Amicus Curiae Brief — Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 915 (2019) (No. 18-481)

No. 18-481

IN THE

Supreme Court of the United States

FOOD MARKETING INSTITUTE,

Petitioner,

Vv.

ARGUS LEADER MEDIA, D/B/A ARGUS LEADER,

Respondent.

On Writ Of Certiorari To

The United States Court Of Appeals

For The Eighth Circuit

BRIEF OF AMICUS CURIAE AMERICAN

SMALL BUSINESS LEAGUE IN SUPPORT OF

RESPONDENT ARGUS LEADER MEDIA

KARL OLSON*

AARON R. FIELD

CANNATA O'TOOLE FICKES

& OLSON LLP

100 Pine St., Suite 350

San Francisco, CA 94111

(415) 409-8900

kolson@cofolaw.com

Counsel for Amicus Curiae

American Small Business

League

*Counsel of Record

fin

susie

I.

II.

IV.

TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE.................. ]

SUMMARY OF ARGUMENT: EXEMPTIONS

ARE NARROWLY CONSTRUED, BURDEN

IS ON GOVERNMENT TO JUSTIFY NON-

DISCLOSURE, AND NATIONAL PARKS

INTERPRETS EXEMPTION 4

ACCURATELY. PETITIONER'S

INTERPRETATION WOULD MAKE IT

NEARLY IMPOSSIBLE TO UNCOVER

WASTEFUL SPENDING. . ..............:.csssssccsseseees 2

SITET asetatnissitissiesehreepsenesecneiniiabiconnepereseses 5

A. REAL-LIFE EXAMPLES

B.

D.

