Aldf v. Fda

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ANIMAL LEGAL DEFENSE FUND, No. 13-17131

Plaintiff-Appellant,

D.C. No.

v. 3:12-cv-04376-

EDL

FOOD AND DRUG ADMINISTRATION,

Defendant-Appellee. OPINION

Appeal from the United States District Court

for the Northern District of California

Elizabeth D. Laporte, Magistrate Judge, Presiding

Argued and Submitted

December 9, 2015—San Francisco, California

Filed April 11, 2016

Before: Susan P. Graber, Kim McLane Wardlaw,

and Mary H. Murguia, Circuit Judges.

Opinion by Judge Graber;

Per Curiam Concurrence

2 ALDF V. FDA

SUMMARY*

Freedom of Information Act

The panel affirmed the district court’s summary judgment

in favor of the Food and Drug Administration (“FDA”), and

its holding that under Freedom of Information Act (“FOIA”)

Exemption 4, the FDA properly withheld categories of

information requested by the Animal Legal Defense Fund

regarding egg-production farms in Texas.

FOIA Exemption 4 applies to “trade secrets and

commercial or financial information obtained from a person

and privileged or confidential.” 5 U.S.C. § 552(b)(4). The

district court concluded that the FDA had established that the

release of five categories of redacted information – total hen

population, number of hen houses, number of floors per

house, number of cage rows per house, and number of cage

tiers per house – was likely to result in substantial

competitive harm due to underbidding among egg producers;

and the information was protected under Exemption 4.

The panel held that the district court had an adequate

factual basis to reach its decision. The panel also held that

the district court did not clearly err in finding that disclosure

of the redacted information was likely to cause substantial

competitive harm to the affected egg producers and farmers.

Finally, the panel held that the district court did not abuse its

discretion by denying third-party discovery.

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

ALDF V. FDA 3

In a concurring per curiam opinion, the panel wrote

separately to explain why it thought that the court should

reconsider en banc the standard of review that is applied to

appellate review of summary judgments in FOIA cases.

COUNSEL

Monte M.F. Cooper (argued), Derek F. Knerr, and Scott

Lindlaw, Orrick, Herrington & Sutcliffe LLP, Menlo Park,

California, for Plaintiff-Appellant.

Lindsey Powell (argued), Dara S. Smith, and Michael S.

Raab, Civil Division, Stuart F. Delery, Assistant Attorney

General, and Victoria R. Carradero, Assistant United States

Attorney, United States Department of Justice, Washington,

D.C., for Defendant-Appellee.

OPINION

GRABER, Circuit Judge:

Plaintiff Animal Legal Defense Fund filed a Freedom of

Information Act (“FOIA”) request with the Food and Drug

Administration (“FDA”) regarding egg-production farms in

Texas. The FDA released almost 400 pages of documents but

redacted data regarding total hen population, number of hen

houses, number of floors per house, number of cage rows per

house, number of cage tiers per house, and number of birds

per cage for each farm in question. Plaintiff filed this FOIA

action seeking to compel the FDA to release the redacted

data. The district court ordered the release of information

regarding the number of birds per cage at each farm. But the

4 ALDF V. FDA

court held on summary judgment that, under FOIA

Exemption 4, the FDA properly withheld the other categories

of information because its release was “likely to cause

substantial competitive harm.” See 5 U.S.C. § 552(b)(4). We

affirm.

FACTUAL AND PROCEDURAL HISTORY

In late 2011, Plaintiff submitted a FOIA request to the

FDA that sought the following:

• All FDA documents since April 26, 2011, relating

to egg safety in Texas, egg production in Texas,

or egg-production facilities in Texas;

• All FDA communications with Texas state

government agencies since April 26, 2011,

relating to egg safety, egg production, or egg-

production facilities; and

• All communications between the FDA and egg

producers in Texas since April 26, 2011.

The FDA released records related to inspections of eleven

chicken egg-production facilities; one quail egg-production

facility and food manufacturer; one food warehouse; and one

food distribution center. But redactions appeared on 277 of

the 398 pages that the FDA produced.

