Petition — Sears v. General Services Administration

Supreme Court brief1977

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— SELES -«

IN THE MAY 9% 19TT |

Supreme Court of the Anited States

OcToser TERM, 1976 | MICHAEL RODAK, JR., CLERK

76-1642

SEARS, ROEBUCK AND CO.,

No.

Petitioner,

vs.

GENERAL SERVICES ADMINISTRATION; ARTHUR F.

SAMPSON, ADMINISTRATOR, GENERAL SERVICES ADMINIS-

TRATION; E. E. MITCHELL, Director or Crvm Ruicuts,

GENERAL SERVICES ADMINISTRATION; PHILIP J. DAVIS,

Director, OFFICE of FEDERAL CONTRACT COMPLIANCE,

UNITED STATES DEPARTMENT OF LABOR; PETER J. BREN-

NAN, SECRETARY oF LaBor, UNITED STATES DEPARTMENT

OF LABor,

and

THE COUNCIL ON ECONOMIC PRIORITIES,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

LAWRENCE M. COHEN

S. RICHARD PINCUS

JerrrReY S. GOLDMAN

LEDERER, FOX AND GROVE

233 South Wacker Drive

Suite 7916

Chicago, Illinois 60606

HYMEN BEAR

Lee M. FINKEL

233 South Wacker Drive

Suite 6800

Chicago, Illinois 60684

Attorneys for Sears, Roebuck

and Co.

Gunthorp Warren Printing Company, Chicago e Financia! 6-6565

TABLE OF CONTENTS

PAGE

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i vc ccs neu pastésescodeeeeobae 5

Reasons for Granting the Petition ................... 7

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‘ TABLE OF AUTHORITIES

Cases

Brown v. Westinghouse Electric Corp., No. 76-1192, cert.

Qi aid SD nee Gp GE, GRGED 0 ccccccdviccs 7, 8,9

Chamber of Commerce v. Legal Aid Society, 432 U. S.

ED di eobands cducueeueedotwiinesaceee 10

Charles River Park “A”, Inc. v. Department of HUD, 519 _

By eee ee Ge Gn ND 0 oe ewencewececeases: 9

Chrysler Corp. v. Schlesinger, 412 F. Supp. 171 (D. Del.

STD A IE 6 66.6.66 60665666 - ctscccvceccs 9, 11-12

Crown Central Petroleum Corp. v. nanny i4 FEP Cases

GB SIGE wwreeccoweve cecewovevewectaes 11

Environmental Protection Agency v. Mink, 410 U. S. 73

SO we cee Oe ee Wiebe i cdi Wadstecsetecdoies 8

FAA Administrator v. Robertson, 422 U. S. 255 (1975)

5 odbhadhebebdaedicticcs cévedebedidecdvecd 6, 8, 9, 10

Goodyear Tire and Rubber Co. v. Dunlop, 13 FEP Cases

i cuau 0s eee60006 665000504 - 12

Holiday Inns. Inc. v. Kleppe, 13 FEP Cases 1337 (W. D.

TU, GRGD oc Desc c cocasccdecccctcccsscsccees 11

Hughes Aircraft v. Schlesinger, 384 F. Supp. 292, app.

pam, Tie, FES ob cds ccvcccccecsvce deeds st 9

Lawyers Cooperative Publishing Co. v. Schlesinger, No.

1974-212 (W. D.N. Y., July 3, 1974) ............ 12

Legal Aid Society v. Brennan, 13 FEP Cases 860 (N. D.

Ge MEE sce canuboee concunes éanpenanneaaess 12

Legal Aid Society v. Chamber of Commerce, 423 U. S.

8 PPT TET TTT TT TTT TTT TTL 1!

Legal Aid Society v. Shultz, 340 F. Supp. 771 (N. D.

Se DED Kecuaend.uepncecseccuadescecucessc 12

National Parks and Conservation Associates v. Kleppe.

$47 F. 28 673 (D. C. Cir. 1976) ... cree cence: 7,9

The Prudential Insurance Company, et al. v. National

Organization of Women, Washington, D. C. Chapter,

et al., No. 76-1052, cert. den., ............ § Vere (May

SEA se) od eecundenne nee Gs 4ctaeeseess nsec 7, 8,9

Renegotiation Board v. Bannercraft, 415 U.S. 1 (1974).. 8

Renegotiation Board v. Grumman Aircraft, 421 U. S. 168

CRUD cu cepass caves en adddbic ce he dd ues cdebexe 8

Robertson v. Department of Defense, 402 F. Supp. 1342

Ae Ge BUD occ cecescccececccesdndescenecds 12

Sears, Roebuck and Co. v. N. L. R. B., 421 U. S. 132

GREED cuccsondacecccecncocnces cddéue ctlth eda 8

Westinghouse Electric Corp. v. Schlesinger, 542 F. 2d 1212

(4th Cir. 1976) cert. den., sub nom. Brown v. Westing-

house Electric Corp., No. 76-1192. ..........6.00005 8,9

Youngstown Sheet and Tube Co. v. Sawyer, 343 U. S. 579

(1952)

ili

Statutes

Civil Rights Act of 1964:

Section 706, 42 U. S. C. § 2000e-S(b) ........... 1}

Section 709(d), 42 U. S. C. § 2000-8(d) ........ 11

Section 709(e), 42 U. S. C. § 2000e-8(e) ... .6,7, 10, 11

Freedom of Information Act:

De Oe Ge SUES ccc cccsccovcncscccecs passim

a ae ee ED kccecceccceces ahveauee 6

i 8 5 SR RE aR sara 6

ND a ee passim

BO ES 10, 11

a a ae 9

Miscellaneous

Brief for the Federal Respondents In Opposition filed in

Prudential Insurance by the Soliciter General, pp. 9-10 8

ee eee td denees oe 12

General Accounting Office Report, “The Equal Employ-

ment Opportunity Program for Federal Nonconstruction

Contractors Can Be Improved,” GAO MWD-76-63 at

pp. 31-32 (April 29, 1975) ..... 6... cece ee ee eees 12

Note, Development Under the Freedom of Information

Act—1974, 1975 Duke L. J. 416..............05. 8

1 CCH Employment Prac. Guide # 1886 (1977) ...... 5

ee i on orn och d650486665 600 CROs ceks 5

iE oo csc cwunedenseesséonnesesuecees 5

ee ee On On... vccccbesseccessecbes 12

Se cctdecducedstndseestobhides beesess 6) 5

110 Cong. Rec. 12733 (1964) (Sen. Humphrey) ...... 1]

Appendix A—Opinion of the United States Court of

Appeals for the District of Columbia Circuit, April

B, BDFD. nccccccccccccccccectebeeseseesiévess A-l

Appendix B—-Memorandum and Order of the United

States District Court for the District of Columbia,

September 10, 1974 2... 00. c cee ce eee e eee ewees B-|

Appendix C—Opinion of the United States Court of

Appeals for the District of Columbia Circuit, Decem-

8 PP ee C-l

Appendix D—Order of the United States Court of Appeals

tor the District of Columbia Circuit, January 8,

DUE Gavccuce cbausce de 6060 Genb shu ctu heeees D-1

Appendix E—Memorandum and Order of the United

States District Court for the District of Columbia,

EY Gk GSD eee ci ccccecesccvecwovccsce E-!

Appendix F—Order Withdrawing Submission in Hughes

Aircraft Company v. Schlesinger, No. 75-4064 (9th

it, I chi cen dinSuniahsntunbions Fi

Supreme Court of the United States

Octosper Term, 1976

Petitioner,

GENERAL SERVICES ADMINISTRATION; ARTHUR F.

SAMPSON, ADMINISTRATOR, GENERAL SERVICES ADMINIS-

TRATION; E. E. MITCHELL, Director or Civm Riocurts,

GENERAL SERVICES ADMINISTRATION; PHILIP J. DAVIS,

Director, Orrice or Feperat Conrract COMPLIANCE,

Unrrep States DeparTMENT or Lasor; PETER J. BREN-

NAN, Secretary or Lasor, UNITED States DerpaRTMENT

or LABOR,

and

THE COUNCIL ON ECONOMIC PRIORITIES,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

Petitioner, Sears, Roebuck and Co. (“Sears”), prays that a

writ of certiorari issue to review the judgment of the United

States Court of Appeals for the District of Columbia Circuit

entered in this case on April |, 1977.

of the stay, the court of appeals dismissed as moot an interlocu-

tory appeal from the district court's first decision. App. D, infra.

Subsequently, the district court issued a second opinion and

order (App. E, infra), reported at 402 F. Supp. 378 (D. D. C.,

1975), from which an appeal to the court of appeals was taken.

The instant petition seeks review of the court of appeals’ final

judgment on that second appeal (“Sears //"). App. A, infra.

U. S.C. 1254(1).

QUESTIONS PRESENTED

1. Whether the 18 U. S. C. $1905 prohibition against

public disclosure of confidential private data y a federal agency

falls within exemption 3 of the Freedom of Information Act,

5 U. S. C. §552(b)(3).

42 U.S. C. § 2000e-8(e) and 44 U. S. C. § 3508(a).

3. Whether a private employer's EEO-1 reports and affirma-

tive action plans are exempt from public disclosure by a federal

agency under 18 U.S. C. § 1905 and exemption 3 of the Free-

dom of Information Act.

RELEVANT STATUTES

The Freedom of Information Act (“FOIA”) provided, prior

to March 12, 1977, im part:

“§ 552 Public Information, agency rules, opinions, orders,

records and proceedings.

(3) specifically exempted from disclosure by statute.”

(3) specifically exempted from disclosure by statute (other

than section 552b of this title), provided that such statute

(A) requires that the matters to be withheld from the

public in such a manner as to leave no discretion on the

issue, or (B) establishes particular criteria for withholding

or refers to particular types of matters to be withheld,”

Section 709 of the Civil Rights Act of 1964, 42 U. S. C.

§ 2000e-8, provides in part:

> >. > > >

(e) Prohibited

It shall be unlawful

Commission to

information obtained by

authority under thi

tion. Any or employee of the Commission who shall

make public in any manner whatever any information in

violation of this subsection shall be guilty of a misdemeanor

and upon conviction thereof, shall be fined not more than

$1,000, or imprisoned not more than one year.”

44 U. S.C. § 3508(a). provides:

is released by that agency to another Federal

“1905. Disclosure of confidential information generally

Whoever, being an officer or employee of the United

States or of any department or agency thereof, publishes,

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

hy reason of any examination or investigation made by, or

STATEMENT OF THE CASE

As a government contractor, since 1968 Sears has developed

and submitted confidential data to the General Services Admin-

istration (“GSA”), its federal contract compliance agency, in

order to demonstrate compliance with Executive Order 11246

and 11375. Such data was provided with the express under-

standing that it would not be publicly disclosed. Joint Appendia

below (“J. A.”) 215 and Supplemental Appendix below (“S.

A.”) 304-307. Included with the material filed with GSA

are separate EEO-! reports (standard form 100)' and

affirmative action plans and reports (“APP’s”)’ for each of

Sears’ stores and other facilities throughout the country.

Sears filed this action when GSA decided to release, over

Sears’ objections, EEO-1 reports and AAP’s for nineteen major

Sears retail units, its New York buying offices and Sears’ corpo-

rate headquarters in response to a request by the Council on

Economic Priorities (“CEP”). Prior to discovery GSA moved

for summary judgment as did defendant-intervenor CEP.