DEMONSTRATE HOW HOLLOW

ASSERTIONS OF CONFIDENTIALITY

OFTEN WILT UNDER SCRUTINY .....5

THE MILITARY-INDUSTRIAL

COMPLEX IS BETTER EQUIPPED TO

BEAR ANY “BURDEN” ASSOCIATED

WITH SUBSTANTIATING

CONFIDENTIALITY CLAIMS THAN

AN EVERYDAY CITIZEN .................... 8

SECRECY, OR OVERBROAD

ASSERTIONS OF

CONFIDENTIALITY, CAN MASK

CORRUPTION, INEFFICIENCY, AND

WETTED ceidssnbisattsnerascnivedncrenuhinaipasccivavite 9

THE SMALL BUSINESS ACT, WHICH

IT IS AMERICAN SMALL BUSINESS

LEAGUE'S MISSION TO ENSURE IS

FOLLOWED BY THE GOVERNMENT

AND ITS PRIME CONTRACTORS,

UNDERSCORES THE IMPORTANCE

OF THE NATIONAL PARKS TEST ...13

re INE oscil cblhicenneencsiadantbacridinntintiebadeinciitn 19

TABLE OF AUTHORITIES

FEDERAL CASES

ACLU v. U.S. Department of Justice,

te Ff ft | Rn 12

American Small Business League v. Contreras-Sweet,

712 F. Appx 667 (Oth Cir. 2018)..............c.0c0000ss00008 15

American Small Business League v. Department of

Defense,

Case No. C 18-01979 WHA, 2019 WL 1100372

COE ee, GE: TE, Ti TED wn scnicaecenddcistonincentecthbieleaeghohtatal 15

Argus Leader Media v. U.S. Department of

Agriculture,

889 F.3d 914 (8th Cir. 2018) ...............c000ssssecssvcssseees 5

Department of Air Force v. Rose,

SS i He CD Srkbncstnctcretetisasdiidinstariecuumienn 2

Hamdan v. U.S. Department of Justice,

coo ef & F .- & eRe 2

Micro v. Defense Logistics Agency

Oa Ae BR Ce Kitt ctcenticitinndeemn 3

Milner v. Department of the Navy,

I Oy Ah CERI PE I csntistisccbnsdvesobecknctcscnitinetinandscnidinaiaatin: 5

Nat'l Parks and Conservation Ass'n v. Morton,

GD Fe Fe ee CR Fe i sctinsenecnsisanlictuesnieninndinleia 4

Nixon v. Fitzgerald,

Ge Cele FA A cccitecipiavictsckcaceitduetisiendsetcinpiaiteas 11

Publicker Indus., Inc. v. Cohen,

2 oie § f¢ ts @ een 12

Press-Enterprise Co. v. Superior Court,

GE TS eB Gi scciviscssunissdciasuescchectitebicbereiithenagaan 2

Richmond Newspapers, Inc. v. Virginia,

a usenuunoes 2,13

Ruckelshaus v. Monsanto Co.,

ESE 12

STATE CASES

In re Providian Credit Card Cases,

Ee 3

NBC Subsidiary (KNBC-TV, Inc.) v. Superior Court,

i I cusmnusoensns 12,13

FEDERAL STATUTES

a ccuientdanmioubantacie 16

a as iaemensicntel 15

EES ER ea 14

FEDERAL REGULATIONS

REE ee 15

SUSE a 16

OTHER AUTHORITIES

Action Needed to Determine Whether DOD's Compre-

hensive Subcontracting Plan Test Program Should Be

Made Permanent, Report No. GAO- 16-27,

GOVERNMENT ACCOUNTABILITY OFFICE (Nov. 2015). 17

Donald Rumsfeld, DOD Acquisition and Logistics

Excellence Week Kickoff — Bureaucracy to Battlefield,

U.S. DEPARTMENT OF DEFENSE (Sept. 10, 2001)....... 11

Harold Damelin, New Management Challenge -

Large Businesses Receive Small Business Awards,

Report # 5-15, U.S. SMALL BUSINESS

ADMINISTRATION, OFFICE OF THE INSPECTOR GENERAL

i

Memorandum for Secretary of Defense, Under Secre-

tary of Defense (Comptroller) / Chief Financial

Officer, DOD, OFFICE OF THE INSPECTOR GENERAL,

U.S. DEPARTMENT OF DEFENSE (Nov. 15, 2018)....... 10

Scot Paltrow, U.S. Army fudged its accounts by

trillions of dollars, auditor finds, REUTERS (Aug. 19,

2016, 8:08 a.m.), https://www.reuters.com/article/us-

usa-audit-army-idUSKCN 10U 1IG (last visited

ET tts TIIIIIETccntniictnturenntseeieninditesinanaatieniasieinedenidiomncnties 10

Small Business Administration: A Primer on Pro-

grams and Funding, CRS Report No. RL33243,

CONGRESSIONAL RESEARCH SERVICE (F eb. 21, 2019)

Small Business Size Standards: A Historical Analy-

sis of Contemporary Issues, CRS Report No. R40860,

CONGRESSIONAL RESEARCH SERVICE (Feb. 1, 2019)

iv

I.

INTEREST OF AMICUS CURIAE'

Perhaps no non-media organization has brought

more Freedom of Information Act (“FOIA”) lawsuits

over the last three decades than the American Small

Business League. American Small Business League

has fought hard, and successfully, to advance the

interests of small businesses. It has crusaded effec-

tively and zealously to ensure that small businesses

get their share of federal subcontracting dollars as

required by the Small Business Act. It has a current-

ly-pending case against the Department of Defense

and the Department of Justice seeking access to

information about subcontracting plans required by

the government's Comprehensive Subcontracting

Plan Test Program (hereafter “Test Program”).

Against that background, American Small Busi-

ness League strongly opposes the effort by Petitioner

to discard decades of settled precedent and weaken

FOIA. Neither the text of Exemption 4 nor the

settled interpretation of it justify jettisoning the

requirement that businesses seeking to withhold

information show a likelihood of substantial competi-

tive harm in order to prevail on a claim of exemption.

And the interpretation championed by Petitioner

would allow compliant or corrupt government offi-

cials, acting in concert with large businesses, to

evade public scrutiny of how billions of tax dollars

are spent.

merican Small Business League’s mission to en-

sure that prime contractors, including large defense

contractors, not hide their compliance, or lack there-

of, with the Small Business Act’s subcontracting

goals gives the American Small Business League a

unique perspective on the issues in this case. Ameri-

' No counsel for any party authored this brief in whole or in

part, and no entity or person, aside from amicus curiae, its

members, and its counsel, made any monetary contribution

intended to fund the preparation or submission of this brief.

The parties have consented to this brief being filed.

can Small Business League respectfully submits that

the lower courts’ judgments in this case — which

relied on evidence, not speculative assertions of harm

._ should be affirmed.

Il.

SUMMARY OF ARGUMENT:

EXEMPTIONS ARE NARROWLY CONSTRUED,

BURDEN IS ON GOVERNMENT TO JUSTIFY

NON-DISCLOSURE, AND NATIONAL PARKS

INTERPRETS EXEMPTION 4 ACCURATELY.

PETITIONER’S INTERPRETATION WOULD

MAKE IT NEARLY IMPOSSIBLE TO

UNCOVER WASTEFUL SPENDING.

FOLA’s core purpose is to “permit public access to

official information long shielded unnecessarily from

public view” and to “create a judicially enforceable

public right to secure such information from possibly

unwilling official hands.” Department of Air Force v.

Rose, 425 U.S. 352, 361 (1976).

FOIA embodies this Court’s observation, in the

context of access to judicial proceedings, that, “

‘People in an open society do not demand infallibility

from their institutions, but it is difficult for them to

accept what they are prohibited from observing.” ”

Press-Enterprise Co. v. Superior Court, 478 U.S. 1, 13

(1986) (quoting Richmond Newspapers, Inc. v. Vir-

ginia, 448 U. S. 555, 572 (1980)).

