Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-00858/USCOURTS-azd-2_13-cv-00858-0/pdf.json

Nature of Suit Code: 895
Nature of Suit: Freedom of Information Act of 1974
Cause of Action: 05:552 Freedom of Information Act

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Torres Consulting and Law Group, LLC,

Plaintiff, 

v. 

Department of Energy, 

Defendant. 

No. CV-13-00858-PHX-NVW

ORDER 

Before the Court is Defendant’s Motion for Summary Judgment (Doc. 16), 

Plaintiff’s Cross-Motion for Summary Judgment and Response (Doc. 18), Defendant’s 

Response and Reply (Doc. 20), and Plaintiff’s Reply (Doc. 22). For the following 

reasons, Defendant’s Motion for Summary Judgment will be granted and Plaintiff’s 

Motion will be denied. 

I. LEGAL STANDARD FOR SUMMARY JUDGMENT 

Summary judgment is appropriate when the moving party carries its burden of 

demonstrating that there is no genuine dispute as to any material fact and that it is entitled 

to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 

317, 322 (1986). A material fact is one that might affect the outcome of the suit under 

the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual 

issue is genuine if “the evidence is such that a reasonable jury could return a verdict for 

the nonmoving party.” Id. 

 Once the moving party has carried its burden under Rule 56, the party opposing 

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summary judgment must “set forth specific facts showing that there is a genuine issue for 

trial.” Anderson, 477 U.S. at 256. The fact are “viewed in the light most favorable to the 

nonmoving party only if there is a genuine dispute as to those facts.” Scott v. Harris, 550 

U.S. 372, 380 (2007). “Where the record taken as a whole could not lead a rational trier 

of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita 

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 

II. FACTS 

On July 31, 2012, Plaintiff Torres Consulting and Law Group submitted a 

Freedom of Information Act (“FOIA”) request to Defendant Department of Energy 

(“DOE”) regarding its Energy Systems Integration Facility (“ESIF”) construction project 

located in Golden, Colorado. Torres sought certified payrolls from MTech Mechanical 

Technologies Group and Diamond Fire Protection, two subcontractors of J.E. Dunn, the 

DOE’s prime contractor on the ESIF. (Doc. 17 ¶¶ 5-7). Specifically, Torres sought rate 

of pay, worker classification, fringe benefits, hours worked, names of contractors and 

subcontractors, and project identifiers. (Doc. 12). Torres sought the information to 

assess compliance with the Davis-Bacon Act, a federal law which requires contractors 

and subcontractors on federally funded projects to pay their laborers no less than the 

prevailing local wage. 

On August 14, 2012, the DOE produced MTech’s certified payrolls but redacted 

the individual employees’ names, social security numbers, hours worked, net and gross 

wages, payroll deductions, and other withholdings. (Doc. 15 ¶¶ 23-25). A week later, 

the DOE produced Diamond Fire Protection’s certified payrolls for the requested dates, 

again redacting the same information. The DOE justified the redactions by raising two 

FOIA exemptions: (1) Exemption 4, 5 U.S.C. § 552(b)(4), which protects “trade secrets 

and commercial or financial information obtained from a person and privileged or 

confidential” from disclosure to the public; and (2) Exemption 6, 5 U.S.C. § 552(b)(6), 

which protects information about individuals in “personnel and medical files and similar 

files” when the disclosure of such information “would constitute a clearly unwarranted 

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invasion of personal privacy.” (Doc. 16). 

In September 2012, Torres filed an appeal with the DOE’s Office of Hearings and 

Appeals, challenging the redactions made under FOIA Exemption 4 for both disclosures. 

(Doc. 17 ¶ 35). It did not challenge any redactions made pursuant to Exemption 6. (Doc. 

17 ¶ 39). Torres sought disclosure of each employee’s wages, including hourly rate, total 

pay, fringe benefits, and hours worked but agreed with the redaction of personal 

identifying information. (Doc. 17 ¶ 42). The Office of Hearings and Appeals denied the 

appeal, finding that the requested information was properly redacted. In response, Torres 

filed this suit for declaratory and injunctive relief. (Doc. 12). The DOE then moved for 

summary judgment (Doc. 16), and Torres cross-moved for summary judgment. (Doc. 