Plaintiff filed a complaint for injunctive and declaratory

relief under FOIA, 5 U.S.C. § 552, seeking to compel the

production of the following information regarding inspected

egg-production facilities: total hen population; number of

hen houses; number of floors per house; number of cage rows

ALDF V. FDA 5

per house; number of cage tiers per house; and number of

birds per cage. The FDA moved for summary judgment on

the ground that FOIA Exemption 4—which applies to “trade

secrets and commercial or financial information obtained

from a person and privileged or confidential,” id.

§ 552(b)(4)—protected the redacted data. In support of its

motion, the FDA submitted several declarations from experts

who stated that releasing the requested information would

enable competitors to learn a given egg producer’s production

rate, which in turn would allow the competitors to undercut

the egg producer’s prices and lure away customers. Plaintiff

filed a cross-motion for summary judgment, supported by its

own declarations from an economist and a food industry

consultant. Those experts attested that releasing the withheld

information would not facilitate competitive underbidding.

Plaintiff also asked to suspend briefing of FDA’s

summary judgment motion in order to permit discovery

directed to whether the information sought was publicly

available. The district court denied that request because,

among other things, Plaintiff had not shown that the

discovery it sought “is essential to litigating the motion for

summary judgment.”

After briefing and oral argument, the district court granted

in part and denied in part both parties’ summary judgment

motions. The district court held that the FDA had fallen short

of showing how releasing the number of birds per cage would

“threaten any competitive harm” and ordered disclosure of

that information. But the court concluded that the FDA had

established that the release of the other five categories of

redacted information—total hen population, number of hen

houses, number of floors per house, number of cage rows per

6 ALDF V. FDA

house, and number of cage tiers per house—was likely to

result in substantial competitive harm due to underbidding.

Plaintiff timely appeals the court’s grant of summary

judgment in favor of the FDA on the redaction of those five

categories of information, as well as the denial of third-party

discovery.

STANDARDS OF REVIEW

“Our review of a grant of summary judgment in a FOIA

case . . . is slightly different than for other types of cases

. . . .” Yonemoto v. Dep’t of Veterans Affairs, 686 F.3d 681,

688 (9th Cir. 2012). We first determine, de novo, whether an

adequate factual basis supports the district court’s decision.

Id. “Whether a particular set of documents gives the court an

adequate factual basis for its decision is a question of law that

the court reviews de novo.” Lion Raisins, Inc. v. U.S. Dep’t

of Agric., 354 F.3d 1072, 1078 (9th Cir. 2004). If no

adequate factual basis exists, the case must be remanded for

further development of the record. Yonemoto, 686 F.3d at

688.

If such a factual basis exists, we next treat the judgment

as “if it were a bench trial,” so that “the district court’s

conclusions of fact are reviewed for clear error.” Id. (internal

quotation marks omitted). On the other hand, “legal rulings,

including [the district court’s] decision that a particular

exemption applies, are reviewed de novo.” Id. As we noted

in Lion Raisins, whether withheld information could be used

by a food producer to undercut competitors is a determination

that is “grounded in . . . findings of fact.” 354 F.3d at 1078.

Therefore, if we determine that the district court had an

adequate factual basis for reaching its decision, we must

ALDF V. FDA 7

review for clear error the district court’s conclusion that

releasing the redacted information likely would cause

substantial competitive harm. Id.

We review for abuse of discretion a district court’s denial

of discovery before ruling on summary judgment. U.S.

Cellular Inv. Co. of L.A., Inc. v. GTE Mobilnet, Inc., 281 F.3d

929, 934 (9th Cir. 2002).

DISCUSSION

A. Disclosure Under FOIA

“Disclosure, not secrecy, is the dominant objective of

FOIA.” Shannahan v. IRS, 672 F.3d 1142, 1148 (9th Cir.

2012) (internal quotation marks and brackets omitted). “We

construe narrowly FOIA’s nine exemptions.” Id. The FDA

relies on Exemption 4, 5 U.S.C. § 552(b)(4), “which is

available to prevent disclosure of (1) commercial and

financial information, (2) obtained from a person or by the

government, (3) that is privileged or confidential.”1 GC

Micro Corp. v. Def. Logistics Agency, 33 F.3d 1109, 1112

(9th Cir. 1994). Commercial information qualifies as

“confidential” when disclosure is “likely . . . to cause

1

Title 5 U.S.C. § 552(b)(4) specifically provides:

This section [requiring disclosure of information]

does not apply to matters that are—

....