The cardinal rule in FOIA cases is that exemp-

tions “must be narrowly construed” in light of FOLA’s

“dominant objective” of disclosure, not secrecy.

Department of Air Force, 425 U.S. at 361. The corol-

lary is that the burden rests upon the government, or

the opponent of disclosure, to show that an exemp-

tion properly applies to the records it seeks to with-

hold. Hamdan v. U.S. Department of Justice, 797

F.3d 759, 772 (9th Cir. 2015).

The narrow construction requirement, and the

placement of the burden on those resisting disclo-

sure, are especially important features of FOIA

litigation because the government, or a submitter of

information, knows what it is withholding, and how

the information might or might not cause competi-

tive harm. The requester, on the other hand, does not

know what is being withheld, or how the information

might or might not cause competitive harm.

Thus, if exemptions are not narrowly construed,

the government, and businesses that submit infor-

mation to the government to obtain large govern-

ment contracts, will enjoy an advantage in FOIA

litigation which would be nearly impossible to over-

come. See In re Providian Credit Card Cases, 96 Cal.

App. 4th 292, 301, 307-09 (2001).

Trade secrets and similar confidential business

information are easy to claim. Many businesses

would like to have their cake and eat it too: they

would like to obtain millions (or in the case of big

defense contractors, billions) of dollars in govern-

ment contracts, without letting the taxpayers who

fund those contracts know where the money is going

or how well the contract is being performed.

In numerous FOIA cases, either the government

or the submitter of information, or both, will submit

a formulaic recitation of a claimed trade secret or

confidentiality requirement and a speculative asser-

tion of potential harm. The requester, who does not

know what is being withheld, will have no way of

overcoming the assertion if FOIA is interpreted the

way Petitioner and its amici would like.

The case of GC Micro v. Defense Logistics Agency,

33 F.3d 1109 (9th Cir. 1994), is a good example of

that. In GC Micro a small computer software compa-

ny sought records relating to the utilization of small

disadvantaged businesses by major federal defense

contractors. The Defense Logistics Agency (“DLA”)

submitted declarations by officers of each of the

three corporations involved, Loral Aerospace,

McDonnell Douglas Corporation, and Northrop

Corporation. Each declaration stated that disclosure

of information on a federal form would cause harm to

their competitive positions because it would provide

competitors with a roadmap of their subcontracting

plans. Jd. at 1113-14.

The Ninth Circuit observed,

While the law does not require the DLA to en-

gage in a sophisticated economic analysis of

the substantial competitive harm to its con-

tractors that might result from disclosure, in

order to prevail the DLA must meet its burden

of showing a potential of substantial competi-

tive harm to its contractors. The DLA has not

met this burden . . . we must balance the

strong public interest in favor of disclosure

against the right of private businesses to pro-

tect sensitive information. Based on the record

in this case, we believe that FOIA’s strong

presumption in favor of disclosure trumps the

contractors’ right to privacy ... . It is ques-

tionable whether the declarations submitted

by the three contractors show any potential for

competitive harm, let alone substantial harm.

Congress did not pass Exemption 4 to protect

large corporations from persistent computer

salespeople.

Id. at 1115 (emphasis in original).

In contrast to the sensible approach taken in GC

Micro and other cases, the approach taken by Peti-

tioner and its amici would allow both the govern-

ment and large government contractors — who al-

ready wield enormous power and wealth — to keep

information from the public simply by saying that it

is confidential. That would turn FOLIA on its head.

The D.C. Circuit's interpretation of Exemption 4 in

National Parks and Conservation Association v.

Morton (“National Parks’), 498 F.2d 765, 770 (D.C.

Cir. 1974) is consistent with the requirements that

FOIA exemptions be construed narrowly and that

opponents of access bear the burden of proof, and

Petitioner's interpretation is not. See Argus Leader

Media v. U.S. Department of Agric., 889 F.3d 914,

916 n.4 (8th Cir. 2018) (rejecting argument that “

‘confidential’ means ‘secret’ ” based on “ ‘the Supreme

Court’s admonition that FOIA exemptions ‘must be

narrowly construed,’ ” and holding that “[uJnder

[Food Marketing Institute]’s reading, Exemption 4

would swallow FOIA nearly whole”) (quoting Milner

v. Department of Navy, 562 U.S. 562, 565 (2011)).

The Eighth Circuit’s decision should be affirmed.

Ill.

ARGUMENT

A. REAL-LIFE EXAMPLES DEMONSTRATE

HOW HOLLOW ASSERTIONS OF

CONFIDENTIALITY OFTEN WILT

UNDER SCRUTINY.

