Opinion ID: 187172
Heading Depth: 3
Heading Rank: 2

Heading: The merits of the APA claim

Text: Venetian asserts the policy of the Commission is arbitrary and capricious for two reasons: It violates the Trade Secrets Act and it is inconsistent with the Commission's own regulations governing FOIA requests.
The TSA prohibits an officer or employee of the United States from disclosing in any manner or to any extent not authorized by law any information coming to him in the course of his employment... which ... concerns or relates to the trade secrets ... of any ... firm. 18 U.S.C. § 1905. Although the TSA is a criminal statute and does not create a private right of action, the Supreme Court has held a party may file an action under the APA to enjoin an agency (and any employee thereof) from disclosing its confidential information in violation of the TSA. Chrysler Corp. v. Brown, 441 U.S. 281, 317-18, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979). As we recently explained, the protection provided by the TSA is at least as broad as that provided by Exemption 4 of the Freedom of Information Act, which protects matters that are ... trade secrets and commercial or financial information obtained from a person and privileged or confidential. 5 U.S.C. § 552(b)(4). Commercial or financial information obtained from a person involuntarily is `confidential' for purposes of the exemption if disclosure [would] ... 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); see also Critical Mass Energy Project v. NRC, 975 F.2d 871, 880 (D.C.Cir.1992) (en banc) (adhering to National Parks with regard to commercial or financial information involuntarily submitted to the Government). We have long held the Trade Secrets Act ... is at least coextensive with ... Exemption 4 of FOIA. CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1151 (D.C.Cir.1987). The upshot is that, unless another statute or a regulation authorizes disclosure of the information, the Trade Secrets Act requires each agency to withhold any information it may withhold under Exemption 4 of the FOIA. Bartholdi Cable Co., Inc. v. FCC, 114 F.3d 274, 281 (D.C.Cir.1997). Canadian Comm. Corp. v. Air Force, 514 F.3d 37, 39 (2008). Venetian contends any disclosure of its confidential information is contrary to the TSA; moreover, because the Manual is not a statute or regulation, it does not render disclosure of the information authorized by law. This argument fails because disclosure of information does not violate the TSA merely because that information was labeled confidential by the submitter. Information is protected by the TSA only if its disclosure would cause substantial harm to the competitive position of the person from whom the information was obtained. National Parks, 498 F.2d at 770. According to the Inzeo Declaration, the Commission strives not to and does not disclose information in violation of the TSA; indeed, no employee of the Commission has ever been accused of having done so. At oral argument counsel for the Commission asserted that, when deciding whether to disclose information labeled confidential, the agency makes an independent assessment of whether the information is a trade secret. These statements are undisputed: Venetian presents no evidence the Commission has ever disclosed any information in violation of the Trade Secrets Act, and absent any such evidence we must presume the agency is acting in accordance with the law. Horowitz v. Peace Corps, 428 F.3d 271, 278 (D.C.Cir. 2005). Venetian next argues that, should a Commission employee determine the release of a document Venetian has labeled confidential will not divulge a trade secret, it will not have the opportunity to contest and prevent the disclosure. If only Venetian were notified in advance that the Commission intended to disclose its confidential information, then Venetian could explain to the Commission why the document is a trade secret and, if the Commission is unconvinced, contest the matter in court; without notice, it is at risk of an uninformed and erroneous judgment by an agency employee that disclosure of its confidential information will not cause it competitive harm. Venetian's argument is not without force. Commission employees, who cannot be intimate with the circumstances of each of the more than 600,000 firms subject to the ADEA, see 29 U.S.C. § 630(b) (making ADEA applicable to any company with twenty or more employees); Statistics about Business Size from the U.S. Census Bureau, available at http://www.census. gov/epcd/www/smallbus.html (noting there were 629,940 firms with twenty or more employees in 2004), cannot be expected to anticipate the competitive implications of disclosing an employer's confidential information. Moreover, although we do not doubt Commission employees attempt in good faith to abide by the TSA, the Commission points to no reason to think they have an incentive to take the precaution of notifying the submitter before disclosing its information. [] In sum, an employee of the Commission is likely unable to assess accurately whether a document is a genuine trade secret before disclosing it. Therefore, although the agency's policy of disclosure without notice does not itself violate the TSA, it does increase the probability that an employee of the Commission will violate the TSA; according to Venetian, that alone makes the policy arbitrary and capricious. In its brief, [] the Commission relies heavily upon EEOC v. Associated Dry Goods Corp., 449 U.S. 590, 101 S.Ct. 817, 66 L.Ed.2d 762 (1981), and University of Pennsylvania v. EEOC, 493 U.S. 182, 110 S.Ct. 577, 107 L.Ed.2d 571 (1990). As the