(4) trade secrets and commercial or financial

information obtained from a person and privileged or

confidential[.]

8 ALDF V. FDA

substantial harm to the competitive position of the person

from whom the information was obtained.” Id. 1112–13

(citing Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d

765, 770 (D.C. Cir. 1974)).

B. Adequate Factual Basis

As noted above, we first must determine whether the

district court had an adequate factual basis to reach its

decision. Lion Raisins, 354 F.3d at 1079. “In making this

determination, we may rely solely on government affidavits

so long as the affiants are knowledgeable about the

information sought and the affidavits are detailed enough to

allow the court to make an independent assessment of the

government’s claim.” Kowack v. U.S. Forest Serv., 766 F.3d

1130, 1132 (9th Cir. 2014) (internal quotation marks

omitted). That threshold is met here.

Several of the declarations by the FDA’s experts stated

that the egg-production industry was “highly” or “extremely

competitive.” One emphasized that “anything that changes

costs by even a penny can make a huge difference.”

According to the experts, the redacted information was likely

to cause substantial competitive harm because the

competitors of the egg producers in question could use the

information to form accurate estimates of each farm’s or

producer’s rate of production and use those estimates to

underbid. For example, one declarant stated that, once a

competitor knows the production rate at an egg farm, the

competitor is able to “enter the farm’s regional market and

offer to produce the same number of eggs per day for a lower

price or a greater number of eggs per day for the same price

and thereby lure away the farm’s customers.” As in Lion

Raisins, 354 F.3d at 1079–80, the declarations in this case

ALDF V. FDA 9

established an adequate factual basis. The declarations

provided the district court with the identity of the information

sought and the claimed exemption, and provided the

necessary detail about the specific competitive harm that

could arise from the release of the redacted information. See

also Bowen v. FDA, 925 F.2d 1225, 1227–28 (9th Cir. 1991)

(holding that government affidavits that described the

documents withheld, the statutory exemptions claimed, and

the specific reasons for the agency’s withholding provided an

adequate factual basis for application of Exemption 4).

C. Review of District Court’s Analysis for Clear Error

We next must decide whether the district court clearly

erred in determining that the redacted information fell within

Exemption 4’s protection. “[The clear error] standard is

significantly deferential, and we will accept the lower court’s

findings of fact unless we are left with the definite and firm

conviction that a mistake has been committed.” Lentini v.

Cal. Ctr. for the Arts, 370 F.3d 837, 848–49 (9th Cir. 2004)

(internal quotation marks omitted).

“An agency seeking to withhold information under an

exemption to FOIA has the burden of proving that the

information falls under the claimed exemption.” GC Micro

Corp., 33 F.3d at 1113. “While conclusory and generalized

allegations of competitive harm are insufficient to show that

requested information is ‘confidential,’” the government need

not show that releasing the documents would cause “actual

competitive harm.” Id. “Rather, the government need only

show that there is (1) actual competition in the relevant

market, and (2) a likelihood of substantial competitive injury

if the information were released.” Lion Raisins, 354 F.3d at

1079.

10 ALDF V. FDA

Plaintiff does not contest that there is actual competition

in the egg-production market, and it also concedes that the

redacted information could be used to estimate an egg farm’s

production capacity. The parties disagree, however, as to

whether releasing the redacted information would likely

cause “substantial competitive harm” to the affected egg

producers and farmers.

Whether or not releasing the requested data would create

a likelihood of substantial competitive harm was subject to

dispute. But, on this record, the district court did not clearly

err in finding that disclosure of the information was likely to

cause commercial undercutting. The FDA provided

declarations that explained how the information would

facilitate accurate estimates of a farm’s egg-production

capacities and how those estimates could facilitate

undercutting. For example, one declarant explained that the

egg-production industry has a “tight profit margin”; industry

experts estimate that an average profit is approximately 6.7

cents per dozen eggs sold. If a national egg producer were

able to determine the production rates of its smaller

competitors, it could direct its resources toward that market;

and if the national producer were able to offer lower prices,

“even a penny can make a huge difference” in the local

company’s ability to keep its customers.