A very recent pair of cases involving American

Small Business League exemplifies the extent to

which both the government and large government

contractors will go to keep information from seeing

the light of day even when no true trade secrets or

competitive harm are involved. In American Small

Business League v. U.S. Department of Defense, Case

No. 14-cv-2166 (N.D. Cal.), American Small Business

League sought disclosure of Sikorsky Aircraft Corpo-

ration’s fiscal year 2013 Comprehensive Small Busi-

ness Subcontracting Plan (“the Plan”).” Sikorsky

2 Sikorsky is a defense contractor famous for helicopters such

as the UH-60 Black Hawk and the MH-60R Seahawk. See

Sikorsky BLACK HAWK Helicopter, SiKORSKY AIRCRAFT CORP.,

https://www.lockheedmartin.com/en-us/products/sikorsky-black-

hawk-helicopter.htm] (last visited March 22, 2019); Sikorsky

MH-60R SEAHAWK Helicopters, SiKORSKY AIRCRAFT CORP.,

https://www.lockheedmartin.com/en-us/products/sikorsky-mh-

60-seahawk-helicopters.htm! (last visited March 22, 2019). The

Plan described Sikorsky’s small business subcontracting goals,

consistent with the Small Business Act. See infra at § liI.D

(discussing Small Business Act procurement programs, includ-

intervened in the case and initially joined with the

Department of Defense in objecting to disclosure of

nearly all of the information in the Plan.

Sikorsky insisted that information in the Plan

was confidential under Exemption 4. But its claim of

confidentiality wilted under cross-examination. As

the government itself later stated in a letter to

Sikorsky’s counsel,

This discovery revealed that at least for some

of the information that had been redacted, the

Company's witnesses were unable to establish

that there is a likelihood of substantial com-

petitive injury in the relevant market... . This

failure is particularly acute given that the in-

formation in the Plan is now over five years

old. First, Ms. Johnson, Sikorsky’s supply

chain executive, was unable to provide any de-

tailed information regarding the subcontracts

at issue during her deposition. She could not

recall the details of any non-disclosure provi-

sions used by Sikorsky to limit dissemination

of information. .. . She did not know whether

Sikorsky’s contracts with suppliers required

exclusivity .... Prior to reaching her conclu-

sion that disclosure would harm Sikorsky’s

competitive interests, she did not check

whether Sikorsky is currently still using any

of the subcontractors, and when asked, did not

know with certainty.

November 7, 2017 Letter from Paul Jacobsmeyer,

Chief of U.S. Department of Defense Freedom of

Information Division, to Sikorsky lawyer Rex

Heinke, filed December 7, 2018 as ECF No. 47-4 at 3

in American Small Business League vy. U.S. Depart-

ment of Defense, Case No. 3:18-cv-01979-WHA (N_D.

Cal.).

ing the Test Program under which Sikorsky provided the Plan

to the government).

Another Sikorsky witness fared even worse when

questioned at deposition about the conclusory asser-

tions of confidentiality she had made in a sworn

declaration. This witness, Martha Crawford, was

asked, “is there any fact that supports your conclu-

sion that the release of any of these redactions would

harm Sikorsky” She replied, “No.” The questioner

then asked, “I understand your answer to be no,

there are no facts.” Crawford answered, “That's

correct.” Crawford Deposition Tr. at 185:9-18, filed

December 7, 2018 as ECF No. 47-14 at 4 in American

Small Business League vy. U.S. Department of De-

fense, Case No. 3:18-cv-01979-WHA (N.D. Cal).

Eventually, given the Sikorsky witnesses’ com-

plete inability to substantiate declarations which the

Court found “generic and generally unpersuasive,”

the Department of Defense decided to release the

information at issue in the Plan, after giving Sikor-

sky an opportunity (of which Sikorsky did not avail

itself) to take court action to enjoin release. March

14, 2018 letter from Paul Jacobsmeyer, Chief of U.S.

Department of Defense Freedom of Information

Division, to Sikorsky lawyer Rex Heinke, filed De-

cember 7, 2018 as ECF No. 47-6 at 2-3, in American

Small Business League vy. U.S. Department of De-

fense, Case No. 3:18-cv-01979-WHA (N.D. Cal).

The government has nevertheless withheld in-

formation in more recent Comprehensive Smal!

Business Subcontracting Plans under Exemption 4,

based in part on the same Sikorsky witness's, Ms.

Crawford's testimony. See American Small Business

League vy. U.S. Department of Defense, Case No. 3:18-

cev-01979-WHA, 2019 WL 1100372, at **5-7 (NLD.

Cal. Mar. 8, 2019). In American Small Business

League vy. U.S. Department of Defense, Case No. 3:18-

cv-01979-WHA (N.D. Cal.), American Smal! Business

League is fighting to enforce its right of access to

that more recent information as well.

