mutual Life Insurance Company ("John Hancock"), the Metropolitan Life Insurance Company ("Metropolitan"), and the Prudential Life Insurance Company of America ("Prudential"), seek to prevent the disclosure to the District of Columbia Chapter of the National Organization for Women ("D.C. NOW") of certain EEO-1 forms and affirmative action plans ("AAPs") submitted by the companies to the Insurance Compliance Staff of the Social Security Administration ("ICS") and the Office of Federal Contract Compliance ("OFCC") pursuant to Executive Order 11246, as amended by Executive Order 11375, and 41 C.F.R. § 60-2.1 et seq. and 41 C.F.R. 60-61.1 et seq.1 The companies also seek to prevent the disclosure of certain Compliance Review Reports ("CRR") compiled by the ICS. This Freedom of Information Act ("FOIA") case is before this Court in a reverse posture. Unlike the typical FOIA action in which a party seeks to force the government to disclose information, in a reverse FOIA action, a party who has submitted information to a government agency seeks to prevent the agency from disclosing information to a third party pursuant to a FOIA, 5 U.S.C. § 552(a), request.

 As government contractors, each of these insurance companies are required, pursuant to the above Executive Orders and regulations, to file annually an EEO-1 for its entire domestic operation and a separate EEO-1 for each individual domestic facility and office. These reports contain summary data on the number of women and minority group members employed by the company. The AAPs which the companies are also required to prepare provide much more extensive and detailed information on the past and projected employment of women and minority group members by the company. The AAPs are made available to the ICS only when the ICS conducts a compliance review of a particular facility. *fn2" The ICS periodically conducts such reviews of the companies subject to its jurisdiction and thereafter compiles a CRR which may incorporate portions of the AAPs.

 On August 9, 1975, D.C. NOW made a FOIA request to the ICS for all current EEO-1s, AAPs, and CRRs *fn3" filed by or relating to the three insurance companies parties to this action and the Equitable Life Assurance Society of the United States. *fn4" Upon being informed by the ICS of D.C. NOW's request, the insurance companies objected to disclosure, arguing that the documents were exempted under sections (b)(3), (4), (6), and (7) of the Act's exemptions. The ICS rejected most of the companies' contentions. *fn5" The companies then appealed to the OFCC pursuant to the provisions of 41 C.F.R. § 60-60.4(d). On July 19, 1976, the OFCC substantially affirmed the ICS's decision. It determined to disclose the EEO-1s and substantial portions of the AAPs and CRRs. Wage and salary information, the names, social security numbers, employee identification numbers, and "other identifying information," comments revealing the closing or reorganization of a unit or units not already publicly disclosed, and training data revealing entry into a new market were deleted. *fn6"

 While the administrative appeal was pending, the two suits which have been consolidated in this action *fn7" were brought. On August 22, 1975, Metropolitan initiated litigation in the Southern District of New York to enjoin release to D.C. NOW of its EEO-1s, AAPs, and CRRs. This action was subsequently transferred to this Court. On January 16, 1976, D.C. NOW filed an action pursuant to the FOIA, 5 U.S.C. § 552, to compel disclosure of the documents which were the subject of its August 9, 1975 request to the ICS. This Court stayed judicial proceedings in this suit pending the final agency decision.

 On July 19, 1976, the insurance companies applied for a temporary restraining order to enjoin the release of the documents subject to D.C. NOW's August 9, 1975, request pending a hearing on a motion for preliminary injunction. After a hearing, this Court granted the companies' motion for a temporary restraining order.

 This action is now before this Court on the insurance companies' motion for a preliminary injunction. *fn8" The companies seek to enjoin the release by the agency of any of the EEO-1s, AAPs, and CRRs which are the subject of D.C. NOW's August 9, 1975 request to the ICS. Alternatively, if this Court is unwilling to enjoin the release of all of the foregoing material, Prudential seeks a preliminary injunction protecting certain portions of the documents. *fn9" The companies take the position that the documents are exempt from mandatory disclosure under the Act by virtue of exemptions (b)(3), (4), (6), and (7) of the Act, 5 U.S.C. §§ 552(b)(3), (4), (6) and (7), and that the agency abused its discretion in deciding to disclose the documents. *fn10" The companies have met the well-recognized standards for preliminary injunctive relief outlined by this Circuit in Virginia Petroleum Jobbers Association v. F.P.C., 104 U.S. App. D.C. 106, 259 F.2d 921 (1958), with respect to certain data contained in the AAPs and those portions of the CRRs which incorporate this data. Specifically, this Court has determined that the insurance companies are entitled to preliminary injunctive relief as to the disclosure of the work force analyses, the department lists, the statistical and narrative data on projected promotions, the reasons for termination contained in certain termination tables, and certain narrative comments concerning performance evaluations or preferences or comments of employees contained in the AAPs and any portions of the CRRs which incorporate this data. The companies have not met the standards for preliminary injunctive relief with respect to the disclosure of the EEO-1s or any of the other data contained in the AAPs and CRRs. *fn11"

 JURISDICTION AND STANDARD OF REVIEW

 The parties do not dispute this Court's jurisdiction over the matter. This Court has jurisdiction to review the agency's decision under the Administrative Procedure Act, 5 U.S.C. § 701 et seq.; Pickus v. United States Board of Parole, 165 U.S. App. D.C. 284, 507 F.2d 1107, 1110 (1974); Charles River Park "A", Inc. v. H.U.D., 171 U.S. App. D.C. 286, 519 F.2d 935, 939 (1975).

