Petition — Brown v. Westinghouse Electric Corp.

Supreme Court brief1977

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Text

FILED &

cpr 28 1977

No. WICHAEL RODAK, JR., CLERK

In the Supreme Court of the Gnited States

OcToBER TERM, 1976

76-1192

HaroLD Brown, SECRETARY

oF DEFENSE, ET AL., PETITIONERS

Vv.

WESTINGHOUSE ELECTRIC CORPORATION, ET AL.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

Danie, M. FRIEDMAN,

Acting Solicitor General,

BarBara ALLEN BaBoook,

Acting Assistant Attorney General,

SrePpHEN L. URBANCZYK,

Assistant to the Solicitor General,

LEONARD SCHAITMAN,

PavuL BLANKENSTEIN,

Attorneys,

Department of Justice,

Washington, D.C. 20530.

——————— TCC

INDEX

Pages

A ce ces cacccuecskseueutesenass 2

IN tas eUl ccd cuca ceobchagnusaekanes 2

I io 5 6065000 6 e sedans esecnnes 2

Statutes and regulations involved ............ 3

oe debe a eaeh ack hae ane eens 3

Reasons for granting the petition ............. 11

I ee dena he dhe Kaba Oe beKeRe ees 19

ee ie oge kas kde nekcehseb acne la

ee he hea ace ea ee eS o8a

NE sit nt Sate es 6onudadtevacneesuoees 70a

I eee oe a eee ie Poel 74a

re a re ie ey oad OC eae aa 8la

CITATIONS

Cases:

Administrator, Federal Aviation Adminis-

tration v. Robertson, 422 U.S. 255 ...... 16

Blair v. Oesterlein Company, 275 U.S. 220. . 16

Camp v. Pitts, 411 U.S. 188 .............. 17,18

Charles River Park ‘‘A’’, Inc. v. Depart-

ment of Housing and Urban Development,

sca cnshesseneeenendd 11-12, 13, 15

Citizens to Preserve Overton Park v. Volpe,

St EE us dcuceccnwsanneeekacueey 17,18

Consumers Union v. Cost of Living Council,

491 F.2d 1396, certiorari denied, sub nom.

Business Roundtable v. Consumers Union,

6 ives din 5eensksen tenner 16

Cort 0. Bah, Sie UT. & . wc cw ccccccccccces 19

Cases—Continued

Department of the Air Force v. Rose, 425

WR CE 5 50 ca keaee eure avedus eevkdas

Dunlop v. Bachowski, 421 U.S. 560 .......

Environmental Protection Agency v. Mink,

PO Se ree oe

Exchange National Bank v. Abramson, 295

Sf 8 PAPE OTT eer eee

Federal Communications Commission v.

Schreiber, 381 U.S. 279 ................

General Services Administration v. Benson,

EE 6 zu o w0%s00essucouns desea

Laughlin v. United States, 474 F.2d 444,

certiorari denied, 412 U.S. 941 .........

National Railroad Passenger Corp. v. Na-

tional Association of Railroad Passen-

ite, GO Wis Ge 0 0<owecssenkbeuebass:

National Parks and Conservation Associa-

tion v. Kleppe, No. 76-1044, decided No-

Cuan Ti, He 6.accéovceneensescusenss

Pennzoil Co. v. Federal Power Commission,

te per eee 12,

Public Utilities Commission of Califorma v.

United States, 355 U.S. 534 ............

Securities Investor Protection Corp. Vv.

Baraat, Ga Was GO occocccccsccccce

Service v. Dulles, 345 U.S. 363 ...........

Smith v. United States, 305 F.2d 197 ......

United States v. Dickey, 268 U.S. 378 .....

Utah Fuel Co. v. National Bituminous Coal

Commission, 306 U.S. 56 ..............

Statutes and regulations:

Administrative Procedure Act, 5 U.S.C. 701

ff «- ETUC TY ETT TTT OTE T TTT TL

ls" & er erry er

Pages

13, 14

ad. SR. or, wee ee yt Ay /

lll

Statutes and Regulations—Continued Pages

PS WEE i din dd oc cawcvvcodtseoucdesen 19

Bf oe os | er 18

Freedom of Information Act:

PN ok ogden duvcxvstdusceiends 3, 8la

5 U.S.C. 522(b) (8) .........%.. 8, 10, 16, 82a

5 U.S.C. 552(b) (4) ...8, 10,11, 13, 14, 18, 82a

DP Ws CED nv codubevvescesue 8,9, 11

Pub. L. 94-574, 90 Stat. 2721 .............. 17

R. &. 3167, 3B Stat. SGT... ccc ccc ccc cce 16

fe eee 16

15 U.S.C. (1940 ed.) 176(b) .............. 16

18 U.S.C. (1940 ed.) 216 ................. 16

18 U.S.C. 1905 ..... 2, 3, 8, 9, 10, 13, 16, 17, 18, 82a

19 U.S.C. (1940 ed.) 18385 ................ 16

gk Rn ne 8,11

a ED 5 vi bi we cuceetéceenncan 15

3 ere ee 14

28 C.F.R.16.1(a) 2.0... ccc ccc cec cece eee. 15

29 C.F.R. 70.21(a) .....0. cece cee cceecees 13

WO O.P-R. BIO .. 2... ccc ccc cecccccccce 15

41 O.PAR. 60-12 . 0.00... cece cece ce eee 4

OR CI GED ini viv dacs cnsevccenices 3

Oh NG ogo gcvvcninscccscevacnns 4

41 C.P-R. @0-1.7(a) ........ccccccccccees 3

41 O.FR. 0-194 ooo... cece enc ceees 4

41 C.F.R. 60-1.40 . 2.00... eee e cece eee. 4

41 O.P.R. 60-2.1 ......... cece ccc cee c cues 4

41 C.F.R. 60-2.2 ........ cece eee c cence 4

43 CPR. OD-B.20 2... ccc ccccccnsccvece: 4

41 C.F.R. Part 60-40 ......... 3, 7, 12, 13, 16, 83a

RU id. wes seccoutestnee 5, 88a

§G0-40.2(a) 1.........cccccecceeeess 5, 88a

§ 60-40.2(b)(1) ..... ccc cece cece eee. 5, 84a

BOND oon cicnscccencees 5, 7, 15, 84a

§ 60-40.3(a)(1) ..... cece cece ceeeeees 6, 85a

§ 60-40.3(a)(2) oo... cc cece cece ees 6, 15, 85a

Statutes and Regulations—Continued Pages

Sirs Sas hands ys eNn oe ees dD, 7, 86a

er ee ee 4

ENS 14

EE is ec ee sss cc bbAe onweveses 14

cea bce hk peeeceeeees 15

Miscellaneous :

Executive Order 11246, 30 Fed. Reg. 12319,

as amended by Executive Order 11375, 32

Fed. Reg. 14303 (3 C.F.R. 169) ......... 3, 4

EE «cick nevcencerestaces 4

oe ca keeccccesencese’s 4

H.R. Rep. No. 92-1419, 92d Cong., 2d Sess.

Oh ee eneeeeeGnisehadenpne cece. 15

H.R. Rep. No. 93-876, 93d Cong., 2d Sess.

TC SUS GER RReseihhisese>avbe nares 15

H.R. Rep. No. 94-1178, 94th Cong., 2d Sess.

ET ree eke lesen bes ibeadsenetotes 16

Office of Federal Contract Compliance Pro-

grams, Federal Contract Compliance

EE Disc esebichenncneee 6s 4

41 Op. Atty. Gen. 166 (1952) ............. 17

S. Rep. No. 813, 89th Cong., Ist Sess. (1965). 13

S. Rep. No. 93-854, 93d Cong., 2d Sess.

ERR RE ae ee ee ere ee 14, 15

In the Supreme Court of the Anited States

OcToBER TERM, 1976

No.

Haro_tp Brown, SECRETARY

OF DEFENSE, ET AL., PETITIONERS

WESTINGHOUSE ELECTRIC CORPORATION, ET AL.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

The Solicitor General, on behalf of the Secretary of

Defense, the Director of the Defense Supply Agency,

the Director of the Office of Federal Contract Com-

pliance Programs, and the Secretary of Labor, peti-

tions for a writ of certiorari to review the judgments of

the United States Court of Appeals for the Fourth

Circuit in these cases.’

‘ Nine separate cases were decided in the single opinion of the

court of appeals: Westinghouse Electric Corporation, et al. v.

Schlesinger, et al., Nos. 74-1801, 74-1802, 74-1803, 74-2047, and 74-

2048 ; United States Steel Corporation v. Schlesinger, et al., Nos.

75-1268 and 75-1269; General Motors Corporation v. Schlesinger,

et al., Nos. 75-1270 and 75-1271. Judgments adverse to the federal

parties were entered in Nos. 74-1801, 74-2046, 75-1269, and 75-1271.

Review is hereby sought in the latter four cases.

(1)

SESS OT

OPINIONS BELOW

The opinion of the court of appeals (App. A, infra,

pp. la-57a) is reported at 542 F.2d 1190. The opinion

of the district court in Westinghouse Electric Corpora-

tion, et al. v. Schlesinger, et al. (App. B, infra, pp.

58a-69a) is reported at 392 F. Supp. 1246; the opinion

of the district court in the consolidated cases of United

States Steel Corporation v. Schlesinger, et al., and

General Motors Corporation v. Schlesinger, et al.

(App. C, infra, pp. 70a-73a) is unreported.

JURISDICTION

The judgments of the court of appeals (App. D,

infra, pp. 74a-80a) were entered on September 30,

1976. On December 22, 1976, the Chief Justice extended

the time for filing a petition for a writ of certiorari to

and including January 28, 1977, and on January 21,

1977, he further extended the time for filing a petition

to and including February 27, 1977 (a Sunday). The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

QUESTIONS PRESENTED

1. Whether the government, pursuant to regulations,

may disclose information that is exempt from manda-

tory disclosure under the Freedom of Information Act

and that is of the character described in 18 U.S.C. 1905.

2. Whether judicial review of an agency’s decision

to disclose information pursuant to the regulations is

limited to review of the administrative record for abuse

of discretion.

STATUTES AND REGULATIONS INVOLVED

The relevant provisions of the Freedom of Informa-

tion Act, 5 U.S.C. 552, as amended, as well as 18 U.S.C.

1905 and the pertinent regulations of the Office of

Wederal Contract Compliance Programs, 41 C.F.R.

Part 60-40, are set forth at App. E, infra, pp. 8la-87a.

STATEMENT

1. Respondents, Westinghouse Electric Corporation

(and its subsidiary, Fraser & Johnston Company),

United States Steel Corporation, and General Motors

Corporation, are government contractors.’ As a condi-

tion of doing business with the government, they are

required by executive order and regulations promul-

gated thereunder by the Secretary of Labor to employ

and treat all employees without regard to race, color,

religion, sex, or national origin, and to take affirmative

action to eliminate discriminatory employment prac-

tices. Executive Order 11246, 30 Fed. Reg. 12319, as

amended by Executive Order 11375, 32 Fed. Reg.

14303 (see 3 C.F.R. 169, 171-172) ; 41 C.F.R. 60-1.4. To

aid in monitoring compliance with these requirements,

every contractor and subcontractor with fifty or more

employees and a contract valued at $50,000 or more is

required by regulation to prepare and file an annual

Employer Information Report, known as an EEO-1

report. 41 C.F.R. 60-1.7(a). These reports contain

data on the number of women and members of minority

groups employed by the contractor. In addition, the

* The statement of facts, which are not in dispute, is based upon

the separate joint appendices in the court of appeals.

contractor or subcontractor must prepare and make

available for agency inspection an Affirmative Action

Program (‘‘AAP’’), in which the contractor is

required to provide detailed information on the past

and projected employment of women and minority

group members. 41 C.F.R. 60-1.40, 60-2.1, 60-60.2(a).°

The Secretary of Labor has delegated administrative

responsibility under these regulations to the Director

of the Office of Federal Contract Compliance Programs

(“*OFCCP’’). 41 C.F.R. 60-1.2.* In turn, the Director

has designated various federal agencies as ‘‘compliance

agencies’’ and has delegated to each of them primary

responsibility for assuring adherence to the equal em-

ployment opportunity program by contractors within

certain geographical areas or industrial classifications.

See 41 C.F.R. 60-1.6. See also OFCCP Compliance

Manual, § 2-202.

The regulations promulgated by the Secretary of

Labor contain rules providing for public access to in-

formation from records of the Oi'CCP or its various

* AAP’s must contain data pertinent to two general categories:

(1) a ‘‘utilization analysis,’’ which describes the occupational levels

of minority personnel employed by the company, and (2) the ‘‘es-

tablishment of goals and time tables’’ by which opportunities for

minority group members can be improved within the company. 41

C.F.R. 60-2.10. Failure of a contractor to develop an AAP, or to

make a good faith effort to adhere to the policy of equal opportunity

employment, can result in the cancellation, termination or suspen-

sion of the contract. 41 C.F.R. 60-1.24, 60-2.2.

*The OFCCP is the successor agency to the President’s Com-

mittee on Equal Employment Opportunity. In Executive Order

11246, the Committee was abolished and its functions’ transferred

to the Secretary of Labor. 30 Fed. Reg. 12319. The Secretary, in

turn, established the OFCCP to carry out his responsibilities. 30

Fed. Reg. 13441.

compliance agencies. 41 C.F.R. Part 60-40 (App. E,

infra, pp. 83a-87a). The regulations are designed ex-

plicitly to ‘‘implement * * * the Freedom of Informa-

tion Act’’ and to give effect to ‘‘the policy of the

OFCC[P] to disclose information to the public and to

cooperate with other public agencies as well as private

parties seeking to eliminate discrimination in employ-

ment.’’ 41 C.F.R. 60-40.1. As a general guideline for

the implementation of this policy, the regulations pro-

vide that ‘‘{u]pon the request of any person * * *

records shall be made available for inspection and

copying, notwithstanding the applicability of the ex-

emption from mandatory disclosure [under the Free-

dom of Information Act], if it is determined that the

requested inspection or copying furthers the public

interest and does not impede any of the functions of

the OFCC[P] or the Compliance Agencies except in

the case of records disclosure of which is prohibited by

law.’’ 41 C.F.R. 60-40.2(a).

Under this general guideline, the Secretary of Labor

has determined that, upon request, ‘‘* * * [EEO-1 re-

ports] which [are] submitted by contractors to

the OFCC[P] [or] a compliance agency * * * shall be

disclosed.’’ 41 C.F.R. 60-40.4. The Secretary also has

determined that affirmative action plans generally

‘‘must be disclosed.’’ 41 C.F.R. 60-40.2(b)(1). But

the regulations contain exceptions for two specified

portions of AAP’s, which ‘‘should be withheld if it is

determined that the requested inspection or copying

does not further the public interest and might impede

the discharge of any of [OFCCP’s or the compliance

agencies’] functions.’’ 41 C.F.R. 60-40.3(a). The por-

tions of AAP’s that are subject to withholding include

‘‘goals and timetables which would be confidential

commercial or financial information because they in-

dicate, :.nd only to the extent that they indicate, that a

contractor plans major shifts and changes in his per-

sonnel requirements and he has not made this informa-

tion available to the public’’ (41 C.F.R. 60-40.3(a) (1) )

and ‘‘information on staffing patterns and pay scales

but only to the extent that [its] release would [inter

alia] injure the business or financial position of the

contractor * * *’’ (41 C.F.R. 60-40.3(a)(2)). These

portions of AAP’s are to be withheld as provided in

the regulations, but ‘‘only after receiving verification

and a satisfactory explanation from the contractor that

the information should be withheld.’’ 41 C.F.R. 60-40.3

(a)(1).

2. The compliance agency for all of the respondents

here is the Defense Supply Agency (DSA), a com-

ponent of the Department of Defense. In 1973, DSA

received requests from various members of the public

for the disclosure of certain EEO-1’s and AAP’s sub-

mitted to the agency by respondents.’ The proceedings

*A request for the 1972 HEO-1 for respondent Westinghouse

Electric’s facility in East Pittsburgh, Pennsylvania, was filed by

Concerned Workers (a public interest group); a request for the

1972 AAP of respondent Fraser & Johnston Company, a wholly-

owned subsidiary of Westinghouse Electric, was submitted by the

Legal Aid Society of Alameda County. A disclosure request for

various AAP’s and EEO-1’s of respondent General Motors was

submitted by Reuben Robertson, III, and separate disclosure re-

quests for the EEO-1’s and AAP’s filed by respondent United

States Steel were made by the Commission for Human Relations

of Gary, Indiana, and by James Davis, Chairman, Civil Rights

with respect to each request followed the same general

pattern. Each respondent was advised that a request

for disclosure of its AAP’s and EEO-1’s had been

received and was given the opportunity to demonstrate,

prior to release, that any portion of the documents

should not be disclosed. DSA requested that respon-

dents submit detailed reasons to support any claim that

the information should be withheld.

Respondents submitted objections to disclosure, each

claiming essentially that the documents should be

withheld because they contained confidential corporate

proprietary information, the release of which would

adversely affect their business interests. After review-

ing respondents’ submissions, DSA concluded that dis-

closure of most of the information requested was war-

ranted under OFCCP’s disclosure regulations, 41

C.F.R. Part 60-40. Specifically, DSA determined that

disclosure of the EEO-1 reports was required by 41

C.F.R. 60-40.4 and that disclosure of substantial por-

tions of the AAP’s was required by 41 C.F.R. 60-40.2

(b)(1). DSA concluded, however, that certain por-

tions of the AAP’s should be withheld from disclosure

under 41 C.F.R. 60-40.3(a).°

Before any information was released, respondents

were given further opportunity to convince the agency

Commission, Local Union 1462, United Steelworkers Union, on

behalf of the Youngstown Urban League.

®In general, the proposed deletions concerned wage data, sal-

ary rates, promotion analyses that would identify individual em-

ployees, projections of hiring or lay-off rates that would indicate

substantial changes in business patterns, and the reasons for ter-

minating the employment of specific individuals,

eee eS

to withhold disclosure. After considering additional

submissions and, in some cases, meeting directly with

representatives of respondents, DSA made its final

determination to disclose.

3. Respondents thereupon filed separate suits in the

United States District Court for the Eastern District

of Virginia, seeking to enjoin the contemplated dis-

closure. The suits brought by respondents General

Motors and United States Steel were consolidated for

trial. The suit brought by respondent Westing-

house Electric proceeded independently. The claims

of all three respondents were virtually identical: that

disclosure was barred, inter alia, by exemptions 3 and

4 of the Freedom of Information Act (‘‘FOIA’’), 5

U.S.C. 552(b)(3) and (4),’ as well as by 18 U.S.C.

1905,* and that release of such documents would con-

stitute an abuse of discretion.’