Commission acknowledges, however, those cases are relevant only to the question whether its disclosure policy is inconsistent with Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. and Venetian raises no issue of that sort. Indeed, the Court in the former case expressly noted that issues concerning the APA, the TSA, and the FOIA are not now before us. 449 U.S. at 594 n. 4, 101 S.Ct. 817. The Commission supplies two explanations for its policy that do specifically reference the TSA. It first contends, without citing any authority, that the TSA proscribes the behavior of individual officers and employees of the federal government, not that of agencies more generally, and pronounces this argument insurmountable. Perhaps the absence of supporting citations is attributable to the Supreme Court's precisely contrary holding in Chrysler Corp., the seminal case on the intersection between the APA and the TSA: [W]e conclude that § 1905 [the TSA] does address formal agency action. 441 U.S. at 301, 99 S.Ct. 1705. The agency's second argument is more convincing: In the absence of any evidence it has violated the TSA in the past, it should not be required to adopt a policy in order to ensure it will not violate the TSA in the future. The policy does not violate the TSA in letter or in spirit, on its face or as applied thus far; the Commission has simply failed to adopt a prophylactic rule in order to reduce the probability that an employee will disclose a trade secret. Although the purpose of the TSA might well be furthered if the Commission gave submitters notice before disclosing their confidential information, the agency is not required to take explicit account of public policies that derive from federal statutes other than the agency's enabling [a]ct. Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 646, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990). The situation might look different if the Commission's disclosure policy, although not a violation of the TSA, routinely caused agency employees to violate that Act, but that is not the case. Indeed, in the Inzeo Declaration, the Commission not only reported that it knew of no employee ever having been accused of violating the TSA; it also stated it was committed to making a good-faith effort to abide by the TSA. In sum, we cannot find the Commission's disclosure policy is contrary to or otherwise frustrates the policy of the Trade Secrets Act and we therefore have no warrant in the Administrative Procedure Act for disturbing it on that ground.
Venetian next argues the Commission's policy is arbitrary and capricious because it is inconsistent with the agency's regulations regarding requests made under the FOIA. Those regulations, which implement Executive Order 12,600, 52 Fed.Reg. 23781 (1987), require the Commission to provide a submitter with explicit notice of a FOIA request for confidential commercial records whenever ... the submitter previously, in good faith, designated the records as confidential commercial information. 29 C.F.R. § 1610.19(b)(3). They further oblige the Commission to afford the submitter the opportunity to provide it with a detailed statement of objections to disclosure, id. § 1610.19(d), to consider carefully the objections of a submitter, id. § 1619.19(e)(1), and, when it decides information should be disclosed notwithstanding such objections, to provide the submitter with a written statement briefly explaining why the objections were not sustained ... in order that the submitter may seek a court injunction to prevent release of the records if it so chooses. Id. Venetian and the two amici contend Section 83 of the Compliance Manual constitutes a back door that allows the Commission unlawfully to avoid the requirements of its own FOIA regulations. According to Venetian, the Commission can decline to notify the submitter of confidential information when it discloses the information to a third party as long as the disclosure is styled disclosure under Section 83 rather than disclosure under the FOIA. In its brief before this court, the only justification the Commission musters in response is the question-begging statement that because the EEOC has not received a FOIA request ... for the Venetian's information ... the [FOIA regulations] do[] not ... apply to this case. [] With this as the only cognizable justification for the Commission's policy, we cannot but agree with Venetian that the policy is arbitrary and capricious. To maintain two irreconcilable policies, one of which the Compliance Manual section relating to the Privacy Actapparently enables the agency or, for that matter, any person asking for information, to circumvent the other, viz., the regulation implementing the FOIA and requiring pre-release notification, is arbitrary and capricious agency action. See INS v. Yang, 519 U.S. 26, 32, 117 S.Ct. 350, 136 L.Ed.2d 288 (1996) ([A]n irrational departure from [a governing] policy ... constitute[s] action that must be overturned as `arbitrary, capricious, or an abuse of discretion' within the meaning of the Administrative Procedure Act (alteration omitted)). We do not say the disclosure policy is necessarily contrary to law; perhaps the EEOC can yet supply a reasoned reconciliation of Compliance Manual § 83.1 and its regulations governing FOIA requests, preferably accompanied by a definitive explanation of exactly when each applies. Until then, however, the agency may not maintain its policy to Venetian's detriment. Venetian is entitled to an injunction against the release of its confidential information in any manner other than that prescribed in the Commission's FOIA regulations.