18). 

III. LEGAL ANALYSIS 

Review of an agency’s response to a FOIA request is conducted de novo. 5 U.S.C. 

§ 552(a)(4)(B). The Freedom of Information Act requires federal agencies to disclose 

documents upon request, unless those documents are exempted from disclosure by 

statute. Willamette Indus., Inc. v. U.S., 689 F.2d 865, 867 (9th Cir. 1982). The decision 

to disclose information turns on the nature of the information requested and not on the 

identity of the requesting party. U.S. Dep’t of Justice v. Reporters Comm. For Freedom 

of Press, 489 U.S. 749, 771-72 (1989). The FOIA contains nine, narrowly construed, 

exemptions that permit the government to withhold requested information. G.C. Micro 

Corp. v. Def. Logistics Agency, 33 F.3d 1109, 1112 (9th Cir. 1994). 

A. FOIA Exemption 6

Exemption 6 protects information about individuals in “personnel and medical 

files and similar files” when the disclosure of such information “would constitute a 

clearly unwarranted invasion of personal privacy.” 5 U.S.C. § 552(b)(6). Because Torres 

did not challenge any redactions the DOE made under Exemption 6 in its administrative 

appeal, it has not exhausted its administrative remedies for redactions made under 

Exemption 6. Exhaustion of administrative remedies is a jurisdictional prerequisite to 

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brining a FOIA claim in district court. United States v. Steele, 799 F.2d 461, 465-66 (9th 

Cir. 1986). Accordingly, there is no jurisdiction to adjudicate redactions made pursuant 

to Exemption 6 in this action. 

The DOE argues Torres’ challenges to the redactions it made under Exemption 4 

are irrelevant because the DOE justified every redaction Torres challenges under both 

Exemption 4 and Exemption 6. (Doc. 16, Pg. 10). The DOE suggests that redactions 

challenged under Exemption 4 still stand under Exemption 6. The index of redactions 

submitted by the DOE, however, does not support this assertion. Page 3-51, for example, 

explains redactions made on M-Tech’s Certified Payroll. (Doc. 17, Exb. A). For 

redactions made under Exemption 4, it lists “[c]onfidential labor costs and commercial 

information contained within the certified payrolls pertaining to overtime, standard time, 

dates and hours worked, (allocation of weekly hours worked and total hours), and gross 

earnings, relating to employees of the subcontractor, MTech.” (Doc. 17, Exb. A). For 

redactions made under Exemption 6, it lists “[n]ames and individual identifying numbers 

of workers employed by MTech . . . and specific personal information related to 

overtime, standard time, dates and hours worked, gross earings, withholding tax, 

Medicare payments, and net earnings.” (Doc. 17, Exb. A). While Exemption 4 is used to 

justify redacting the confidential labor costs and commercial information, Exemption 6 is 

only used to justify redacting names and personal identifying information associated with 

such data. Furthermore, on the actual payroll sheets submitted, “Exemption 6” is 

stamped near where the name of the employee would be shown, and “Exemption 4” is 

stamped where the total hours worked would be shown. (Doc. 17, Exb. A). 

Accordingly, the index supports Torres’ assertion that at least some of the information 

sought was redacted only under Exemption 4. Because Torres properly exhausted its 

administrative remedies in challenging redactions under Exemption 4, those claims are 

properly presented. 

B. FOIA Exemption 4 

Exemption 4 prevents the disclosure of trade secrets, which are defined as “(1) 

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commercial and financial information, (2) obtained from a person or by the government, 

(3) that is privileged or confidential.” GC Micro Corp., 33 F.3d at 1112 (citing 5 U.S.C. 

§ 552(b)(4)). The government bears burden of proving that the information withheld 

under Exemption 4 is protected from disclosure. Frazee v. U.S. Forest Serv., 97 F.3d 

367, 371 (9th Cir. 1006). Torres concedes that the first two criteria for trade secrets are 

met, and the parties only dispute whether the information withheld under the FOIA was 

“privileged or confidential.” (Doc. 18, Pg. 4). 