In the Westinghouse Electric case, the district

* These exemptions provide that the requirement of mandatory

disclosure in the FOIA ‘‘does not apply to matters that are—* * *

(3) specifically exempted from disclosure by statute * * * [or to]

(4) trade secrets and commercial or financial information obtained

from a person and privileged or confidential * * *.’’ See App. E,

infra, p. 82a.

®18 U.S.C. 1905 provides that ‘‘[w]hoever, being an * * * em-

ployee of the United States * * * discloses * * * in any manner or

to any extent not authorized by law any information coming to him

* * * which information concerns or relates to the trade secrets,

processes, operations [ete.] * * * of any * * * firm * * * shall be fined

not more than $1,000, or imprisoned not more than one year, or both ;

and shall be removed from office or employment.’’ See App. E, infra,

pp. 82a-83a.

* Respondents also claimed that disclosure was barred by 42

U.S.C. 2000e-8(e). Respondents United States Steel and Westing-

house Electric additionally claimed that the documents were pro-

tected under exemption 7 of the FOIA.

court permanently enjoined petitioners from releasing

specific portions of the AAP’s and EEO-1’s at issue

(App. B, infra, p. 66a). Relying upon testimony taken

at a de novo trial, the district court found that certain

specified portions of the documents ‘‘contain com-

mercial or financial information which is confidential’’

(App. B, infra, p. 62a) and that ‘‘the disclosure of

{those portions] of the EEO-1[’s] and AAPj’s] is

prohibited by the exemption contained in 5 U.S.C.

502(b)(4) * * *’’ (App. B, infra, p. 62a). The court also

indicated that disclosure of portions of the documents

was prohibited by 18 U.S.C. 1905 and that respondents

could ‘‘invoke this statute to prevent the Government

from disclosing information to a third party * * *”’

(App. B, infra, p. 64a).”°

A few months after the decision of the district court

in Westinghouse Electric, judgment was entered in

the consolidated General Motors and United States

Steel cases. The district court in those cases adopted

‘fin toto’’ the opinion of the court in Westinghouse

Electric and, after viewing the documents in issue, held

that certain portions of them could not be disclosed

(App. C, infra, pp. 70a-73a).

On consolidated appeals by all parties, the court of

appeals affirmed (App. A, infra, p. 57a). The court

of appeals stated that ‘‘disclosure of * * * exempt infor-

mation is ordinarily discretionary with the agency

[b]Jut the exercise of this discretionary power is subject

to the restraints imposed by other ‘statutes * * *’ and to

any clear declarations of a legislative policy against

of all parts of the documents was prohibited by exemption 7 (App.

B, infra, p. 65a).

SE ——EE—————

disclosure as reflected in an exemption of the [Free-

dom of Information] Act * * *’’ (App. A, imfra, p.

12a). The court held that under this general prin-

ciple respondents were entitled to an injunction bar-

ring any disclosure that would violate 18 U.S.C. 1905

(App. A, infra, p. 41a)." In the alternative, the court

of appeals held that exemption 4 provided the supplier

of confidential commercial or financial information

with an absolute right to have such information with-

held from the public, and that ‘‘the FOTIA itself * * *

confers on a supplier of private information, an im-

plied right to invoke the equity jurisdiction to enjoin

the disclosure of information within Exemption 4’’

(App. A, infra, pp. 41a-42a; emphasis in original).”

The court also ruled that respondents were entitled to

a trial de novo in the district court on the question

whether the information in question fell within either

18 U.S.C. 1905 or exemption 4 (App. A, infra, pp. 53a-

54a ; see id. at 50a-51a).”

On the merits, the court of appeals, without discus-

sing the OFCCP regulations that authorized disclosure,

‘1 The court was of the view that 18 U.S.C. 1905 was compre-

hended by exemption 3 of the FOIA, and thus that information

within its coverage was both exempt from mandatory disclosure

under the FOIA and nondisclosable (App. A, infra, pp. 14a, 26a).

12 The court stated that the standard of confidentiality of exemp-

tion 4 and Section 1905 were the ‘‘same’’ or ‘‘co-extensive’’ (App.

A, infra, pp. 27a, 36a). The standard of confidentiality adopted by

the court was whether disclosure was likely to cause respondents

substantial competitive injury (App. A, infra, p. 27a).

The court rejected the argument that respondents’ judicial

remedy was limited to the review provisions of the Adminis-

trative Procedure Act (APA), 5 U.S.C. 701 et seq., but the court

concluded that even if review were available only under the APA,

the procedure followed by the district courts here ‘‘was free from

error’’ (App. A, infra, p. 38a).

held that the findings of the district court that por-

tions of the EEO-1 reports and AAP’s in question

were within exemption 4 and 18 U.S.C. 1905 were not

clearly erroneous (App. A, infra, p. 57a). The court

sustained the injunctions against disclosure of those

portions of the reports (App. A, infra, p. 57a).

REASONS FOR GRANTING THE PETITION

These cases are representative of a steadily increas-

ing number of so-called ‘‘reverse FOLA”’ suits by pri-

vate parties seeking to enjoin the federal government

from complying with FOIA requests.” Such cases

raise important questions concerning the purpose of

the Freedom of Information Act, its use by private

parties to obtain judicial relief against the disclosure

of information, and the role of the executive branch in

discharging the legislative directive, affirmatively ex-

pressed in the Act, to permit the ‘‘fullest responsible

disclosure.’’ The court of appeals below, by disregard-

ing, and thereby implicitly rejecting, regulations au-

thorizing the disclosure of exempt materials, seriously

misconstrued the language and purpose of the Freedom

of Information Act. The court’s holding that the

executive branch lacks any power to disclose exemption

4 materials conflicts with Charles River Park “‘A,”’

** The court of appeals, however, rejected respondents’ conten-

tions that disclosure of their AAP’s and EEO-1’s, in their entirety,

was prohibited by 42 U.S.C. 2000e-8(e) (App. A, infra, pp. 16a-

17a), or that the documents were exempt from disclosure under ex-

emption 7 of the FOIA (App. A, infra, pp. 15a-16a, n. 20).

* During 1976, at least 78 reverse FOIA suits were brought

against the government.

Inc. v. Department of Housing and Urban Develop-

ment, 519 F. 2d 935 (C.A.D.C.), and Pennzoil Co. v.

Federal Power Commission, 534 F.2d 627 (C.A. 5),

both of which recognized the existence of discretion to

disclose. Furthermore, in holding that the district

courts may appropriately conduct trials de novo to

review an agency’s determination to disclose, the court

of appeals erroneously departed from the settled rule,

often confirmed by this Court, that review of agency

action under the Administrative Procedure Act is to

be based upon the administrative record.

1. These cases originated with determinations by the

Director of the Defense Supply Agency to comply

with requests, made under the Freedom of Information

Act, for disclosure of certain equal employment op-

portunity reports and affirmative action plans sub-

mitted to it by respondents. Those determinations were

made pursuant to regulations specifically requiring

disclosure, in compliance with such requests, of EEO-1

reports and, upon a finding of nonconfidentiality,”* of

AAP’s as well. 41 C.F.R. 60-40.1 et seq. If, as we sub-

mit, those regulations are valid, the courts below would

have been required to affirm the decision to disclose

respondents’ EEO-1 reports, and their review of the

decision to disclose respondents’ AAP’s would have

been limited to a determination whether those materials

were exempt from mandatory disclosure under the

‘In the interest of brevity, we use the expression ‘‘finding of

nonconfidentiality’’ as a shorthand summarization of the deter-

minations with regard to the public interest, competitive injury,

confidentiality, ete., that must be made in connection with a de-

cision to disclose AAP’s. See pp. 5-6, supra.

FOIA and, if so, of the correctness of the agency’s

finding of nonconfidentiality.

The regulations authorizing disclosure of the mate-

rials at issue here are valid. The court of appeals did

not give explicit consideration to those regulations, but

its holding that the government may not disclose in-

formation within exemption 4 of the Freedom of In-

formation Act constitutes an implicit rejection of

them.”

The court’s holding in this regard reflects a mis-

understanding of the FOIA. The FOIA is a broadly

conceived statute whose ‘‘basic policy’’ and ‘‘dominant

objective’’ is ‘‘disclosure, not secrecy.’’ Department of

the Air Force v. Rose, 425 U.S. 352, 361. When Con-

gress enacted the Act, it was ‘‘plac[ing] emphasis on

the fullest responsible disclosure.’’ S. Rep. No. 813,

89th Cong., Ist Sess. 3 (1965). Thus the exemptions

under that Act only permit, they do not require, the

government to refuse disclosure of information.

Charles Rwer Park “‘A’’, Inc. v. Department of Hous-

ing and Urban Development, supra, 519 F. 2d at 941;

Pennzoil Co. v. Federal Power Commission, supra, 534

F. 2d at 629-631. The approach taken by the court

below therefore is inconsistent with that taken in simi-

lar reverse FOIA cases by the courts in Charles River

Park and Pennzoil.”

7 The court of appeals discussed a Department of Labor regula-

tion, 29 C.F.R. 70.21(a), which prohibits any employee of the De-

partment from disclosing certain records ‘‘in any manner or to

any extent not authorized by law’’ (App. A, infra, pp. 24a-25a).

But disclosure by the OFCCP of the documents at issue here was

made pursuant to the authority granted by 41 C.F.R. Part 60-40.

The court of appeals’ reliance upon 29 C.F.R. 70.21(a) as a

ground for enjoining disclosure therefore was misplaced.

** It is unclear, however, whether the decision below conflicts with

Furthermore, nothing in the FOIA forbids dis-

closure. The exemptions, while an important compo-

nent of the Act, merely describe ‘‘the types of informa-

tion that the Executive Branch must have the option

to keep confidential, if it so chooses.’’ Environmental

Protection Agency v. Mink, 410 U.S. 73, 80. Disclosure

of exempt material is left to the discretion of the of-

ficials administering the Act:

Congress did not intend the exemptions in the

FOIA to be used either to prohibit disclosure of

information or to justify automatic withholding of

information. Rather, they are only permissive.

They merely mark the outer limits of information

that may be withheld where the agency * * * deter-

min[es] * * * that the information should be with-

held. [S. Rep. No. 93-854, 93d Cong., 2d Sess. 6

(1974) ; emphasis in original. ]

Congress understood and intended that discretion to

disclose exempt materials could be exercised pursuant

to regulations such as those promulgated by the Sec-

retary of Labor authorizing disclosure here. In con-

sidering the 1974 amendments to the Act, Congress ex-

pressed approval of agency regulations that provide

for the discretionary disclosure of exempt information,

including commercial vr financial information within

Charles River Park and Pennzoil in final result. The courts in those

cases held that disclosure decisions could be reviewed for abuse of

discretion, and the court in Charles River Park indicated that, at

least in most circumstances, disclosure of material of the kind

described in 18 U.S.C. 1905 would be an abuse of discretion. 519

F. 2d at 542, 543 n. 10. However, there is no suggestion that the

court in Pennzoil would have barred disclosure here.

exemption 4. See S. Rep. No. 93-854, supra, at 6.”

The Senate Committee stated that ‘‘[t]his approach

was clearly intended by Congress in passing the

FOIA’’. Ibid. See also H.R. Rep. No. 93-876, 93d

Cong., 2d Sess. 4 (1974); H.R. Rep. No. 92-1419, 92d

Cong., 2d Sess. 7, 13-17 (1972). And see General Serv-

ices Administration v. Benson, 415 F. 2d 878 (C.A. 9).

Cf. Federal Communications Commission v. Schreiber,

381 U.S. 279; Utah Fuel Co. v. National Bituminous

Coal Commission, 306 U.S. 56. But see Charles River

Park “‘A’’, Inc. v. Department of Housing and Urban

Development, supra.

The controlling regulations here implement Con-

gress’ intention under the FOIA to afford ‘‘the fullest

responsible disclosure.’’ Under the regulations, dis-

closure generally is predicated upon a determination

that it would ‘‘further[] the public interest and * * *

not impede any of the functions of the OFCC[P] or

the Compliance Agencies * * *.’’ 41 C.F.R. 60-40.2(a).

But the regulations also give recognition to the com-

petitive interests of government contractors by requir-

ing the agency to determine whether ‘‘release would

injure the business or financial position of the con-

tractor * * *.’’ 41 C.F.R. 60-40.3(a) (2); see generally

41 C.F.R. 60-40.3(a). These regulations are reasonable

and should have been sustained by the court of appeals.

* The committee report commented favorably upon 43 C.F.R. 2.2

(Department of Interior), 45 C.F.R. 5.70 (Department of Health,

Education, and Welfare), 24 C.F.R. 15.21 (Department of Housing

and Urban Development), 49 C.F.R. 7.51 (Department of Transpor-

tation), all of which provide for the disclosure of exempt informa-

tion. See also, e.g., 28 C.F.R. 16.1(a) (Department of Justice) ; 10

C.F.R. 9.10(¢) (Nuclear Regulatory Commission) ; 40 C.F.R. 2.101

(Environmental Protection Agency).

Insofar as the decisions to disclose respondents’ EEO-1

reports and AAP’s were authorized by the regulations,

they also should have been sustained.

The court of appeals nevertheless held that disclosure

was barred by 18 U.S.C. 1905 (App. A, infra, p. 41a).

That criminal statute forbids disclosure by government

officials of certain documents ‘‘in any manner or to

any extent not authorized by law * * *’’ (see App. E,

infra, pp. 82a-83a).” But, unless the agency erred in its

finding of nonconfidentiality with regard to the AAP’s,

disclosure here was ‘‘authorized’’ by the Department

of Labor regulations. Since validly promulgated regu-

lations have the force of law (see Public Utilities Com-

mission of California v. United States, 355 U.S. 534,

542-543; ef. Service v. Dulles, 354 U.S. 363), they

satisfy the authorization requirement of 18 U.S.C. 1905.

Cf. Smith v. United States, 305 F. 2d 197, 201-202

(C.A. 9); Laughlin v. United States, 474 F. 2d 444, 453,

n. 12 (C.A. D.C.), certiorari denied, 412 U.S. 941.”

2° The disclosure of information that is not exempt from manda-

tory disclosure under the FOIA is ‘‘authorized’’ by the FOIA. The

court of appeals here held, however, that 18 U.S.C. 1905 is an ex-

emption 3 statute (see note 11, supra). See Administrator, Federal

Aviation Administration v. Robertson, 422 U.S. 255. But see H.R.

Rep. No. 94-1178, 94th Cong., 2d Sess. 14 (1976) ; National Parks

and Conservation Association v. Kleppe, No. 76-1044, decided No-

vember 15, 1976 (C.A.D.C.) (slip op. 26-28). As we argue immedi-

ately below, whether or not the materials here are exempt from man-

datory disclosure, disclosure of the information is ‘‘authorized’’ by

41 C.F.R. Part 60-40. Accordingly, the question whether 18 U.S.C.

1905 is an exemption 3 statute need not be reached in this case.

21 The term ‘‘authorized by law’’ in 18 U.S.C. 1905 and its prede-

cessor statutes (see 15 U.S.C. (1940 ed.) 176b; 19 U.S.C. (1940

ed.) 1335; 18 U.S.C. (1940 ed.) 216; R.S. 3167, 28 Stat. 557; 13

Stat. 238) has been broadly construed. See, e.g., Blair v. Oesterlein

Company, 275 U.S. 220, 227 ; United States v. Dickey, 268 U.S. 378;

Exchange National Bank v. Abramson, 295 F. Supp. 87 (D. Minn.) ;

Thus even if the materials at issue otherwise are of

the type described in 18 U.S.C. 1905, their disclosure is

not prohibited by that statute if it is permitted by

regulation.

2. Judicial review of adverse agency action taken

pursuant to a statutory or a regulatory standard nor-

mally is governed by the APA. See, e.g., Dunlop v.

Bachowski, 421 U.S. 560; Camp v. Pitts, 411 U.S. 138;

Citiens to Preserve Overton Park v. Volpe, 401 U.S.

402.”

But the scope of review provided under the APA for

eases such as this is narrow. Indeed, once it is deter-

mined that the regulations authorizing disclosure are

valid, the agency’s determination to disclose EEO-1

reports would be essentially unreviewable: the regula-

tions affirmatively require disclosure of all EEO-1 re-

ports upon request, and a reviewing court could do no

more than ascertain whether the materials to be dis-

ef. Consumers Union v. Cost of Living Council, 491 F. 2d 1396

(T.E.C.A.), certiorari denied sub nom. Business Roundtable v.

Consumers Union, 416 U.S. 984. While the early origins of the

statute have obscured its principal purpose, it was most likely

designed to prevent government officials from taking advantage of

their official position to sell or otherwise make public confidential

business data. We do not believe it was intended to operate to in-

hibit an agency from disclosing such information in connection with

valid program or policy objectives. See 41 Op. Atty. Gen. 166, 169

(1952) (‘‘authorized by law’’ includes ‘‘authorized in a general

way by law’’).

** The exceptions to judicial review (see 5 U.S.C. 701) do not ap-

pear to be applicable here. In the court of appeals, the government

argued that respondents’ suits were barred by sovereign immunity.

But Congress since has amended the APA to provide that its judi-

cial review provisions waive sovereign immunity in cases seeking

declaratory or injunctive relief. Pub. L. 94-574, 90 Stat. 2721.

closed were in fact such reports. The scope of review

of a decision to disclose AAP’s would be only slightly

broader: the court would determine whether the

agency’s conclusion that the materials were disclosable

under the regulatory standard was ‘‘arbitrary, caprici-

ous, an abuse of discretion, or otherwise not in accord-

ance with law.’’ 5 U.S.C. 706(2) (A).

As a matter of course, such review would be on the

basis of the administrative record. ‘‘[T]he focal point

for judicial review should be the administrative record

already in existence, not some new record made initially

in the reviewing court.’’ Camp v. Pitts, supra, 411

U.S. at 142. See also Citizens to Preserve Overton

Park v. Volpe, supra, 401 U.S. at 415-416.

Respondents were notified of the FOIA requests for

the documents they had furnished in connection with

their government contracts, they were informed of the

exact documents subject to the request, and they were

afforded a full opportunity to submit materials in sup-

port of their claim that the documents should not be

disclosed. See pp. 6-8, supra. The record in these

eases thus provided an adequate basis upon which to

undertake an assessment of the agency’s determina-

tions to disclose. Accordingly, the court of appeals

plainly erred in approving the district court’s de novo

review of those determinations.”

7° The court of appeals approved de novo review on the theory

that respondents’ suits were based upon implied causes of action

under exemption 4 and 18 U.S.C. 1905. That theory fails for two

separate reasons. If, as we have argued, the disclosure regulations

here are valid, a fortiori respondents had no residual right to non-

disclosure under either exemption 4 or 18 U.S.C. 1905; in that event

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

DANIEL M. FRIEDMAN,

Acting Solicitor General.

