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Delta Limited v. U.S. Customs and Border Protection Bureau

October 14, 2005


The opinion of the court was delivered by: Royce C. Lamberth, United States District Court


This matter comes before the Court on defendant's Motion [20] for Reconsideration of this Court's Order of July 26, 2005. Defendant United States Customs and Border Protection Bureau ("CBP") brings this motion pursuant to Rule 59(e) of the Federal Rules of Civil Procedure. Previously, this Court rejected defendant's attempt to withhold information which relied solely upon Exemption 4 of the Freedom of Information Act ("FOIA"). In rejecting the Exemption 4 claim, this Court indicated that defendant had not met its burden of showing that release of the information would create a likelihood of substantial harm. Defendant now returns to this Court with previously omitted evidence. While this Court is reluctant to grant reconsideration for the government's failure to follow standard litigation practice, in order to prevent manifest injustice to innocent third parties, the Court grants in part and denies in part defendant's motion for reconsideration and orders that the voluntarily submitted commercial information may be withheld pursuant to Exemption 4.


As set out in this Court's Memorandum Opinion of July 26, 2005, plaintiff Delta Limited ("Delta") filed a request with CBP, seeking all information relied upon by CBP for the seizure in Customs Case Nos. 2003-2704-000603 and 2003-2704-000768. After an unsatisfactory administrative decision, Delta filed the present suit on December 3, 2004 seeking the remaining undisclosed documents.

On summary judgment, the Court upheld the invocation of all FOIA exemptions except those withheld solely under Exemption 4 because CBP had failed to meet its burden. CBP asserted that it had obtained the commercial information involuntarily. Accordingly, the Court applied the test announced in Nat'l Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974) and decided that CBP had failed to prove the likelihood of substantial injury to the competitive position of the person who submitted the information. Rejecting CBP's claim of categorical exemption, the Court advised that this exemption requires specific examples as to how and to whom substantial harm would be likely.

CBP moves that this Court reconsider the previous ruling and argues that it now has specific information, specifically a declaration from Cary Silahian VP for Texas International Gas & Oil ("Texas International") that shows a likelihood of substantial harm to the competitive position of Texas International, successor-in-interest to the party from whom the information was obtained. CBP states that it erroneously asserted that all the information was involuntary as some of the submitted information was voluntary and is governed by the more lenient test set out in Critical Mass Energy Project v. Nuclear Regulatory Comm'n, 975 F.2d 871, 879 (D.C. Cir. 1992).


A. Rule 59(e)

Pursuant to Rule 59(e) of the Federal Rules of Civil Procedure, a court may grant a motion for reconsideration when there is an "intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996). While the courts have not defined "manifest injustice," Oneida Indian Nation of NY v. County of Oneida, 214 F.R.D. 83, 98 (N.D.N.Y. 2003), it seems clear that injury to innocent third parties would fall beneath the "manifest injustice" umbrella. See Changzhou Laosan Group v. CBP, 374 F.Supp.2d 129, 132 (D.D.C. 2005) (granting motion to reconsider in a case substantially similar to the present matter); Computer Prof'ls for Social Responsibility v. U.S. Secret Service, 72 F.3d 897, 903 (D.C. Cir. 1996) (granting relief from judgment where privacy interests of third parties would have been harmed). Rule 59(e) motions are not granted if the court suspects the losing party is using the motion to reargue the same theory or to assert new arguments that could have been raised prior to final judgment. Taylor v. DOJ, 268 F.Supp.2d 34, 35 (D.D.C. 2003) (citing Kattan v. District of Columbia, 995 F.2d 274, 276 (D.C. Cir. 1993).

It is with great reluctance that the Court grants the current motion. Standard litigation practice dictates that parties come before the court with the entire arsenal of arguments. A party should not be able to get two bites at the apple, particularly when the evidence that forms the basis for this motion was readily available when this issue was originally being litigated. What is most galling is that CBP treats this issue nonchalantly and does not recognize and acknowledge the seriousness of the omission. CBP is putting third parties at risk by failing to follow common litigation practices, let alone CBP's own regulations, which require it to contact the party who submitted the information. Moreover, it seems that CBP had a similar declaration from Cary Silahian as early as May 5, 2005 in the Changzhou Laosan Group FOIA litigation. Assuming that one hand knows what the other is doing, a cautious and perceptive attorney would have moved to supplement the record with this information. However, since there is no clear evidence of bad faith and a third party's commercial interests would be significantly affected by the release of the voluntarily submitted information, the Court will reluctantly grant the motion to reconsider.

B. Voluntarily Submitted Information

Exemption 4 protects "trade secrets and commercial or financial information obtained from a person and is privileged or confidential." 5 U.S.C. § 552(b)(4). Voluntarily submitted commercial and financial information may be withheld to protect the government's "continuing availability to secure such data on a cooperative basis" and to protect the interests of the person who submitted the information. Critical Mass, 975 F.2d at 879. Such information is protected when "it is of a kind that would customarily not be released to the public by the person from whom it was obtained." Id.

The predecessor-in-interest to Texas International voluntarily submitted some of the information in question during a CBP investigation of a smuggling scheme involving the company's IRS number. Along with the IRS number, these documents contain other commercial information about the company's business relationships.*fn1 Information such as an IRS number is of the type that would not be normally provided to the public at large. Silahian Decl. ΒΆ 6. Since CBP has a strong interest in maintaining the continuing availability of information relating to smuggling ...

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