Although the information sought may not provide a

national egg producer with every piece of information that it

would consider before entering a new market, knowing the

production capacity of potential competitors could make the

decision of whether or not to enter a competitor’s market

easier. By becoming aware of potential limitations in its

competitors’ production capabilities, a national producer

could decide to focus all its resources on egg markets in

ALDF V. FDA 11

which it could out-produce local competitors—whether in

terms of efficiency, price, or total quantity. See Lion Raisins,

354 F.3d at 1081 (holding that releasing information that

allows a raisin farmer to “infer the volume of its competitors’

raisin sales” could facilitate undercutting and, therefore,

create a likelihood of substantial competitive harm).

Plaintiff submitted its own declarations, which asserted

that the production information it seeks is insufficient to

affect the market. Nevertheless, under our special standard

of review for FOIA cases, and in view of the extensive FDA

affidavits, we see no clear error. The incomplete data could

allow egg producers to make more accurate—if

imperfect—estimates of their competitors’ production

capabilities and sales than they could without the redacted

information. Due to the competitiveness of the egg-

production industry, where “even a penny can make a huge

difference,” even a slight upgrade in the accuracy of

projections might have a large effect on competition.

Although the information may not afford egg producers their

competitors’ exact profit-per-egg statistics, the FDA need

only establish, as the district court correctly noted, “a

likelihood of substantial competitive harm, not a certainty.”2

2

We are likewise unpersuaded by Plaintiff’s argument that the redacted

information is already publicly available and, therefore, cannot be

considered likely to cause substantial competitive harm. The sought-after

data is more detailed and more specific than anything currently available

in the public domain. For that reason, Plaintiff’s argument fails. See Wolf

v. CIA, 473 F.3d 370, 378 (D.C. Cir. 2007) (“Prior disclosure of similar

information does not suffice; instead, the specific information sought by

the plaintiff must already be in the public domain by official disclosure.”);

Fitzgibbon v. CIA, 911 F.2d 755, 765 (D.C. Cir. 1990) (“[T]he information

requested must be as specific as the information previously released.”).

12 ALDF V. FDA

D. Third-Party Discovery

The district court did not abuse its discretion by denying

third-party discovery. In response to a summary judgment

motion, a non-moving party may obtain relief pursuant to

Federal Rule of Civil Procedure 56(d) if it “shows by

affidavit or declaration that, for specified reasons, it cannot

present facts essential to justify its opposition.” A party

seeking further discovery must show that there is “some basis

for believing that the information sought actually exists.”

Blough v. Holland Realty, Inc., 574 F.3d 1084, 1091 n.5 (9th

Cir. 2009) (internal quotation marks omitted). Further, a

party seeking discovery must show that it lacks the “essential

facts” to resist the summary judgment motion. Cal. Union

Ins. Co. v. Am. Diversified Sav. Bank, 914 F.2d 1271, 1278

(9th Cir. 1990).

Plaintiff here sought additional discovery to show that the

sought-after information was already publicly available. The

district court ruled that the evidence Plaintiff sought was not

sufficiently similar to the information requested through

discovery; Plaintiff’s request was grounded in speculation;

and allowing discovery of “an individual farm’s egg

production could improperly give Plaintiff information that

it could not obtain through its FOIA request.” That ruling fell

within the district court’s range of discretion.

AFFIRMED.

ALDF V. FDA 13

PER CURIAM, concurring:

We write separately to explain why we think that our

circuit should reconsider the standard of review that we apply

to summary judgments in FOIA cases.

We generally review de novo a district court’s grant of

summary judgment. “Summary judgment is appropriate

when, viewing the evidence in the light most favorable to the

nonmoving party, there are no genuine questions of material

fact and the district court correctly applied the underlying

substantive law.” Campbell v. PricewaterhouseCoopers,

LLP, 642 F.3d 820, 824–25 (9th Cir. 2011). Typically, of

course, the district court does not make factual findings at

summary judgment. Rand v. Rowland, 154 F.3d 952, 957 n.4

(9th Cir. 1998) (en banc).

In FOIA cases, by contrast, we allow the district court to

make factual findings, and we review those findings for clear

error. Schiffer v. FBI, 78 F.3d 1405, 1409 (9th Cir. 1996).