BARBARA ALLEN BABCOCK,

Acting Assistant Attorney General.

STEPHEN L. URBANCZYK,

Assistant to the Solicitor General.

LEONARD SCHAITMAN,

Pau. BLANKENSTEIN,

Attorneys.

FEBRUARY 1977.

respondents’ rights to nondisclosure are measured solely by the dis-

closure regulations, and review of a determination to disclose is

available only under the APA for the reasons discussed above. On

the other hand, if the disclosure regulations are invalid, it could

only be because respondents have a statutory right to nondisclosure

with which those regulations conflict ; in that event, a determination

to disclose would ‘‘ adversely affect or aggrieve’’ respondents within

the meaning of 5 U.S.C. 702, for that reason they would be entitled

to APA review of the agency determination, and therefore there

would be no need to infer an independent right of action under

some other statute. Cf. Cort v. Ash, 422 U.S. 66; Securities Investor

Protection Corp. v. Barbour, 421 U.S. 412; National Railroad

Passenger Corp. v. National Association of Railroad Passengers, 414

U.S. 453.

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 74-1801

WESTINGHOUSE ELectric Corp. AND Its SvUBSIDIARY,

FRASER & JOHNSTON CO? PANY, APPELLEES,

—versus—

JAMES R. SCHLESINGER, SECRETARY, U. S. DEPARTMENT

oF Derryse; Lt. Gen. WALLACE Ropinson, DIREcTOR,

DEFENSE SuppPLy AGENCY; Pump J. Davis, Director,

OFFICE OF FEDERAL CONTRACT COMPLIANCE; PETER J.

BRENNAN, SECRETARY, DEPARTMENT OF LABOR,

APPELLANTS,

CONCERNED WorKERS, Ropert Woo.ey, LecaL Am

SocrETy OF ALAMEDA CouUNTY, AND COUNCIL ON

ECONOMIC PRIORITIES, INTERVENOR-DEFENDANTS.

No. 74-1802

WESTINGHOUSE ELECTRIC CORPORATION AND Its Sus-

SIDIARY, FRASER & JOHNSTON CO., APPELLANTS,

—versus—

JAMES R. SCHLESINGER, SECRETARY, U. 8S. DEPARTMENT

oF DeFrense; Lt. GEN. WALLACE Rosrnson, DIrecror,

DEFENSE SuppLy AGENCY; PHiwr J. Davis, Director,

OFFICE OF FEDERAL CONTRACT COMPLIANCE; PETER J.

BRENNAN, SECRETARY, DEPARTMENT OF LABOR; AND Con-

CERNED WorKERS, Ropert Woo.ey, LecaL Arp Society

or ALAMEDA Co., CouNciL ON Economic PRIORITIES,

APPELLEES.

No. 74-1803

WESTINGHOUSE ELECTRIC CORPORATION AND Its Sus-

SIDIARY, FRASER & JOHNSTON CO., APPELLEES,

—versus—

JAMES R. ScCHLESINGER, SECRETARY, U. 8S. DEPARTMENT

oF Drerense; Lt. Gen. WALLACE Roprnson, DIREcToR,

DrEFENSE SuppLy AGENcY; Puiuip J. Davis, Director,

OFFICE OF FEDERAL ConTRACT COMPLIANCE; PETER J.

BRENNAN, SECRETARY, DEPARTMENT OF LABOR,

DEFENDANTS,

CONCERNED WorKERS, Rospert Woo.Ley, LeaaL AID

Socrery or ALAMEDA CouNTY, AND COUNCIL ON

EconoMIc PRIORITIES, APPELLANTS.

No. 74-2047

WESTINGHOUSE ELectTRIC Corp. AND Its SUBSIDIARY,

FRASER & JOHNSTON COMPANY, APPELLEES,

—versus—

JAMES A. SCHLESSINGER, SECRETARY, U. S. DEPARTMENY

OF DEFENSE; WALLACE Roprnson, Director DEFENSE

Suppty Agency; Pump J. Davis, Director, OFFICE

oF FEDERAL CONTRACT COMPLIANCE; PETER J. BRENNAN,

SECRETARY, DEPARTMENT OF LABOR, DEFENDANTS.

CONCERNED WorKERS, Rospert Woo.ey, LecaL Am

Socrety oF ALAMEDA Co., CouNcrIL ON EconoMICc

PRIORITIES, INTERVENORS-APPELLANTS.

No. 74-2048

WESTINGHOUSE ELEcTRIC Corp. AND Its SUBSIDIARY,

FRASER & JOHNSTON COMPANY, APPELLEES,

—versus—

JAMES R. SCHLESINGER, SECRETARY, U. S. DEPARTMENT

OF DEFENSE; WALLACE Rosrnson, DrrectoR DEFENSE

Suppty Agency; Pamir J. Davis, Drrector, OFFICE

oF FEDERAL CONTRACT COMPLIANCE; PETER J. BRENNAN,

SECRETARY, DEPARTMENT OF LABOR, APPELLANTS,

CONCERNED WorKERS, Rospert Woo.ey, LecaL AID

Society oF ALAMEDA Co., CouNcIL ON ECONOMIC

PRIORITIES, DEFENDANT-INTERVENORS.

Appeals from the United States District Court for the

Eastern District of Virginia, at Alexandria. Albert V.

Bryan, Jr., District Judge.

No. 75-1268

Unitep States STEEL CORPORATION, APPELLANT,

—versus—

JAMES R. ScHLESINGER, SECRETARY, UNITED STATES

DEPARTMENT OF DEFENSE; Lt. GEN, WALLACE ROBINSON,

Drrector, DereNse Supp.ty AcEeNcy; Pump J. Davis,

Director, OFFICE OF FEDERAL CoNTRACT COMPLIANCE;

AND Perer J. BRENNAN, SECRETARY, UNITED STATES

DEPARTMENT OF LABOR, APPELLEES.

No. 75-1269

Unirep States STEEL CORPORATION, APPELLEE,

—versus—

James R. ScHLEsINGER, SECRETARY, UNITED STATES

DEPARTMENT OF DEFENSE; Lt. GEN. WALLACE ROBINSON,

Director, DEFENSE Suppty AceNcy; Purip J. Davis,

Director, OFFICE OF FrepERAL CONTRACT COMPLIANCE;

AND Perer J. BRENNAN, SECRETARY, UNITED STATES

DEPARTMENT OF LABOR, APPELLANTS.

No. 75-1270

GENERAL Motors CoOPORATION, APPELLANT,

—versus—

JameEs R. ScHLESINGER, SEcRETARY, U. S. DEPARTMENT

or DEFENSE; Lr. GEN. WALLACE Rosinson, Director,

DeEreNnsE SuppLy AGENCY; Pur J. Davis, Director,

OFFICE oF FepERAL ConTRACT COMPLIANCE; AND PETER

J. BRENNAN, SECRETARY, DEPARTMENT OF LABOR,

APPELLEES.

No. 75-1271

GENERAL Motors CoRPORATION, APPELLEE,

—versus—

JAMES R. SCHLESINGER, SEcRETARY, U. S. DEPARTMENT

OF DEFENSE; Lt. Gen. Wa.LLAceE Rosinson, Director,

DereNnse SuppLy Acency; Pair J. Davis, Director,

OFFICE OF FEDERAL ConTRACT COMPLIANCE; AND PETER

J. BRENNAN, SECRETARY, DEPARTMENT OF LaBoR,

APPELLANTS.

Appeals from the United States District Court for the

Eastern District of Virginia, at Alexandria. Oren R.

Lewis, District Judge.

Argued: December 4, 1975. Decided: Sept. 30, 1976

Before RUSSELL and WIDENER, Circuit Judges,

and THOMSEN, Senior District Judge.*

RUSSELL, CIRCUIT JUDGE:

The plaintiffs in these three actions are government

contractors, seeking injunctive and declaratory relief

against the disclosure of certain information filed by

them with the Office of Federal Contract Compliance

* Sitting by designation.

(OFCC), as required under regulations issued by the

Secretary of Labor pursuant to Executive Order

11,246,’ as amended by Executive Order 11,375." Two

of the actions were consolidated for trial in the District

Court,’ and heard by one judge; the third action pro-

ceeded independently in the same court and was heard

by another judge. In the three actions, however, plain-

tiffs were granted similar partial protection from dis-

closure of the information in question.‘ The defendants

appeal from the denial of the motions to dismiss and to

the grant of any relief herein; the plaintiffs cross-

appeal from the denial of protection from disclosure of

all the material filed by them under the requirements

of the Executive Orders. All three cases involve, so

The OFCC was given the authority to ‘‘adopt such rules and

regulations and issue such orders as * * * necessary and appro-

priate to achieve the purposes thereof.’’ § 201, Executive Order

11,246.

2 The text of Executive Order 11,246, as amended by Executive

Order 11,375, is set forth in 3 C.F.R. 169-177, (1974).

3 The action by General Motors against the defendants were con-

solidated and tried with United States Steel and any reference to the

United States Steel case covers the General Motors case as well.

* Westinghouse Electric Corporation v. Schlesinger (E.D. Va.

1974) 392 F. Supp. 1246; United States Steel Corp. v. Schlesinger

(E.D. Va. 1974) 34 Ad. L. 2d 790.

The two opinions, though, rendered by different judges of the

same court, were, for all practical purposes, identical and any

reference to ‘‘court’’ hereafter in the opinion is to the opinions and

decisions of both judges.

The cases themselves are reviewed in detail in O’Reilly, Govern-

ment Disclosure of Private Secrets Under the Freedom of Informa-

tion Act, 30 Bus. Lawyer 1125, 1139-41 (1975), and see, also, discus-

sion in Note, Developments Under the Freedom of Information

Act-1974, 1975 Duke L.J. 416 at 428-9.

far as material, like facts and like legal issues. For

this reason, we have consolidated them on appeal and

dispose of them in this opinion.

We affirm.

The information, the disclosure of which is the sub-

ject of controversy, was supplied under the provisions

of an Executive Order, and the regulations issued

thereunder, which required a government contractor,

such as the plaintiffs, to file, with respect to any plant

or facility engaged in performing work under a govern-

ment contract, an Affirmative Action Program (AAP)

and an Equal Employment Opportunity Report

(EEO-1). These reports are to be filed with the con-

tracting agency having responsibility for the contract.

They are to include extensive information on staffing

patterns, pay scales, actual and expected shifts in em-

ployment, promotions, seniority and related matters

as well as forecasts of future employment, goals, time-

tables and future employment projections, promotion

and utilization of minorities and females. They em-

brace, also, an analysis of the employer’s success in

meeting such goals. All the plaintiffs filed such reports.

The reports of the plaintiff United States Steel covered

its Youngstown, Ohio plant, and the American Bridge

Division plant at Gary, Indiana; the reports of the

plaintiff General Motors dealt with its plants at

Danville, Illinois, and Bedford, Indiana; and the plain-

tiff Westinghouse filed reports with respect to its plant

at East Pittsburgh, Pennsylvania, and its Fraser &

Johnston Co. subsidiary plant at San Lorenzo, Cali-

fornia. In submitting such reports, all the plaintiffs

did so under a claim of confidentiality. The reports,

prepared on Standard Form 100, bore the following

governmental promise or guarantee of confidentiality :

‘‘TA]ll reports and information obtained from in-

dividual reports will be kept confidential as required

by Section 709(e) of Title VII.’’*

Third parties made requests of the defendants for

disclosure under the Freedom of Information Act

(FOIA)* of the AAP’s and EEO-1’s filed with them

by the several plaintiffs. The defendants advised the

plaintiffs of the requests and of a preliminary determi-

nation that the FOIA’s and OFCC’s disclosure rules

required that the requested material, with certain

identified deletions, be made available, but that before

*In Legal Aid Society of Alameda County v. Shultz (N.D. Cal.

1972) 349 F. Supp. 771, 776, the Court held that ‘‘administrative

promises of confidentiality cannot extend the command of the

Freedom of Information Act that only matters ‘specifically ex-

empted from disclosure by statute’ are protected under § 552

(b)(3)’’ (Italies in opinion). Cf., however, 3A.19 Davis, Admims-

trative Law Treatise, pp. 150-1 (1970 Supp.).

In Robles v. Environmental Protection Agency (4th Cir. 1973)

484 F.2d 843, 846, we reached the same result as did the Court in the

Shultz Case.

Since Shultz, the defendants have conceded that their promise of

confidentiality is unavailing if the matter sought to be discovered

is not exempted from disclosure by the terms of § 552 itself. Sup-

pose, however, the material does fall within an exemption and that

disclosure under the particular exemption is discretionary with the

agency, has the agency by its promise of confidentiality foreclosed

itself from the exercise of any discretion to disclose and obligated

itself to respect the confidentiality? See Davis, The Information

Act: A Preliminary Analysis, 34 U.Chi.L.Rev. 761 at 787-92

(1967); Note, The Freedom of Information Act: A Seven-Year

Assessment, supra, 74 Colum. L.Rev. at 948-50. Since the District

Court, however, did not predicate its decision on any such point, we

see no occasion to consider this point.

°5 U.S.C. § 552.

the information would be released, the plaintiffs would

be afforded an opportunity to present any claim that

the information requested was exempt from disclosure

under the FOIA and the appropriate administrative

regulations. The plaintiffs submitted their objections

to the disclosure, claiming that the requested informa-

tion was not disclosable under the terms of 5 U.S.C.

592(b)(3), (4), (6) and (7), 18 U.S.C. § 1905, and 42

U.S.C. § 2000e-8(e), as well as 41 C.F.R. 60-1.1, et seq.

of the Department of Labor’s own regulations.’ The

defendants responded by advising the plaintiffs that

under the FOLA and the regulations issued thereunder,

the defendants were obliged, absent judicial interven-

tion, to release the information, subject to certain speci-

fied deletions. These actions to enjoin, and for a declar-

atory judgment that the material was exempt under

the FOIA, and disclosure thereof forbidden under

applicable statutes and regulations, followed. The Dis-

trict Court, finding federal jurisdiction under § 1331,

28 U.S.C., granted injunctive relief but denied a declar-

atory judgment. In reaching its conclusion, the court

made, among others, this finding of fact:

‘*This Court finds from the evidence presented

that the AAPs and EEO-1s in question contained

confidential commercial or financial information

* Exemptions 3 and * which are the only exemptions later found

to be appropriate, are as follows:

‘*(b) This section does not apply to matters that are-

. * >

(3) specifically exempted from disclosure by statute ;

(4) trade secrets and commercial! or financial information ob-

tained from a person and privileged or confidential.’’

10a

which would not customarily be released to the

public by the corporate plaintiffs, and that such

information would be of substantial value to the

plaintiff’s competitors in performing cost-price

analyses of plaintiffs’ pricing practices, in moni-

toring plaintiffs’ development of new products and

processes, in identifying plaintiffs’ customers in

their consumption needs, in analyzing plaintiffs’

production by product line, and in developing com-

petitive bidding strategies to be used against the

plaintiffs; and that disclosure of this information

would both impair the Government’s ability to

obtain necessary information for its administra-

tion of the Executive Orders and Title 7 of the

Civil Rights Act and would cause substantial harm

to the competitive position of the plaintiffs.’’ *

The decision of the District Court enjoining disclo-

sure herein rests to a substantial extent on a construc-

tion of the FOIA.’ This statute mandates the release

® This finding was made in the cases of United States Steel and

General Motors v. Schlesinger, supra, but is similar to the finding

of fact made in the Westinghouse case.

* § 552, 5 U.S.C.

The construction of the Act is complicated not only by the lan-

guage of the Act itself but by its legislative history as well. Profes-

sor Levin, in his article, /n Camera Inspections Under the Freedom

of Information Act, 41 U. Chi. L. Rev. 557, ns. 9 and 10 (1974),

quotes ‘‘ Professor Kenneth Culp Davis, the Act’s most influential

commentator” to the effect that the Act is a ‘‘shabby product’’ and

adds that ‘‘{i]nterpretation of the Act is complicated by the fact

that the House and Senate committee reports on the Act contradict

each other in many particulars, and in some instances contradict the

statutory language itself.’’

This ambiguity in the language of the Act and in its legislative

lla

by public officials of information in their custody, sub-

ject to certain exemptions specifically enumerated in

the Act itself.° If the information sought to be dis-

history, the author points out, has been productive of much of the

litigation under the Act.

It has been stated that these exemptions ‘‘constitute in the

aggregate a substantial withdrawal of the public’s right of access to

information.’’ Note, The Freedom of Information Acts A Seven-

Year Assessment, 74 Colum. L. Rev. 895, 929 (1974).

The reason for including them in the Act was that, ‘‘in developing

a statute providing greater citizen access to agency information,

Congress recognized the necessity for protecting the confidentiality

of some agency information and the right of privacy of some in-

dividuals who are required to provide agencies with confidential

information. To protect these interests Congress exempted nine

eategories of information from mandatory disclosure.’’ Note,

Reverse-Freedom of Information Act Suits: Confidential Informa-

tion in Search of Protection, 70 Nw. U.L. Rev. 995 (1976).

In commenting on National Parks and Conservation Ass’n. v.

Morton (D.C.Cir. 1974) 498 F. 2d 765, which dealt with the exemp-

tions in the Act, the editor in 88 Hurv. L. Rev. 470 at 474 (1974),

said:

““* * * The Court found that the Act’s strong emphasis on

public disclosure was counterbalanced, in the nine exemptions,

by the public interest in efficient governmental operation and

by various interests of private informants in maintaining

secrecy.”’

It is often declared in the decisions construing the exemptions

that they are to be ‘‘narrowly construed.’’ Ethyl Corporation v.

Environmental Protection Agency (4th Cir. 1973) 478 F. 2d 47, 49.

But, as one writer has prudently observed, the Court, in following

this rule of construction, must ‘‘recognize that the public’s interest

in confining the breadth of the exemptions is not equally strong for

all nine provisions."’ Ibid., 41 U.Chi.L.Rev. at 564, n. 52. This

distinction is important when the request for information relates to

‘*the agency’s actions, plans, and policies’’ rather than when it re-

lates to information that has to do with the ‘‘actions, plans, and

policies’’ of private parties. Jbid., 41 U.Chi.L.Rev. at 565; Note,

A Review of the Fourth 7 csemption of the Freedom of Information

Act, 9 Akron L. R. 673, 694 (1976).

12a

closed under the Act ‘‘fall[s] within one of the Act’s

exempt categories, * * * the Act ‘does not apply’ to

such doeuments.’”’ NLRB v. Sears, Roebuck & Co.

(1975) 421 U. S. 132, 147-8; Charles River Park “A”’

Inc. v. Department of H. & U.D. (D.C.Cir. 1975) 519

F. 2d 935, 942." So far as exempt information is con-

cerned, the Act, in the ordinary situation ‘‘neither

authorizes [n]Jor prohibits the disclosure of such in-

formation,’’ and the disclosure of such exempt in-

formation is ordinarily discretionary with the agency.