 The parties are in dispute as to the appropriate standard of review in a reverse-FOIA case. The federal government and D.C. NOW argue that the Court is limited to reviewing the agency's decision, on the basis of the agency record, for an abuse of discretion. *fn12" The insurance companies contend that they are entitled to de novo review in this Court. To some extent, both positions have merit.

 In a reverse-FOIA case the threshold question is whether the documents sought are subject to mandatory disclosure or fall within an exemption to the Act. If the documents sought are subject to mandatory disclosure, the lawsuit is at an end. If the documents, or portions thereof, fall within an exemption to mandatory disclosure, the Act does not apply and the agency's decision to disclose the documents is subject to reversal only for an abuse of discretion. Charles River Park "A", Inc. v. H.U.D., supra, at 941-42. In determining whether any exemptions apply to the information which the agency intends to disclose, the Court is not confined to reviewing the agency record. Even under APA review, the Court must hold a hearing and determine de novo whether an exemption applies just as if the suit were one brought to compel disclosure. Id. at 940 n. 4. However, in determining whether the agency abused its discretion in deciding to disclose the information, the Court must only review the administrative record. Id. at 943.

 MERITS

 The parties have submitted numerous EEO-1s and AAPs, which they have stipulated to be representative of the documents which are the subject of this action, to the Court. No CRRs were submitted. After reviewing the documents on a page-by-page basis to determine what, if any, of the information falls within an exemption to the Act, the Court is of the opinion that there is a substantial likelihood that certain portions of the AAPs fall within the ambit of the (b)(4) and (b)(6) exemptions. To the extent that the CRRs incorporate portions of the AAPs *fn13" which the Court has determined to be exempt, those portions of the CRRs are also likely to fall within these exemptions. The EEO-1s do not come within either the (b)(4) or (b)(6) exemption. Neither the (b)(3) nor (b)(7) exemption is applicable to the EEO-1s, AAPs and CRRs.

 EXEMPTION (b)(3)

 This exemption applies to documents "specifically exempted from disclosure by statute." The insurance companies rely on these exemption statutes: § 709(e) of the Civil Rights Act, 42 U.S.C. § 2000e-8(e); 44 U.S.C. § 3508; and 18 U.S.C. § 1905.

 Section 709(e) of the Civil Rights Act concerns the disclosure of information collected by the Equal Employment Opportunity Commission (EEOC) pursuant to its authority under § 709 of the Civil Rights Act by employees or officers of the EEOC. The documents involved in the instant action were collected by the ICS, not the EEOC. The contentions put forth by the insurance companies to circumvent this hurdle to the applicability of § 709(e) are lacking in merit. The courts which have considered the question of the applicability of § 709(e) to EEO-1s, AAPs, and CRRs have uniformly rejected such arguments and held that § 709(e) is not applicable to these documents. See Sears, Roebuck and Co. v. General Services Administration, 166 U.S. App. D.C. 194, 509 F.2d 527 (1974); Goodyear Tire and Rubber Co. v. Dunlop, C.A. No. 75-1828 (D.D.C. December 9, 1975); Hughes Aircraft Company v. Schlesinger, 384 F. Supp. 292 (C.D. Cal. 1974); Legal Aid Society of Alameda County v. Shultz, 349 F. Supp. 771 (N.D. Cal. 1972). Therefore the Court holds that § 709(e) does not bar disclosure of these documents.

 Only John Hancock relies on 44 U.S.C. § 3508. Section 3508 provides that when confidential information supplied to one agency is released to another agency, the recipient agency is subject to the same disclosure restrictions as the original agency. John Hancock argues that since the EEO-1s *fn14" were in effect released to the OFCC by the EEOC, under § 3508 the OFCC is subject to the same disclosure restrictions with respect to this data as is the EEOC, in particular § 709(e). The EEO-1s were released to the OFCC by the Joint Reporting Committee (JRC), not the EEOC. The arguments put forth by John Hancock to circumvent this hurdle to the applicability of § 3508 have repeatedly met with defeat in the courts. See Sears, Roebuck and Co. v. General Services Administration, 166 U.S. App. D.C. 194, 509 F.2d 527 (1974); Goodyear Tire and Rubber Co. v. Schlesinger, supra; Lawyers Cooperative Publishing Co. v. Schlesinger, C.A. No. 74-212 (W.D.N.Y. July 20, 1974). Therefore, the Court holds that the disclosure of the EEO-1s is not barred by § 3508.