That peculiar standard means that a dispute of material fact

does not necessarily defeat summary judgment. See

Yonemoto v. Dep’t of Veterans Affairs, 686 F.3d 681, 688 n.5

(9th Cir. 2012) (“Our cases do not explain why [we review

for clear error], and one can question whether it should be.

By definition, summary judgment may be granted only when

there are no disputed issues of material fact, and thus no

factfinding by the district court.”). But we see no good

reason to depart from our traditional standard of review in

FOIA cases. See generally Rebecca Silver, Comment,

Standard of Review in FOIA Appeals and the Misuse of

Summary Judgment, 73 U. Chi. L. Rev. 731 (2006) (arguing

that de novo review should apply in FOIA appeals).

14 ALDF V. FDA

As a threshold matter, “[s]ummary judgment is the

procedural vehicle by which nearly all FOIA cases are

resolved.” Office of Information Policy, U.S. Dep’t of

Justice, Guide to Freedom of Information Act: Litigation

Considerations 104 (2013). In this case, though, the parties

presented contradictory declarations as to the likelihood of

substantial competitive harm, making summary judgment an

inappropriate vehicle for resolving that issue. See In Def. of

Animals v. U.S. Dep’t of Agric., 501 F. Supp. 2d 1, 8 (D.D.C.

2007) (stating that summary judgment in a FOIA case is

“improper” when a “dispute is genuine and factual,” even

though the contention on which it is based may be “doubtful

on the basis of the evidence before the court”); Pub. Citizen

Health Research Grp. v. FDA, 953 F. Supp. 400, 403 (D.D.C.

1996) (concluding that “contradictory” claims by the parties

made summary judgment “an inappropriate vehicle” for

resolution of a FOIA case and scheduling a bench trial).

Our past cases reasoned that we owe substantial deference

to the district court in FOIA cases because of their unique

nature. See, e.g., Assembly of Cal. v. U.S. Dep’t of

Commerce, 968 F.2d 916, 919 (9th Cir. 1992). “Because

there will rarely be any genuine issues of material fact—the

document says whatever it says—the case may usually be

decided on summary judgment.” Id. To make its decision,

the district court often reviews sensitive documents in

camera, a process that we have described as “a trial on a

hidden record.” Id. The district court’s characterization of

the document in this context “more closely resembles a

finding of fact than a conclusion of law.” Id. Therefore, we

grant substantial deference to the district court. Id.; see also

Schiffer, 78 F.3d at 1409 (“[W]e endorsed the [clear error]

standard because in FOIA cases the district court’s findings

ALDF V. FDA 15

of fact effectively determine our legal conclusions.” (internal

quotation marks omitted)).

Although the FOIA statute requires that district courts

“determine the matter de novo,” it is silent as to the

appropriate standard of review for appellate courts. 5 U.S.C.

§ 552(a)(4)(B).1 We originally adopted our deferential

standard of review in reliance on a D.C. Circuit Court’s

footnote, without explanation. See Church of Scientology of

Cal. v. U.S. Dep’t of Army, 611 F.2d 738, 743 (9th Cir. 1980)

(citing Mead Data Cent., Inc. v. U.S. Dep’t of Air Force,

566 F.2d 242, 251 n.13 (D.C. Cir. 1977)). The D.C. Circuit

has since abandoned the FOIA-specific standard of review,

and it now applies ordinary summary judgment principles in

FOIA cases. See Petroleum Info. Corp. v. U.S. Dep’t of

Interior, 976 F.2d 1429, 1433 & n.3 (D.C. Cir. 1992) (noting

that the D.C. Circuit “applies in FOIA cases the same

standard of appellate review applicable generally to summary

judgments” but that, in contrast, the Ninth Circuit applies “a

clearly erroneous standard”). Likewise, the Second, Sixth,2

1

The relevant portion of the statute reads: “On complaint, the district

court . . . has jurisdiction to enjoin the agency from withholding agency

records and to order the production of any agency records improperly

withheld from the complainant. In such a case the court shall determine

the matter de novo, and may examine the contents of such agency records

in camera . . . .” 5 U.S.C. § 552(a)(4)(B).

2

Like the D.C. Circuit, the Sixth Circuit originally had a deferential

standard of review similar to our own but has since done away with it.