1. The EBO-! reports (35 F. R. 2586, 42 F. R. 3454) are two-

sion ( ) virtually all employers are required to file

job categories broken down by and qollemsd extn, and

race,

comin, hen segcabe epianatons of fain, “change snd

mont Pec Guide ¢ 1896 (1977). “qs

2 Tie 467) cuttin 9 Guuies “wah Son exit, Gm of

and job in each facility, and each facility's Goals and

Ses Tide 41°C FR. Pent 00-2, Sections 6D.21. ef seq

)

be exempt from disclosure under the subsection (b) (3) exemp-

tion of the FOIA and 18 U. S. C. § 1905. The court further

concluded that, because Sears’ alternative allegations that sub-

section (b)(4) and (b)(6) of the FOIA exempted the dis-

puted data from disclosure were “not yet ripe for summary

judgment,” this aspect of the case should be stayed pending

further agency review. A subsequent interlocutory appeal from

one aspect of the district court's order was taken by Sears, but

later dismissed as moot by the court of appeals (“Sears I”). App.

D, infra.

With regard to the bulk of the disputed data, Sears then

submitted a detailed position statement to GSA, designating,

inter alia, those portions of the data which it claimed exempt

under subsection (b) (4) of the FOIA. Sears relied, in significant

part, upon the affidavits of four experts in the field of competitive

analysis that described the substantial competitive advantage

such data would afford to Sears’ competitors. GSA concluded,

nevertheless, in a decision issued January 17, 1975, that none

of the data involved was exempt under subsection (b)(4), and

transmitted its decision and the parties’ submissions to the

district court. In that court, Sears renewed its position that

Section 709(e) and 18 U.S. C. § 1905 prohibited the threatened

disclosure and were incorporated into exemption 3 of the

FOIA. The district court, however, in a decision dated Septem-

ber 26, 1975, concluded that “the EEO-1 and affirmative

action reports could not be of great usefulness to a Sears’ com-

petitor” (App. E, infra, p. E-8) and reaffirmed, notwithstanding

the intervening decision of this Court in FAA Administrator v.

Robertson, 422 U. 8. 255 (1975), its earlier views concerning

the inapplicability of 18 U. S. C. § 1905, as well as Section

709(e) of Title VII, to the disputed data.

Sears appealed to the court of appeals asserting, inter alia,

that the disclosure prohibitions of 18 U. S. C. § 1905 and sec-

tion 709(e) of Title VII were applicable to the data in question,

and that both statutes fell within the subsection (b)(3) exemp-

tion to mandatory disclosure under the FOIA. In its opinion, the

court of appeals confirmed its view as expressed in Sears / that

GSA would not be acting beyond its administrative powers by

disclosing data covered by Section 709(e). With respect to 18

U. S. C. § 1905, the court, while questioning the validity of the

previous rule of law in the circuit with regard to the “extent 18

U. S. C. § 1905 falls within exemption 3 of F. O. I. A.” (App.

A, infra, p. A-10), refused to reconsider the view of another

panel of the Court (see National Parks and Conservation Asso-

ciates V. Kleppe, 547 F. 2d 673 (D. C. Cir. 1976)) because of

“pending matters in the Supreme Court,” referring to Harold

Brown Vv. Westinghouse Electric Corp., No. 76-1192, cert. den.,

—— i oe (May 16, 1977), and The Prudential Insur-

ance Company, et al. v. National Organization of Women,

Washington, D. C. Chapter, et al., No. 76-1052, cert. den.,

wwe U.S. —. (May 16, 1977). Id. at A-11, The case was,

therefore, remanded to the district court to “give whatever

reconsideration of § 1905 and exemption 3 is called for by the

actions of the Supreme Court.” /d. at A-11.

REASONS FOR GRANTING THE PETITION

The questions presented are ones that are likely to recur in

the administration of the FOIA, and, in fact, have been aptly

characterized by the Solicitor General as “steadily increasing.”*

Indeed, the instant petition is now the third filed with this

Court during the current term presenting related questions. See

Brown Vv. Westinghouse Electric, supra; and The Prudential

Insurance Company Vv. National Organization of Women, supra.

The instant case provides a superior vehicle for this Court's

consideration of the issue. This case, in contrast to the prior

petitions,‘ presents the key questions and is in a proper pro-

cedural posture.

3. Petition for Writ of Certiorari, Brown v. Westinghouse Elec-

tric Corp., No. 76-1192, p. 11.

4. In Prudential Insurance, the petition t relief before

judgment had issued from the court of appeals. In Westinghouse,

the Solicitor General's petition raised only highly restricted issues

(Footnote coutinued on next page.)

Due to the impact of the FOIA on variegated private and

public interests, this Court has in the recent past resolved

numerous cases involving this statute.’ Each of these cases,

however, only addressed the conflict between the administrative

agencies and private parties requesting government data. The

instant case focuses upon the neglected interest in the tripartite

balance struck by Congress: the rights of private persons who

provide data to the agencies to protect its confidentiality.°

1. Guidance from this Court defining the scope of such

rights is now imperative. 18 U. S. C. § 1905 is a criminal

statute which proscribes the disclosure of confidential private

data by government agencies. In Robertson, this Court acknowl-

edged that Congress, by including exemption 3 in the FOIA,

preserved the vitality of “numerous laws then extant allowing

confidentiality.” 422 U. S. at 266. Section 1905 is one such

preexisting statute which specifies an “identified need” that Con-

gress chose to protect. Moreover, it does not, in contrast to

the statute at issue in Robertson, leave the confidentiality deci-

sion to the unbridled discretion of an administrative officer. It

expressly requires confidentiality." The threshold question, there-

( Footnote continued from preceding page.)

which avoided the critical questions presented here. Sec, e.¢.. Brief

for the Federal Respondents in Opposition filed in Prudential Insur-

ance by the Solicitor General. pp. 9-10. The instant petition is from

a decision of the court of appeals and does not restrict the issues

presented. Hence, the impediments to review which existed in Pru-

dential Insurance Company and Westinghouse are not present in the

instant case.

5. See, e.g., Environmental Protection Agency v. Mink, 410

U. S. 73 (1973); F. A. A. Administrator v. Robertson, supra; Sears,

Roebuck and Co. v. N. L. R. B., 421 U. S. 132 (1975); Renegotia-

tion Board v. Grumman Aircraft, 421 U. S. 168 (1975); and

Renegotiation Board v. Bannercraft, 415 U. §. 1 (1974).

6. See, Note, Development Under the Freedom of Information

Act—1974, 1975 Duke L. J. 416, 430-432; Westinghouse Electric

Corp. Vv. Schlesinger, 542 F. 2d 1212 (4th Cir. 1976) cert. den.

sub. nom., Brown v. Westinghouse Electric Corp., supra.

7. Subsequent to Robertson, Congress amended exemption 3 to

limit its protective scope to those confidentiality statutes in one of

(Footnote continued on next page.)

ee Ce

fore, is, as stated by the court below, “whether § 1905 is within

the now more limited group of statutes described by exemp-

tion 3. On this the Supreme Court may speak. . . .” App. A,

infra, p. A-11. This case provides the Court with that oppor-

tunity “to speak.”

The courts of appeals are, as the court below observed, in con-

flict; the District of Columbia Circuit's decision “in National Parks

I] (547 F. 2d 673 (1976)] and Charles River Park [519 F. 2d

935 (1975)] conflict with that of the Fourth Circuit in Westing-

house Electric Corp. Vv. Schlesinger.” App. A, infra p. A-10.

Because of its anticipation that this Court would speak, the court

below understandably thought “it inadvisable to express an

additional view on the same issue.” App. A, infra, pp. A-10,

A-11. This uncertainty is shared by the United States Court of

Appeals for the Ninth Circuit. On April 14, 1977—a full year

after oral argument—that court issued an “Order Withdrawing

Submission” in a case, presenting issues intimately related to the

instant petition, “pending action by” this Court on the petitions

filed in Westinghouse and Prudential Insurance Company.

Hughes Aircraft v. Schlesinger, 384 F. Supp. 292, app. pend.,

No. 75-1064. See Appendix F, infra. The same issues are also

now pending before the United States Court of Appeals for the

Third Circuit as well as various district courts. See Chrysler

Corp. Vv. Schlesinger, 412 F. Supp. 171 (D. Del. 1976) app.

pend. and pp. 11-12 n.8, infra. The instant case provides an

appropriate vehicle io resolve the undesirable confusion and

to guide the lower courts on an important statutory issue.

(Footnote continued from preceding page.)

two categories: those that leave “no discretion” to administrators or

alternatively those that ‘establish particular criteria for withholding”.

Admittedly this amendment does exclude from the scope of exemp-

tion 3 the type of discretionary disclosure statute at issue in Robert-

son (49 U. S. C. § 1504), which permitted unbridled administrative

power to make disclosure decisions. Criminal statutes, however, like

18 U. S.C. § 1905 (as well as 42 U. S. C. 2000e discussed infra at

pp. 10-12), which strictly prohibit disclosure of specified types of

data, are of a different nature. Accordingly, as acknu wledged by this

Court in Roberison, Sears submits that such non-discretionary pro-

hibitions on government action are still protected by exemption 3.

2. The failure of the court of appeals to acknowledge the

application of Section 709(e) of the Civil Rights Act of 1964 to

the proposed disclosure of Sears’ EEO-1 reports also raises a

question warranting review. The authority of GSA to gather

information with regard to the compliance by private employers

with federal civil rights requirements is founded only upon the

authority of an executive order. GSA, however, would here

utilize that private data in a manner inconsistent with the express

will of Congress. While 709(e) and 44 U. S. C. § 3508(a)

criminally proscribe the EEOC and other agencies from publicly

disclosing an employer's EEO-1! reports, GSA would nonetheless

disclose these very documents. Absent an express delegation to

the agency, however, GSA may not “. . . take measures incom-

patible with the expressed or implied will of Congress.” Youngs-

town Sheet & Tube Co. v. Sawyer, 343 U. S. 579, 638 (1952)

(Jackson, J., concur). See also the opinion of Mr. Justice

Douglas in Chamber of Commerce v. Legal Aid Society, 423

U. S. 1309 (1975).

The legislative history of Title VII with regard to the confi-

dential nature of data, such as EEO-1 reports, compels the

conclusion that Congress did not intend to permit the public

disclosure of these reports. As noted above, when Title VII was

enacted in 1964 Congress was not content merely to delegate to

the EEOC the authority to determine whether to disclose EEO-1

reports and other such data, but positively banned public disclo-

sure. Cf. Robertson, and p. 8 n.7, supra. in 1972, when Title VII

was amended and the powers of the EEOC were expanded, Con-

gress reiterated its concern for the confidentiality of such data.

While encouraging cooperation and the exchange of data be-

tween the EEOC and state or local agencies, Congress concomi-

tantly amended Section 709d) to close a loophole against public

disclosure of EEO-1 reports and similar data through the state

and local agencies by providing that “. . . information [furnished

upon request by the EEOC to a state or local agency] shall be

furnished on a condition that it not be made public by the re-

cipient agency. . . .” 42 U. S. C. 2000e-8(d). Under this amend-

ment, the ban on federal disclosure of the EEO-1 reports under

section 709 and 44 U. S. C. § 3508 was extended to state agen-

cies. By the same token Congress also provided for federal

cooperation; an Equal Employment Opportunity Coordinating

Council, including the Defendant Secretary of Labor and the

Chairman of EEOC, was created to promote cooperation in the

interchange of data and consistency in the policies and practice

of the agencies. No basis exists from which one can conclude

that Congress ever contemplated that the administrative agen-

cies would abrogate the confidential status of the EEO-1 re-

ports. Nor was it contemplated that an agency would follow a

policy inconsistent with the one prescribed in Congress.