The result in American Small Business League's

2014 lawsuit was important. Sikorsky’s 2013 Com-

prehensive Small Business Subcontracting Plan

revealed that it had reduced its small business

subcontracting goals since the prior year, including

its goals for women and veteran owned small busi-

nesses. See Sikorsky Aircraft Corporation Compre-

hensive Small Business Subcontracting Plan for

Fiscal Year 2013, filed December 7, 2018 as ECF No.

47-24 at 8-9, in American Small Business League v.

U.S. Department of Defense, Case No. 3:18-cv-01979-

WHA (N.D. Cal.). Also, more broadly, it allowed

American Small Business League to look behind the

curtain and assess for itself Sikorsky’s small busi-

ness subcontracting efforts based on actual data, at

least to the extent permitted by the Plan. The public

and groups like American Small Business League

need actual data to independently evaluate, inter

alia, whether the Comprehensive Small Business

Subcontracting Test Program is helping small busi-

nesses. See infra at § ILD.

B. THE MILITARY-INDUSTRIAL COMPLEX

IS BETTER EQUIPPED TO BEAR ANY

“BURDEN” ASSOCIATED WITH

SUBSTANTIATING CONFIDENTIALITY

CLAIMS THAN AN EVERYDAY CITIZEN.

Petitioner's amicus the Chamber of Commerce of

the United States complains to this Court that the

National Parks test has “imposed substantial bur-

dens on courts and litigants.” Chamber of Commerce

Amicus Brief at 10. This is a one-sided view which

bears little relationship to reality. It ignores the

burdens imposed upon everyday citizens and smal]

businesses who want to obtain information from

their government about how their tax dollars are

spent, and the burdens imposed upon businesses and

citizens who write big checks to the government on

April 15 to pay for government employees’ salaries

and prime contractors’ profits. For example, Ameri-

can Small Business League's 2014 and 2018 lawsuits

against the Department of Defense take on a gov-

ernment agency which spends hundreds of billions of

taxpayer dollars a year, and a subsidiary of a For-

tune 500 co mpany which gets billions of taxpayer

dollars a year.

We respectfully submit that a company which

gets $36 billion a year from the government in tax-

payer dollars is better equipped to bear whatever

“burdens” arise from justifying confidentiality claims

than a small business watchdog group or a citizen.

Likewise, the government itself — which generally

aligns with private parties claiming confidentiality’

~ is well equipped to bear the minuscule burden

involved in defending the rare FOIA case.

As Respondent points out, very few FOIA re-

quests turn into litigation: the overwhelming majori-

ty of FOLA requests are resolved at the administra-

tive level. Less than one-tenth of one percent of FOIA

requests turn into litigation, and of those, very few

get to discovery, and fewer still to trial. Brief for

Respondent at 57 & n.27. In the almost 30 years

between 1979 and 2008, there were just 88 FOIA

trials (fewer than three per year), only a fraction of

which concerned Exemption 4.

C, SECRECY, OR OVERBROAD

ASSERTIONS OF CONFIDENTIALITY,

CAN MASK CORRUPTION,

INEFFICIENCY, AND WASTE.

President Dwight Eisenhower famously warned of

* Lockheed Martin Corporation, of which Sikorsky is a subsidi-

ary, reported 2015 sales of $46.1 billion, with a backlog of $99.6

billion; 78.1 percent of ite sales were to the U. 8. Government.

ECF No. 47-12 at 6-7, filed December 7, 2018 in American

Small Business League v. U.S. Department of Defense, Case No.

3: 18-ev-01979-WHA (N_D. Cal).

‘ As noted above in section IILA, the Department of Defense in

a 2014 case eventually agreed to release information over

Sikorsky's objections, but when Anerican Small Business

League made a similar request later, the DOD again sided with

the defense contractors and has provided free legal help for

them in the currently-pending litigation involving American

Small Business League.

the dangers of giving what he called the “military-

industrial complex” too much power. In the nearly 60

years since that warning, the Pentagon and its prime

contractors have grown even more powerful. FOIA

was enacted to allow the public to keep a watchful

eye on how its money is spent, and no agency spends

more federal money than the Pentagon, which has

been known to purchase toilet seats for $640 apiece

and fighter planes for a million times that amount.

Brief for Respondent at 54 & n.23. This Court should

not enact a regime which would allow the govern-

ment and government contractors to keep infor-

mation secret with a mere “because | said so.”

In a June 2016 report from the Department of De-

fense’s own Office of Inspector General, the Inspector

General concluded that the Pentagon could not

account for a staggering $6.5 trillion in spending in

2015 alone. Scot Paltrow, U.S. Army fudged its

accounts by trillions of dollars, auditor finds,

REUTERS (Aug. 19, 2016, 8:08 a.m.), https://www.reut

ers.com/article/us-usa-audit-army-idUSKCN 10U 11G

(last visited March 22, 2019).