But the exercise of this discretionary power is subject

to the restraints imposed by any other ‘‘statutes, rules,

and regulations’’”’ and to any clear declarations of a

legislative policy against disclosure as reflected in an

exemption of the Act itself, and, when review of an

The Act itself, § 552(b), 5 U.S.C., it would appear makes this

clear by the following provision :

‘*This section [of the FOIA] does not apply to matters that

are-’’ within the definitions of exemptions (1)-(9).

12 Moore-McCormack Lines, Inc. v. 1.7.0. Corp. of Balt. (4th Cir.

1974) 508 F. 2d 945, 950.

18 See, 70 Nw.U.L.Rev., supra, at 1011:

‘If a particular disclosure would be contrary to a policy of

the Act, [such as release in a particular case of material within

the fourth exemption] a court may properly find that an agency

‘abused its discretion’ in deciding to release the information-

an approach coupling the policy considerations of the FOIA

with the remedial provisions of the APA.’’

The editor in the Note, Protection from Government Disclosure-

The Reverse-FOIA Suit, 1976 Duke L.J. 330 at 340, expresses sub-

stantially the same thought:

‘*The cases suggest three specific approaches the reverse-FOIA

plaintiff might use once he has shown that the information in

question is FOIA exempt: he can allege (1) that disclosure of

13a

administrative decision to disclose is sought under the

APA, it is subject to reversal if arbitrary, capricious,

an abuse of discretion ‘‘or otherwise not in accordance

with law.’’"* The fact that a contrary statute will

prevent the exercise of any discretionary authority in

the agency to release exempt information follows

because it is settled that the FOLA does not repeal

directly or by implication any other statutes which may

the information in question would violate a statute; (2) that

disclosure would be contrary to agency regulations; or (3) that

disclosure would constitute an abuse of discretion.’’

In this connection, we would sharply distinguish between equit-

able jurisdiction invoked with reference to non-exempt and exempt

information. As the Court said in Freuhauf Corporation v. Internal

Revenue Service (6th Cir. 1975) 522 F. 2d 284, appeal pending,

‘‘we do not conceive that the traditional equitable powers of the

district court justify it or us in adding a tenth or eleventh exemp-

tion to the nine specifically enumerated in the Act * * *.’’ 522

F. 2d at 292. This in effect accords with our decisions in Wellman

Industries, Inc. v. N.L.R.B. (4th Cir. 1974) 490 F. 2d 427, 429,

cert. demed 419 U. S. 834 (1974), and Wellford v. Hardin (4th

Cir. 1971) 444 F. 2d 21, 25. And, as we understand Renegotiation

Board v. Bannercraft Co. (1974) 415 U.S. 1, discussed at length

infra, its reference to federal equity jurisdiction in this area is

concerned with exempt information under the FOIA. This, however,

is not the universal view. For a general discussion of the question,

see, Note, The Freedom of Information Act: A Seven-Year Assess-

ment, 74 Colum. L. Rev. 895, 911-20 (stating the case for general

equity jurisdiction for both exempt and non-exempt information) ;

Note, Developments Under the Freedom of Information Act-1974,

1975 Duke L.J. 416 at 418-27; Note, Developments Under the Free-

dom of Information Act-1975, 1976 Duke L.J. 366 at 370-2. While

not direct to this point, Department of the Air Force v. Rose (1976)

— U.S. —, might be considered as pointing in the direction that the

discretionary jurisdiction does not cover non-exempt information.

*§706(2)(A), 5 U.S.C.; Charles River Park ‘‘A’’, Ince. v.

Department of H. & U.D., supra, 519 F. 2d at 940-1; Note [bid.,

70 Nw.U.L.Rev. at 995 and 1011.

l4a

limit or restrict the disclosure of information by public

officials, and those other statutes remain in full force

and effect despite the enactment of the FOIA.” Thus

if there is some other statute or regulation which pro-

hibits the disclosure of the exempt information, there is

no agency discretion and ‘‘the [government] agencies

have no alternative but to follow the legislative man-

date’’ or agency regulation and to deny disclosure.”

This follows because, whenever disclosure of the in-

formation in question would be violative of some other

federal statute, both its exempt-character under the.

FOIA and its nondisclosability are thereby estab-

lished.” This conclusion reshlts from the Act’s own

1° FAA Administrator v. Robertson (1975) 422 U.S. 255, 265;

Moore-McCormack Lines, Inc. v. 1.7.0. Corp. of Balt. (4th Cir.

1974) 508 F. 2d 945, 950.

1® Note, Freedom of Information: The Statute and the Regula-

tion, 56 Geo.L.J. 18, 34 (1967).

Cf., also, EPA v. Mink (1973) 410 U.S. 73 at 95, note, (Stewart,

J., concurring) :

‘‘Similarly rigid is [exemption 3], which forbids dis-

closure of-materials that are ‘specifically exempted from

disclosure by statute.’ Here, * * * the only ‘matter’ to be

determined in a district court’s de novo inquiry is the

factual existence of such a statute, * * *.’’

1” Thid., 1976 Duke L.J. at 340.

In this article the editor correctly states that a FOIA-plaintiff

‘*need show only that disclosure would violate a particular federal

statute in order to prove both that the information is FOIA-exempt

and also that disclosure must be enjoined. Once it is determined

that a specific statute prohibits the disclosure of certain informa-

tion, the information is by definition exempt from mandatory dis-

closure under the statutory exemption of the FOIA. At the same

time, disclosure which would violate a statute may be enjoined

under the APA as agency action which is ‘not in accordance with

law.’ ’’

15a

exemption of all matters that are ‘‘specifically ex-

empted from disclosure by statute,’’” and from the

holding in FAA Administrator v. Robertson, supra,

422 U.S. at 265, discussed later, that the FOIA does

not repeal or modify any other statute which may

restrict disclosure.”

In these cases, the plaintiffs assert that both the

Civil Rights Act of 1964, Title VII, § 709(e), 42 U.S.C.,

§ 2000e-8(e), and § 1905, 18 U.S.C., which prohibit

under criminal penalty the disclosure by any federal

employee of confidential trade and financial informa-

tion supplied a federal agency, represent statutes em-

braced within exemption (h)(3) of the FOIA, and are

statutes which prohibit the release of much of the in-

formation in the two reports in question. They raised

this contention in thier objection to disclosure sub-

mitted administratively to the defendants. The de-

fendants, however, dismisSed the claim under both

statutes. They specifically found that § 2000e-8(e) did

‘‘not prohibit the release of information by officers or

employees of other Government agencies where such

information is obtained under other authority as E.O.

11246 which requires contractors having a contract,

containing provisions prescribed in Section 202 of said

E.O. to file Compliance Reports and furnish such in-

formation.’’ The same objections to disclosure, based

upon both § 1905 and § 709(e), were pressed in the

District Court.” That Court, is disposing of the claims,

*® § 552(b) (3).

1° 422 US. at 265.

2° The plaintiffs, also, claimed exemption under (b) (7), which

deals with investigatory files. The District Court found such a

l6a

stated that 709(e) of the Civil Rights Act of 1964 was

not applicable since the reports involved here were

filed, not under the provisions of the Civil Rights Act

of 1964, but under Executive Order 11,246. It did not

deal specifically with § 1905 as within the exemption of

(b)(3) of the Act but it did conclude that § 1905, taken

in conjunction with (b)(4), represented a clear pro-

hibition against disclosure of ‘‘confidential’’ material

as defined in (b)(4) of the Act and in § 1905. The

plaintiffs, by their cross-appeal, renew their conten-

tions under § 709(e).

So far as a claim under § 709(e) is concerned, we are

inclined to agree with the District Court that, despite

the persuasiveness of the argument to the contrary,

and the cogent reasoning advanced by Justice Douglas

in his opinion disposing of a request for a stay in

Chamber of Commerce v. Legal Aid Society (1975) 423

U.S. 1309, the information involved here cannot claim

immunity under § 709(e) as a statute forbidding dis-

claim without merit. The 1974 amendments to the Act, which are

applicable here, fully support this conclusion. See, Ibid., 1976

Duke L. J. at 399-401. Those amendments, the Court declared in

NLRB v. Sears, Roebuck & Co., supra, 421 U.S. at 164-5, extend

this exemption ‘‘only to * * * ‘the production of such records

[which] would interfere with enforcement proceedings, deprive a

person of a right to a fair trial or an impartial adjudication, [or]

constitute [an] * * * unwarranted invasion of personal privacy,

disclose the identity of an informer, or disclose investigative tech-

niques and procedures.’ ’’ Obviously, the information in question

cannot qualify under that standard and it is accordingly unneces-

sary to consider further this claim of the plaintiffs. See, Note,

Fuselier and Moeller, NLRB Investigatory Records: Disclosure

Under the Freedom of Information Act, 10 U.Rich.L.R. 541 (1976)

17a

closure of the information in question in these actions.”

The applicability of § 1905, upon which the District

Court rested its decision, is, however, considerably more

compelling. This is because of the recent decision in

FAA v. Robertson. There had been, prior to Robertson,

considerable contrariety in the decisions of the District

and Circuit Courts on the statutes properly within the

scope of Exemption 3. Some of those conflicting deci-

sions are cited by the Supreme Court in Robertson, 422

U.S. at 262-3, n. 6. Among those statutes about which

there has been such a difference of opinion is § 1905.

Thus, in the early case of Consumers Union of U. S.,

Inc. v. Veterans Admin. (S.D.N.Y. 1969) 301 F. Supp.

796, 801-2, appeal dismissed on other grounds, 436 F. 2d

1363, it was assumed that § 1905 was within the cover-

age of Exemption 3 but the Court found that the in-

formation there involved did ‘‘not appear to contain

trade secrets or other information mentioned in

§ 1905.’’** However, in a consistent line of cases, be-

ginning with Grumman Aircraft Engineer. Corp. v.

Renegotiation Bd. (D.C.Cir. 1970) 425 F. 2d 578, 580,

n. 5, and continuing up to Charles River Park “‘A’’,

21 See, Sears, Roebuck and Co. v. General Services Admin. (D.C.

Cir. 1974) 509 F.2d 527, 529; Huges Aircraft Company v. Schle-

singer (D.C. Cal. 1974) 384 F. Supp. 292, 295; Legai Aid Society

of Alameda County v. Shultz (N.D. Col. 1972) 349 F. Supp. 771,

775-6.

22 An interesting case, not listed in Robertson and which reached

a contrary result to that in the District of Columbia decisions, later

discussed, is Nichols v. United States (10th Cir. 1972) 460 F. 2d

671, 673, cert. denied 409 U. S. 966 (1972), involving items and

material connected with the assassination of President Kennedy.

23 To the same effect is Pleasant Hill Bank v. United States (W.D.

Mo. 1973) 58 F.R.D. 97, 98, n. 1.

18a

Inc. v. Department of H. & U.D. (D.C.Cir. 1975) 519

F. 2d 935, 941, n. 7, the District and Circuit Courts of

the District of Columbia have held that § 1905 is not

among the statutes referred to in § 552(b) (3).

In Grumman, the earliest of these cases, the rationale

for this holding was stated to be that ‘“‘section 1905

merely creates a criminal sanction for the release of

‘confidential information.’ Since this type of informa-

tion is already protected from disclosure under the Act

by 552(b) (4), section 1905 should not be read to expand

this exemption, especially because the Act requires that

exemptions be narrowly construed.’’ In other words,

§ 1905 was found under this reasoning to be ‘‘co-exten-

sive with exemption 4,’’ which itself constituted ‘‘a

separate ground for non-disclosure’ and accordingly

it was unnecessary to consider whether § 1905 fell

within the third exemption of the Act since the result

would be the same in any event.” In M. A. Schapiro &

Co. v. Securities and Exchange Com’nr. (D.C. D. 1972)

339 F. Supp. 467, 470, the Court found another reasen

for denial of inclusion of § 1905 within (b)(3). It said:

«“* * * There is nothing in 4 1905 of Title 18 that

prevents the operation of the Freedom of In-

formation Act. Moreover, the provision for docu-

‘aents specifically exempted from disclosure by

statute [5 U.S.C. §552(b)(3)] relates to those

other laws that restrict public access to specific

government records. It does not, as defendants

allege, relate to a statute [such as § 1905] that

* See Ditlow v. Volpe (D.C. D. 1973) 302 F. Supp. 1321, 1324,

rev. on other grounds 494 F.2d 1073.

19a

generally prohibits all disclosures of confidential

information.’’ *

Other cases from the District of Columbia have pro-

ceeded on this distinction between statutes which de-

scribed ‘‘specific’’ records as nondisclosable and those

which generally prohibited disclosure in finding § 1905

and like statutes not within (b)(3).”% This reasoning

was adopted in Robertson v. Butterfield (D.C. Cir.

1974) 498 F.2d 1031, 1033, n. 6, rev. sub nom. FAA Ad-

ministrator v. Robertson (1975) 422 U.S. 255, where,

in finding that nondisclosure under the authority of

§ 1504, 49 U.S.C., a statute which represented a general

*° The holding in this case was summarized in O'Reilly, ibid., p.

1135:

““* * * The district court held * * * that the general

nature of its prohibition prevented Section 1905’s applica-

tion to the FOIA exceptions for documents ‘specifically

exempted from disclosure by statute.’ ”’

The District Court of New York had reached a similar result in

Frankil v. Securities and Exchange Commission (S.D. N.Y. 1971)

336 F. Supp. 675, reversed without reference to this point, 460

F.2d 813, cert. denied 409 U.S. 889 (1972) but the later case of

Consumers Union, supra, from the same District, 301 F. Supp. 796,

seems to be contrary.

*° Other cases, echoing the reasoning on this point in Schapiro,

are Sears, Roebuck & Co. v. General Services Admin. (D.C. Cir.

1974) 509 F.2d 527, 529, and Neal-Cooper Grain Company v. Kis-

singer (D. D.C. 1974) 385 F. Supp. 769, 776. In Neal-Copper, the

Court said:

‘*The ‘ordinary meaning of the language of Exemption

(3) is that the statute therein referred to must itself

specify the documents or categories of documents it au-

thorizes to be withheld from public scrutiny.’ The law in

this Circuit, as stated supra, appears to be that 18 U.S.C.

§ 1905 is not sufficiently specific to come within Exemption

(3). No more need be said on that score.’”’

20a

prohibition of disclosure of confidential information

rather than of ‘‘specific’’ records, was not justified by

reference to Exemption 3, the Court said:

‘618 U.S.C. § 1905 is a criminal statute prohibiting

unauthorized disclosure of any information by a

federal employee. There is nothing in the section

which prevents the operation of the Information

Act. It does not fall within the ambit of Exemp-

tion (3),’’ citing Schapiro.

Whether the Court in Butterfield, by its reference

to the fact that § 1905 was a criminal statute, found in

this any reason for excluding it from the scope of Ex-

emption 3 is perhaps unclear. If it did, though, the

decision manifestly is at variance with the later deci-

sion from the same court in Parker v. Equal Employ-

ment Opportunity Commission (D.C. Cir. 1976) 534

F.2d 977, where the Court found, after stating that

‘“‘(t]he Supreme Court [in FAA Administrator v.

Robertson (1975) 422 U.S. 255] has extended that ex-

emption [i.e., (b)(3)] beyond what may have been its

narrowest compass,’’ found the statute involved there,

which was a criminal statute like § 1905, within Ex-

emption 3. And in both Tax Analysts d Advocates v.

].R.S. (D.C. Cir. 1974) 505 F.2d 350, and Freuhauf

Corporation v. Internal Revenue Service, supra, 522

F.2d 284, it was recognized that a criminal statute

(§ 7213, 26 U.S.C.) would qualify under Exemption 3.

There remain only two objections that (1) § 1905 does

not contain language which ‘‘ prevents the operation of

the FOIA” and (2) that it is a general prohibition on

disclosure rather than a prohibition against the dis-

closure of ‘‘specific’’ records. The Court in Charles

2la

River Park effectively answered the first objection”

and the Supreme Court in FAA v. Robertson, revers-

ing Robertson v. Butterfield, it seems manifest, disposes

finally and conclusively of both objections to § 1905 as

qualifying under Exemption 3.”

The Supreme Court in Robertson, focusing upon

Exemption 3, concluded (1) that it was not the intent

of Congress in enacting the FOIA to repeal or amend

in any way statutes then ‘‘extant’’ which restricted

access to especific government information but in-

tended that such statutes should remain in effect, and

(2) that the term ‘‘specific’’ in Exemption 3 does not

mean that such Exemption applies only to statutes re-

stricting access to named documents but applies to

statutes which generally direct government agencies to

withhold.” And it specifically rejected the construction

27 519 F.2d at 522.

The reasoning of Charles River Park on this point may be sum-

marized thus: Information ‘‘confidential’’ under the test stated in

National Parks and Conservation Ass’n. v. Morton, supra, 498

F.2d at 770, is necessarily both within Exemption 4 of the FOIA,

and the prohibition of § 1905. Since such information would be

exempt from disclosure under the FOIA, its disclosure is not ‘‘au-

thorized’’ under the FOIA and its disclosure is prohibited under

§ 1905.

** We had, to some extent at least, anticipated Robertson in our

decision in Sears v. Gottschalk (4th Cir. 1974) 502 F.2d 122 at

128-31.

See, also, Citizens for a Better Environ. v. Dept. of Com. (N.D.

Ill. 1976) 410 F. Supp. 1248, 1249-50.

2° 422 U.S. 264-66.

The Court said at pp. 265-66 :

‘‘* * * The term ‘specific’ as there used cannot be read as

meaning that the exemption applies only to documents speci-

fied, t.e., by naming them precisely or by describing the cate-

22a

of the Exemption as phrased in Schapiro.”

It is true that Robertson did not identify § 1905 as a

gory in which they fall. To require this interpretation would

be to ask of Congress a virtually impossible task. Such a con-

struction would also imply that Congress had undertaken to

reassess every delegation of authority to withhold information

which it had made before the passage of this legislation—a

task which the legislative history shows it clearly did not

undertake.

‘<# © ® To spell out repeal by implication of a multitude of

statutes enacted over a long period of time, each of which was

separately weighed and considered by Congress to meet an

identified need, would be a more unreasonable step by a court

than to do so with respect to a single statute such as was

involved in the Regional Rail Reorganization Act Cases, * * *.

Congress’ response was to permit the numerous laws then

extant allowing confidentiality to stand; it is not for us to

override that legislative choice.’’

Ill. 1976) 410 F. Supp. 1248, 1249-50.