The Ninth Circuit employs a two prong test to determine whether information is 

privileged or confidential. Under that test, information is considered confidential if it is 

likely “(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.” G.C. Micro Corp., 33 F.3d at 1112 (internal 

citations and quotations omitted). Here, the first prong is inapplicable because the 

subcontractors associated with this case are required to submit their payroll information, 

meaning the outcome of this case has no bearing on the government’s ability obtain 

similar information in the future. (Doc. 16, Pg. 8). 

To prove substantial competitive harm under the second prong, the government 

must “show that there is (1) actual competition in the relevant market and (2) a likelihood 

of substantial competitive injury if the information were released.” Lion Raisins v. U.S. 

Dep’t. of Agric., 354 F.3d 1072, 1079 (9th Cir. 2004). A common sense approach is 

applied when determining whether there is actual competition in the relevant market. 

Watkins v. U.S. Bureau of Customs and Border Protection, 643 F.3d 1189, 1195 (9th Cir. 

2011) (internal citation and quotations omitted). Although neither party provided much 

data on this issue, the competitive nature of federal contracts is well-established. See 10 

U.S.C. § 2304(a)(1) (requiring federal agencies “conducting a procurement for property 

or services . . . [to] obtain full and open competition through the use of competitive 

procedures”). Accordingly, to defend its redactions on the ESIF project, the government 

must show that releasing the requested information is likely to cause substantial 

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competitive injury to MTech and Diamond Fire Protection. 

Substantial competitive harm occurs when disclosure would allow competitors to 

estimate and undercut a contractor’s bid. G.C. Micro Corp., 33 F.3d at 1115. Whether 

disclosure would allow a competitor to undercut a bid requires a case-specific inquiry 

into the nature of the industry involved and the significance of the information being 

disclosed. The government’s burden can be satisfied by producing “government 

affidavits so long as the affiants are knowledgeable about the information sought and the 

affidavits are detailed enough to allow the court to make an independent assessment of 

the government’s claim.” Lion Raisins, 354 F.3d at 1079. Although it is unnecessary to 

engage in a “sophisticated economic analysis of the likely effects of disclosure, 

conclusory and generalized allegations of substantial competitive harm are unacceptable 

and cannot support an agency’s decision to without requested documents.” Watkins, 643 

F.3d 1189 at 1195. 

A likelihood of substantial competitive harm is often found when the disclosed 

information would give a competitor conclusive insight into how it could modify its 

business to undercut another’s. In Watkins v. U.S. Bureau of Customs and Border 

Protection, for example, the Ninth Circuit found a likelihood of substantial competitive 

harm when disclosure of a Customs and Border Protection Notice of Seizure would 

reveal importers’ entire distribution and supply chains, and agency affidavits showed the 

industry players “zealously guarded” such information. 643 F.3d at 1196. A likelihood 

of substantial competitive harm was also found when a raison producer sought disclosure 

of its competitors’ Line Check Sheets from the United States Department of Agriculture 

(“USDA”). Lion Raisins, 354 P.3d at 1080. In Lion Raisins, the plaintiff claimed 

disclosing information allowing it to calculate the volume and types of raisins produced 

by its competitors would not give it a significant competitive advantage because many 

variables go into raisin production. Id. at 1081. The USDA, however, produced 

affidavits from various industry leaders attesting that the raisin market is highly 

competitive and if Lion Raisins knew the volume and types of raisins produced by its 

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competitors, it could undercut prices on the same varieties. Id. at 1080-82. 