Compare Ingle v. Dep’t of Justice, 698 F.2d 259, 267 (6th Cir. 1983)

(“Initially, the reviewing court must establish that the district court had an

adequate factual basis for its decision. Secondly, the court on appeal must

ascertain upon the factual foundation developed below if the conclusion

of the trial court is clearly erroneous.”), with Jones v. FBI, 41 F.3d 238,

242 (6th Cir. 1994) (reviewing de novo the district court’s grant of

16 ALDF V. FDA

Eighth, and Tenth Circuits also apply de novo review when

evaluating FOIA summary judgment decisions. See TPS, Inc.

v. U.S. Dep’t of Def., 330 F.3d 1191, 1194 n.5 (9th Cir. 2003)

(collecting cases).

We acknowledge that some other circuits appear to use a

deferential standard of review similar to our own. See Silver,

73 U. Chi. L. Rev. at 740–43. But those circuits all appear to

have adopted the standard without explanation or analysis,

and at least one has questioned whether a deferential standard

of review is appropriate. See Stephenson v. IRS, 629 F.2d

1140, 1144 (5th Cir. 1980); Chilivis v. SEC, 673 F.2d 1205,

1210 (11th Cir. 1982); Antonelli v. DEA, 739 F.2d 302, 303

(7th Cir. 1984) (per curiam); Lame v. U.S. Dep’t of Justice,

767 F.2d 66, 70 (3d Cir. 1985); Willard v. IRS, 776 F.2d 100,

104 (4th Cir. 1985). But see Flightsafety Servs. Corp v. Dep’t

of Labor, 326 F.3d 607, 611 n.2 (5th Cir. 2003) (per curiam)

(noting the circuit split and choosing not to take a firm stand

because the case’s outcome remained “the same whether the

district court’s judgment [was] reviewed de novo or for clear

error”).

De novo review would be consistent with our usual

summary judgment standards. As the Second Circuit has

explained, de novo review also is consistent with FOIA’s

history and purpose:

In striking a balance between the incompatible

notions of disclosure and privacy when it

summary judgment in a FOIA case), and ACLU of Mich. v. FBI, 734 F.3d

460, 465 (6th Cir. 2013) (holding, in a FOIA case, that “[t]he propriety of

the district court’s grant of summary judgment is likewise reviewed de

novo on appeal”).

ALDF V. FDA 17

enacted FOIA in 1966, Congress

established—in the absence of one of that

law’s clearly delineated exemptions—a

general, firm philosophy of full agency

disclosure, and provided de novo review by

federal courts so that citizens and the press

could obtain agency information wrongfully

withheld. De novo review was deemed

essential to prevent courts reviewing agency

action from issuing a meaningless judicial

imprimatur on agency discretion. We are not

unmindful of the institutional pressures that

might make a more deferential standard of

review seem appealing. Yet . . . the de novo

standard is more faithful to the text, purpose,

and history of FOIA . . . .

Halpern v. FBI, 181 F.3d 279, 288 (2d Cir. 1999) (citations,

internal quotation marks, and paragraph break omitted).

Even if we assume that the sensitive nature of documents

withheld under a FOIA exemption calls for deference in some

contexts, why we defer to the district court in cases such as

this one—where the factual inquiry on which the summary

judgment turns is one that does not depend on a review of

withheld information—remains unclear. Here, the district

court found that the release of the egg-production data was

likely to cause substantial competitive harm by reviewing

declarations and testimony that went well beyond, and

depended little on, the redacted information. That review

process did not concern what the documents said; rather, it

centered on what effect their release would have because of

the kind of data involved. The district court ultimately

decided that the FDA’s declarations were more persuasive

18 ALDF V. FDA

than those submitted by Plaintiff. But the district court was

in no better position to make that determination at summary

judgment than we are on appeal. See Grand Cent. P’ship,

Inc. v. Cuomo, 166 F.3d 473, 478 n.2 (2d Cir. 1999) (holding

that, in a FOIA case where “no witnesses were heard and no

credibility findings were made,” “the district court was in no

better position to evaluate the record than” the circuit court).

In sum, if ordinary principles applied, summary judgment

would not be appropriate because the record contains a

disputed issue of material fact, and we would reverse and

remand for further proceedings. Under our current FOIA

standard, however, we must affirm. We urge our court to

take up, en banc, the appropriate standard of review in FOIA

cases.