That Robertson is in effect a reversal of Schapiro and related

eases is, also, the opinion of the editor in the Note, Developments

under the Freedom of Information Act—1975, 1976 Duke L.J. 366

at 395-8. In that article, the editor refers to the view taken in

Robertson v. Butterfield and like cases such as Schapiro and com-

pares them with the construction of Exemption 3 as set forth by

Judge MacKinnon in his dissent in Schechter v. Weinberger (D.C.

Cir. 1974) 498 F.2d 1015, 1016. In that dissent, Judge MacKinnon

assumed that Congress in enacting the FOIA was aware of the

‘‘extant’’ statutes prohibiting disclosure and reasoned that ‘‘[i]f

Congress had not intended to include [a particular statute] within

Exemption Three, it could easily have done so either by explicitly

narrowing the coverage of the exemption or by amending’’ the

statute in question. This construction of the Exemption is described

as the ‘‘broadest’’ construction of the Exemption, ‘‘since it clearly

rejects the notion that the FOIA can be read in any sense as

repealing or modifying by implication a statute authorizing non-

disclosure which existed prior to the enactment of the FOIA.’’

Ibid., at 396. The editor concludes that ‘‘[t]he construction of

exemption 3 adopted by the Court in Robertson is similar in both

23a

statute within the parameters of Exemption 3. But

the conclusion seems inescapable that it was so con-

sidered. § 1905 certainly fitted the description of an

‘“‘extant”’ statute as defined by the Supreme Court in

Robertson and it represented the type of ‘‘general’’

prohibition of disclosure discussed therein. Moreover,

the Court in Roberston, quoting from the legislative

record, stated :

“* * * When the House Committee on Govern-

ment Operations focused on Exemption 3, it took

note that there are ‘nearly 100 statutes or parts

of statutes which restrict public access to specific

Government records. These would not be modified

by the public records provision of 8.1160.’ ”’

(Italics in opinion) ™

theory and consequence to the broad construction advanced by

Judge MacKinnon.’’ Ibid., at 396.

Sears, Roebuck and Co. v. General Services Admin. (D.C. D.

1975) 402 F. Supp. 378, 381, n. 3 takes a contrary view but it is

impossible to reconcile its conclusion with the decision of the

Supreme Court in Robertson or of the Circuit Court in Charles

River Park.

% Tbid., 422 U.S. at p. 265.

In an early article on the FOIA, a writer anticipated the later

ruling in Robertson, stating :

‘‘There are nearly one hundred statutory provisions spe-

cifically restricting disclosure in one way or another. While

they are phrased in various ways—such as specifically exempt-

ing from disclosure, prohibiting disclosure except as authorized

by law, or providing for disclosure only as authorized by law—

it is clear from the House Report that all of them are included

in exemption (b)(3).’’

Note, Freedom of Information: The Statute and the Regulations,

56 Geo. L. J. 18 at 33-4 (1967).

24a

There can be little doubt that § 1905 was among those

‘‘nearly 100 statutes or parts of statutes * * * not

* * * modified’’ or repealed by the FOIA and in-

tended to be covered by Exemption 3, to which the

Congress and the Court in Robertson referred. And the

Attorney General in his Memorandum Opinion on the

scope and application of the Act, as quoted in Robertson

v. Butterfield, supra, 498 F.2d at 1033-4, n. 6, regarded

§ 1905 as such. Further, § 1905 had been eariier identi-

fied in legislative hearings as a statute which prohibited

disclosure.” In Weisberg v. Department of Justice

(D.C. Cir. 1973) 489 F.2d 1195, 1202, cert. denied 416

U.S. 993 (1974), an en bane decision of the very Circuit

that had espoused the doctrine of Schapiro, the Court

referred to the Regulations of the General Services Ad-

ministration, as set forth in 41 C.F.R. § 105-60.604

(1972) for a listing of illustrative statutes considered

to be within Exemption 3. The first statute on that list

is § 1905." Indeed, the Department of Labor itself has

assumed that § 1905 is among the statutes incorporated

%2 See 1958 Hearings before the Subcommittee on Constitutional

Rights, Senate Judiciary Committee, pp. 985-7.

*3 41 (.F.R. § 105-60.604 reads as follows :

‘‘(a} 5 U.S.C. 552(b) (3) provides that the statute does not

apply to matters that are specifically exempted from disclosure

by other statutes. (For further discussion of this matter, see the

Attorney General's Memorandum on the Public Information

Section of the Administrative Procedure Act, (June 19, 1967),

pages 31 and 31).

(b) The following are illustrative of such statutes, but are

not all inclusive :

(1) 18 U.S.C. 1905 (trade and financial information pro-

vided in confidence by businesses ) .

* * *,;

258 <

within Exemption 3, for in ite Regulations on disclo-

sure, it forbids any employee under its control or dele-

gation to disclose any records or information within

the prohibition of § 1905. In fact, this Regulation of

the Department of Labdr, by which the defendants in

the stipulation in the United States Steel Case admitted

they were bound, since they only act in these matters

by delegation of the Department of Labor, has the ef-

fect of law and would itself meet the qualifications of

Exemption 3. Ant such was the specific holding in

Chrysler Corp. v. Schlesinger (D. Del. 1976) 412 F.

Supp. 171, 177, involving an identical claim to that

asserted here, and being against the same defendants

as in these cases.” In the Chrysler Case, the court said:

‘“*5 U.S.C. § 301 is the general statute providing

for the promulgation, of regulations for the use

and custody of government recprds. Pursuant to

** 29 C.F.R. § 70.21(a) is as follows:

‘**Pursuant to the provisions of 18 U.S.C. 1905, every officer

and employee of the Department of Labor is prohibited from

publishing, divulging, disclosing, or making known in any

manner or to any extent not authorized by law any information

coming to him in the course of his employment or official duties

or by reason of any examination or investigation made by, or

return, report or record made to or filed with the Department

or any agency or officer or employee thereof, which informa-

tion concerns or relates to the trade secrets, processes, opera-

tions, style of work, or apparatus, or to the identity, con-

fidential statistical data, amount or source of any income,

profits, losses, or expenditures of any person, firm, partnership,

corporation, or association. No officer or employee of the De-

partment of Labor shall disclose records in violation of this

provision of law.’’

*° 392 F. Supp. at 1250.

26a

this statute, the Secretary of Labor promulgated

29 C.F.R. § 70.21(a) which is applicable to DSA

as a delegate cf powers of the Department of

Labor’s OFCC. (See, 41 C.F.R. § 60-1.6).”

We accordingly think the District Court in these

eases properly found that § 1905 is a statute qualifying

under Exemption 3, both specifically as one of the ‘‘100

or more”’ statutes included therein, and by incorpora-

tion thereunder of the applicable Regulation of the

Department of Labor,” and could have decided the

cases on that basis,” as we later indicate.

%6 The author in the Note in 70 Nw. U. L. Rev. at 1016 would

find § 1905 not to be a restriction on disclosure, ‘‘ |b] ecause reliance

on section 1905 would restrict unduly the court’s ability to deter-

mine whether the information should be disclosed,’’ and it ‘‘is per-

ceived as a relic of an earlier age of government secrecy.’’ It based

this comment largely on a recommendation of the Sub-committee

on Government Operations, made to the House Committee on the

Judiciary, that § 1905 be repealed so that it would not be an im-

pediment to disclosure. The Congress, however, has not repealed

§ 1905. This fact, under the reasoning of Judge MacKinnon in

Schechter, note 28, which was adopted later in People of State of

California v. Weinberger (9th Cir. 1974) 505 F.2d 767, 768, and

received final approval in Robertson, would seem fairly conclusive

evidence of legislative intent not to remove § 1905 as a prohibition

against disclosure, qualifying as such under Exemption 3. In any

event, in the absence of actual repeal, it is not, under Chief Justice

Burger’s language in Robertson, the function of courts to do what

Congress has failed to do. We might note parenthetically, too, that

the author at no point cites or refers to Robertson, which it would

seem invalidates his conclusion.

Even if the author were correct in his analysis, the defendants

would not be aided in their defense of these cases. The regulation

of the Department of Labor, which they stipulated as controlling,

incorporated the restrictions of § 1905 eo nomine and a violation

of such regulations would justify relief in any event. See Umted

States v. Heffner (4th Cir. 1969) 420 F.2d 809, 811-12.

3? This was the criticism directed at the decision in Charles River

27a

But whether the information be deemed exempt

under the FOIA or prohibited from disclosure under

§ 1905, the defendants would deny completely any jur-

isdiction in the District Court to make a determination

to that effect at the instance of the plaintiffs who were

the suppliers of the information.” They contend the

FOIA provides a procedure to compel disclosure and

that is the exclusive remedy available under the Act.

Under this argument, a requestor of government infor-

mation, if denied access, is entitled under the Act to a

de novo judicial hearing on his right to obtain the in-

formation but the Act not only does not give, it pre-

cludes any remedy in favor of a supplier of private

‘‘confidential’’ information to a governmental agency

under statutory or administrative compulsion. The

latter, under this argument, is completely remediless

if the agency determines to release the information,

despite the fact that such information be confidential

private information, exempt under Exemption 4 and

within the prohibition of disclosure under § 1905,

which, if released, will inflict competitive injury on

him. It would seem sufficient answer to this argument

that this position of the defendants, though often

by the writer in Note, Developments Under the Freedom of Infor-

mation Act—1974, 1975 Duke L. J. 416, 428, n. 56, noted infra.

** We group § 1905 and Exemption 4 together because it has been

uniformly held that the scope of § 1905 and Exemption 4 of the

FOIA are, as stated in Pharmaceutical Manufacturers Ass’n. v.

Weinberger (D.C.D. 1975) 401 F. Supp. 444 at 446, ‘‘the same,’’

or, as put in Ditlow, 362 F. Supp. at 1324, ‘‘co-extensive.’’ Ac-

cordingly, material qualifying for exemption under (b) (4) falls

within the material, disclosure of which is prohibited under § 1905.

And this was the specific holding in Charles River Park (519 F.2d

pp. 941-2 and n. 7). See, also, n. 27, supra.

28a

raised, has never been accepted by any court. As one

commentator has concluded, after an exhaustive review

of all the reverse-FOIA cases, ‘‘no court has [ever]

failed to find jurisdiction,’’ in such cases, though he

adds ‘‘there has been substantial disagreement as to

the proper basis for this finding.’’ Note, Protection

from Government Disclosure—The Reverse-FOIA

Suit, 1976 Duke L. J. 330, 347; see, also, Note, Reverse-

Freedom of Information Act Suits: Confidential In-

formation in Search of Protection, 70 Nw. U. L. Rev.

995, 999-1000; Charles River Park ‘‘A’’, Inc. v. H. &

U.D. (D.C. Cir. 1975) 519 F.2d 935, 939; Sears, Roe-

buck and Co. v. General Services Admin. (D.C. Cir.

1974) 509 F.2d 527 (jurisdiction assumed without dis-

cussion) ; Chrysler Corp. v. Schlesinger (D. Del. 1976)

412 F. Supp. 171, 174-5; Burroughs Corporation v.

Schlesinger (C.D. Cal. 1974) 384 F. Supp. 292, 294;

Westinghouse Electric Corporation v. Schlesinger (E.

D. Va. 1974) 392 F. Supp. 1246, 1248; United States

Steel Corp. v. Schlesinger (E.D. Va. 1974) 35 Ad. L. 2d

790 jurisdiction assumed without discussion) ; McCoy v.

Weinberger (W.D. Ky. 1974) 386 F. Supp. 504, 507-8;

Neal-Cooper Grain Company v. Kissinger (D. D.C.

1974) 385 F. Supp. 769 (jurisdiction assumed without

discussion) ; Hughes Aircraft Company v. Schlesinger

(C.D. Cal. 1974) 384 F. Supp. 292, 294.” And this as-

In Neal-Cooper Grain Company v. Kissinger (D.C. D. 1974)

385 F. Supp. 769, 775, the Court noted that in the District Court

decision in Charles River Park (360 F. Supp. 212).

‘“(t]he Court held that the FOIA did not apply to the case

because it was passed for the benefit of parties seeking dis-

closure, apparently concluding that it thus had no relevance

to a claim seeking to bar disclosure.

29a

sumption of jurisdiction seems to have recently re-

ceived approval in Renegotiation Board v. Banner-

craft Co. (1974) 415 U.S. 1, 17. In that case, the same

argument as is pressed by the defendants here was ad-

vanced, 1.¢., that the remedy expressly given under the

FOIA “‘constitute[s] the exclusive method’’ under the

Act and ‘‘that any implication of other injunctive

power * * * would be inconsistent with the statutory

language.’’ In answer, the Court, after noting ‘‘ ‘the

broad equitable jurisdiction that inheres in courts

* * * where the proposed exercise of that jurisdiction

is con ‘stent with the statutory language and policy,

the legislative background and the public interest’ ’’ *°

held:

‘The broad ianguage of the FOIA, with its ob-

“Charles River was one of the first ‘reverse-FOIA’ suits to

come to the courts. Developments since that time have, in the

opinion of the Court, made it clear that the FOIA does apply

to such matters. In National Parks & Conservation Assoc. v.

Morton, plaintiffs sought to compel disclosure of information

which has been supplied to the government on a confidential

basis. The District Court had granted summary judgment to

defendant on the basis of the confidentiality exemption to

the FOIA. The Court of Appeals remanded, saying that the

lower court must examine the material to determine if the

informational disclosure would either impair the Govern-

ment’s ability to obtain information in the future or harm

the competitive position of the supplier of information. In so

doing, the Court recognized both that the policy of the

FOIA was to encourage disclosure and that the purpose of the

confidentiality exemption was to protect the rights of suppliers

of information. After Morton, there would scem little doubt

that the FOIA does apply to a suit seeking to prevent dis-

closure.’’

*° Quoting from Porter v. Warner Holding Co. (1946) 328 U.S.

395, 403.

30a

vious emphasis on disclosure and with its exemp-

tions carefully delineated as exceptions ; the truism

that Congress knows how to deprive a court of

broad equitable power when it chooses so to do,

Scripps-Howard, supra, 316 U.S., at 17; and the

fact that the Act, to a definite degree, makes the

district courts the enforcement arm of the statute, 5

U.S.C. § 552(a)(3), persuade us that the Babcock

and Switchman’s Union principle of a statutorily

prescribed special and exclusive remedy is not ap-

plicable to FOIA cases. With the express vesting

of equitable jurisdiction in the district court by

§ 552(a), there is little to suggest, despite the Act’s

primary purpose, that Congress sought to limit

the inherent powers of an equity court.’’ (pp. 19-

20)

It follows, therefore, that the supplier of informa-

tion, protected from disclosure under the overall policy

expressed in an exemption to the FOIA, or under a

specific statutory prohibition such as § 1905, is not

‘without a remedy, in a proper case, to challenge the

right of an agency to disclose material furnished the

agency under a claim of confidentiality; and the argu-

ment of the defendants to the contrary is without

merit. The real issue thus becomes the type of remedy

available to the supplier in such a case.

It is the defendants’ position that, if the plaintiffs

are entitled to any judicial remedy in these cases, it

must be solely under the review procedures provided

under the Administrative Procedure Act,” that there

“1 § 706, 5 U.S.C.

3la.

can be no other basis for subject-matter jurisdiction.

This argument of the defendants seems to have been

faced directly in but one reported case, Charles River

Park “‘A’’, Inc. v. H.& U.D.” In that case, the Court

began initially with the assumption that § 1905 did

apply and, on that basis, found federal-question juris-

diction.” On reargument, however, it withdrew its

holding to this effect, reasoning that ‘‘review under

the APA, the normal method of reviewing agency ac-

tion, is sufficient to safeguard any interests that section

1905 is supposed to protect.’’** To some extent, the

Court was undoubtedly influenced in this conclusion by

the previous rulings of the Cireuit in Grumman,"

519 F.2d 935.

*8 See, Pharmaceutical Mfrs. Ass’n. v. Weinberger (D.C.D. 1976)

411 F. Supp. 576, 577, n. 1:

“‘The published opinion in Charles River Park withdrew

the slip opinion’s observation (found in footnote 5) that 18

U.S.C. § 1905 created a private right of action. The court

held instead that review under the Administrative Procedure

Act is available.’’

It seems quite clear that had the Court in Charles River Park

had the benefit of the later decision in FAA v. Robertson, it would

not have receded from its initial decision that § 1905 provided a

basis for federal subject-matter jurisdiction and would have

granted the plaintiff the full evidentiary hearing to which such a

proceeding would have entitled the plaintiff. In such an action,

there would have been nc basis for an APA review, since § 1905

does not admit of administrative discretion, the review of which is

the purpose of APA review.

Cf., Note, 1976 Duke L. J. at 342 (‘‘* * * section 1905 does not

speak in terms of discretion * * *’’).

** 519 F.2d at 941, n. 6.

*5 425 F.2d 578.

32a

Schapiro“ and similar cases, discussed supra, that

§ 1905 is not within Exemption 3, though it is interest-

ing that the Court, somewhat reluctant to reaffirm com-

pletely Schapiro and Grumman, said somewhat crypti-

eally that ‘‘5 U.S.C. §552(b), does not incorporate

section 1905 into the FOIA in such a way as to make

section 1905 broader than the fourth exemption”’ and

conclude with the statement that, ‘‘[s]Jince only the

FOIA’s fourth exemption deals with matters covered

by section 1905, consideration of section 1905 in FOIA

cases is appropriate only when the information falls

both within the fourth exemption and under section

1905.’’*’ In short, it construed § 1905 and Exemption

4 as ‘‘eo-extensive’’ in scope “ and held that, if the ma-

terial were exempt from disclosure under Exemption

4 of the FOIA, it was automatically prohibited from

*6 339 F. Supp. 467.

*7 519 F.2d 941-2, n. 7.

It is of interest that Charles River is criticized in the Note, 1975

Duke L. J. at 428 as ‘‘a thoroughly unsatisfactory decision’’ and

the rationale of its criticism was that ‘‘[t]he issue in the case

should have been whether section 1905 specifically exempted the

information from disclosure under the statutory exemption, 5 U.S.C.

§ 552(b)(3) (1970)—a position uniformly rejected by other sta-

tutes, see note 76 infra—and, if so, whether a private party can

invoke the exemption.’’ We agree, as we later indicate, that the

applicability of § 1905 was a critical issue in that case, as it is in

these cases. But, in Charles River, the panel was writing for a

court, which, not yet supplied with the authoritative construction of

Exemption 3 as declared in Robertson was bound by its earlier

decisions giving that exemption a restricted application and as-

similating § 1905 with Exemption 4 by finding that the two were

‘*eo-extensive.”’

*® Pharmaccutical Mfrs. Ass’n. v. Weinberger, supra, 401 F. Supp.

at 446 ; Ditlow v. Volpe, supra, 362 F. Supp. at 1324.

