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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0861%3A17

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2019

## Text

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

19

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0861%3A17. Public record. Not legal advice.