Later, in a November 15, 2018 report, the De-

partment of Defense’s Office of the Inspector Genera]

stated, following an attempt at an audit of the De-

partment of Defense's financial records, that, rather

than shedding light on the Department of Defense's

mysterious expenditures, the Inspector General had

been “unable to obtain sufficient appropriate audit

evidence to provide a basis for an audit opinion,” due

in part to “material weaknesses in internal control

over financial reporting that affected DOD as a

whole.” Memorandum for Secretary of Defense, Under

Secretary of Defense (Comptroller) / Chief Financial

Officer, DOD, Orvice OF THE INSPECTOR GENERAL,

U.S. DEPARTMENT OF DEFENSE 2-3 (Nov. 15, 2018),

available at

https://comptroller.defense.gov/Portals/45/Documents

/afr/fy2018/DoD_FY18_Agency_Financial_Report.pdf

#page=138.

10

In a speech the day before September 11, 2001,

Secretary of Defense Donald Rumsfeld presaged

these accounting problems at the Pentagon, stating:

The technology revolution has transformed or-

ganizations across the private sector, but not

ours, not fully, not yet. We are, as they say,

tangled in our anchor chain. Our financial sys-

tems are decades old. According to some esti-

mates, we cannot track $2.3 trillion in trans-

actions. We cannot share information from

floor to floor in this building because it's stored

on dozens of technological systems that are in-

accessible or incompatible.

Donald Rumsfeld, DOD Acquisition and Logistics

Excellence Week Kickoff — Bureaucracy to Battlefield,

U.S. DEPARTMENT OF DEFENSE (Sept. 10, 2001),

available at

https://web.archive .org/web/20 10030116172 1/http://w

ww .defense.gov/Speeches/Speech aspx?Speech!I D=43

0 (last visited March 22, 2019).

Finally, in a much earlier instance of famous cost

overruns at the Pentagon that reached this Court, a

management analyst at the Department of the Air

Force, A. Ernest Fitzgerald, lost his job approximatly

one year after reporting, “[tjo the evidenct embar-

rassment of his superiors in the Department of

Defense,” that “cost-overruns on the C-5A transport

plane could approximate $2 billion. He also revealed

that unexpected technical difficulties had arisen

during the development of the aircraft.” Nixon vy.

Fitzgerald, 457 U.S. 731, 734 (1982).

The suggestions by Petitioner and its amici that

this Court should do away with the requirement of

narrow construction of exemptions, or allow alleged

harm to corporate reputation to justify non-

disclosure, Petitioner's Brief at 50, both lack merit

and would seriously undercut FOILA’s core purpose.

As noted above, both the government and the sub-

mitter of information are in the best position to

explain why an exemption should apply. Narrow

construction of exemptions, and the placement of the

burden on the government to justify non-disclosure,

are essential to preserve a level playing field under

FOIA.” See ACLU y. U.S. Department of Justice, 880

F.3d 473, 483 (9th Cir. 2018) (disclosure is the domi-

nant purpose of FOIA, and exemptions are to be

narrowly construed).

The suggestion that harm to reputation should

suffice to justify non-disclosure would be inconsistent

with FOIA’s core purpose of allowing the public to

monitor the spending of public money. As this Court

has observed, “the value of a trade secret lies in the

competitive advantage it gives its owner over com-

petitors,” not any protection from embarrassing

fallout such as “the harmful side effects of [its]

product.” Ruckelshaus v. Monsanto Co., 467 U.S. 986,

1011 n.15 (1984); see also NBC Subsidiary (KNBC-

TV, Inc.) v. Superior Court, 20 Cal. 4th 1178, 1208

(1999) (closure of unfair trade practices lawsuit not

justified merely in order to minimize damage to

corporate reputation); Publicker Industries, Inc. v.

Cohen, 733 ¥.2d4 1059, 1074 (3d Cir. 1984) (public has

First Amendment right of access to civil proceedings

concerning motion for preliminary injunction in

securities litigation; closure is not warranted to

protect against “potential harm” from “disclosure of

poor management in the past” which “is hardly a

trade secret”) (internal citation and quotation marks

omitted). For example, a defense contractor may get

a multi-billion dollar contract to manufacture a plane

that doesn’t fly properly or a weapons system which

proves defective or ineffective. The revelation that a

company took billions of government dollars to

deliver a defective product might harm its reputa-

tion, but it is not a trade secret. It is information the

public has a right and a need to know.

* It should be noted that disclosure of information under FOLA

promotes a level playing field. If competitors all have access to

information about government contracts, none of them will

suffer competitive harm.