Public disclosure of EEO-1 reports by Department of Labor

compliance agencies would, we submit, render nugatory Con-

gress’ intent through these amendments to maintain the confi-

dential nature of employer reports under Title VII while, at the

same time, encouraging their coordinated use by the EEOC and

other agencies. Such disclosure would not only violate that

objective, but would seriously impede the EEOC’s statutorily

required voluntary compliance efforts under Title VII. See 42

U. S. C. 2000e-5(b), 8(e) and 110 Cong. Rec. 12733 (1964)

(Sen. Humphrey). Congress’ objective can be fulfilled and

applied in a consistent manner only if all federal and state

agencies utilizing EEO-1 reports are prohibited from disclosing

them prior to initiation of judicial proceedings as provided by

Congress in Title VII. /bid.

The confidential nature of the EEO-1 reports has been the

cause of substantial litigation throughout the nation as employers

seek to maintain the confidentiality of sensitive employment

data.” A substantial segment of the nation’s employers do busi-

8. See, e.g., Legal Aid Society Vv. v. Chamber of Commerce, 423

U. S. 1309 (1975); Crown Central Petroleum Corp. v. Kleppe, 14

FEP Cases 40 (D. Md. 1976); Holiday Inns, Inc. v. Kleppe, 13

FEP Cases 1337 (W. D. Tenn. 1976); Chrysler Corp. v. Schlesin-

(Footnote continued on next page.)

ness with the federal government as a contractor or subcontrac-

tor and face this same conflict.’ The question presented is thus a

common problem under the FOIA affecting a broad segment of

American employers. This Court should answer that question,

and correct the erroneous interpretation of the court below with

respect to the critical interrelationship of section 709(e) of

Title VII and the FOIA.

CONCLUSION

For the foregoing reasons, it is respectfully submitted that the

Petition for Writ of Certiorari should be granted.

Respectfully submitted,

LAWRENCE M. COHEN

S. RICHARD Pincus

JEFFREY S. GOLDMAN

LEDERER, Fox AND GROVE

233 South Wacker Drive

Suite 7916

Chicago, Illinois 60606

HYMEN BEAR

Lee M. FINKEL

233 South Wacker Drive

Suite 6800

Chicago, Illinois 60684

Attorneys for Sears, Roebuck

May 23, 1977 and Co.

(Footnote continued from preceding page.)

ger, 412 F. . 171 (D. Del. 1976); Goodyear Tire & Rubber

Co. v. Dunlop, 13 FEP Cases 1734 (D. D. C. 1975); Robertson v.

Department of Defense, 402 F. . 1342 (D. D. C. 1975); Legal

Aid Society v. Brennan, 13 FEP 860 (N. D. Cal. 1975); The

Lawyers Cooperative Publishing Co. v. Schlesinger, No. 1974-212

(W. D.N. Y. J 3, 1974); Legal Aid Society vy. Schultz, 349

. 771 CN. D. Cal. 1972).

9. 41 C. F. R. 60-40-1 ef seq. The Department of Labor has

estimated that there are more than 275,000 nonconstruction contrac-

tors subject to Executive Order 11246. a

Federal Nonconstruction Contractors Can mal OAD

MWD-75-63, at pp. 31-32 (April 29, 1975).

APPENDIX A.

Unitep STATES COURT OF APPEALS

For the District of Columbia Circuit

No. 75-2127

SEARS, ROEBUCK AND Co.,

Appellant,

vs.

GENERAL SERVICES ADMINISTRATION, et al.

Appeal from the United States District Court

for the District of Columbia

(D. C. Civil 2149-73)

Argued 15 December 1976

Decided 1 April 1977

Before: Ross and Wiikey, Circuit Judges, and GESELL,*

United States District Judge for the District of Columbia Circuit.

Opinion for the Court filed by Circuit Judge WILKEY.

WILkey, Circuit Judge: This is a “reverse” freedom of infor-

mation case in which appellant Sears, Roebuck & Company has

responded with a declaratory judgment action to prevent the

intervenor Council on Economic Priorities from securing under

the Freedom of Information Act (FOIA)' certain EEO-1

* Sitting by designation pursuant to Title 28, US Code Section

292(a).

1. 5 U.S.C. § 552.

reports and affirmative action plans from the defendant General

Services Administration. The EEO-1 reports contain data on

Sears employees broken down by race and sex, while the affirma-

tive action plans are proposed future action to correct effects of

past employment discrimination.

This action is one of several judicial challenges to the Secre-

tary of Labor's new disclosure rules of 2 February 1973, which

altered the previous policy of confidentiality guaranteed data

submitted by Government contractors in compliance with Execu-

tive Orders 11246 and 11375* on nondiscrimination. Without

reciting in detail the previous procedural steps in both the

District Court and this court, which are duly reported,‘ this

appeal is from the opinion and order of 26 September 1975 of

the District Court.°

In that opinion the District Court reaffirmed its previous

rulings that the records here do not fall within two of the Act's

exempted categories, 5 U. S. C. § 552(b)(3) (exempted by

statute) and (b)(7) (investigatory files), and similarly ruled

that the data was not protected by two other exemptions pressed

by Sears, (b)(4) (trade secrets and confidential data) and

(b)(6) (personnel records). The District Court thus granted

summary judgment for the intervenor and summary judgment in

part for the defendant GSA.

I, JURISDICTION AND STANDARD OF REVIEW

The jurisdictional basis for this suit is to be found in 28

U. S. C. § 1331(a).* The action arises under the FOIA’ and

2. 41. F. R. 60-40-1 ef seq.

3. 3C. F. R. 169-177 (1974).

4. 384 F. Supp. 996 (D. D. C. 1974), 509 F. 2d 527 (D. C.

Cir. 1974). ' is

5. 402 F. Supp. 378 (D. D. C. 1975).

6. ruoze hes Leen considecsbic contusion je sesst ences enn

cerning proper basis for federal court jurisdiction in reverse

FOIA cases. The District Court in this case relied on the APA as a

(Footnotes 6 and 7 continued on next page)

relief is sought pursuant to the Declaratory Judgment Act,’

since the FOIA provides for actions requiring disclosure but not

actions to prevent disclosure of documents that are in the cus-

tody of Government agencies. We agree with the District Court

that the “actual controversy” here is whether the records sought

are exempt from disclosure under the FOIA, and that Sears has

a right to a declaratory judgment on this issue.

The Government's position has shifted somewhat. It initially

indicated that it desired to release the records, even if not com-

]

;

addition, this court in Charles River Park “A” Inc. v. HUD had also

relied on Section 10 of the APA for subject matter jurisdiction. 519

F. 2d 935, 939 (1975). The Supreme Court has held that

Section 10 of the APA is not an implied grant of matter

to review federal agency action. Califano v. , 45

S. L. W. 4209 (23 February 1977)

The recent decision of this court in Planning Research Corpora-

tion Vv. FPC held that federal i in reverse FOIA cases is

property on 28 U. S. C. § 1331. No. 75-1549, Slip op. at

6, (1 1977). We are aware of the recent revision of

§ 1331 by Congress to eliminate the $10,000 amount in controversy

requirement in civil actions “brought the United States, any

thereof, or any officer or thereof in his official

copaclty.” ghey 3 pip dy hy 2721 (1976) » a

arguendo, as did in Planning Research Corpo-

jericiedion to “be mensuved anourding to

mit

;

“gle

sates

: ba

fee

re one

Bn .

ith

sty!

fue

aT SHE

;

pelled to do so by the FOIA, but its final position in the District

Court and here on appeal is that it has not yet determined

whether it will release the data, if the ‘!*imate conclusion of

the court is that the data is protected by one or more of the

exemptions, and thus its release not compelled by the FOIA.

We also agree with the District Court as to the standard of

and procedure in review by that court of the agency's action.

The District Court is not precluded from a de novo considera-

tion of the issues, since this reverse FOIA case is brought as a

declaratory judgment action, not for review of agency action

under the APA. The review standard of the FOIA in a suit to

compe! disclosure is also the appropriate standard in the reverse

FOIA case. Charlies River Park “A” Inc. v. HUD.®

Il. Exemption 4: Trape SECRETS AND CONFIDENTIAL

COMMERCIAL DaTA

5 U. S. C. §552(b)(4) exempts from disclosure “trade

secrets and commercial or financial information obtained from

a person and privileged or confidential.” The data which Sears

claims falls under exemption 4 is in: First, the EEO-1 reports,

which detail employment totals in nine occupational categories,

specifically broken down by sex and minority group status of

employees in each Sears unit; second, the affirmative action

plan, drawn up on the basis of 19 job categories, broken down

by race and sex, with specific totals for hiring, promotions,

terminations, training, and projected time tables for attaining

the objectives.

The critical issue in this case, under exemptions 4 and 3, is

whether this data contains “trade secrets” or other confidential

material whose disclosure will “cause substantial harm to the

competitive position of” the appellant Sears. National Parks and

9. 519 F. 2d 935, 940 n. 4, 941 a. 10 (D. C. Cir. 1975). See

Westinghouse Electric Corp. v. Schlesinger, et al., 542 F. 2d 1190,

1208 n. 57 (4th Cir. 1976).

Conservation Association ¥. Morton.” On this issue the evi-

dence offered the District Court was conflicting—on which

statement .s predicated the action we take on this appeal.

Sears filed six affidavits from five experts asserting that from

the EEO-1 reports and affirmative action plan employment

category totals a knowledgeable competitor could deduce Sears’

labor costs, sales volume, plans for expansion, and secure other

data valuable to a competitor of Sears. Sears claims these

affidavits make a prima facie case for “substantial competitive

harm.” The intervenor and defendant countered with an affidavit

by Dr. Sar Levitan, which asserted that “EEO-1 and the affirma-

tive action reports could not be of great usefulness to a Sears

competitor. The information which would be released could

provide only the roughest approximation of sales volume, growth

patterns, or labor costs. Equally accurate approximations are

already possible without the use of these data.”

It is at this point that we part company with the District

Judge. In reference to the affidavit of Dr. Levitan, the District

Judge stated,” “The court embraces his affidavit and adopts his

conclusion. . . .” This statement and the recitation from Dr.

Levitan’s affidavit, quoted in toto above, conclude the District

Court's discussion of the exemption 4 issue. The District Court

did not specify its reasons for adopting the particular conclusion

advanced by Dr. Levitan. The District Court did not recite any

facts in the record to which the court gave credence, either as

being undisputed or as being preferable in validity to those facts

relied upon the six Sears affidavits.

The question of what this data in the reports would mean to

an intelligent competitor is a factual issue. The answer to that

issue is in the nature of a fact, a factual conclusion if you prefer,

but still partaking of the nature of fact. The Sears affidavits

make certain factual assertions concerning the nature of the

10. 498 F. 2d 765, 770 (D. C. Cir. 1974).

11. 402 F. Supp. at 384.

12. Id.

material in the reports and how this material could be used by

intelligent competitors to gain a competitive advantage. For

example, the Sears affiants state that the information in the

EEO-1 reports and the affirmative action plans cannot be

obtained from commercial publications, research services, or

other governmental sources. In addition, the claim is made that

on-site inspections of Sears’ retail units cannot yield the same

type or quality of information as provided in the reports. As an

example of the use to which the information in the reports could

be put by competitors, the Sears affiants assert that the informa-

tion would be of great use to a competitor in determining where

to locate future retail stores. In addition, these affiants state that

the reports clearly reveal “promotable” individuals who may be

induced to leave Sears and move to a competitor. Dr. Levitan’s

affidavit attempts to refute the claims of competitive harm put

forth in the Sears affidavits. Sears asked more than once for an

evidentiary hearing, particularly for the purpose of cross-

examining Dr. Levitan after his rebuttal affidavit was filed.