33a

disclosure under § 1905.“ And it held that this deter-

mination could be made through the review procedure

made available under the APA, though, as one com-

mentator has observed, ‘‘the court in Charles River

Park ‘A’, Inc. v. HUD indicated that it would imply

a private right of action under section 1905 in the ap-

propriate sitnation.’’ * Charles River Park thus is not

authority for the proposition that the plaintiffs’

remedy here is solely and exclusively under the APA

simply because in that case it proceeded under the

APA. In fact, any such rule would create a jurisdic-

tional anomaly, under which a federal court in one

district might afford the supplier a remedy which

would be denied him in another federal district. This

result follows from the great difference among the

Circuits, and in the opinion of the commentators, on

whether the APA confers federal subject-matter jur-

isdiction.” Such difference is illustrated by the de-

*° O'Reilly, ibid., 30 Bus. Law. at 1137, summarizes this ruling of

the Court:

‘‘{alfter a rejection of section 1905’s use as a ‘specifically

exempted by statute’ protection under the Freedom of Infor-

mation Act, the Charles River opinion gave that confidentiality

statute a new usefulness.’’

°° Note, 1976 Duke L. J. at 350.

* This difference of opinion on whether the APA confers inde-

pendent subject-matter jurisdiction, is illustrated in the contrary

views of two respected commentators. Professor Davis in Admin-

istrative Law of the Seventies, § 23.02, p. 530 (1976 Supp.) finds

the clear weight of authority in favor of subject-matter jurisdiction

under the APA; 13 Wright, Miller & Cooper, Federal Practice and

Procedure, § 3568, pp. 465-6 (1975 ed.) is equally certain that the

“‘majority view’’ is expressed by those courts which have rejected

the argument that the Administrative Procedure Act is a grant of

jurisdiction.

34a

cisions in Charles River Park and Chrysler Corp. v.

Schlesinger. The first arose in the District of Columbia,

where the rule prevails that the APA confers subject-

matter jurisdiction; the second arose in the Third

Circuit, which has found that APA confers no such

jurisdiction.” If the defendants were correct in their

contention, the plaintiff in Charles River Park would

have a remedy but the plaintiff in Chrysler would be

remediless. It is inconceivable that such a disparity in

rights could be sanctioned in a unified judicial system.”

Littell v. Morton (4th Cir. 1971) 445 F.2d 1207, 1212-13;

McEachern v. United States (4th Cir. 1963) 321 F.2d 31, 33, and

Deering Milliken, Inc. v. Johnston (4th Cir. 1961) 295 F.2d 856,

865, it seems support the view that in this Circuit the APA is

regarded as granting federal subject-matter jurisdiction; at least

Hart & Wechsler, The Federal Courts and the Federal System, p.

1161, n. 6 (1973 ed.) so construe McEachern, and Ortego v. Wein-

berger (5th Cir. 1975) 516 F.2d 1005, 1011, finds Littell to recognize

that the APA confers jurisdiction. However, the District Court

decisions in this Circuit, as well as those outside, ‘‘are approxi-

mately equally divided on whether the APA is an independent

jurisdictional grant.’’ 516 F.2d at p. 1011. Compare, Etheridge v.

Schlesinger (E.D. Va. 1973) 362 F. Supp. 198, 200-1; River v.

Richmond Metropolitan Authority (E.D. Va. 1973) 359 F. Supp.

611, 622, aff’d. on other grounds, 481 F.2d 1280, and Garmon v.

Warner (W.D. N.C. 1973) 358 F. Supp. 206, 208 (all sustaining

jurisdiction under APA), with International Fed. of P. & T. Eng.,

Loc. No. 1 v. Williams (E.D. Va. 1974) 389 F. Supp. 287, 291,

aff’d. without opinion, 510 F.2d 966; Hagedorn v. Union Carbide

Corporation (N.D. W.Va. 1973) 363 F. Supp. 1061, 1063, and

Yahr v. Resor (E.D. N.C. 1972) 339 F. Supp. 964, 967, aff’d. on

other grounds, 431 F.2d 690 (all to the contrary, denying subject-

matter jurisdiction under APA).

52 519 F.2d at 939.

°° 412 F. Supp. at 174-5.

** It was this very uncertainty of a remedy, arising if the APA

were held to be the exclusive procedure available to the supplier of

a OO ae NS chet Ame eth

int ti ait ak oder ear teen

35a

But even if the method of review under the APA

as approved in Charles River Park were followed in

these cases, the procedure would not have been sub-

stantially different from the procedure actually fol-

lowed by the District Court. The only action taken by

the District Court at trial, to which the defendants

object, is that it held an evidentiary hearing in these

eases and received evidence from both plaintiffs and

defendants on the single issue of ‘‘confidentiality”’ of

the information under review, as defined in National

Park and Conservation Ass’n. v. Morton, supra, 498

F.2d 765."% They contend the District Court was for-

bidden from holding such evidentiary hearing and was

information, that caused the writer of the Note in 70 Nw. U. L.

Rev. at 1007 to opt for a § 1331 action. He said:

‘‘The uncertainty of the APA as an independent jurisdic-

tional grant makes the statutory grant of ‘federal question’

jurisdiction in section 1331 of Title 28 of the United States

Code the most likely basis for jurisdiction in reverse-FOIA

suits.”’

55 This definition of ‘‘confidentiality’’ as stated in Morton, is:

‘‘To summarize, commercial or financial matter is ‘con-

fidential’ for purposes of the exemption if disclosure of the

information is likely to have either of the following effects: (1)

to impair the Government’s ability to obtain necessary infor-

mation in the future; or (2) to cause substantial harm to the

competitive position of the person from whom the information

was obtained.’’ (p. 770)

For an exhaustive review of the progress in development of the

definitive standard for construing the terms of Exemption 4 of the

Act, see Note, Public Disclosure of Confidential Business Informa-

tion Under the Freedom of Information Act, 60 Cornell L. Rev.

109, 113 (1974), and Ibid., 74 Colum. L. Rev. at 948-53.

There is, also, an extensive note on this exemption in 21 A.L.R.

Fed. 224, et seq., and it is discussed at length in 41 U. Chi. L. Rev.

at 572-5, as well as Note, 9 Akron L. Rev. at 675-81.

36a

required to render its decision on the administrative

record, consisting almost entirely of the agency’s ipse

dizit that the information in question was disclosable

under the Act and was not protected under either Ex-

emption 4 or § 1905. Specifically, their position is that

the District Court had no right to receive any evidence

on the qualification of the challenged material as ‘‘con-

fidential’’ under the standard mandated in § 1905 and

Exemption 4, which, according to the decisions, as we

have seen, are the ‘‘same’’ or ‘‘co-extensive.’’ ”

Charles River Park, however, holds exactly to the

contrary : it declares that, even in an APA review, the

District Court should have an evidentiary hearing to

determine whether, on the evidence adduced, the chal-

lenged material is ‘‘confidential’’ and thereby exempt

from disclosure under Exemption 4 and prohibited

from disclosure under § 1905. In that case, the Circuit

Court did not instruct the District Court to look to the

administrative record, or the decision of the agency, in

order to determine whether the information in ques-

tion was ‘‘confidential’’ and thus within the exemption

prohibited by Exemption 4 of the FOIA, and within

the prohibition of § 1905; on the contrary, it directed

the court to follow the following procedure on remand :

‘“* * * Thus, the district court should hold a

hearing to determine whether the information in-

volved here would have been exempt just as it

would if a suit had been brought under the FOIA

to compel disclosure. See 5 U.S.C. § 552(b) (3);

56 See, Pharmaceutical Manufacturers Ass’n. v. Weinberger, 401

F. Supp. at 446; Ditlow v. Volpe, 362 F. Supp. at 1324.

ee ee

37a

National Parks & Conservation Assn. v. Morton

* * *. In holding this hearing, the district court

is not reviewing agency action; it is making a

threshold determination whether the plaintiff has

any cause of action at all.’’ ”’

It went on to add that, on remand, the District Court

should ‘“‘consider 18 U.S.C. §1905 and determine

whether the information sought falls within the specific

prohibitions therein contained,’’ previously stated as

‘*eo-extensive’’ with Exemption 4. And it added that,

“*[i]f it does, it would be an abuse of discretion for

HUD to release the information”’ and ‘‘to ignore such

a statutory mandate.’’ It concluded by remanding the

cause because ‘‘[a]n evidentiary hearing will be neces-

sary since the present record is not sufficient to make

the above determination.’’ ™

°? 519 F.2d at 940-41, n. 4.

What the court is stating here is that, until it is determined that

the information is within an exemption, the agency has no discre-

tion to exercise and no basis for review under the APA. This is

what it describes as the ‘‘threshold’’ question. This follows, since

if the information is not exempt, the Act commands disclosure;

but, if, on the other hand, the information is exempt, then the

agency ordinarily has discretion, the exercise of which is review-

able under APA standards.

See, also, Note, 1976 Duke L. J. at 345, n. 73:

‘*The court of appeals in Charles River, however, directed

the lower court on remand to hold an evidentiary hearing on

the threshold question of whether the information is exempt

under the FOIA.’’

5* 519 F.2d at 942-3.

As construed in Pharmaceutical Mfrs. Ass’n. v. Weinberger,

supra, 411 F. Supp. at 577-8, Charles River Park, in remanding the

case, directed the District Court to follow ‘‘[{a] three step process

* * ©: determination of whether the material fit within a FOIA

38a

It follows that, were review here available under

the APA, the procedure followed by the District Court

was free of error.” But the District Court did not find

exemption ; consideration of the prohibitions of 18 U.S.C. § 1905;

and (assuming the pertinence of a FOIA exemption and the inap-

plicability of 18 U.S.C. § 1905) examination of the agency’s dis-

cretionary decision to release. 519 F.2d at 943. Such judicial review

is under the Administrative Procedure Act and appropriate reme-

dies include injunctive relief. 519 F.2d at 939, 941-42 & n. 6.”’

See, also, Burroughs Corporation v. Schlesinger (E.D. Va. 1975)

403 F. Supp. 633 at 637, where Charles River Park was construed :

‘‘* * * The Circuit Court for the District of Columbia has

suggested that a District Court hold appropriate hearing

whenever evidence is insufficient on the issue of substantial

harm. Charles River Park ‘‘A’’, Inc. v. H.U.D., supra, 519

F.2d at 940, 943-944 (D.C. Cir. 1975). This suggestion is well

taken. The defendants, in the meantime, shall remain enjoined

from disclosing the Recap Table pending a final decision after

such hearings are held.’’

5° We may add that, even when review is sought under the APA,

the plea of sovereign immunity, as asserted by the defendants, will

not be sustained. The defendants rely on Littell v. Morton (4th Cir.

1971) 445 F.2d 1207. Their reliance in this regard on Littell v.

Morton is misplaced. It is true that in Littell we did not follow

the lead of those cases which had found in the APA itself a waiver

of sovereign immunity. But we took note of the increasing judicial

distaste for the doctrine of sovereign immunity and the unanimous

condemnation of the doctrine by academic commentators. We

accordingly narrowed the doctrine in actual application within a

very restricted compass, as established by its rational justification.

We stated that, under the impetus of an increasing ‘‘ weakening

of general faith in the validity of the doctrine’’ its only remaining

‘rationale [for existence] boils down to substantial bothersome

interference with the operation of government.’’ Jbid., at 1214.

This statement is not substantially different from that articulated

by Professor Cramton in his notable article, Nonstatutory Review

of Federal Administrative Action: The Need for Statutory Reform

of Sovereign Immunity, Subject Matter Jurisdiction, and Parties

Defendant, 68 Mich. L. Rew. 389 at 397 (1970) :

Vente) Betvins Momm its +. . =)

39a

jurisdiction under the APA in these cases; its jurisdic-

tional base rested upon the general federal-question

jurisdiction under § 1331.”

§ 1331 grants original jurisdiction to the District

Court over any action that ‘‘arises under the Con-

stitution, laws, or treaties of the United States.’’ And

we agree with the trial court that these cases meet the

jurisdictional requirements of § 1331. The informa-

tion, the disclosure of which the plaintiffs seek by their

action to prevent, was filed under the compulsion of a

valid Executive Order issued under federal authority ;

the disclosure of such information, it was alleged, is ex-

empt from compelled disclosure under the terms of both

subsections § 552(b)(3) and (4) of the FOIA and its -

‘‘* * * The only rationale for the doctrine [of sovereign im-

munity] that is now regarded as respectable by courts and

commentators alike is that official actions of the Government

must be protected from undue judicial interference.’’

These suits, if sustained, will not interfere in the slightest with

the performance by the Government or its agents under the Execu-

tive Order; any decree entered herein would not curtail the power

of the Government to enforce the Executive Order. Actually, the

Government itself has no real interest in these suits; the only

parties that may suffer are the plaintiffs through the disclosure of

confidential information harmful to their competitive position and

the only parties to be benefitted, if the plea is sustained, are the

private parties who for their own personal curiosity desire the

information. Littell can accordingly give them no support; on the

contrary, it is compelling authority against the validity of the

plea. The editor in the Note, supra, 1976 Duke L. J. 358, con-

cludes also that Littell would not bar a suit such as these reverse-

FOIA cases.

*° See, Burroughs Corporation v. Schlesinger, supra, 403 F. Supp.

at 634; Chrysler Corp. v. Schlesinger, supra, 412 F. Supp. at 174-

5; and Hughes Aircraft Company v. Schlesinger, supra, 384 F.

Supp. at 294.

40a

disclosure is forbidden under § 1905, 18 U.S.C. On the

basis of those allegations, the plaintiffs invoked the

equitable jurisdiction of the federal court to secure an

injunction against disclosure. Such jurisdiction, it

would seem, would exist both as an action to enjoin the

violation of the positive mandate of § 1905 by an ex-

ecutive officer and as an action implied under the very

terms of Exemption 4 of the FOIA itself. Both such

grounds would rest on a federal statute and qualify

under § 1331.

It would be a violation of both logic and reason to

find that an action by one who is faced with substantial

competitive harm and injury by the threat of disclo-

sure of information, submitted by him solely because

of the compulsion of a federal Executive Order, validly

issued under federal law by a federal agency, whose

officers are forbidden by federal law to disclose such in-

formation (as does § 1905), is not an action arising

‘‘under the * * * laws, * * * of the United States.’’

It has been well stated that ‘‘[i]t is an inherent power

of the federal judiciary to enjoin * * * an act’’ sought

to be carried out by a federal official in violation of

federal law, and ‘‘[t]hat there be such [judicial] power

was one of the prime compelling reasons for the crea-

tion of the judicial branch as an independent and equal

branch of the Government.’’” And this power of a

federal court to grant injunctive and declaratory relief

under § 1331 against the threat of action by a public

officer ‘‘in excess of [his] delegated powers and con-

trary to a specific [federal statutory] prohibition”’

*! Fleming v. Moberly Milk Products Co. (D.C. Cir. 1947) 160

F.2d 259, 264, appeal dismissed 331 U.S. 786 (1946).

De ke ee eee ee a See eee

* ew]

4la

such as § 1905, causing irreparable harm to a private

person, has been repeatedly recognized and exercised.”

The principle is plainly applicable in actions such as

these under review and affords federal subject-matter

jurisdiction under § 1331(a).™

We accordingly have, as we have said, no difficulty

in finding that the District Court had jurisdiction of

these actions under § 1331 to enjoin an action by the

defendants in violation of § 1905.

Should, however, the contention of the defendants

be accepted that § 1905 is inapplicable, the FOLA itself,

it would seem, confers on a supplier of private infor-

mation, an implied right to invoke the equity jurisdic-

tion to enjoin the disclosure of information within

6 Leedom v. Kyne (1958) 358 U.S. 184 at 188-90; Borden, Inc.

v. F.T.C. (7th Cir. 1974) 495 F.2d 785, 787, (‘‘the agency has

clearly violated a right secured by statute or agency regulation’’) ;

Elmo Division of Drive-X Company v. Dizon (D.C. Cir. 1965) 348

F.2d 342, 344-6.

See, also, McQueary v. Laird (10th Cir. 1971) 449 F.2d 608, 611,

Zirin v. McGinnes (3d Cir. 1960) 282 F.2d 113, 115, cert. denied

364 U.S. 921 (1960), and Green v. Connally (D.C. three-judge

et. 1971) 330 F. Supp. 1150, 1172, aff’d. sub nom. Coit v. Green,

404 U.S. 997 (1971).

In McQueary, the court said :

‘Tf a federal officer does or attempts to do acts which are in

excess of his authority or under authority not validly con-

ferred, equity has jurisdiction to restrain him.’’

Green is perhaps more forceful :

‘‘The Federal courts have power to correct improper or

inadequate action of Federal! officials not only, as in the case

of State officials, for failure to observe constitutional limits,

but also for failure to act in consonance with pertinent Federal

legislation. ’’

6a The District Court found the presence of the jurisdictional

amount under § 1331 and the defendants have not contested this

finding of jurisdictional amount.

42a

Exemption 4. To understand this exemption and to

determine its scope and application, we must look first

to the legislative intent or purpose in enacting the

FOLA itself. It is clear that the Act’s basic purpose

‘‘was to protect the people’s right to obtain informa-

tion about their government, to know what their gov-

ernment is doing and to obtain information about

government activities and policies’ and to remedy the

‘“‘mischief’’ of ‘‘arbitrary and self-serving withhold-

ing, by agencies which are not directly responsible to

the people, of official information on how the govern-

ment is operating through the use of vague phraseology

in Section 3 of the Administration Procedure Act.’ “

** Note, A Review of the Fourth Exemption of the Freedom of

Information Act, 9 Akron L. Rev. 673, 694 (1976). The full text on

this point is:

‘‘One factor which seems to have received little attention in

analyzing the purpose of Exemption 4 is that the mischief

which Congress was attempting to remedy was the arbitrary

and self-serving withholding, by agencies which are not directly

responsible to the people, or official information on how the

government is operating througi the use of vague phraseology

in Section 3: of the Administrative Procedure Act. The pur-

pose of the Freedom of Information Act was to protect the

people's right to obtain information about their government,

to know what their government is doing, and to obtain informa-

tion about government activities and policies. The Freedom of

Information Act was not enacted for the purpose of enabling

the public to obtain information about individuals and corpo-

rations, about what those individuals and corporations are

doing, or about what their activities and policies are.

