Legal Opinion: GMP-0138

Index: 7.340

Subject: FOIA Appeal: Management Agreements

January 15, 1993

Mr. Robert R. Campbell

Campbell Group, Ltd.

P. O. Box 91176

Long Beach, California 90809-1176

Dear Mr. Campbell:

This is in response to your Freedom of Information Act

(FOIA) appeal dated September 14, 1992. Marjorie S. Campbell,

in her initial requests dated June 5 and July 17, 1992, requested

HUD\'s Certifications of Managers from 1982 through 1992 for the

Royal Palms Cooperative Apartments, Inc. (Project No: 170-23080)

and information regarding HUD\'s consent to secondary financing on

the project. In a letter dated August 19, 1992, Reagan E. Reed,

Freedom of Information Liaison Officer, Los Angeles Office,

provided information regarding the secondary financing. However,

he withheld the Management Agreements under Exemption 4 of the

FOIA.

I have determined to reverse the initial denial and release

redacted copies of the Management Agreements. Certain

information from the Management Agreements, pertaining to the

compensation of the Management Agent and limitations on spending

and liability, will continue to be withheld under Exemption 4.

Exemption 4 of the FOIA, 5 U.S.C. Section 552(b)(4), exempts

from mandatory disclosure \"trade secrets and commercial or

financial information obtained from a person and privileged or

confidential.\" Information may be withheld under Exemption 4 if

disclosure of the information is likely to have either of the

following effects: \"(1) to impair the Government\'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.\" National Parks and

Conservation Association v. Morton, 498 F.2d 765, 770 (D.C. Cir.

1974).

The redacted information from the Management Agreements,

described above, comprises commercial and financial information

which, if released, could cause substantial competitive harm.

Disclosure of the amount of compensation and the other withheld

information could reveal to competitors the Management Agent\'s

pricing strategy and would enable competitors to solicit and

undercut other customers of the Management Agent. See, e.g.,

Gulf & Western Industries, Inc. v. U.S., 615 F.2d 527 (D.C. Cir.

1979\) (protecting from disclosure financial information including

profit and loss data, expense rates, and break-even point

calculations); Timken Co. v. United States Customs Service,

531 F. Supp. 194 (D.D.C. 1981) (protecting financial and

commercial information on pricing and marketing).

Your claim that Ms. Campbell is a shareholder and not a

competitor of the Management Agent does not preclude a finding

that disclosure of the withheld information would cause

competitive harm. The issue is whether public disclosure of the

information would likely cause competitive harm to the business

submitter, regardless of the willingness of the requester to

restrict circulation of the information or a claim by the

requester that it is not a competitor. See generally, Burke

Energy Corporation v. Department of Energy, 583 F. Supp. 507

(D. Kan. 1984).

Four Management Agreements in the time period specified in

your requests are available for your review in the Los Angeles

Office. Two were executed by Merle G. Capps in 1982 and 1986;

one was executed by Ednamae Olsen, as Manager of an unnamed

entity in 1990, and one was executed by Bruce Steinbaum, on

behalf of SK Management Company in 1992. There was no record in

the file of a Management Agreement executed by Campbell Property

Services, Inc. You may contact Janine Dolezel, Chief Counsel,

Los Angeles Office, at (213) 251-7100, to inspect the four

redacted Management Agreements.

In your appeal, you also requested a copy of the HUD

waiver/consent on secondary financing, referred to in an

April 16, 1991 letter from National Cooperative Bank. In

response to your request, I am enclosing a December 10, 1991

letter from HUD to Helen M. Zazulak, Esq., of McKittrick,

Jackson, DeMarco & Peckenpaugh.

I have also determined, pursuant to 24 C.F.R. Section 15.21,

that the public interest in protecting confidential commercial

and financial information militates against release of the

withheld information.

You are advised that you have the right to judicial review

of this determination under 5 U.S.C. Section 552(a)(4). Judicial

review is available to you in the United States District Court

for the judicial district in which you reside or have your

principal place of business, or in the District of Columbia, or

in the judicial district where the records you seek are located.

Very sincerely yours,

George L. Weidenfeller

Deputy General Counsel (Operations)

Enclosure

cc: Yvette Magruder

Beverly Agee, 9G

Janine Dolezel, 9.4G