The District Judge believed that there were no factual conflicts

“While there are conflicts between the Sears affidavit and those

of defendant and intervenor, these conflicts do not raise issues

of material fact, but rather concern expert opinions as to the

adverse consequences to Sears of release of the EEO-1 and

AAP reports.””’ We think the existence and nature of any

“adverse consequences to Sears” are in themselves facts to be

ascertained by inquiry. While the “adverse consequences” may

be considered as ultimate facts, to be derived from certain undis-

puted facts in the documents filed by Sears, yet the ultimate

facts as to the probable future adverse consequences can only

be determined by putting with those undisputed facts other facts

within the experts’ knowledge to reach the conclusion as to

consequences. It is apparent that the five Sears experts and

Dr. Levitan relied upon different experience factors to put with

13. Id. at 383 a. 8.

the facts in the documents in reaching their differing conclusions

as to consequences.

Where there is a conflict in the affidavits as to what adverse

consequences will flow from the revelation of the facts contained

in the documents sought to be disclosed, then it appears that

there is indeed a conflict regarding very material facts which

calls for some type of adversary procedure. The District Court

thus attempted to resolve the conflict in the ultimate facts with-

out having the evidence before it. There also appears to be a

fact conflict as to the availability of this allegedly confidential

data to other persons. Summary judgment was not appropriate.

In regard to the kind of adversary proceeding which the

District Judge should conduct, he may do so by any means he

thinks appropriate, di by i ton anal det

requests for admissions, or an open hearing in court with or

without the preceding discovery procedures. The District Judge

permitted the filing of affidavits, but he did not permit discovery

by any techniques. We think there is a right of confrontation

by the appellant Sears versus Dr. Levitan (and likewise by the

opposing parties versus the Sears affiants), and so the parties

should have the right to examine the affiants either by depositions

or in open court. If the conflicts regarding material facts are not

resolved in the proceeding conducted by the District Judge, the

case should be tried like any other adversary proceeding and

the District Court should make findings of fact and conclusions

of law.

Ill. EX@mpPTion 6: PERSONNEL, MEDICAL,

AND SIMILAR FILES

The District Judge concluded, in agreement with intervenor

Council on Economic Priorities but contrary to Sears’ and GSA's

contentions. that two categories of information contained in

Sears’ submitted data were not within exemption 6." The court

ee a ee

14. “(1) [(Clomments including reasons why applicants were not

hired, reasons employees left Sears, and comments concerning pro-

— and, (2) service, termination, and promotion dates.” /d.

at .

reached this conclusion “after weighing the public interest in

disclosure of thes comments and taking inte consideration the

character of the comments as well as the unlikelihood that it will

be possible for members of the public to attach the comments

to particular employees of Sears.””*

The balancing analysis made by the District Judge is in

accord with our prior decisions in Rural Housing Alliance v.

U. §. Department of Agriculture, et al.,"° and Getman v.

NLRB." Despite the contention of Sears, we do not think that

the recently enacted “Privacy Act” would alter the procedure

recommended by this court and followed by the District Judge

here, nor do we think that the Privacy Act itself puts anything

further in the scales for him to weigh.

Therefore, in accordance with the principle that findings on

matters of fact by the District Court will not be upset unless

clearly erroneous, we must agree with the District Court's

decision on this point."

IV. EX®MPTION 3: SPECIFICALLY EXEMPTED FROM

DiscLosure sy STATUTE—18 U. S.C. § 1905

Subsequent to both decisions of the District Court a chain of

events with regard to the relationship of 18 U. S. C. § 1905”

15. Jd. at 384-85.

16. 498 F. 2d 73, 77 (D. C. Cir. 1974).

17. 450 F. 2d 670, 674 (D.C. Cir. 1971).

18. 5S U.S.C. §552(a) ef seq.

19. Sears’ original claim under exemption 7 (investigatory files )

Mot at issue on this appeal. Nothing has occurred since the action

of the District Court in Saha Ee an 1974) and thls court in

509 F. 2d 527 (1974) to alter ini i

, being an officer or of the United States or of

any or agency thereof, divulges, discloses, or

makes in any manner or to any extent not authorized by law

(Footnote continued on next page )

ee ee

to exemption 3 of the FOLA occurred. In F 1A Administrator v.

Robertson the Supreme Court held that the statute there

involved™ was intended to “restrict public access” to the FAA

records and did fall within exemption 3 of the FOIA. This court

had held to the contrary and the District Court here had relied

upon our opinion.” Whereupon the Congress enacted an amend-

ment to exemption 3, with the announced intention” of reversing

the Supreme Court’s broad interpretation of exemption 3. The

applicable statutory subsection, effective 12 March 1977, reads:

(b) This section does not apply to matters that are—

e * . * 6

exempted from disclosure statute

ek — A Saal et is ais), povdaes Gat cuth

statute (A) requires that the matters be withheld from the

public in such a manner as to leave no discretion on the

issue, or (B) establishes particular criteria for

or refers to particular types of matter to be withheld; . . .

21. 422 U. S. 255 (1975).

22. 49 U. S. C. § 1504, section 1104 of the Federal Aviation

Act of 1958.

23. 384 F. Supp. at 99.

24. H. R. Rep. No. 1441, 94th Cong., 2d Sess. 14 (1976)

(Conference Report).

25. 5 U. S. C. 552(b)(3), Pub. L. 94-401, 94th Cong. (13

Sept. 1976).

Al0

v. Kleppe (National Parks 11),”* in which this court reaffirmed

its “view that the third exemption ‘does not incorporate section

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

broader than the fourth exemption,”” citing our previous deci-

sion in Charles River Park “A”, Inc. v. Department of HUD.*

We recognize that this court’s decisions in National Parks I

and Charles River Park conflict with that of the Fourth Circuit in

Westinghouse Electric Corp. v. Schlesinger.” The Solicitor Gen-

eral has sought certiorari in Westinghouse.*” Raising similar issues,

several insurance companies have filed a petition for writ of cer-

tiorari to this court to review before judgment the companies’

appeals from a decision of the United States District Court for the

District of Columbia in National Organization for Women v.

Social Security Administration, et al. and Metropolitan Life

Insurance Company v. Usery, et al.*’ Following a denial of a

stay by this court,®* the Chief Justice granted a stay™ pending

further consideration by the Supreme Court.

Any reconsideration by us of the issue as to what extent 18

U. S. C. § 1905 falls within exemption 3 of the FOIA and thus

forbids the disclosure of the records here (assuming that they

fall within the description of § 1905) would necessarily be a

reconsideration of the view of a panel of this court in National

Parks Il, supra, expressed most recently in light of both actions

by the Supreme Court and Congress.“ While the court in

National Parks I specifically labeled its views on § 1905 and

26. No. 76-1044 (D. C. Cir., 15 Nov. 1976).

27. /d., Slip Op. at 27, quoting from Charles River Park.

28. 519 F. 2d 935, 941 n. 7 (D.C. Cir. 1975).

29. 542 F. 2d 1190, 1203 (4th Cir. 1975).

30. No. 76-1192, filed 28 February 1977.

31. No. 76-1052, filed 1 February 1977; C. A. Nos. 76-0087

and 76-0914, 6 Dec. 1976, as amended 14 Dec. 1976.

32. Nos. 76-2119 et seqg., 19 Jan. 1977.

33. A-586 et seq., 45 U. S. L. W. 3517 (1 Feb. 1977).

34. Charles River Park, supra, was decided before the Supreme

Court decision in Robertson and the ensuing Congressional amend-

ment.

All

exemption 3 as dicta,* and theoretically we would be free to

reconsider the issue, if we deemed it essential to the disposition

of this case, yet given the presently pending matters in the

Supreme Court, we think it inadvisable to express an additional

view on the same issue.

Rather, since we are remanding this case to the District

Court for a reconsideration of the issue under exemption 4, we

are confident that the District Judge will himself give whatever

reconsideration of § 1905 and exemption 3 is called for by the

actions of the Supreme Court on the aforementioned pending

matters. Irrespective of the outcome in the Supreme Court, in

reviewing the particular issue the District Judge will doubtless

bear in mind, as regards his freedom of action under our own

decisions, that this court's views in National Parks Il, supra,

were classed as dicta, and that our views in Charles River Park,

supra, were expressed before the Supreme Court decision in

Robertson, supra, or the ensuing Congressional amendatory

action. While the amendment to the statute had the effect of

excluding § 1104 of the FAA from exemption 3, thus reversing

the holding of the Supreme Court on this point, it does seem

clear, as the Government appellees here agree, that § 1905

must be “considered independent of the FOIA” exemptions.”

That is, contrary to what we thought in Charles River Park,”

the congruence of § 1905 with exemption 4 is immaterial; the

threshold issue now is whether § 1905 is within the now more

limited group of statutes described by exemption 3. On this the

Supreme Court may speak; lacking decisive new guidance by

the Supreme Court, the District Court is free to reconsider its

view in light of all that has taken place subsequent to its origi-

nal decision.

For action in accordance with this opinion the case is

Remanded.

35. No. 76-1004, Slip Op. at 26 n. 46 (D. C. Cir., 15 Nov.

1976).

36. Government Br. at 34. See Note, The Effect of the 1976

Amendment to Exemption Three of the Freedom of Information

Act, 76 Col. L. Rev. 1029 (1976)

37. Note 9, supra.

a ,

UNITED States District Court,

District of Columbia.

Civ. A. No. 2149-73.

SEARS, ROEBUCK AND Co.,

Plaintiff,

vs.

GENERAL SERVICES ADMINISTRATION et al.,

Defendants,

and

THe CoUNCIL ON ECONOMIC PRIORITIES,

Intervenor.

Sept. 10, 1974.

As Amended Nov. 12, 1974.

MEMORANDUM AND ORDER.

Bryant, District Judge.

In this action plaintiff Sears, Roebuck and Company (“Sears”)

seeks to prevent the disclosure to intervenor Council on Eco-

nomic Priorities (“CEP” or “intervenor”) of EEO-1 forms and

affirmative action plans (“AAP’s”) submitted by nineteen Sears

branches to defendant General Services Administration (“GSA”

or “agency”) and to the Office of Federal Contract Compliance,

Department of Labor (“OFCC”), pursuant to Executive Order

No. 11,246, 30 F. R. 12319 (1965), as amended by Executive

Order No. 11,375, 32 F. R. 14303 (1967), and regulations

promulgated thereunder, 41 C. F. R. § 60-2.1 et seq. (Revised

Order 4) and 41 C. F. R. § 60-60.1 et seq. (Revised Order

14).'

During the summer of 1973, CEP formally requested from

defendant GSA copies of plaintiff's EEO-1's and AAP’s, pursu-

ant to the Freedom of Information Act (“FOIA”), 5 U. S. C.

§ 552. Subsequent to that request, plaintiff sought to persuade

GSA and OFCC not to disclose those materials. Plaintiff's repre-

sentatives met and corresponded with defendants from Septem-

ber to December, 1973. At plaintiff's request, release was de-

layed so that the Freedom of Information Act Committee of

the Department of Justice could be consulted. That committee

agreed with defendants that the Freedom of Information Act and

OFCC disclosure regulations, 41 C. F. R. § 60-40.1 et seq.,

require defendants to disclose the material sought by CEP.