‘Disclosure of any information which corporations have

traditionally kept secret for valid competitive reasons strikes

at the heart of the free enterprise system and was undoubtedly

what Congress intended to guard against when, in expressing

the purpose of Exemption 4, it stated :

‘* “This exception is necessary to protect the confidentiality

——

— aly eee ee 4. me

43a

‘‘One cannot, however, review the hearings and com-

mittee reports accompanying the FOIA without recog-

nizing that Congress was also deeply concerned with

protecting an individual’s right of privacy and thus

designed some of the exemptions to accommodate what

it perceived to be legitimate private as well as govern-

mental interests.’’ (Italics in text) In drafting the

Act, Congress sought carefully to balance the right of

the public to know what its government was doing

against the rights of the individual to the privacy of

private confidential information” and to make clear

of information . . . which would customarily not be re-

leased to the public by the person from whom it was

obtained.’ ”’

** The full text of this part of the Note in 1975 Duke L. J. at

431-2, is as follows:

‘‘One cannot, however, review the hearings and committee

reports accompanying the FOIA without recognizing that Con-

gress was also deeply concerned with protecting an individual’s

right of privacy and thus designed some of the exceptions to

accommodate what it perceived to be legitimate private as well

as governmental interests. Tests devised by courts interpreting

the exemptions dealing with privately submitted material to

determine whether certain information can be withheld under

those exemptions have incorporated this desire to protect

legitimate private interests, probably with the expectation that

an agency will respect such interests and assert the exemption

for their protection. * * * Where the exemption was intended

to protect the asserted private interest, an ageney should re-

spect the desire of the person submitting the information, and

a court, consistent with the overall policy of the FOIA, may

order the agency to withhold that information.’’ Italics added )

* See, S. Rep. 813, 89th Cong., Ist Sess. (1965) :

‘“The committee feels that this bill, as amended, would

establish a much-needed policy of disclosure, while balancing

the necessary interest of confidentiality.’’

44a

the distinction between the right of the public to infor-

mation and the right of the individuals to protection

from disclosure of certain confidential private informa-

tion. In summary, the Act was intended, to use the

language of the Senate report, to set ‘‘up workable

standards for what records should and should not be

open to public inspection.’’* (Emphasis added) And

one of the sections of the Act, which declared what pri-

vate information acquired by the government ‘‘shcould

not be open to public disclosure’? was Exemption 4.

That exemption declared that ‘‘commercial or financial

information obtained from any person and privileged

or confidential’ should ‘‘not be open to disclosure.”’

And, as we have already seen, the term ‘‘confidential,’’

as used in the statute, covers information, the release

of which would ‘‘cause substantial harm to the -om-

petitive position of the person from whom the infor-

mation was obtained.’’® The protection from disclo-

sure given such information by Exemption 4 was stated

in the legislative hearings to have been granted to such

information ‘‘not only as a matter of fairness, but as

a matter of right, and as a matter basic to our free

enterprise system.’’“ (Italics added) In enacting

such exemption, the Congress had balanced the right

to public disclosure against the right of the private

party to protection and had opted for the right to

privacy in favor of the private interest.” This pro-

* S. Rep. No. 813, 89th Cong., 2d Sess. at p. 5 (1965).

*" See 498 F.2d at 770.

°° 498 F.2d at pp. 767-69, quoting from the Senate hearings.

| * The author in 70 Nw.U. L. Rev. at 1017 is somewhat more

limited in his approach. Under his construction of the Act and its

ee ee ee Srl «whe

45a

vision in the Act was more than a simple exemption;

it represented an express affirmation of a legislative

policy favoring confidentiality of private information

furnished government agencies, the disclosure of which

might be harmful to private interests. It was mani-

festly intended to protect that private interest. And

when a statute, whether phrased in the form of an ex-

emption or not, grants a private party protection from

disclosure, it carries with it an implied right in the

private party to invoke the equity powers of a court

to assure him that protection. It matters not that the

statute does not in express terms accord him that right.

Bannercraft, as we have seen, disposed of the contrary

argument by declaring that, in addition to the express

grant of jurisdiction in the Act itself, there was avail-

able to any proper party the right to invoke the broad

general jurisdiction of equity in the assertion of a

right under the Act. And this would cover the right

of the private party seeking the protection given by

Exemption 4. The Court said as much in National

Parks and Conservation Ass’n. v. Morton, supra,

498 F.2d at 770. It declared that ‘‘[t]he exemption

[i.e., Exemption 4] may be invoked for the benefit of

policies, an agency, if it chose to disclose material falling within

Exemption 4, would be under a ‘‘burden * * * to demonstrate that

the public interest requires disclosure of an individual’s confidential

information,’’ and ‘‘absent a strong, countervailing public need to

know,”’ injunctive relief against disclosure is appropriate. The de-

fendants made no such showing in this case. In fact, they made no

real defense in Westinghouse, see 9 Akron L. R. at 683, and certainly

not on this ground in the other cases. Even if the courts may engage

in a balancing of interests, despite the prior balancing by Congress,

there was no basis for such balancing in this case, as we later

indicate.

46a

the person who has provided commercial or financial

information if it can be shown that public disclosure

is likely to cause substantial harm to his competitive

position.’’”° The Court in Sears, Roebuck & Co. v.

General Services Adm’n. (D.C.D. 1974) 384 F. Supp.

996, 1001, echoed the same thought, putting it that ‘‘[a]

decision to release information is no less susceptible to

court review than a decision to deny disclosure.’’ Sears

was reversed in part and affirmed in part in 509 F.2d

527, but in so doing the Court of Appeals’ decision has

been construed as holding ‘‘that a person submitting

information to the government can invoke the FOIA

exemptions to enforce nondisclosure of exempt ma-

terial.’’™ (Italics added )

And the idea that the supplier of private informa-

tion which may fall within Exemption 4 is entitled to

seek independent judicial protection under the federal-

question jurisdiction statute is approved generally by

the legal commentators. Thus, in a recent Note in 70

Northwestern L. Rev. 995 (1976), titled ‘“‘ Reverse-

Freedom of Information Act Suits: Confidential In-

formation in Search of Protection,’’ the author states

(pp. 998-9) :

‘* Although National Parks demonstrated a clear

congressional intent to exclude confidential busi-

ness materials submitted to a Government agency

from the disclosure requirements of the FOTA,

it is not clear who was intended to enforce that

7° See, Neal-Cooper Grain Company v. Kissinger, supra, 385 F.

Supp. at 775, as quoted supra, n. 41.

71 Note, 1975 Duke L. J. at 429, n. 60.

47a

right, the agency or the indi-idual whose materials

may be disclosed. Several reasons exist for pre-

ferring private civil actions over agency enforce-

ment. First, from the perspsective of an individual

required to submit information to the Government,

the agencies cannot always be relied upon to pro-

tect adequately the confidentiality of that infor-

mation. One commentator has stated: [O’Reilly,

Government Disclosure of Private Secrets Under

the Freedom of Information Act, 30 Bus. Lawyer

1125, 1134 (1975) ]

‘Counsel for the agency, prime target of the

disclosure-oriented FOIA has little or no in-

centive to protect the secrets of the business

community. Exemption (4) [trade secrets and

commercial or financial information] does not

require confidentiality but leaves the burden on

the agency to assert it. It may be bad for ap-

pearances in a period of ‘‘openness’’ and ‘‘hon-

esty’’ for an agency to refuse disclosure from

its files.’

‘*Moreover, the individual is more aware than

the agency of the potential competitive harm he

will suffer should information be released. Self-

representation theoretically insures the plaintiff

of both zeal and expertise in the advancement of

this claim of confidentiality. Finally, an indi-

vidual seeking to prevent disclosure may find his

administrative remedies either nonexistent or in-

adequate. Virtually all agency regulations imple-

menting the FOIA provide administrative appeal

procedures for a decision to withhold information.

48a

However, virtually no agency has established ap-

peal procedures for a decision to disclose informa-

tion.

‘‘Therefore, absent the availability of reverse-

injunctive suits, individuals would be unable to

prevent effectively the economic injury to their

businesses that could result from the release of

trade information to a competitor. Such a check

on agency action, it should be noted, is consistent

with the FOIA’s attempt to balance the goal of

agency disclosure against the need to combat ad-

ministrative arbitrariness and to protect certain

rights of privacy and confidentiality.’’ ”

The same thought was set forth in the Note in 1975

Duke L. J. at 431-2:

72 In this same article, the author, in developing the principle

under which a supplier may directly challenge a decision to disclose

exempt material, basing federal jurisdiction under § 1331 on the

FOIA itself, said (p. 1011) :

‘‘It seems clear, therefore, that the FOIA does not auto-

matically require relief for the reverse-FOIA plaintiff, because

the Act does not forbid disclosure of exempted materials. Thus,

relief must be predicated upon an indirect application of the

FOIA in light of the policies underlying the Act and its ex-

emptions. If a particular disclosure would be contrary to a

policy of the Act, a court may properly find that an agency

‘abused its discretion’ in deciding to release the information

—an approach coupling the policy considerations of the FOIA

with the remedial provisions of the APA.’’

And then to make it clear, he is referring primarily to Exemp-

tion 4, the author adds in footnote 92:

““# * * For the policies, especially in a fourth exemption con-

fidentiality question, may lead a court to conclude that a par-

ticular disclosure constitutes an abuse of agency discretion and

therefore may be enjoined.”’

. vada

49a

‘‘* * * Where the exemption was intended to pro-

tect the asserted private interest, (which, we in-

terpolate, was the obvious purpose of Exemption

4) an agency should respect the desire of the per-

son submitting the information, and a court, con-

sistent with the overall policy of the FOLA, may

order the agency to withhold that information.”’

Actually, there seems to be no real dispute over the

right of the private party to be protected from the dis-

closure of private confidential information qualifying

under Exemption 4. The only issue is, as the writer of

the article in Northwestern Law Review suggests,

whether it is the agency or the private party who may

invoke it. The writer of the Note in Duke Law Journal,

just quoted, goes further and states that the ‘‘agency

should respect the desire of the person submitting the

information,’’ and when the supplier claims the exemp-

tion, the agency should refuse disclosure. This sug-

gestion seems to have been in the mind of the writer of

the Note in 41 University of Chicago Law Review at

574, when he indicated that the agency should respect

the claim to confidentiality under the exemption, there-

by precipitating an action by the requestor, whereupon

the supplier of the information could intervene in that

action and secure a de novo trial on the confidentiality

of the information under the Act. This, to say the

least, is the circuitous way of protecting the rights of

the supplier of the information. Moreover, there is

always the real risk that the agency itself will be de-

linquent in asserting the rights of the private party.

After all, it could not care less about protecting the

50a

competitive position of a supplier of information. That

is no part of its responsibility. Neither does it have,

as has already been observed, in most instances, suf-

ficient knowledge to assert properly the private party’s

right to confidentiality. And it must not be forgotten

that the protection of a competitive position is both a

valuable and often complex matter, dependent upon

full proof,” and one ‘‘basie to our free enterprise

system.’’ Should not the person who is threatened with

harm through a disclosure, which the Congress has in-

dicated clearly is against the public policy as expressed

in the FOIA itself, be the proper one to assert that

73 In 9 Akron L. Rev. at 683-4, the writer states:

‘“‘* * * Although there may be instances in our highly regu-

lated economic system when basic economic principles no longer

effectively operate, the industrial sector is still highly competi-

tive. Corporations have varying numbers of market and finan-

cial specialists who continually search out fragments of in-

formation about competitors and markets from any available

source; published government statistics and information, vari-

ous legislative documents, analyses and surveys performed by

consultants, field surveys performed by corporate specialists,

information continually obtained and reported by sales per-

sonnel, or disclosures by government agencies. Since govern-

ment-derived information is often submitted according to

statutory or regulatory requirement, it is usually more credible

than information from other sources ; the latter usually depends

on what a company decides, for its own carefully considered

reasons, to make available. An additional reliable ‘fragment’

of information may be enough to bring the whole picture into

much clearer focus and could conceivably mean the difference

between success or failure in certain contract bidding situations.

The importance of a court’s decision on disclosure in any given

case is magnified by the fact that a number of jobs and possibly

the future of a business may hinge on obtaining a given con-

tract, depending on the industry involved and a number of

other factors.’’

ee ee

2 Sve ae

5la

right to protection from disclosure assured him under

Exemption 4, in an equity action in which he can have

a de novo trial? The envious competitor or the curious

busybody demanding access to that private information

has the right to such a de novo trial. The Act gives it to

him. But is not the same right to be implied, when the

supplier, with a right that Congress gave him ‘‘not only

as a matter of fairness but as a matter of right,’’ seeks

what may be regarded as correlative relief? This right

was given him in Charles River Park, though incident

to an APA review.“ That it qualifies under statutory

federal-question jurisdiction is the conclusion of the

writers of the Notes in 1976 Duke Law Journal at

351-2 and in 70 Northwestern Law Review at 1008.

In the latter Note, the editor states:

‘* Although no clear test for deciding whether an

action ‘arises under’ federal law has been devel-

oped, it can safely be said that a substantial claim

based on an interpretation of a federal statute is

sufficient to satisfy the arising under requirement.

In a reverse-FOIA suit, the plaintiff’s claim for

relief requires a determination of what commer-

cial and financial information is confidential within

the meaning of section 552(b)(4). Thus, it seems

clear that such an action arises under federal law

for purposes of statutory federal question juris-

diction.’’ (Italics added)

** 519 F.2d at 940, n. 4:

‘‘* * * Thus, the district court should hold a hearing to deter-

mine whether the information involved here would have been

exempt just as it would if a suit had been brought under the

FOIA to compel disclosure.’”’

52a

We agree. In our opinion, federal-question jurisdiction

does exist for an implied action by the private party to

protect his right to protection from disclosure, stated

as a general over-all legislative policy in Exemption 4

of the FOIA.

Nor would the plea of sovereign immunity, so earn-

estly argued by the defendants, be any more available,

where jurisdiction is invoked under § 1331, than it

would be in an APA suit, to which we have already

adverted.” It has been long accepted that an action

to enjoin a federal official from doing an act beyond

his statutory power or authority—the situation here

where the threatened disclosure is alleged to be vio-

lative of the prohibition imposed upon the defend-

ants both by § 1905 and by Department regulations—

and violative of a right of privacy granted under

Exemption 4 of the FOILA—represents an exception to

the application of the plea of sovereign immunity. This

was made clear in Larson v. Domestic & Foreiyn Corp.

(1949) 337 U. S. 682, 689, reh. denied 338 U. 8. 840

(1949), in which the Court said that, ‘‘where the offi-

cer’s powers are limited by statute, his actions beyond

those limitations are considered individual and not

sovereign actions. * * * His actions are ultra vires

his authority and therefore may be made the object

of specific relief.’’"* This exception to the right of

sovereign immunity has been often applied. Indeed,

in Ragland v. Mueller (5th Cir. 1972) 460 F.2d 1196,

1197, a plea of sovereign immunity in a case for injunc-

78 See note 59, supra. 4

76 See Cramton, 68 Mich. L. Rev. at p. 404.

53a

tive relief against proposed official action in violation

of law was dismissed as ‘‘border[ing] on the frivolous.”

And in De Masters v. Arend (9th Cir. 1963) 313 F.2d

79, 85, appeal dismissed 375 U.S. 936 (1963), the Court

said:

““* * * However, it appellants were indeed pro-

hibited by Section 7605(b) or the Fourth Amend-

ment from initiating this inquiry, a suit to restrain

their unlawful conduct would not be barred by the

doctrine of sovereign immunity.’’

Recent cases to the same effect are Eastern Kentucky

Welfare Rights Org. v. Simon (D.C. Cir. 1974) 506

F.2d 1278, 1282, cert. granted 421 U.S. 975 (1975);

Bowers v. Campbell (9th Cir. 1974) 505 F.2d 1155,

1158; State Highway Commission of Missouri v. Volpe

(8th Cir. 1973) 479 F.2d 1099, 1123. And other courts

have specifically held that the doctrine was inapplicable

where an agency or officer was proposing to take action

illegal under any statute prohibiting disclosure of in-

formation exempt under FOIA.”

Since these actions find their jurisdiction properly

based on § 1331 and since the doctrine of sovereign

immunity is not applicable, the District Court properly

received evidence, even though the evidence was largely

expert testimony calculated to inform the court of the

nature of the information so that the court could better

determine whether it fell within the statutory definition

™ Charles River Park ‘‘A’’, Inc. v. Department of H. & U.D.,

supra, 519 F.2d at 941, n. 7; Sears, Roebuck & Co. v. General Serv-

ices Admin., supra, 509 F.2d at 529 and Neal-Cooper Grain Com-

pany v. Kissinger, supra, 385 F. Supp. at 776.

54a

of Exemption 4 and the statutory language of § 1905.

This was specifically held in Sears, Roebuck and Co.

v. General Services Admin., supra, 402 F. Supp. at

382-3. In that case, the issue was ‘‘the standard to be

applied by this Court in its review of the agency’s

decision’’ to disclose. The court stated that all parties

agreed that the FOLIA directed a de novo review where

the agency’s decision not to disclose was challenged. It

recognized that if review were being had under the

APA, the agency’s decision could only be reviewed on

the ground of whether it was ‘‘arbitrary and caprici-

ous.’’ ‘‘ But,’’ it declared, ‘‘since Sears has filed a valid

declaratory judgment action on whether any of the doc-

uments are exempt under the FOTA, this Court will

apply the de novo standard mandated by the Informa-

tion Act’’ for resolving the issue whether the informa-

tion is exempt. Actually, this is substantially the same

procedure approved by Charles River Park for pro-

ceedings in this regard under the APA, as we have

seen.”* It would be an incredible rule that a legislative

prohibition such as § 1905, fixing limits on executive

action for the benefit of the plaintiffs, is to be construed

and applied by the executive, with only a right of re-

view for arbitrariness on the part of those for whose

benefit the statutes were enacted. This would be tanta-

mount to committing the execution of such law to ‘‘the

self-restraint of the executive branch’’ itself, see

™ See 1976 Duke L. J. at 334, n. 18:

‘‘In Charles River Park ‘A’, Ine. v. HUD, 519 F.2d 935

(D.C.Cir. 1975), it was determined that the scope of the court’s

inquiry on the issue of whether the information is within an

exemption should be that of de novo review.’’

aU atetes, Veo. wer euibed w Rt we

ch re

55a

Fleming v. Moberly Milk Products Co., supra, 160 F.2d

at 265, and making the executive’s ipse dizit final, see

Weisberg v. Department of Justice, supra, 489 F.2d at

1202. It would be grossly unfair, as we have already

said, to force the supplier of information which carries

some indicia of confidentiality under both § 1905 and

Exemption 4, to rely wholly on the agency. Such a rul-

ing limiting the supplier to a challenge of arbitrariness

alone against the agency’s decision to disclose would be

contrary to the whole thrust of the FOIA, since ‘‘be-

cause the FOIA was enacted expressly to combat ad-

ministrative arbitrariness, Congress clearly did not

intend to commit the disclosure decision totally to

agency discretion ;’’ and this was stated to be true in the

reverse-FOIA case.” The supplier, if his claim to pro-

tection is as Morton declared a ‘‘matter of right,’’ is

entitled to a fair and adequate hearing, on proper

evidence, in the courts, one that is no less broad and

adequate than that given the merely curious who may

seek disclosure. To repeat, when the issue is whether

certain information is without a prohibition of dis-

closure, whether because ‘‘confidential’’ within both

§ 1905 and Exemption 4 or because of national security

privilege, it is for the court itself to determine ‘‘ whether

the circumstances are appropriate for the claim’’ and

not the executive department concerned and ‘‘the courts

must be satisfiea from all the evidence and circum-

stances,”’ that the information is within or without the

prohibition or privilege. This is so, because ‘‘[j ]udicial

control over the evidence in [such] a case cannot be

7°70 Nw. U. L. R. at 1004.