 The applicability of 18 U.S.C. § 1905 to these documents presents a more difficult question. *fn15" Section 1905 imposes criminal sanctions for the unauthorized disclosure of commercial or financial information submitted to the government. The insurance companies rely on the Fourth Circuit's recent decision in Westinghouse Electric Corp. v. Schlesinger, 542 F.2d 1190 (4th Cir. 1976), and precedents from other district courts to the effect that § 1905 is one of the statutes incorporated into the (b)(3) exemption and that AAPs, EEO-1s and CRRs are exempt from disclosure, in part, because of § 1905. *fn16"

 The District of Columbia Circuit has taken a somewhat different approach to the applicability of § 1905. In Charles River Park "A", Inc. v. H.U.D., supra, this Circuit indicated that while the (b)(3) exemption may incorporate § 1905, the scope of § 1905 is no broader than the scope of the (b)(4) exemption to the Act. Id. at 941 n. 7. Consideration of § 1905 was deemed to be appropriate in a reverse-FOIA case only after a court determined that the information sought falls within the (b)(4) exemption. At that point, § 1905 was seen as a check on the discretionary disclosure of exempt information. Id. at 943. *fn17" Therefore, consideration of the applicability of § 1905 is premature at this point and will be deferred until after this Court considers the applicability of the (b)(4) exemption.

 EXEMPTION (b)(4)

 This exemption applies to "trade secrets and commercial or financial information" which is "privileged or confidential." Specifically, this exemption applies to confidential documents whose disclosure would cause substantial competitive injury to the person from whom the information was obtained or would impair the government's ability to obtain information. National Parks and Conservation Ass'n v. Morton, 162 U.S. App. D.C. 223, 498 F.2d 765, 770 (1974). The courts which have considered the applicability of this exemption to EEO-1s, AAPs, and CRRs have reached disparate results. Compare Westinghouse Electric Corp. v. Schlesinger, 392 F. Supp. 1246 (E.D. Va. 1974), affirmed Westinghouse Electric Corp. v. Schlesinger, 542 F.2d 1190 (4th Cir. 1976); U.S. Steel Corp. v. Schlesinger, 8 F.E.P. Cases 923 (E.D. Va. 1974), affirmed Westinghouse Electric Corp. v. Schlesinger, 542 F.2d 1190 (4th Cir. 1976); Chrysler Corp. v. Schlesinger, supra; with Sea-Land Service, Inc. v. Morton, C.A. No. 76-161 (D.D.C. 1976); Sears, Roebuck and Co. v. General Services Administration, 402 F. Supp. 378 (D.D.C. 1975) appeal pending; Goodyear Tire and Rubber Co. v. Dunlop, supra; Hughes Aircraft Company v. Schlesinger, supra; Lawyers Cooperative Publishing Co. v. Schlesinger, supra.

 The testimony adduced at the hearing revealed that the insurance industry is a highly competitive industry and that the insurance companies involved in this action are engaged in intense competition with numerous other companies. *fn18" There are approximately 1600 to 1800 insurance companies in the United States. *fn19" These companies, including the insurance companies who are parties to this action, compete not only with other insurance companies but also with the newly emerging administrative services companies. *fn20" These administrative services companies perform only the administrative functions involved in insurance business. *fn21" Dr. Schwartzchild, testifying for D.C. NOW and the federal defendants, agreed that there was intense competition at the point of sale, although he did not believe there was competition in other aspects of the insurance business. *fn22" The witnesses for the insurance companies testified throughout the hearing that competition exists in all aspects of the insurance business. *fn23" In the case of group insurance contracts such as the one handled by John Hancock's Ford Group Office which is renewable on an annual basis, the competition at the time of renewal is particularly intense. *fn24"

 The work force analyses, department lists, and projected promotions data contained in these documents are clearly confidential commercial information. *fn25" This data constitutes commercial information in that it pertains to the mode of operations, work force, policies, and employment practices of these companies. The companies have not customarily released these documents to the public and have consistently treated this information in a confidential manner. *fn26"

 With respect to the question of whether disclosure of these documents will cause substantial competitive harm to the companies or impair the government's ability to obtain information, the companies have set forth numerous contentions as to how such detrimental results will flow from disclosure of these documents. The Court is not persuaded that there is a substantial likelihood that disclosure of these documents will impair the government's ability to obtain information. The Court is also not persuaded that all of the information contained in these documents falls within exemption (b)(4) because its disclosure would result in substantial competitive harm *fn27" or that all of the companies' claims to competitive injury have merit. The Court has determined, however, that the companies have shown that there is a substantial likelihood that the disclosure of the work force analyses, department lists, and projected promotions data contained in the AAPs and any portions of the CRRs which incorporate this data would result in substantial competitive injury to the companies.

 1. Work force analyses and department lists.

 The work force analyses, or manning tables, contain a breakdown by specific job categories of the total number of employees in each job category and of the number of women and minorities in each job category. *fn28" Metropolitan's Department lists also reveal the number of women, and, in the 1975 Department List, the number of minority group members ("MGMs") employed in each of the Company's specific job categories. The disclosure of this ...


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