Plaintiff was repeatedly offered the opportunity to review

the requested materials and justify why any particular portion

should be withheld under 41 C. F. R. § 60-40.3.? No disclosure

1. EEO-! reports, required of large government contractors

under penalty of contract cancellation, contain statistics concerning

the ethnic composition of the contractor’s work force. Affirmative

action plans outline steps proposed by the contractor to correct

effects of past employment discrimination.

2. 41C. F. R. § 60-10.3, in pertinent part, reads:

(1) Those portions of affirmative action plans such as goals

and timetables which would be confidential commercial or

was to be made until December 10, 1973, to allow plaintiff

to avail itself of that opportunity. Throughout this period plaintiff

maintained that the requested documents should remain undis-

closed in their entirety, and neither speciiied sensitive portions

nor offered to do so.

On December 6, 1973, Sears filed the instant action to

enjoin defendants from disclosing EEO-1’s, AAP’s, and related

documents. Sears withdrew its motions for preliminary injunctive

relief after defendants stipulated that they would not release any

material, absent ten day notice to Sears, pending resolution of

this suit. The court granted CEP’s motion to intervene on De-

cember 26, 1973.

On February 4, 1974, plaintiff and defendants applied for a

temporary restraining order to enjoin publication and compel

return by CEP of an EEO-1 form inadvertgntly sent to CEP

by GSA. This attempted prior restraint of CEP, a party not

bound by GSA’s stipulation not to disclose, was denied by the

court.

Defendant has moved to dismiss, and plaintiff, defendants,

and intervenor have each moved for summary judgment. Dis-

covery has been stayed by stipulation pending this court's dis-

position of the pending motions.’

JURISDICTION.

At the threshold this court faces the question of jurisdic-

tion. It is clear that the FOIA itself does not confer jurisdiction.

perts protective

order, Sears’ EEO-1's and A -4 + | Akg

ing on alleged competitive injury. For reasons below,

court believes that discovery on this issue is premature at this time,

and should be denied.

those categories.‘ And it provides a right to de novo court re-

view for those who are denied information, not for those who

would suppress it. Sears is not within the class of intended ben-

eficiaries of the Act, and we do not read into the Act an

implied private right of action by those who would prevent

disclosure.*

The Administrative Procedure Act (“APA”), 5 U. S. C.

§ 701 et seq., however, confers jurisdiction upon this court

to consider Sears’ claim. In its motion to dismiss the gov-

ernment appears to argue that APA jurisdiction is denied

either by the exemption in 5 U. S. C. § 701(a)(2) for “agency

action . . . committed to agency discretion by law,” or by

sovereign immunity. Both objections fail. The agency discretion

exemption has been read narrowly to apply only when there is

“no law” that can be applied by the court in its review of the

agency. Citizens to Preserve Overton Park v. Volpe, 401 VU. S.

402, 410, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971). A decision

to release information is no less susceptible to court review

than a decision to deny disclosure; indeed courts in this circuit

have expended great amounts of energy dealing with FOIA

cases. And it is settled in this circuit that the APA is a waiver

of sovereign immunity.* Thus it seems clear that an agency de-

cision to release data submitted to the agency by a private party

is an “agency action” adversely affecting that private party and

entitling that party to judicial review.’

4. Davis, Administrative Law, § 3A.5 (1970 Supp.).

5. Sears contends that under Board v. Bannercraj:

Co., 415 U. S. 1, 94 S. Ct. 1028, L. Ed. 2d 123 (1974), an

6. Scanwell Laboratories v. Shaffer, 137 U. S. App. D. C. 371,

424 F. 2d 859 (1970).

7. We sympathize with defendants’ and intervenor’s concerns

that allowing review will enable those seeking suppression of infor-

(Footnote continued on next page.)

Accordingly, we need not decide whether jurisdiction is con-

ferred by any other statutes.

SUMMARY JUDGMENT.

All parties have moved for summary judgment. Additionally.

Sears has asked for further discovery in the event that its motion

for summary judgment is denied, such discovery being needed

for Sears to augment its oppositions to defendants’ and inter-

venor’s motions. Sears’ discovery requests relate to its claims

under several exemptions of the FOIA, and will be discussed

The Freedom of Information Act does not confer jurisdic-

tion over this action, nor do its exemptions make nondisclosure

mandatory. But the policies behind those exemptions provide a

sound basis for determining whether release of the documents

in question would be “arbitrary, capricious, an abuse of discre-

tion, or otherwise not in accordance with law." Those policies

will be applied.

The Freedom of Information Act is designed to encourage

disclosure:

As the Supreme Court said in Environmental Protection

Agency Vv. Mink, 410 U. S. 73, 80, 93 S. Ct. 827, 832, 35 L.

Ed. 2d 119 (1973),

(Footnote continued from preceding pege )

mation to frustrate the purposes of the FOIA. It should be noted,

however, :

review extends only to information supplied by private

parties.

that:

b. Such review extends only up to such time as disclosure

= —

in favor of disclosure.” Sears claims that its EEO-1's and AAP’s

in their entirety should not be disclosable by GSA because of

the law and policy articulated in exemptions 5 U. S. C. § 552

(b)(3) (exempted by statute) and (b)(7) investigatory files),

and that, in the alternative, portions of those documents should

be nondisclosable under exemptions (b)(4) (trade secrets and

confidential commercial data) and (b)(6) (personnel records).

Exemption (b)(3).

empted from disclosure by statute.” Sears argues that Section

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

§ 2000e-8(e),"” should bar disclosure of its EEO-1 reports.

Those reports are sent to the Joint Reporting Committee (JRC),

which forwards copies to the appropriate federal compliancy

9%. Bristol-Myers Company v. F. T. C., 138 U. S. App. D. C. 22,

424 F. 2d 935, 938 (1970), Fisher v. Board, 153

U.S. D. C. 398, 473 F. 2d 109, 112 (

145 U. S. App. D. C. 144, 448 F. 2d 1067, 1080 (1971).

10. Section 709(e) reads:

agency for Executive Order No. 11,246—in this case the De-

partment of Labor (OFCC)—and to the Equal Employment

Opportunity Commission (EEOC). Sears argues that the JRC is

in reality an agent or alter ego of the EBOC because it is com-

posed of personnel from EEOC and funded by the EEOC.

Hence disclosure by the JRC, or by any agency receiving in-

formation from the JRC,"' is barred by Section 709(e).

The difficulty with this argument is that § 709(e) is

a criminal statute and must therefore be narrowly read,

particularly in light of the requirement of exemption (b)(3)

that material be “specifically exempt.” And § 709(¢). in its

terms, applies only to “any officer or employee of the Commis-

sion,” making public “information obtained by the Commission

pursuant to its authority under this section.”’’ The documents

im question were obtained under the authority not of § 709,

but of Executive Orders 11,246 and 11,375." And they were

collected not by the EEOC, but by the OFCC, which has 2

function separate and distinct from that of the EEOC.

Nor, for the purposes of this statute, are members of

JRC “employees” of EEOC. The EEOC could require

reporting forms that differ from EEO-1's, and could route them

11. Section 709(d) extends the proscription of publication to

12. Section 709(c) is the source of EBOC's authority to require

13. Federal law prohibiting discrimination by government con-

tractors predated the Civil Act of 1964, and was embodied in

Executive Orders No. | 26 F. R. 1977 (1961) and No.

exempts” documents

from disclosure. Section 3508(a) merely provides that On

cable law follows documents as they travel from one

Neither statute, however,

§ 60-40.1 et seq., disclosure of EEO-1’s and AAP’s by GSA/

seston Gio have chuaty Gostied Gat Gunde Gum ME ©

GSA/OFCC is not to be construed as transfer from EEOC to

GSA/OFCC. Under the relevant Disclosure Rules, 41 C. F. R.

(3). M. A.

. Supp. 467 (D. D.C.1972); F

co 675 (S.D. N.Y. 1971), rev'd

oe Ee

(it dds

ita

dil

iP tes

ef liliz

i :

: a

iH Hit:

Sears’ precise claim was raised, and overruled, in Legal Aid

We also note that AAP’s, which include EEO-1's," are

required under 41 C. F. R. § 60-2.1 et seq., and not by the

EEOC at all. Hence, regardless of whether § 709(e) is read to

Society of Alameda County v. Shultz, 349 F. Supp. 771, at

775-776 (N. D. Cal. 1972). There, plaintiffs sought release

for OFCC pursuant to Executive Order 11,246, it must be

deemed an agent of OFCC, not EEOC.*

of EEO-1's and AAP’s from a government agency that opposed

disclosure. The court held that disclosure was compelled by the

FOIA, despite § 709(e)". A fortiori, when GSA /OFCC desires

'o disclose, we hold that § 709(e) does not bar disclosure."*

bar disclosure of EEO-i's by GSA/OFCC, it cannot bar dis-

Sears also argues that the documents sought were fur-

nished to the government under express and implied promises

of confidentiality, and that disclosure should therefore be barred

closure of AAP’s, which include the data in EEO-1’s.

by 44 U. S.C. §3508(a), 18 U. S C. § 1905, and the

§ 3508(a)

ges

2 Sav

ia bs

B10

other grounds 460 F.2d 813 (2d Cir.), cert. denied, 409

U.S. 889, 93 S.Ct. 125, 34 L.Bd.2d 146 (1972).”

Robertson V. Butterfield, 498 F. 2d 1031 at p. 1033 n. 6

(D. C. Cir, 1974).

Nor can Sears argue that since the government promised

confidentiality, the court should exercise its equitable dis-

cretion and refuse to order disclosure: It is well settled in

one of the exemptions of the Act.” “Nor can a promise of

confidentiality in and of itself defeat the right of disclosure.”*

Hence we hold that disclosure of EEO-I's and AAP’s by

GSA/OFCC to CEP is not barred by 5 U. S. C. § 552(b)(3).

Exemption (b)(7)

Exemption (b)(7) applies to “investigatory files com-

piled for law enforcement purposes . . .” Sears argues that

EEO-1's and AAP’s are gathered as part of compliance pro-

cedures under the Civil Rights Act and Executive Orders and

are likely to become part of litigation files used in any actions

now pending or which may be brought against Sears for non-

compliance. In addition, Sears claims that under amendments to

Revised Order No. 14, 41 C. F. R. § 60-60.4(d), 39 F. R.

ne cee we comeitennd pars

19. Getman v. N. L. , 146 U. S. D. C. 209, 450

F. 2d 670, 672 (1971); Soucie v. David, 145 S. . D.C. 144,

448 F. 2d 1067, 1077 (197 i). See also Legal wy of

Alameda County v. Shul Aad. om 776 (N. D. Cal.

fn)

oss

tz, 349

Schlesinger, C. A.

No. 118-74-A, E. D. Va., April 2 Ty ye p. 9.

Sears argues that summary beca

wer oer cmsrnng pat fonda” Sas

is needed. Since we find such promises orce-

, whether or not they were made, this isswe of fact is not

‘|

thas Vv. Staats, 501 F. 2d 887 at p. 889 (D. C. Cir. 1974).

Bil

of an investigatory file compiled for law enforcement purposes

within the meaning of 5 U. S. C. § 552(b)(7) and. . . shall

be treated as exempt from mandatory disclosure under the

Freedom of Information Act during the compliance review.’ ”

The purposes behind exemption (b)(7) are:

[1] to prevent the premature disclosure of the results of

an investigation so that the Government can present

its strongest case in court, and

[2] to keep confidential the procedures by which the agency

conducted its investigation and by which it has obtained

information.

Aspin v. Department of Defense, 491 F. 2d 24 at 29 (D. C.

