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Erg Transit Systems Inc. v. Washington Metropolitan Area Transit Authority

January 22, 2009


The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge


In this "reverse" Freedom of Information Act ("FOIA")*fn1 case, ERG Transit Systems (USA), Inc. ("ERG") sues the Washington Metropolitan Area Transit Authority ("WMATA") to prevent WMATA from releasing certain ERG records to its competitor, Cubic Transportation Systems, Inc. ("Cubic"), under WMATA's Public Access to Records Policy ("PARP"), which, for purposes of this case, is identical to, and interpreted in accordance with, the FOIA.*fn2 ERG argues that the records are exempt from compelled disclosure under FOIA Exemption 4, 5 U.S.C. § 552(b)(4). Both WMATA and Cubic disagree. All parties have moved for summary judgment. The Court will grant in part and deny in part ERG's motion and deny WMATA's and Cubic's motions.


ERG is a California corporation that develops and supplies integrated fare management software systems and "smart card" systems and services for the transit industry. Cubic is a Delaware corporation that directly competes with ERG. In 2001, WMATA issued a request for proposals for the procurement of an automatic fare collection system. Both ERG and Cubic submitted proposals. WMATA awarded the contract to both ERG and Cubic, giving part of the work to ERG and part to Cubic. Delays resulted from difficulties in integrating ERG's and Cubic's operating systems, which apparently were less than perfectly compatible, and ERG incurred additional costs because of the shared work relationship with Cubic. In response, ERG submitted to WMATA several requests for change orders and, ultimately, a request for an equitable adjustment to the contract with supporting documentary evidence.*fn3

These submissions are the subject of Cubic's PARP request and this lawsuit. WMATA informed ERG that it intends to release the records to Cubic, subject to certain redactions of, inter alia, information that WMATA determined would aid a competitor, and ERG filed this suit to enjoin WMATA from doing so. ERG argues that much of the information WMATA intends to disclose to Cubic is exempt from compelled disclosure under Exemption 4, 5 U.S.C. § 552(b)(4), because it is confidential commercial and financial information that is not routinely disclosed to the public and which ERG voluntarily submitted to WMATA. WMATA determined that Exemption 4 is inapplicable because ERG submitted the documents to it involuntarily and disclosure of the information would not cause ERG substantial competitive harm.

ERG asks the Court to enjoin WMATA from releasing its "confidential and proprietary commercial and financial information and trade secrets to a direct competitor." Pl.'s Mot. for Summ. J. at 2. WMATA requests that, should the Court determine the threshold issue of the voluntariness of the submissions in ERG's favor, "the Court remand this matter to WMATA for revision of its redactions in accordance with the standard for voluntarily submitted records." Def.'s Mot. for Summ. J. at 2.*fn4


Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment must be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Moreover, summary judgment is properly granted against a party who "after adequate time for discovery and upon motion . . . fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

In ruling on a motion for summary judgment, the court must draw all justifiable inferences in the nonmoving party's favor and accept the nonmoving party's evidence as true. Anderson, 477 U.S. at 255. A nonmoving party, however, must establish more than "the mere existence of a scintilla of evidence" in support of its position. Id. at 252. In addition, the nonmoving party may not rely solely on allegations or conclusory statements. Greene v. Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999). Rather, the nonmoving party must present specific facts that would enable a reasonable jury to find in its favor. Id. at 675. If the evidence "is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citations omitted).

"A person whose information is about to be disclosed pursuant to a FOIA request may file a 'reverse-FOIA action' and seek to enjoin the Government from disclosing it." Canadian Commercial Corp. v. Dep't of Air Force, 514 F.3d 37, 39 (D.C. Cir. 2008). Reverse FOIA cases are deemed informal agency adjudications, and thus are reviewable under Section 706 of the Administrative Procedure Act, 5 U.S.C. § 706. See Occidental Petroleum Corp. v. SEC, 873 F.2d 325, 337 (D.C. Cir. 1989); see also Chrysler Corp. v. Brown, 441 U.S. 281, 317-18 (1979) (reverse FOIA cases are reviewed under the Administrative Procedure Act). Accordingly, the Court must decide whether WMATA's FOIA determination was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A); see also CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1154-55 (D.C. Cir. 1987).


The FOIA mandates the disclosure of agency records unless the records are exempt from compelled disclosure by one of nine exemptions. See NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 136 (1975); 5 U.S.C. § 552(b). In addition to trade secrets, Exemption 4 protects from public disclosure information that is "(1) commercial or financial, (2) obtained from a person, and (3) privileged or confidential." Pub. Citizen Health Research Group v. FDA, 704 F.2d 1280, 1290 (D.C. Cir. 1983); see also 5 U.S.C. § 552(b)(4). The only issue in dispute is whether the information ERG submitted to WMATA in connection with its request for an equitable adjustment to the contract is "confidential."*fn5

Whether the information is "confidential" within the meaning of Exemption 4 depends on whether ERG provided the information to WMATA "on a voluntary basis" or "under compulsion." Critical Mass Energy Project v. NRC, 975 F.2d 871, 879 (D.C. Cir. 1992) (en banc). "[F]inancial or commercial information provided to the Government on a voluntary basis is 'confidential' for the purposes 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." Id. However, "[i]nformation that a person is required to submit to the Government is considered confidential only if its disclosure is likely either '(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.'" Pub. Citizen Health Research Group v. FDA, 185 F.3d 898, 903 (D.C. Cir. 1999) (quoting Nat'l Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974)). "[A]ctual legal authority, rather than parties' beliefs or intentions, governs judicial assessments of the character of submissions." Ctr. for Auto Safety v. Nat'l Highway Traffic Safety Admin., 244 F.3d 144, 149 (D.C. Cir. 2001).

"WMATA relied on two main factors in determining that the documents were required: the contract required ERG to submit the documents if it wanted to pursue a change, and ERG submitted them in order to obtain additional compensation." Def.'s Mem. in Supp. of ...

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