Opinion ID: 56723
Heading Depth: 3
Heading Rank: 1

Heading: FOIA and Exemption 4

Text: The FOIA generally requires federal agencies to disclose records in their possession upon request. 5 U.S.C. § 552(a)(3)(A). The FOIA “evidences a ‘strong public policy in favor of public access to information in the possession of federal agencies.’” Cochran v. United States, 770 F.2d 949, 954 (11th Cir. 1985) (quoting Brown v. FBI, 658 F.2d 71, 73 (2d Cir. 1981)). Recognizing, however, that entities submitting records to the government will at times reserve a strong interest in ensuring the confidentiality of the information submitted, Congress included in the FOIA exemptions by which the responding agency may withhold records. It is clear that the FOIA’s disclosure provisions are construed broadly and its exemptions narrowly, with the burden “squarely on the government” to prove an exemption applies. Ely v. FBI, 781 F.2d 1487, 1489 (11th Cir. 1986). In withholding the requested information in this case, the FDA cited Exemption 4, which permits the government to withhold “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552(b)(4). The Defendants do not contend that the requested information 7 constitutes trade secrets.3 Instead, they contend the requested information contains the net number of doses of the hepatitis B vaccine in each lot of hepatitis B vaccine distributed in the United States. This information, they contend, is confidential commercial information. Thus, the issue on appeal is whether the Defendants have carried their burden of proving the requested information is “confidential” within the meaning of Exemption 4. Vaccine manufacturers are required by FDA regulations to submit information regarding the quantity of vaccines they distribute. 21 C.F.R. § 600.81. Information in a mandatory submission is considered confidential within the meaning of Exemption 4 if its disclosure would either “impair the Government's ability to obtain necessary information in the future; or . . . cause substantial harm to the competitive position of the person from whom the information was obtained.” Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974) (footnote omitted). The Defendants do not argue that disclosure will impair the Government’s ability to obtain future information from Merck and Glaxo; rather, they argue that Merck and Glaxo will suffer substantial competitive harm from disclosure. In order to prove substantial competitive harm, the Defendants must demonstrate (1) that there is a 3 It is undisputed that Merck and Glaxo are “person[s]” under the FOIA. See 5 U.S.C. § 551(2) (defining “person” to include corporations). 8 competitive market for the hepatitis B vaccine and (2) that substantial competitive injury will result from disclosure. See Miami Herald Publ’g Co. v. U.S. Small Bus. Admin., 670 F.2d 610, 613-14 (5th Cir. Unit B 1982).4 The district court found, and we agree, that the declarations submitted by the Defendants in support of their motions for summary judgment establish that Merck and Glaxo are engaged in actual competition for sales of hepatitis B vaccine. The evidence submitted by the Sharkeys does not raise a material issue of fact to the contrary. Consequently, we must only determine whether the Defendants’ submissions establish without dispute that Merck and Glaxo would suffer substantial competitive injury if the FDA disclosed the requested records. In order to succeed, the Defendants “need not ‘show actual competitive harm.’” Pub. Citizen Health Research Group v. FDA, 704 F.2d 1280, 1291 (D.C. Cir. 1983) (quoting Gulf & W. Indus., Inc. v. United States, 615 F.2d 527, 530 (D.C. Cir. 1979)). “No actual adverse effect on competition need be shown . . . . The court need only exercise its judgment in light of the nature of the material sought and the competitive circumstances in which the [submitter] does business . . . .” Miami Herald, 670 F.2d at 614 (quoting Nat’l Parks & Conservation Ass’n v. Kleppe, 547 F.2d 673, 683 (D.C. 4 Cases decided by Unit B of the former Fifth Circuit are binding precedent in this circuit. Stein v. Reynolds Sec., Inc., 667 F.2d 33, 34 (11th Cir. 1982). 9 Cir. 1976)) (internal quotation marks omitted). The Defendants must prove that disclosure of the requested records will reveal otherwise non-public information and that release of that information will result in competitive injury. The Defendants maintain that release of the requested records will make public two categories of otherwise non-public information. First, the Defendants argue that release of the net number of doses distributed per lot would reveal the manufacturers’ domestic market shares and sales volume. Second, the Defendants argue that release of the net number of doses distributed per lot would reveal each manufacturers’ production capacity. The district court relied on numerous declarations offered by the Defendants in holding that substantial competitive harm would result from disclosure. After reviewing the declarations, we conclude that disclosure of the net number of doses distributed per lot will, at a minimum, reveal the manufacturers’ market shares and sales volume for the hepatitis B vaccine. Given this conclusion, we need not decide whether release of the records will reveal production capacity. The Defendants’ declarations assert that the requested information would allow competitors to “make determinations” regarding and “provide insight into” the manufacturers’ respective market shares and sales volume. (Thomas Decl., R.1-39, Attach. 2 ¶ 5; Ryan Decl., R.1-39, Attach. 1 ¶ 27.) This is somewhat intuitive. 