Cir. 1973), quoting Frankel v. Securities and Exchange Com-

mission, 460 F. 2d 813, at 817 (2d Cir. 1972). Disclosure will

clearly not prejudice the government’s case in court since Sears,

the potential litigant, already knows the contents of the docu-

ments in question. More important, exemption (b)(7) is clearly

designed to protect interests of the government only. In this case

GSA and OFCC, by their willingness to release the material,

have waived those protections. We hold that Sears has no

standing to assert an interest of the government when the gov-

ernment has explicitly waived that interest and that exemption

(b)(7) gives Sears no interest of its own in non-disclosure.

In arguing that the amended Revised Order No. 14, includes

EEO-1's and AAP’s within exemption (b) (7), Sears has omitted

crucial language from the order. That order, in pertinent part

reads:

[Djuring the conduct of a compliance review or while

enforcement action against the contractor is in progress or

within a reasonable time, all information

obtained from a contractor under subpart B except infor-

mation disclosable under §§ 60-40.2 and 60-40.3 of this

title is to be considered part of an investigatory file com-

piled for law enforcement purposes within the meaning

of 5 U.S.C. 552(b)(7), and such information obtained

from a contractor under subpart B shall be treated as

B12

exempt from mandatory disck. .re under the Freedom of

Information Act during the compliance review.” (emphasis

added)

EEO-1! reports and AAP’s are disclosable under §§ 60-40.2

and 60-40.3. Hence Revised Order No. 14 does not bring

the documents in question within exemption (b)(7).

In sum, then, disclosure of EEO-1’s and AAP’s is not barred

by 5 U. S. C. § 552(b)(7). Accord, Legal Aid Society of

Alameda County v. Shultz, 349 F. Supp. 771, 777 (N. D. Cal.

1972); Westinghouse Electric Corp. v. Schlesinger, C. A. No.

118-74-A, E. D. Va., April 2, 1974, slip opinion p. 9.

Exemptions (b)(4) and (b) (6)

Having rejected Sears’ claim that its EEO-1’s and AAP’s

should enjoy blanket immunity from disclosure under 5 U. S. C.

§ 552(b) (3) and (7), we turn to Sears’ claim for partial exemp-

tions. Essentially, Sears argues that (b)(4), which applies to

“trade secrets and commercial or financial information obtained

from a person and privileged or confidential,” and (b)(6),

which applies to “personnel and medical files and similar files

the disclosure of which would constitute a clearly unwarranted

invasion of personal privacy,” should bar disclosure of portions

of the documents held by GSA/OFCC.

In order to bring a matter (other than a trade secret) within

this exemption, it must be shown that the information is (a)

commercial or financial, (b) obtained from a person, and (c)

privileged or confidential. Getman v. N. L. R. B., 146 U. S.

App. D. C. 209, 450 F. 2d 670, 673 (1971), quoting Con-

sumers Union of United States, Inc. v. Veterans Administration,

301 F. Supp. 796, 802 (S. D. N. Y. 1969), appeal dismissed,

436 F. 2d 1363 (2d Cir. 1971). It is apparent from the require-

ments of 41 C. F. R. § 60-2.1 et seq. that EEO-1’s and AAP’s

are commercial information obtained from a person. Sears has

made no claim of privilege aside from “confidentiality.” Hence

B13

the issue narrows to whether the information is “confidential”

within the meaning of exemption (b) (4).

The leading case on exemption (b)(4) is National Parks

and Conservation Association v. Morton, 498 F. 2d 765 (D. C.

Cir. 1974). The Court of Appeals there said that:

“commercial or financial is ‘confidential’ for purposes of

the exemption if disclosure of the information is likely to

have either of the following effects: (1) to impair the Gov-

ernment’s ability to obtain necessary information in the

future; or (2) to cause substantial harm to the competitive

position of the person from whom the information was

obtained. (Footnote omitted) .”

(p. 770)

In the present action, the government desires to release the

documents, showing its lack of concern that such disclosure will

impair its ability to obtain information in the future. Sears, of

course, has no standing to raise that argument when the govern-

ment has waived it. Thus the crux of the issue is whether dis-

closure of the various EEO-1l’s and AAP’s contain “trade

secrets” and whether their disclosure will “cause substantial

harm to the competitive position of’ Sears.

It appears to the court that this aspect of the case is not

yet ripe for summary judgment. Aside from a single affidavit

filed by Sears and responsive affidavits filed by GSA and CEP,

(as well as legal memoranda filed by all parties,) the record

is incomplete on the question of whether disclosure wil] harm

Sears’ competitive position.

In its motion for reconsideration intervenor requests further

discovery and an evidentiary hearing to develop the facts neces-

sary to decide this issue.*' Such a process, however, would

present administrative and judicial difficulties. Sears represented

at oral argument that the documents in question would be

21. Intervenor, of course, has previously moved for summary

judgment, claiming that there are no genuine issues of material fact.

Sears has also requested further discovery related to its claims under

exemption (b)(3). We have considered those requests above.

Bi4

“twelve inches thick.” It is not clear what role intervenor could

play in such a hearing, since the question at issue is whether it

should have access to the documents in the first place.** And the

court begins without any agency determination as to whether

such documents should fit within the exemption. In light of

other “reverse FOIA” suits which may be brought in the future,

this burden should not fall totally on the court.

On the other hand, the agency involved, GSA/OFCC, has

continually offered to consider specific objections under 41

C. F. R. § 60-40.3 made on the basis of (b)(4) and (b)(6)

of the FOIA. Until now, Sears has refused to make such specifi-

cations, desiring instead to have its blanket claims decided ju-

dicially before proceeding to narrow its request.** Now that this

court has rejected those blanket claims, it may be that Sears and

GSA can reach an agreement regarding at least part of the

material. The process should be made easier by intervenor’s

repeated disclaimer of interest in trade secrets.** Having had

22. Intervenor argues that confidential commercial information

is discoverable (with safeguards) in civil discovery. This may be

true, but is inapposite in this action. Civil discovery is limited by

requirements of relevancy. When necessary to prepare for a case

SS ene Se ee Sar Se Se ee Cee ee , con-

fidential and private ts may be discoverable. The present

action, however, is merely a “reverse FOIA” suit for the documents

themselves. To hold that a FOIA claim itself automatically

ri to discovery that would otherwise be limited by requirements

would effectively wipe out the protections that exemp-

tion (b)(4) was intended to give private parties. Accordingly, inter-

venor’s motion for reconsideration must be denied.

23. Defendant and intervenor argue that this gives Sears “un-

clean hands,” and should bar relief. In the context of an important

case of first impression in this Circuit, however, in which Scars has

offered to make such specification after judicial resolution of its

larger claims, we are unwilling to bar relief to Sears.

24. This should also be possible with to Sears’ claim

under (b)(6). According to Getman v. N. L. R. B., 146 U. S. App.

D. C. 209, 450 F. 2d 670, 674 (1971), “(E)xemption (6) re-

quires a court reviewing the maticr de novo to balance the right of

privacy of affected indivi against the right of the public to be

informed; and the statutory language ‘clearly unwarranted’ instructs

B15

its day in court on its blanket claims, Sears should exhaust its

administrative remedies on its narrower claims before seeking

relief from this court. Hence we shall stay the remainder of our

disposition pending agency review of Sears’ claims under ex-

emptions (b)(4) and (b)(6).

Such review should be conducted 1 an expedited fashion in

view of the amount of time already elapsed since intervenor

first requested the documents, and the expedited treatment au-

thorized by the FOIA. The court deems it appropriate that

Sears submit its contentions to GSA within 30 days of the date

of this order, and that the agency make its final decision (sub-

ject to this court's review), within another 50 days.

Sears has argued that the agency’s Disclosure Rules fail to

provide Sears with a hearing, required by due process. Since

those seeking disclosure under the FOIA are not entitled to

such an agency hearing, and since the agency’s decision will be

reviewed in this court, we decline to order such a hearing.

After the agency has reached its decision on Sears’ specific

claims, those decisions will be reviewed by this court. Where

the agency agrees with Sears that the documentary portion in

question contains material that should not be disclosed, the case

will fit the more typical FOIA pattern in which the agency

(GSA/OFCC) has refused disclosure and the information-

seeker (intervenor CEP) has brought suit. Hence all such docu-

senting their arguments for non-disclosure. Intervenor, at that

time, will be given opportunity to respond appropriately. A

the court to tilt the balance in favor of disclosure.” [Footnotes

omitted] See Rural Housing Alliance v. United States Dept. of Agr.,

498 F. 2d 73 (D. C. Cir. 1974). It appears unlikely, from the

record, that Ss SD SS Ne eaten

this exemption. Hence possi particularly in

light of imervenor’s disclaimer of interest in information that will

invade personal privacy.

B16

In instances where the agency disagrees with Sears’ conten-

tions, Sears may, if it wishes, bring to this court those documents

for in camera inspection, together with supporting memoranda.

The agency and intervenor will then be afforded opportunity to

respond. Documents which Sears does not bring to the court's

attention will be ordered released by the agency to intervenor.

Of course, documents which Sears does not bring to the agency’s

attention within 30 days as falling under (b)(4) or (b)(6)

should be released by the agency immediately.

A few points are in order regarding the substance of Sears’

burden under (b)(4). In its complaint, Sears argues that

“disclosure will adversely affect the goodwill of Sears and

further present opportunities for adverse publicity and unwar-

ranted litigation, as the result of improper inferences and con-

clusions that may be drawn from such documents, with respect

to plaintiffs equal employment opportunity position.” (Para-

graph 15.) In its Statement of Genuine Issue of Material Fact,

Paragraph 17 amplifies the same fears of “irreparable harm.”

This fear of potential loss of goodwill is tenuous at best. It is

just as likely that evidence of Sears’ compliance with Executive

Order 11,246 will enhance, not diminish Sears’ corporate image.

In any event, it is not actionable under the standards of National

Parks.

In the affidavit of Alfred A. Kuehn,” however, Sears, al-

leges a different type of harm; disclosure, it is said, will allow

Sears’ competitors to compete more effectively with Sears by

having access to “inside information.” While the affidavit is

limited to a discussion of the usefulness of statistical employee

breakdowns,” it may be that Sears’ AAP’s also contain plans

25. This affidavit was y sent to chambers enclosed

in a letter of arguments from * counsel dated May 28, 1974.

Although never i to do so, this court docketed

the affidavit on July 31, 1974.

26. Cf. Westinghouse Electric Corporation v. Schlesinger, C. A.

No. 118-74-A (E. D. Va. April 2, 1974).

B17

relating to “expansions, reductions, mergers,”*’ other planned

“major shifts or changes in his personnel requirements,”* or

information whose release “would constitute an unwarranted

invasion of the privacy of an employee.”*” We believe that these

are the factors that might lead to the “substantial harm to the

competitive position,” envisioned by National Parks, and these

are the kind of factors which we will consider on review.*

Accordingly, therefore, it is this 6th day of September,

1974,

Ordered that summary judgment be, and hereby is, granted

in part for defendant and for intervenor, in accordance with

this memorandum, and it is further

Ordered that further proceedings in this court be, and hereby

are stayed to afford plaintiff an opportunity to exhaust its

administrative remedies.

27. These factors were cited by the Alameda court, 349 F. Supp.

771 at 777.

28. 41C. F. R. § 60-40.3(a)(1).

29. 41°C. F. R. § 60-40.3(a)(2).