56a

abdicated to the caprice of executive officers.’’ Umted

States v. Reynolds (1953) 345 U.S. 1, at 8-10."

Nor can the defendants fault the findings of fact as

made by the District Court to the effect that the in-

formation ordered not to be disclosed qualified as ‘‘con-

fidentially’’ exempt under Exemption 4 and within the

prohibition of § 1905. In fact, they make no assault in

their briefs in this Court on the District Court’s factual

findings. Nor would it be easy for them to do so. It

is in the record of the trial of the consolidated cases

that the defendants conceded that in the earlier West-

inghouse Case the District Court had properly deter-

mined the confidentiality issue ‘‘ [o]n the evidence he

had before him.’’ And the defendants have otherwise

conceded that some of the material in the reports in

question was exempt from disclosure under Exemption

4 and they refused to disclose for that reason. They

reaffirmed this in Robertson v. Department of Defense

(D.C.D. 1975) 402 F. Supp. 1342, 1345, where in an

action involving similar reports filed by the plaintiff

General Motors, the Court stated the defendants ‘‘have

taken the position that certain portions of the docu-

ments are confidential commercial or financial data

which, if released, could injure GM’s competitive posi-

tion and are exempt from disclosure under the fourth

exemption. Other portions would be disclosed were it

not for the Virginia injunction. These defendants have

not taken any position on the two motions presently

before the Court—that of GM for summary judgment

and Robertson for partial summary judgment.’’ It is

*° This case was cited with approval to this point in Nizon v.

United States (1974) 418 U.S. 683, 715.

Mane Ss Se

57a

true that the District Court extended protection beyond

that agreed upon by the defendants but, in so doing,

the District Court was making a finding of fact, based

on an in camera examination of the reports, and the

defendants offer no reason to suggest that such a find-

ing was erroneous on the record before the District

Court. After all, the factual issue is complex and is <

matter that must be left to the informed judgment of

the District Court. We, therefore, find no error in the

procedure followed in these cases by the District Court,

or the result reached, and this would be true whether

jurisdiction was being exercised under the APA or

under § 1331."

We accordingly affirm the grant of injunctive relief

in favor of the plaintiffs and sustain the denial of

declaratory relief as provided in the judgments of the

Distri‘t Court, for the reasons stated herein.

The decisions of the District Court in the three cases

therefore are

AFFIRMED.

*! In the Note in 1975 Duke L.J. at 432, n. 72, the author states:

‘“‘* * * The weakness in the Westinghouse and United States

Steel opinions is in their implication that exemptions compel

the withholding of all information which would qualify as ex-

empt, regardless of a request by a private party for non-

disclosure.’’

This statement is somewhat inexplicable, since the plaintiffs did

object both administratively and by the institution of these actions.

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Alexandria Division

WEsTINGHOUSE ELECTRIC CORPORA- |

TION, ET AL.,

eames \Crvi. ACTION

v. No. 118-74-A

JAMES R. SCHLESINGER, ET AL.,

DEFENDANTS.

MEMORANDUM OPINION

This is an action brought by a corporation ( Westing-

house) and its subsidiary (Fraser & Johnston) to pre-

vent threatened disclosure of certain documents which

those entities have filed with governmental agencies.

The documents are an Employer Information Report

(EEO-1) filed by a Westinghouse facility in East Pitts-

burg, Pennsylvania, and an Affirmative Action Pro-

gram (AAP) filed by Fraser & Johnston with the De-

fense Supply Agency or the Office of Federal Contract

Compliance (OFCC) or a Joint Reporting Committee.

The EEO-1 is required to be filed by 41 CFR § 60-1.7

and the AAP is required to be developed by 41 CFR

§ 60-1.40. These regulations were promulgated by the

Secretary of Labor pursuant to Executive Orders 11246

and 11375 and relate to the ‘‘promotion and insuring

of equal opportunities for all persons, without regard

to race, color, religion, sex, or national origin, employed

or seeking employment with Government contractors

*** ' 41 CFR §60-1.1.

58a

eT AAC. edtaed O« aor

atid .

Br. EE bk hee Chet A

59a

The Hill House Association (Hill), on October 17,

1973, requested the release of the latest EEO-1 form

filed by the Westinghouse facility. Earlier the Legal

Aid Society of ‘Alameda County (Alameda) had re-

quested release of Fraser & Johnston’s 1972 AAP. The

recipients of the requests in each instance notified

Westinghouse and Fraser & Johnston of the requests.

These companies objected to the releases and after an

exchange of correspondence and meetings between the

companies and the agencies, the latter determined on

November 30, 1973, to release the AAP of Fraser &

Johnston and on February 13, 1974, to release the EEO-

1 of Westinghouse. This action was filed on March 6,

1974.

By agreement of the parties, a temporary restraining

order was entered on March 8, 1974, and the case was

set for hearing of the application for a preliminary

injunction on March 27, 1974, the Court also advancing

the trial of the action on the merits to that date and

consolidating it with the hearing on the application.

The case was tried on March 27, 1974 as scheduled,

Alameda and Hill having in the meantime moved to

intervene as parties defendant. The other parties con-

sented to the intervention and the intervenors partici-

pated in the trial.

Initially the defendants contest the jurisdiction of

the Court. While numerous grounds of jurisdiction

are asserted by the plaintiffs,’ the Court finds that

jurisdiction exists under 28 U.S.C. § 1331, the injury

sought to be prevented being sufficiently alleged in the

*5 U.S.C. §§ 702, 704; 38 U.S.C. § 1337; 38 U.S.C. § 1346; 28

U.S.C. §§ 2201-02 ; 28 U.S.C. § 1331.

60a

complaint as being in excess of the requisite jurisdic-

tional amount, and the action arising under the Free-

dom of Information Act (FOIA), 5 U.S.C. § 552, under

the Civil Rights Act of 1964, 42 U.S.C. § 2000e, and

under 18 U.S.C. § 1905.

The defendants also, of course, raise the defense of

sovereign immunity. They say that while the action is

nominally against the federal officers who head the

agencies involved it is actually one against the United

States. The Court concludes that the relief sought,

if granted, would not ‘‘expend itself on the public

treasury or domain, or interfere with the public ad-

ministration’’ to the extent that the Government would

be ‘‘stopped in its tracks.’’ Land v. Dollar, 330 U.S.

731, 738 (1947) ; Larson v. Domestic & Foretgn Corp.,

337 U.S. 682, 704 (1949) ; and that the actions of the

federal officers are sufficiently alleged to be beyond their

statutory powers so that those actions would not be

the actions of the sovereign. Dugan v. Rank, 372 U.S.

609, 621 (1963).

Plaintiffs base their claim for relief on certain

exemptions from required disclosure contained in 5

U.S.C. § 552, and on 18 U.S.C. § 1905 which, although

a criminal statute making unlawful certain disclosures,

is invoked civilly to effectuate the congressional] pur-

pose. Wyandotte Co. v. United States, 389 U.S. 191, 202

(1967) ; J. I. Case Co. v. Borak, 377 U.S. 426 (1964).

Insofar as the exemptions provided by the Freedom

of Information Act are concerned, the Court does not

base its decision on the exemption contained in 5 U.S.C.

§552(b)(3) for matters ‘‘(3) specifically exempted

from disclosure by statute,’’ although the plaintiffs’

ie fe ed ee ee eee Se és

di eGettle> is edicsn viel an

So. ee ee ee x.

6la

argument here does raise substantial questions. The

statute they invoke as specifically prohibiting disclos-

ure is §709(e) of the Civil Rights Act of 1964, 42

U.S.C. § 2000e-8(e). This statute created the Equal

Employment Opportunity Commission, and by its terms

applies only to that agency. The Joint Reporting Com-

mittee and the OFCC were created by regulations pro-

mulgated by the Secretary of Labor pursuant to Execu-

tive Order 11246, which, of course, mentions neither

a Joint Reporting Committee nor an OF CC. That order

purports, at least in part to effectuate the provisions of

42 U.S.C. § 2000e insofar as firms having contracts with

the Government are concerned. It is therefore arguable

that the ultimate authority for the Joint Reporting

Committee and OFCC is 42 U.S.C. § 2000e; that they

are alter egos of the EEOC; and that they should be

subject to the disclosure restriction of 42 U.S.C. § 2000e-

8(e).

Conciliation is the preferred policy for matters com-

ing within the jurisdiction of the EEOC, a policy which

is subverted by public disclosure. There would argu-

ably be a circumvention of that policy if defendants

were allowed, by virtue of an Executive Order grounded

on § 2000e, to set up separate agencies which collected

the same or similar data as the EEOC, but which were

not bound by restrictions against disclosure. Weighed

against this, of course, would be the policy of liberally

interpreting the FOLA in favor of disclosure and con-

sequently of narrowly interpreting statutory exemp-

tions. However, it is not at all clear that § 2000e was

the basis for Executive Order 11246. Moreover, the

existence of Executive Order 10925, 1961 U S. Code

62a

Cong. & Ad. News 1274, promulgated prior to passage

of § 2000e, lends support to the argument that Execu-

tive Order 11246 has a basis independent of § 2000e,

being grounded instead in another statute or in an in-

herent power of the Executive branch to choose the

terms of Government contracts. As stated, though, the

decision in this case is not based on the exemptions

found in § 2000e-8(e) and 5 U.S.C. § 552(b) (3), and

the Court need not decide those issues.

The Court concludes, however, that the disclosure

of the EEO-1 and AAP is prohibited by the exemption

contained in 5 U.S.C. § 552(b) (4) for matters that are

‘*(4) trade secrets and commercial or financial infor-

mation obtained from a person and privileged or con-

fidential. . . .”’ The Court finds here, from the testi-

mony of Professor Rutenberg, that the parts of the

AAP hereafter specified and the EEO-1 contain com-

mercial or financial information which is confidential.’

While he had not viewed the two documents sought by

the intervenors, he was in a position, from his familiar-

ity with the regulations which prescribed the contents

of the documents, to evaluate the effect of revelation of

those contents. His conclusion was that with this in-

formation a competitor could deduce labor costs of the

plaintiffs, the most difficult area for a competitor to

learn ir making strategic decisions. From this can be

extrapolated a company’s profit margin and resulting

vulnerability to price change. Moreover, viewing the

same documents over a period of time would enable a

competitor to obtain a forewarning on new products

? See attached Appendix.

eee

63a

and process changes being undertaken by the plaintifts.

Comparing this testimony with the EEO-1 and AAP

in question confirms the witness’s conclusion. The Court

relies on the testimony as well as on the nature of the

material, not the mere claim of the plaintiffs, in deter-

mining that confidentiality exists. In reaching the con-

clusion the Court has followed the purpose of the

exemption as set forth in Bristol-Myers Company v.

F. T. C., 424 F.2d 935, 938 (D. C. Cir. 1970):

This provision serves the important function of

protecting the privacy and the competitive position

of the citizen who offers information to assist gov-

ernment policy makers.

In Sterling Drug Inc. v. F. T. C., 450 F.2d 698, 709

(D. C. Cir. 1971), the court apparently adopted the

standard for coverage by the exemption which was

set forth in the Senate Report on the Freedom of In-

formation Act, namely:

This exception is necessary to protect the con-

fidentiality of information which is obtained by

the Government through questionnaires or other

inquiries, but which would customarily not be

released to the public by the person from whom it

was obtained. This would include business sales

statistics, inventories, customer lists, and manu-

facturing processes.

S. Rep. No. 813, 89th Cong., 2d Sess. 9 (1964). The

House Reports add:

It would also include information which is con-

fidential, since a citizen must be able to confide in

64a

his Government. Moreover, where the Government

has obligated itself in good faith not to disclose

documents or information which it receives, it

should be able to honor such obligations.

H.R. Rep. No. 1497, 89th Cong., 2d Sess. 10 (1964).

18 U.S.C. § 1905, which makes it a crime for a gov-

ernmental official to disclose information if ‘‘not au-

thorized by law”’ to do so, also supports the relief re-

quested by plaintiffs. It can be argued that reliance on

this statute begs the question where the Government

invokes it to prevent disclosure sought pursuant to

FOIA. However, such is not the case where the potenti-

ally injured party invokes this statute to prevent the

Government from disclosing information to a third

party, for this is the precise situation dealt with by

§ 1905. In view of the finding of confidentiality set

forth above, and the relation of the information con-

tained in the documents to processes, operations and

profit margins, the statute is clearly applicable here.

Cf. J. I. Case Co. v. Borak, supra.

The defendants argue that the FOIA is authority

only for disclosing information, not withholding it, and

consequently cannot be used as a vehicle to prevent

disclosure; that the exemptions are permissive only,

being categories of information which may be exempt

by an agency; and that this is a matter largely com-

mitted to agency discretion. The Court rejects thie

argument. It makes the statutory exemption meaning-

less and flies in the face of the protective purpose of

the exemption as enunciated in the Senate and House

Reports quoted above as well as in Bristol-Myers Co.

65a

v. F. T. C., supra. The Court recognizes that that case,

like most of the others arising under the FOLA, in-

volved an instance where a plaintiff sought and the

governmental agency contested disclosure. This does

not mean, however, that a plaintiff which the exemption

is designed to protect may not properly invoke that

exemption where disclosure is threatened.

Insofar as being committed to agency discretion is

concerned, the disclosure portion of the regulations

itself recognizes an exemption of confidential informa-

tion, with and without reference to the FOLA. 41 CFR

§ 60-40.3. The FOIA cannot permit agency discretion

to the extent that such discretion precludes de novo

determination by a court of the entitlement to an exemp-

tion under FOIA.

Plaintiffs also contend that the materials in question

are ‘investigatory files’’ within the meaning of 5 U.S.C.

§ 552(b) (7). However, the purpose of that exemption

is only “‘to prevent premature discovery by a defend-

ant in an enforcement proceeding,’ Wellford v.

Hardin, 444 F.2d 21, 23 (4th Cir. 1971), and it is in-

applicable to the facts of this case.

Nor does the Court conclude that the defendants are

bound by language of confidentiality which plaintiffs

read into the receipts for the AAPs signed by the Con-

tract Compliance Officers. These seem no more than

an attempt by plaintiffs to assert their ownership of

the documents, an attempt pursued at trial. The own-

ership of the documents, however, is not determinative

of the outcome of this case.

In view of the foregoing, reviewability of the

agencies’ action under the Administrative Procedure

66a

Act, 5 U.S.C. §701, et seq., and whether that action

ean stand under the standard of review of the Act

need not be considered.

The Court accordingly concludes that that part of

the EEO-1 (Exhibit A) filed by Westinghouse which

is under the heading ‘‘Section D—EMPLOYMENT

DATA” may not be disclosed and that only that part

of the AAP (Exhibit C) which appears in Exhibit B

may be disclosed.

Plaintiffs have requested a declaratory judgment

that disclosure of any EEO-1 reports or AAPS of

plaintiffs is prohibited. This is further relief than the

Court feels is warranted. The Court holds no more

here than that certain portions of two specific docu-

ments which the Court has had the opportunity to

examine must not be disclosed. The requested declara-

tory relief would necessarily cover information yet to

be prepared which may or may not be confidential in

nature.

A decree enjoining defendants from disclosure other

than in accordance with the foregoing should be pre-

pared by counsel for the plaintiffs and presented for

entry after submission to counsel for defendants and

intervenors for approval as to form.

ALBERT V. BRYAN

United States District Judge

Alexandria, Virginia

April 2nd, 1974

APPENDIX

“BY MR. DRIVER:

Q. Dr. Rutenberg, in referring to the EEO1 report,

if you would look at it, please, sir, and from the break-

down of that report are you able in your area of knowl-

edge to come up with opinions as to the work force and

corporate vulnerability of a company ?

A. Definitely, yes.

Q. All right.

A. With this information, this is the most—the area

of information is the most difficult to get in making

strategic decisions. This is the area of the cost, the

variable cost, which is primarily employee cost broken

down in a lot of detail. There are nine categories here.

Q. All right, sir. With that information, what might.

you in corporate planning or strategic deduce about a

company’s competitive position ?

A. Okay. From this information I can—with this

information, knowing where the facility is, I can get

the wage rates from competitive indices, from employ-

ment services and so on.

From this I can infer the labor cost of the facility.

Knowing the labor cost—the cost of the product is

based on the labor cost plus the material cost. If I

know that, and the material cost is gettable by what is

called volume analysis and purchasing and engineering

design. If I know those two components, I then know

the facility’s profit margin. I can get that information

fairly readily.

With the material in the affirmative action program,

67a

68a

I have such detail I can get a very precise fix on the

variable manufacturing cost per unit, and from this

the profit margin per unit of this facility.

If I am a competitor, I can then think through the

effect—and particularly if I am a dominant competi-

tor—I can think through the effect of a price change

on the existence of this facility. This is a competitive

vulnerability of this facility to a price change.

Q. Take, for example, over a period of years, if you

have had three or four such documents and you start

either a reduction or an increase in a certain employee’s

category and you could pick one based on that form,

tell the Court what that might indicate to you.

A. Let’s consider the question of professionals. In

the affirmative action program, this is broken down into

a lot of categories.

One that I was looking at has 23 categories. Another

has about 18.

If I can watch the number of senior design engineers

through time, and I can watch this buildup, I can then

get a very good clue that it is very likely that this

facility, they are developing new products or new proc-

esses—I don’t know which at this time.

If I watch a number of maintenance workers, then

I can get a very good idea, broken down, again, in fine

detail, in the affirmative action program, I can get a

good idea whether it is a new process they are working

on or new product development, and from this I can

get a good forewarning as to what a competitor, what

moves a competitor will be making.

If I am not engaged in similar kinds of research, I

can immediately start doing so, and this is a fairly

69a

common practice, to have—in essence, strive for some

forewarning of a competitor’s process, of a competitor’s

product.

If I can get that kind of information, I can embark

on my own catch-up research, and it is relatively easy ;

why, because it is possible to hire, to job interview

from the competitor, to hire a few people, to canvass

_ suppliers, to try to get a clue to what it is exactly that

they are buying that is unusual from their previous

buying patterns, and in this way my catch-up research

may even be cheaper than the first person’s research.”’

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE

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