12

As courts have observed, access to public infor-

mation can expose “corruption, incompetence, ineffi-

ciency, prejudice and favoritism.” NBC Subsidiary,

20 Cal. 4th at 1211 n.28 (internal citations omitted).

U.S. taxpayers pay for billions of dollars in federal

spending, and a lot of that goes to private companies.

Not all of it is well spent. The public has a right to

know where its money goes, and companies who get

big government contracts have to expect some level

of public scrutiny of whether government money is

well spent.

Another reason this Court should not discard

decades of precedent under Exemption 4 is that this

precedent has given rise to the favorable judgment of

experience.

[T]he case for a right of access has special

force when drawn from an enduring and vital

tradition of public entrée to particular pro-

ceedings or information. . . . a tradition of ac-

cessibility implies the favorable judgment of

experience. Second, the value of access must

be measured in specifics.

Richmond Newspapers, 448 U.S. at 589 (Brennan, J.

concurring).

D. THE SMALL BUSINESS ACT, WHICH IT

IS AMERICAN SMALL BUSINESS

LEAGUE’S MISSION TO ENSURE IS

FOLLOWED BY THE GOVERNMENT

AND ITS PRIME CONTRACTORS,

UNDERSCORES THE IMPORTANCE OF

THE NATIONAL PARKS TEST.

The structure and purpose of the Small Business

Act underscores the importance of preserving the

National Parks test and affirming the Eighth Cir-

cuit.

13

The Small Business Act is intended to promote

small businesses in order to

. . . preserve free competitive enterprise, to

insure that a fair proportion of the total pur-

chases and contracts or subcontracts for

property and services for the Government (in-

cluding but not limited to contracts or subcon-

tracts for maintenance, repair, and construc-

tion) be placed with small business enterpris-

es, to insure that a fair proportion of the total

sales of Government property be made to

such enterprises, and to maintain and

strengthen the overall economy of the Nation.

15 U.S.C. § 631. As the Congressional Research

Service has explained,

In economic terms, the congressional intent

was to assist small businesses as a means to

deter monopoly and oligarchy formation with-

in all industries and the market failures

caused by the elimination or reduction of com-

petition in the marketplace.

Small Business Size Standards: A Historical Analy-

sis of Contemporary Issues, CRS Report No. R40860,

CONGRESSIONAL RESEARCH SERVICE 1 (Feb. 1, 2019),

available at

https://crsreports.congress.gov/product/pdf/R/R40860.

In furtherance of these objectives, the Small

Business Act

. . . directs the President to “establish

Governmentwide goals for procurement con-

tracts awarded to small business concerns,”

which “shall be established at not less than 23

percent of the total value of all prime contract

awards for each fiscal year.” 15 U.S.C.

§ 644(g)(1)(A), (i). The Act also requires federal

agencies to set individual goals, _ id.

§ 644(g)(2)(A), and directs the Small Business

14

Administration . . . to submit an annual report

to the President and Congress explaining

whether federal agencies achieved these goals,

id. § 644(h)(2)(B)-(C).

American Small Business League v. Contreras-Sweet,

712 F. App’x 667, 667-68 (9th Cir. 2018).

The Small Business Act generally “requires prime

contractors to submit ‘Individual Subcontracting

Plans’ for each contract to show how government

contracts and subcontracts are awarded

to small businesses.” American Small Business

League, 2019 WL 1100372, at *1; see also 15 U.S.C. §

637(d); 48 CFR § 19.702(a). However, a so-called

“Test Program” “allow|s] certain large defense con-

tractors to instead submit a single annual ‘Compre-

hensive Subcontracting Plan’ for an entire plant,

division, or company to identify all subcontract

amounts awarded to small businesses on government

contracts.” American Small Business League, 2019

WL 1100372, at *1. “Test Program participants must

submit their Comprehensive Subcontracting Plan to

the DOD each year for review and approval.” /d.

The subcontracting plans of prime contractors,

and ensuing communications about the extent to

which plans are consistent with the government's

small business goals and are being adequately exe-

cuted, provide hard numbers that are essential to the

public and groups like American Small Business

League in assessing whether the Small Business Act

is helping small businesses, not large government

contractors. But if Petitioner's interpretation of

FOLIA is adopted, information about compliance with

Small Business Act goals may never see the light of

day.

American Small Business League’s watchdog ef-

forts — which involve unearthing information, includ-

ing hard numbers, on how small business subcon-

tracting dollars are being spent — are essential to

making the Small Business Act work.