30. Sears’ belief that if . . . “defendants apply a less stringent

standard for disclosure to others, than was applied here to plaintiff,

their actions would be arbitrary and capricious,” fails to convince

the court that discovery is needed (Plaintiff's Memorandum of

P. & A. p. 25). FOIA requests made of GSA or any other agency

for documents legally indistinguishable from EEO-1’s and AAP’s

should be governed by the same rules that govern disclosure of Sears’

documents. I.e., unless those documents properly fall within exemp-

tions (b)(4) or (b)(6), non-disclosure by an agency would violate

the FOIA. Evidence that such violations occur, of course, will not

idvance Sears’ cause in this action. If an agency properly withholds

such documents under (b)(4) or (b)(6), however, it is doing no

more than GSA can now do, on remand, with Sears’ help.

APPENDIX C.

UNITED STATES Court oF APPEALS,

District of Columbia Circuit.

No. 74-1946.

SEARS, ROEBUCK AND COMPANY,

Appellant,

vs.

GENERAL SERVICES ADMINISTRATION et al., Council on

Intervenor-Plaintiff.

Dec. 9, 1974.

Before BAZELON, Chief Judge and LEVENTHAL, Circuit Judge.

Per CURIAM:

Sears, Roebuck & Company brought this action in the District

Court, seeking to prevent disclosure under the Fieedom of

Information Act (FOIA), 5 U. S. C. § 552, of EEO-1 forms

and Affirmative Action Plans (AAP’s) which Sears, as a govern-

ment contractor, has been required to submit to the General

Services Administration (GSA) and to the Office of Federal

Contract Compliance, Department of Labor (OFCC) by Ex-

ecutive Order No. 1!246, 30 F. R_ 12319 (1965), as amended

by Executive Order No. 11375, 52 F. R. 14303 (1967), and

r‘gulations promulgated thereunder. Disclosure is sought by

Intervewor Counc’ on Economic Priorities, a non-profit corpora-

tion which is cunentl, preparing a study of the comparative

social performance of five major national retailers, including

Sears. GSA and the OFCC, having first consulted the FOIA

Committee of the Department of Justice, were willing to re-

lease the documents. These agencies offered Sears an opportu-

nity to review the documents and point out any portions which

were exempt from disclosure under either the FOIA or the

OFCC disclosure regulations, 41 C. F. R. § 60-40.1 et seq.’

Sears declined to follow this procedure because it maintained

that the documents were wholly exempt under FOIA exemptions

§ 552(b)(3) (specifically exempted by statute) and § 552(b)

(7) (investigatory files complied for law enforcement purposes).

Therefore it sought in District Court ar injunction restraining

the government from disclosing any of the information. The

Council on Economic Priorities was permitted to intervene.

In an extremely careful and thorough opinion, 384 F. Supp.

996 (D. D. C. 1974), Judge Bryant held that the documents

ternative that large portions of the documents were exempt

Sears has appealed from Judge Bryant's order granting sum-

mary judgment for the government on the (b)(3) and (b)(7)

claims. Having unsuccessfully sought a stay of that order in the

District Court, Sears moved in this Court for a stay pending dis-

position of the appeal. Because shortage of time did not

permit thorough consideration of the case when the motion

was filed, this Court granted a temporary stay on October 10,

1974. But intervening weeks have permitted a more complete

understanding of the case, and the Court is now convinced

that the stay should be dissolved.

This Court’s decision in Virginia Petroleum Jobbers v.

F. P. C., 104 U. S. App. D. C. 106, 259 F. 2d 921 (1958)

requires, inter alia, that one who seeks a stay demonstrate a

strong likelihood of success on the merits. This Sears has failed

to do. Its (b) (3) argument is based on three statutory provisions:

§ 709(e) of Title VII of the Civil Rights Act of 1964, 42

U. S. C. § 2000e-8(e); 44 U. S. C. § 3508; and 18 U. S.C.

§ 1905. None of those provisions specifically exempts the docu-

ments from disclosure within the meaning of § 552(b)(3).

Section 709(e) is a criminal statute which prohibits

officers and employees of the EEOC from making public

information obtained by the Commission pursuant to its av-

thority under Title VII. The EEO-I’s herein were collected

by the Joint Reporting Committee (JRC), which collects

documents for and distributes them to both the EEOC and

the OFCC. Although under some circumstances the EEOC

does require the submission to EEO-1's, which the JRC col-

lects for it, Judge Bryant correctly held that all of the documents

herein were obtained by the JRC pursuant to Executive Orders

11246 and 11375 and not pursuant to the Commission's au-

thority under Title VII. Further, members of the JRC are not

officers or employees of the Commission. While the JRC may be

an agent of the Commission when it acts for the Commission,

it is an agent of the OFCC when it collects information for

that agency pursuant to Executive Order 11246. Thus, the

data in question here was not collected by the EEOC, nor was

it obtained pursuant to EEOC authority. Section 709(¢) does

not apply.*

Sears’ argument that 44 U. S. C. § 3508 exempts the

3508 prohibits agencies from disclosing confidential information

received from other agencies which would not themselves be

permitted by law to disclose it. As we have already explained,

GSA and OFCC do not receive the data from the EEOC. Thus,

the argument that GSA and OFCC cannot disclose the informa-

tion because the EEOC, if in possession of such information,

could not disclose it, is without merit.

Sears’ final (b)(3) argument is based on 18 U. S. C.

§ 1905. This Court has indicated that § 1905 does not fall

within the ambit of exemption (b)(3) because it does noi itself

define what information is exempt from disclosure. Grumman

Aircraft Engineering Corp. v. Renegotiation Board, 138 U. S.

App. D. C. 147, 149 n. 5, 425 F. 2d 578, 580 n. 5 (197°),

Robertson Vv. Butterfield, 162 U. S. App. D. C. 298, 300, 498

F. 2d 1031, 1033 n. 6 (1974).

Sears has also failed to demonstrate that it is likely

to succeed on the merits of its (b)(7) claim. In two recent de-

cisions, Rural Housing Alliance v. U. S. Department of Agri-

culture, 162 U. S. App. D. C. 122, 498 F. 2d 73 (1974), and

Center for National Policy Review v. Weinberger, 163 U. S.

App. D. C. 368, 502 F. 2d 370 (1974). this Court has

distinguished between records compiled as part of a routine

monitoring procedure and records compiled as part of “investiga-

tions which focus directly on specifically alleged illegal acts.”

Rural Housing Alliance, supra, 162 U. S. App. D. C. at 130,

498 F. 2d at 81. Records in the former category are not

protected by exemption (b) (7). The EEO-1's and AAP’s which

Sears, as a government contractor, was required to supply in

order that its compliance with executive orders prohibiting em-

ployment discrimination could be monitored are not “investiga-

tory files” and are not exempt from disclosure under (b)(7).

Therefore, since Sears has failed to demonstrate the probable

success on the merits of its appeal required for continuance of

the stay, the stay of the District Court’s order which this Court

granted on October 10 is dissolved, and GSA is directed to

release forthwith all of the information sought herein which

Sears has not specified as exempt under FOIA exemptions (b)

(4) and (b)(6).

So ordered.

APPENDIX D.

UnNiTep STATES CouRT OF APPEALS

for the District of Columbia Circuit

September Term, 1974

No. 74-1946

SEARS, ROEBUCK AND COMPANY,

Appellant,

Vv.

GENERAL SERVICES ADMINISTRATION, et al.,

COUNCIL ON ECONOMIC PRIORITIES,

Intervenor-Plaintiff.

Before: BAZELON, Chief Judge; and LEVENTHAL, Circuit Judge.

ORDER.

On consideration of the motion of the Chamber of Com-

merce of the United States of America (Chamber) for leave

to file motion to intervene, of the Chamber’s motion to accept

brief on appeal, of intervenor’s (Council on Economic Priori-

ties) motion for summacy affirmance, and of the responses of

the parties to the forego!ng motions, it is

ORDERED by the Court, sua sponte, that the above appeal is

dismissed as moot, and it is

FURTHER ORDERED that the aforesaid motions are denied.

PER CURIAM

APPENDIX E.

UNITED States District Court,

District of Columbia.

Civ. A. No. 2149-73.

SEARS, ROEBUCK AND Co.,

Plaintiff,

GENERAL SERVICES ADMINISTRATION, et al.,

Defendants,

and

THe CoUNCIL ON ECONOMIC PRIORITIES,

Intervenor.

Sept. 26, 1975.

MEMORANDUM AND ORDER

Bryant, District Judge.

In this action Sears, Roebuck and Company seeks a declara-

tory judgment to prevent the defendant General Services Ad-

ministration (“GSA”) and various federal government officials

from disclosing to intervenor Council on Economic Priorities

(“CEP”) EEO-1 forms (“EEO-1’s”) and affirmative action

plans (“AAP’s”) submitted by nineteen Sears branches to the

General Services Administration and to the Office of Federal

Contract Compliance, Department of Labor. The EEO-1 re-

ports, which contain statistics concerning the ethnic and sexual

composition of Sears’ work force, are required of large govern-

ment contractors under penalty of contract cancellation.’ Af-

firmative action plans outline steps proposed by the contractor

to correct effects of past employment discrimination. All parties

have moved for summary judgment.

This Freedom of Information Act case is before the Court

in a reverse posture. Whereas the typical FOIA case is initiated

by a party seeking to force the government to disclose informa-

tion, here Sears has sued a government agency to prevent dis-

closure to the intervenor. In both types of cases a government

official makes the initial decision as to whether to disclose the

sought records, and more particularly whether the Act compels

disclosure. Typically the party seeking the records sues in court

after the government official has refused disclosure.* In the

reverse FOIA case, as here, the government official has deter-

mined to disclose the documents, cither because he finds that

the Act compels disclosure, or that some other statute, regula-

tion, or government policy requires him to comply with the

request. Often the official does not reveal the basis of his decision

to disclose in the reverse FOIA case.

The Freedom of Information Act provides in the relevant

operative section that each agency shall promptly “make avail-

able to any person” all “identifiable records”, but that the Act

“shall not apply” to nine categories of exempted records. 5

U. S. C. § 552. Sears contends that the documents whose dis-

closure it sought to prevent fall within four of the exemptions.

1. Executive Order No. 11,246, 30 F. R. 12319 (1965), as

amended by Executive Order No. 11,375, 32 F. R. 14303 (1967)

and regulations promulgated thereunder. 41 C. F. R. § 60-2.1 et

seq. (Revised Order 4) and 41 C. F. R. § 60-60.1 ef seg. (Revised

Order 14).

2. Here the government has refused to disclose a small portion

of the record and the Cour wil review intervenor challenge 1

that decision according to standards required in the 1A

case. See pp. 383, 384, infra.

This Court's Memorandum and Order of September 10.

1974, D.C. D. C., 384 F. Supp. 996, sets out the factual back-

ground and jurisdictional ba: «f the case, and contains the

Court's initial ruling on the parties’ cross-motions for summary

judgment. In that Memorandum the Court ruled that the rec-

ords do not fall within two of the Act's exempted categories,

5 U. S. C. § 552(b)(3) (exempted by statute) and (b)(7)

(investigatory files),* and directed Sears to exhaust with the

agency its claim pursuant to the policies of two other exemp-

tions, (b)(4) (trade secrets and confidential commercial data)

and (b)(6) (personnel records).

THE STANDARD OF REVIEW

The Court remanded the case to the agency for consideration

under its own procedure, 41 C. F. R. § 60—40.3 ef seq., with

the expectation that Sears and the agency would reach an

agreement regarding at least part of the material. Sears declined

to designate 197 of 460 pages as exempt under (b)(4) and

(b) (6), and GSA has released these documents. Moreover the

3. Sears continues to argue that the documents are exempt

under (b)(3) and (b)(7), even though the U. S. Court of Appeals

for the District of Columbia approved this Court’s ruling on these

two exemptions when it dissolved its stay of the September 10

Order, since Sears had failed to show likelihood of success on the

merits of its appeal of this Court’s ruling on those two exemptions.