10 Because Merck and Glaxo are the only two domestic sellers of the hepatitis B vaccine, disclosure of the net number of doses per lot per manufacturer would clearly allow a competitor to better estimate Merck’s and Glaxo’s market share. And, contrary to the Sharkeys’ suggestion, this information was not made publicly available in a report produced by the Centers for Disease Control and Prevention. (R.1-39, Attach. 1, Ex. J.) 5 As the FDA’s declaration explains, this report provides only the total net number of doses distributed for hepatitis B vaccines in the United States during the period from 1991-2001. (Ryan Decl., R.1-39, Attach. 1 ¶ 26 n.4.) This report does not provide distribution data by manufacturer (which would be publicized under Plaintiffs’ request), nor does it include the net number of does per lot by specific manufacturer (which would also be publicized under Plaintiffs’ request). (Ryan Decl., R.1-39, Attach. 1 ¶ 26 n.4.) Even if the report revealed the information the Sharkeys claim it does, it does not account for the number of doses distributed between 2001 and March 10, 2003 (the date of the Sharkeys’ first request), numbers which would certainly be made public for the first time if the records were disclosed. Therefore, we find that the Defendants have demonstrated 5 The report is CDC, Surveillance for Safety After Immunization: Vaccine Adverse Event Reporting System (VAERS)–United States, 1991-2001, 52 Morbidity & Mortality Wkly. Rep., No. SS-01 (Jan. 24, 2003). 11 that disclosure of the withheld information will reveal their market shares and sales volume of the hepatitis B vaccine in the United States. Our inquiry does not end here, however. Having determined that disclosure of the net number of doses per lot of each manufacturers’ hepatitis B vaccine will reveal market share and sales volume, we now must decide whether the district court correctly found that Merck’s and Glaxo’s competitors’ knowledge of this information would likely result in substantial competitive harm to the manufacturers. While some of the Defendants’ declarations are conclusory in explaining how release of the records will result in competitive harm, others contain explanations beyond “conclusory and generalized allegations” of competitive injury that are sufficient to support a finding of substantial competitive harm. See Pub. Citizen, 704 F.2d at 1291. The Defendants argue that knowledge of their market share will allow a competitor to better estimate even more confidential information, such as production capacity and manufacturing specifics. (Ryan Decl., R.1-39, Attach. 1 ¶¶ 27-28; Twyman Decl., R.2-52, Ex. B ¶ 7.) The Defendants contend that with this information, a competitor can estimate Merck’s and Glaxo’s ability to fill large orders for bid and price its bid to exploit this knowledge. (Twyman Decl., R.2-52, Ex. B ¶ 7.) For example, if the World Health Organization submitted bids for a large order 12 of vaccine, international competitors, with knowledge of the above information, could price their bids in order to take advantage of Merck’s and Glaxo’s inability to fill the order. Additionally, competitors with knowledge of sales volume will know the optimum volume of doses per lot of vaccine distributed by Merck and Glaxo, information that the Defendants maintain is kept highly confidential. (Ryan Decl., R.1-39, Attach. 1 ¶ 28.) Consequently, release of the withheld records would result in a very real, competitive harm that we believe is protected by Exemption 4. Cf. Lion Raisins Inc. v. U.S. Dep’t of Agric., 354 F.3d 1072, 1081 (9th Cir. 2004) (affirming “substantial competitive harm” finding where disclosure would allow competitor to infer production volume, thus allowing it to underbid produce distributor). Our conclusion that market share and sales volume qualifies as confidential information is supported by Merck’s declaration detailing the drastic measures it takes to ensure this information remains confidential. (See Turner Decl., R.1-39, Attach. 3 ¶ 4.) Both the efforts to keep this information confidential and the highly sensitive information that may be gleaned from it leads us to conclude that public knowledge of Merck’s and Glaxo’s domestic market shares and sales volume of the hepatitis B vaccine will likely result in substantial competitive harm. 13 Even so, the Defendants are not entitled to summary judgment if the Sharkeys’ affidavits create a genuine issue of material fact. But, we agree with the district court that they do not. The only evidence presented by the Sharkeys that disclosure of the withheld records will not cause competitive harm is the affidavit of Dr. Marks, who states that no harm will result because Merck and Glaxo already know each other’s respective market share. (Marks Aff., R.1-45, Ex. B ¶ 14.) While this may be true, Dr. Marks fails to account for the competitive harm that may result if an international competitor or third-party considering entry into the hepatitis B vaccine market6 learns the market shares of Merck and Glaxo. Nor does Dr. Marks convince us that knowledge of Merck’s or Glaxo’s sales volume will not be advantageous to an international competitor or third-party entrant. The Defendants have offered evidence showing that disclosure of the net number of doses per lot per manufacturer of hepatitis B vaccine will likely result in substantial competitive harm. Because the Sharkeys have failed to create a genuine issue of material fact otherwise, the district court correctly granted summary judgment in favor of the Defendants. 6 While Merck and Glaxo are currently the only hepatitis B manufacturers licensed to distribute in the United States, the field may one day become more occupied. See, e.g., Press Release, Dynavax, Dynavax Initiates Pivotal Phase 3 Trial for Hepatitis B Vaccine (June 23, 2005). (R.2-53, Attach. 3.) 14