15

First, public discourse based on hard numbers

provides government agencies with a political incen-

tive to comply with the Small Business Act. As the

Small Business Administration’s Inspector General

stated in 2005, “One of the most important challenges

facing the Small Business Administration (SBA) and the

entire Federal Government today is that large businesses

are receiving small business procurement awards and

agencies are receiving credit for these awards.” Harold

Damelin, New Management Challenge — Large Busi-

nesses Receive Small Business Awards, Report # 5-15,

U.S. SMALL BUSINESS ADMINISTRATION, OFFICE OF THE

INSPECTOR GENERAL (Feb. 24, 2005), available at

http://www.asbl.com/documents/05-15.pdf. As one

Congressional Research Service Report explains,

“(t]here are no punitive consequences for not meeting

the small business procurement goals” that agencies

set for themselves. Small Business Administration: A

Primer on Programs and Funding, CRS Report No.

RL33243, CONGRESSIONAL RESEARCH SERVICE 23

(Feb. 21, 2019), available at

https://crsreports.congress.gov/product/pdf/RL/RL332

43/96. However, “media attention” and questions

from Members of Congress incentivize government

agency compliance. Jd. Public access to Small Busi-

ness Act compliance information is needed to ensure

this sort of public scrutiny is fact-based and etiective.

Second, public discourse based on hard numbers

incentivizes good faith compliance with the Small

Business Act by prime contractors. The Small Busi-

ness Act directs prime contractors to give part of

their government payouts to small business subcon-

tractors. Prime contractors have a strong incentive to

do the minimum necessary to secure future govern-

ment business. The best medicine for this problem is

sunlight.

Third, public discourse based on hard numbers

allows the public and groups like American Small

Business League to meaningfully evaluate how

Congress and the Executive Branch have defined

“small business” under the Small Business Act. The

16

Small Business Act provides that a small business

must be “independently owned and operated” and

“not dominant in its field of operation.” 15 U.S.C.

§632(a)(1); see also 48 CFR § 19.703 (eligibility

requirements for small business subcontracting

program).

Fourth, public discourse based on hard numbers

is needed to assess whether the Department of

Defense’s Comprehensive Small Business Subcon-

tracting Plan Test Program should continue. In a

2015 report, the Government Accountability Office

asserted that the Test Program helps “participants,”

some of the largest defense contractors, by reducing

their administrative costs. See Action Needed to

Determine Whether DOD’s Comprehensive Subcon-

tracting Plan Test Program Should Be Made Perma-

nent, Report No. GAO-16-27, GOVERNMENT

ACCOUNTABILITY OFFICE 7-8 (Nov. 2015), available at

https://www.gao.gov/assets/680/673649.pdf; see also

id. at 3 (listing large defense contractor Test Pro-

gram participants as of Fiscal Year 2015). But the

report included comments from the Department of

Defense to the effect that the Test Program did not

help the small businesses it was supposed to. /d. at

28-30. A chart provided by the Department of De-

fense showed that “the percentage of dollars subcon-

tracted to small businesses by all of the [Test Pro-

gram] participants combined declined over the life of

the [Test Program] from approximately 46% in

FY96” to “24% in FY14.” Id. at 30. To assess how this

happened, and, if appropriate, make a case for

change, the public and groups like American Small

Business League must be able to look behind num-

bers like these and review hard data submitted by

prime contractors, like the FY2013 Plan the Ameri-

can Small Business League secured in its 2014

lawsuit.

As our society grapples with how to allocate hun-

dreds of billions of taxpayer dollars to government

contractors, it is critical that it have access to hard

numbers. The public needs hard numbers to ensure

17

that discourse about the Small Business Act’s future

is based on facts, not speculation or political postur-

ing.

The requirement under National Parks that the

government or submitters of information show likely

competitive harm in order to withhold information

under Exemption 4 is necessary to ensure that the

public and groups like American Small Business

League can make informed judgments about how the

Small Business Act is working. Eliminating the

competitive harm element of the National Parks test

would invite prime contractors to conceal infor-

mation about Small Business Act goals and perfor-

mance with minimal effort. And prime contractors

would have strong incentives to acvept that invita-

tion: avoiding public scrutiny of their Small Business

Act compliance, or lack thereof, and denying the

public information that could support policy, regula-

tory, or statutory changes.

To ensure that the public and groups like Ameri-

can Small Business League can continue to monitor

how hundreds of billions of taxpayer dollars are

spent, Petitioner's novel interpretation of Exemption

4 should be rejected, and the Eighth Circuit's deci-

sion should be affirmed.

IV.

CONCLUSION

Petitioner has asked this Court to discard decades

of precedent and to keep the public in the dark about

how billions of dollars of government money are

spent. This Court should decline the invitation. The

decision of the Court of Appeals should be affirmed.

Respectfully submitted,

KARL OLSON*

AARON R, FIELD

CANNATA O'TOOLE FICKES

& OLSON LLP

100 Pine St Suite 350

San Francisco, CA 94111

(415) 409-8900

kolson@cofolaw.com

Counsel for Amicus Curiae

American Small Business

*Counsel of Record

March 22, 2019

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