Substantial competitive harm is less likely to be found when the information 

redacted provides insight into only one of several variables a competitor needs to gain an 

advantage. In G.C. Micro v. Defense Logistics Agency, for example, the plaintiff 

submitted a FOIA request for certain documents pertaining to the amount of money spent 

on Small Disadvantaged Business subcontracts under Department of Defense contracts 

with Loral Aerospace, McDonnell Douglas Corporation, and Northrop Corporation. 33 

F.3d at 1111. In response, the government withheld a requested document which 

estimated the total dollars spent on subcontractors per contract, actual dollars spent on 

Small Disadvantaged Business subcontracts, and the actual percentage of Small 

Disadvantage Business subcontracts on each contract. Id. The government argued the 

documents would provide competitors with a roadmap for those contractors 

“subcontracting plans and strategies,” but the plaintiffs prevailed by showing that because 

the documents did not show how many subcontracts each company had, the subject 

matter of the subcontracts, or who the subcontracts were awarded too, the document left 

too many unknown variables in play for competitors to gain an advantage from them. Id. 

at 1112-15. 

In the present case, the DOE submitted affidavits from the heads of the 

subcontractors MTech and Diamond Fire and the primary contractor, J.E. Dunn. The 

affidavits state that disclosing the hours worked by individual employees, net and gross 

wages, payroll deductions, and other withholdings would be a competitive disadvantage 

because the hourly labor rate for the ESIF project is set by the government, meaning the 

subcontractors’ labor production costs could be calculated by multiplying the 

government’s labor rate by the hours worked. (Doc. 17, Exbs. D-F). They attest that 

labor production rates are treated as confidential information in the construction industry 

and that disclosing them would allow to competitors to underbid the contractors when 

competing for work because labor production rates are a significant element of a 

contractor’s price. (DSOF ¶¶ 51-52; Doc. 17, Exbs. D-F). It is undisputed that 

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information permitting a competitor to accurately estimate a bid price is likely to cause 

competitive harm. 

The essence of this dispute is whether the labor production rate is just one of the 

many variables that make up a bid, or if the labor production rate is such a significant 

piece of a bid that release of the data would essentially reveal the bid price, causing 

substantial competitive harm. Torres does not dispute that labor production rates could 

be calculated from the information sought but asserts that knowledge of the labor 

production rate is not enough to allow one contractor to undercut another’s bid because 

other crucial variables, such as costs of materials, overhead, administrative costs, profit 

margins, and multipliers make up a bid. (Doc. 18, Exbs. B-C). 

 In support of its position, Torres submitted affidavits from two owner/operators 

of companies who claim they have years of experience with government contracts and 

frequently bid on prevailing wage projects. (Doc. 18, Exbs. B-C). The affidavits present 

broad, conclusory statements without supporting facts. They fail to specifically 

contradict the central role labor production rates play in bid estimates and are not 

sufficient to create a triable issue of fact. See generally Far Out Prods., Inc. v. Oskar, 

247 F.3d 986, 997 (9th Cir. 2001) (noting that “[a] party opposing summary judgment 

may not simply question the credibility of the movant to foreclose summary judgment. 

Instead, the non-moving party must go beyond the pleadings and by its own evidence ‘set 

forth specific facts showing that there is a genuine issue for trial.’ Fed. R. Civ. P. 56(e)”). 

That the DOE has released substantial information to Torres that is useful in evaluating 

whether Davis-Bacon was complied with is also significant. 

The DOE has met its burden on this Motion for Summary Judgment by 

establishing that a likelihood of competitive harm is beyond dispute. Its affidavits 

establish conclusively that competitive harm would result if its subcontractors’ labor 

production rates were disclosed. While the exact extent of that competitive harm is 

debatable, the precise amount need not be determined in this action. Additionally, 

disclosing the requested wage and hour information could hurt the DOE by impacting the 

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type and amount of bids received in the future and harm the contractors’ employees by 

altering the wages offered on future contracts. 

IV. CONCLUSION

The Department of Energy’s Motion for Summary Judgment (Doc. 16) will be 

granted, and Torres’ Consulting Group’s Cross-Motion for Summary Judgment (Doc. 18) 

will be denied. 

IT IS THEREFORE ORDERED that Defendant’s Motion for Summary Judgment 

(Doc. 16) is granted, and Plaintiff’s Cross-Motion for Summary Judgment (Doc. 18) is 

denied. 

IT IS FURTHER ORDERED that the Clerk enter judgment in favor of Defendant 

and against Plaintiff and that Plaintiff take nothing. The Clerk shall terminate this case.

DATED this 27th day of November, 2013. 

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