166 U. S. App. D. C. 194, 509 F. od 527 (1974). Sears’ single

new argument is that a recent Supreme Court decision, F. A. A.

Administrator Vv. Robertson, 422 U. S. 255, 95 S. Ct. 2140, 45

L. Ed. 2d 164 (1975), requires the Court to reconsider its rejection

of Sears’ prior (b)(3) argument, since Robertson held that (b)(3)

various federal statutes limiting government disclosure,

lactating, cececding t» Seam, 18 U. S. C. § 1905. Sears, however,

misconceives the reach of section 1905. That statute merely makes

it a criminal offense for a government official to disclose various

s of confidential business data if “not authorized by law”.

1905 tuthonaed by agency where disclosure is competed

statute or is regulation or policy. Sears’

1 arguments add ‘fren’ other arguments that disclo-

sure is prohibited. Charles ivers Park ‘A”, Inc. v. H. U. D., 519

F. 2d 935 (D. C. Cir. 1975) nn. 5 & 6.

agency has accepted Sears’ arguments as to portions of the

documents naming Sears’ employees and giving identifying de-

tails and evaluative comments. The intervenor has acquiesced

to the deletion of employee names, addresses and phone num-

bers, but argues that the identifying characteristics must be

disclosed pursuant to the Freedom of Information Act. Finally,

as to a portion of the pages it declined to designate, Sears has

not objected to the agency’s remand decision.

The parties are again before the Court. Both Sears and CEP

argue that the Court should set aside portions of the agency's

order.

The threshold question in this case is whether Sears can

invoke the Freedom of Information Act, or whether the plain-

tiff must rely on the judicial review section of the Administrative

Procedure Act in its campaign to prevent disclosure. The FOIA

itself gives Sears no cause of action in the face of a government

decision to disclose, if that decision is not based on the require-

ments of the Freedom of Information Act. If the Act requires

disclosure then the agency must make the records available

regardless of any argument Sears might make. If the records are

exempt then the Act “shall not apply”, §552(b). The Act

simply does not prohibit disclosure of records which are exempt

from its coverage.

However, Sears does have a right to a declaratory judgment

on the issue of whether the contested material is exempt, if the

government official’s decision to disclose is based solely on his

finding that he is compelled to do so by the Act. The “actual

controversy”, as required by the Declaratory Judgment Act, 28

U. S. C. § 2201, concerns whether contested records are exempt

under the FOIA. Here Sears would simply be seeking a judicial

interpretation of the law which it could use to convince the

agency that the Act does not require disclosure. Thus the

viability of Sears’ cause of action under the FOIA depends

entirely on the basis of the defendants’ decision to disclose.

The government's initial pleadings indicated that it desired to

release the records even if not compelled to do so by the FOIA.*

Accordingly in the September 10 Memorandum and Order

this Court held that the FOIA does not apply to this case, and

that to prevail Sears must show that the decision to release

should be set aside under the judicial review section of the

Administrative Procedure Act as “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law.”

5 U. S. C. § 706 (2)(A). Under this view of the case, the

FOIA exemptions were relevant only as guidelines in measuring

the agency’s action.

More recently the government has made clear its position

in this regard, which is that it has not yet determined whether

it will release the data should the Court find that release

is not compelled under the FOIA.® Accordingly, it is appropri-

ate for this Court to issue a declaratory judgment as to whether

the contested documents are exempt under the Freedom of

Information Act.®

The next legal issue, over which there has been much

confusion and about which there has been niuch discussion by

the parties in their papers, concerns the standard to be applied

by this Court in its review of the agency’s decision. All parties

4. See Motions of Defendants to Dismiss or, in | the Alternative.

for Summary J t, filed February 1, 1974, pp. 9-10, where

defendants at the FOIA does not apply to this case because

they may disclose the contested records even if not compelled to do

so by Act.

5. Motion of Defendants for Protective Order, filed June 6,

1975, p. 4.

6. This ) pee is consistent with the ure outlined by

the Court of Appeals in Charles Rivers Park, supra. This Court's

determination that none of the records which Sears seeks to prevent

GSA from disclosing is exempt under the Act makes it unnecessary

to reach the other issucs discussed by the Court of Appeals in that

If the agency were to decide to release any information which the

Court found exempt under the FOIA, then the plaintiff could seck

agree that the Information Act directs the Court to review,

de novo, CEP’s challenge to the agency's decision not to

release portions of the documents. 5 U. S. C. § 552(a)(3). As

to Sears’ challenge to the agency decision, the standard of

review depends wholly on the applicability of the Freedom of

Information Act. The intervenor and the government correctly

argue that if the Court were reviewing the agency decision

pursuant to the Administrative Procedure Act it could set aside

the agency’s decision only on a finding that the decision was

“arbitrary and capricious”. Camp v. Pitts, 411 U. S. 138, 93

S. Ct. 1241, 36 L. Ed. 2d 106 (1973); Citizens to Preserve

Overton Park Inc. v. Volpe, 401 U. S. 402, 91 S. Ct. 814,

28 L. Ed. 2d 136 (1971). But since Sears has filed a valid

declaratory judgment action on whether any of the documents

are exempt under the FOIA, this Court will apply the de novo

standard mandated by the Information Act.’

Exemption (b) (4)

The data which Sears seeks to prevent from disclosure

under exemption (b)(4) consists of various types of employ-

ment statistics for 19 Sears units. Section D of the EEO-1

reports consists of employment totals in nine occupational cate-

gories for each Sears unit, with columns detailing the sex and

minority group status of employees. The Affirmative Action

Plan reports include 19 job categories similarly broken down by

race and sex, with separate tallies for hiring, terminations, train-

ing, and projected time tables for reaching affirmative action

goals.

The (b)(4) exemption applies to “trade secrets and commer-

house Electric Corp. v. Schlesinger, 7 FEP Cases

» ¥, , 682,

(E. D. Va. 1974); U. S. Steel v. Schlesinger, 8 FEP Cases

(E. D. Va. 1974). . -*y

Order discussed the applicability of that section to this case,

and pointed out that the crux of the issue here is whether the

EEO-1’s and AAP’s contain “trade secrets” or other material

the disclosure of which will “cause substantial harm to the com-

petitive position of” Sears. National Parks and Conservation

Association v. Morton, 162 U. S. App. D. C. 223, 498 F. 2d

765, 770 (1974). After reviewing the documents submitted for

in camera inspection and the affidavits submitted by the partics*

the Court concludes that Sears has not sustained its burden of

showing that any materials contained in the EEO-|’s and AAP’s

are exempt under (b)(4).

Since the September 10 remand Sears has submitted six affi-

davits from five experts,’ in support of its contention that release

of the data contained in the documents would cause it substan-

tial competitive harm. The affidavits filed by Sears’ experts

generally consist of assertions that a competitor could deduce

from the EEO-1 and AAP employment totals estimates of Sears’

labor costs, sales volume, and plans for expansion, coupled

with claims as to the harmful effects which the release of the

cause Sears substantial competitive injury, except for general

assertions to that effect. Sears’ experts have alsu declined to

compare accuracy of estimates which could be made from the

8. Since the remand Sears has pressed for an evidentiary hear-

ing. On July 1, 1975 this Court heard oral argument on the appli-

of the (b)(4) and (b)(6) exemptions to the data and

orally denied Sears’ request for an evidentiary hearing on the ground

lL, Og t ffi J,

written with the court and the agency. While there

are between the Sears’ affidavit and those of defendant and

intervenor, these conflicts do not raise issues of material fact, but

bh as to the adverse consequences to

Sears of release of the | and AAP reports.

On the of the oral hearing Sears moved for leave to file sup-

plemental By separate order the Court will grant that

motion.

9. Sears submitted four of these affidavits to the agency. The

Se Se eee 6 Se eee

All these materials are part of the record

is the assumption by the Sears’ experts that the GSA is releasing

EEO-1's and AAP’s for all Sears’ units for several years. Since

the information request at issue in this case is confined to nine-

teen Sears’ units any ruling also must be so confined. Sears may

raise its arguments relating to the release of other data only at

the time the government proposes to release that data.

The deficiencies in the Sears’ affidavits are ably identified

Exemption (b) (6)

Exemption (b)(6) applies to “personnel and medical files

and similar files the disclosure of which would constitute

10. Levitan Aff., p. 7

Sears also release would cause it “substantial com-

petitive injury” the data would be useful to competitors in

tion requires the court to “balance the right of privacy of

affected individuals against the right of the public to be

informed” keeping in mind that “the statutory language ‘clearly

unwarranted’ instructs the court to tilt the balance in favor of

disclosure”. Getman v. N. L. R. B., 156 U.S. App. D. C. 209,

450 F. 2d 670, 674 (1971); Rural Housing Alliance v. U. S.

Department of Agriculture, 162 U. S. App. D. C. 122, 498 F.

2d 73, 77 (1974).

Al! parties agree that the names, addresses and phone num-

bers of employees should be deleted. In addition, the agency

proposes to delete certain other identifying information and

comments. CEP challenges this decision under the Freedom

of Information Act.

The agency in its remand opinion and the government in

its brief identified relatively few pages with comments. More-

over most of these comments are harmless and certainly are not

the type of “files the disclosure of which would constitute a

clearly unwarranted invasion of personal privacy”.'' CEP argues

E10

that the comments are important to assessing employment dis-

crimination. After weighing the public interest in disclosure of

these comments and taking into consideration the character of

the comments as well as the unlikelihood that it will be possible

for members of the public to attach the comments to particular

employees of Sears, the Court concludes that the comments do

not fall within exemption (b) (6).

The dates of change in employment status involve no

right of privacy directly. Apparently, the agency deleted them

on the theory that these dates could be used to identify em-

ployees. Since these dates are important to comparing the ad-

vancement of ethnic minorities with others, these dates could

be important to a study of Sears’ employment practices with

respect to minorities. Moreover, except for the comments dis-

cussed above, the other data is not personal in nature."* Again

the public interest in disclosure of the dates of change in em-

ployment status, which are relevant to assessing employment

since it is unlikely that the information can be tied to any in-

dividual.

Accordingly, it is this 26th day of September, 1975

Ordered that summary judgment be, and hereby is, granted

for intervenor and in part for defendant, in accordance with

this memorandum.

12. The reports show information such as ethnic group, sex,

name of training course, and job title of employee.

Unirep States Court OF APPEALS

For the Ninth Circuit

No. 75-1064

HuGHes AIRCRAFT COMPANY,

Plaintif}-Appellant,

vs.

James A. SCHLESINGER, Secretary, U. S. Department of De-

fense; Lt. GEN. WALLACE RoBiINnson, Director Defense Sup-

ply Agency; Puitie J. Davis, Director, Office of Federal

Contract Compliance; PeTeR J. BRENNAN, Secretary Depart-

ment of Labor,

Defendants-A ppellees.

ORDER WITHDRAWING SUBMISSION

Before: Barnes, E_y and Cuoy, Circuit Judges.

Submission for decision of this case is withdrawn pending the

determination by the Supreme Court of the Government's peti-

tion for a writ of certiorari in Brown v. Westinghouse, Sup. Ct.

No. 76-1192.

If the Court denies certiorari in Brown, this case will stand

re-submitted as of the date of the denial of certiorari; and if

the Court grants certiorari in the Brown case, this case will not

be re-submitted until the Court's decision in Brown is filed, on

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.