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McDonnell Douglas Corp. v. United States Dept of the Air Force

August 27, 2002

MCDONNELL DOUGLAS CORPORATION, PLAINTIFF,
v.
UNITED STATES DEPARTMENT OF THE AIR FORCE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Richard W. Roberts, United States District Judge.

MEMORANDUM OPINION

Plaintiff McDonnell Douglas Corporation ("MDC"), a wholly-owned subsidiary of The Boeing Company ("Boeing"), brought this "reverse" Freedom of Information Act ("FOIA") case challenging the decision of the United States Department of the Air Force ("USAF") to disclose the contents of Boeing's contract with USAF pursuant to a FOIA request from Boeing's competitor, Lockheed Martin Aircraft and Logistics Center ("Lockheed"). The parties filed cross motions for summary judgment. Because the USAF's decision to release the contested information was not arbitrary or capricious, MDC's motion for summary judgment will be denied, and the defendants' motion for summary judgment will be granted.

BACKGROUND

The Air Force solicited bids on a one-year contract with options for eight additional years to provide supplies and services for KC-10 and KDC-10 aircraft. Bidders were required to submit detailed cost and pricing information in order for their bids to be considered. (Administrative Record ("AR") 52 at 40-41; AR 53.) Boeing submitted a detailed contract proposal, or bid, containing Contract Line Item Number (CLIN) prices for specific tasks. (Compl. at ¶ 9.) The proposal also contained Boeing's prices for the option years of the contract. (Id. at ¶ 10.) On June 29, 1998, USAF awarded the contract to Boeing. (Compl. ¶ 7; Mem of P. & A. in Supp. of Pl.'s Mot. for Summ. J. ("Pl.'s Mot.") at 13.) The CLIN prices and the option year prices from Boeing's proposal were incorporated into the contract. (Compl. ¶ 11.) On July 6, 1998, USAF received a FOIA request from Lockheed seeking a copy of the contract. (Def. Statement of Material Facts at 1.

When notified of Lockheed's FOIA request, Boeing agreed that a large part of the contract should be released. However, it objected to the release of those portions of the contract that it deemed to contain "confidential and proprietary pricing information" (Compl. ¶ 17) *fn1 that would be protected from disclosure by § 552(b)(4) of FOIA. See 5 U.S.C. § 552(b)(4) (2000). During a two-year period of review that followed, USAF requested comments from Boeing on its position three times. (AR 3, 9, 33.) Boeing provided comments eleven times. (AR 7, 10, 11, 21, 30, 31, 37, 39, 40, 42, 43.) While Boeing was in the process of submitting its comments, USAF twice issued letters to Boeing explaining why the comments USAF had received thus far had not convinced it that it was not under a duty to honor the FOIA request. (AR 8, 12.

Ultimately, USAF decided that the contested information should be released pursuant to Lockheed's FOIA request. On June 23, 2000, USAF issued its Final Administrative Decision Letter ("Letter") to Boeing. The twelve-page Letter addressed each point of fact and law made by Boeing in its comments and provided explanations for why USAF disagreed with Boeing's interpretations of the law and the facts. (AR 49.) The Letter explained that USAF intended to release the requested information on July 15, 2000. (Defs.' Statement of Material Facts ¶ 49.) After receiving the Letter, Boeing filed a two-count complaint seeking to prevent disclosure of the information. Boeing alleges in Count I that USAF's decision that this material was not protected from disclosure under § 552(b)(4) of FOIA was arbitrary, capricious and contrary to law, in violation of the Administrative Procedures Act ("APA"), 5 U.S.C. §§ 701-706. Count II alleges that USAF's decision to disclose violates the Trade Secrets Act ("TSA"), 18 U.S.C. § 1905. *fn2 The parties filed cross motions for summary judgment.

APPLICABLE STATUTES

I. APA

A party may challenge certain agency action under the APA, a statute which requires a reviewing court to "hold unlawful and set aside agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]" 5 U.S.C. § 706(2)(A). "Arbitrary and capricious review requires the court to 'consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.'" Lykes Bros. Steamship Co. v. Pena, Civ. A. No. 92-2780-TFH, 1993 WL 786964, at *2 (D.D.C. Sept. 2, 1993) (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971)). A reviewing court must base its review on the full administrative record that was available to the agency at the time of its decision. See id. A reviewing court does not substitute its judgment for the judgment of the agency under the arbitrary and capricious standard of review. Instead, the court simply determines whether the agency action constitutes a clear error in judgment. See Bartholdi Cable Co. v. FCC, 114 F.3d 274, 279 (D.C. Cir. 1997).

Agency findings that are merely conclusory statements will not survive the arbitrary and capricious standard of review. A court may not "sanction agency action when the agency merely offers conclusory and unsupported postulations in defense of its decisions or when it ignores contradictory evidence in the record and fails to justify seeming inconsistencies in its approach." Prof'l Pilots Fed'n v. FAA, 118 F.3d 758, 771 (D.C. Cir. 1997) (Wald, J., concurring in part and dissenting in part) (citing Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 41 (1983)).

II. FOIA

FOIA creates a policy of disclosure and a presumption that information in the government's possession is producible upon request by anyone. See Martin Marietta Corp. v. Dalton, 974 F. Supp. 37, 40 (D.D.C. 1997). This general rule of disclosure has nine statutorily defined exceptions. 5 U.S.C. § 552(b). This case implicates "Exemption 4," which excludes from disclosure matters that are "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4).

The applicability of Exemption 4 depends upon whether the information that a party seeks to have disclosed by the government was provided to the government voluntarily or under compulsion. See McDonnell Douglas Corp. v. NASA, 180 F.3d 303, 304 (D.C. Cir. 1999). If the information was provided voluntarily to the government, the standard developed in Critical Mass Energy Project v. Nuclear Regulatory Comm'n, 975 F.2d 871 (D.C. Cir. 1992) ("Critical Mass") applies. See McDonnell Douglas Corp., 180 F.3d at 304. Under Critical Mass, if financial or commercial information is submitted to the government on a voluntary basis, it "is 'confidential' for the purpose of Exemption 4 if it is of a kind that would customarily not be released to the public by the person from whom it was obtained." Critical Mass, 975 F.2d at 879.

If, however, the information was required to be submitted to the government, the test in National Parks and Conservation Assoc. v. Morton, 498 F.2d 765 (D.C. Cir. 1974) ("NPC") applies. See McDonnell Douglas Corp., 180 F.3d at 305. In NPC, the D.C. Circuit held that "commercial or financial matter is 'confidential' for purposes of [Exemption 4] 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." ...


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