Court Opinion

ID: 2652123
Source: CourtListenerOpinion
Date Created: 2014-02-04 15:13:28.456122+00
Date Added: 2024-06-11T12:57:46.703359
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 15, 2013            Decided February 4, 2014

                         No. 12-5331

                 CAROLYN JUREWICZ, ET AL.,
                      APPELLANTS

                              v.

    UNITED STATES DEPARTMENT OF AGRICULTURE AND
        HUMANE SOCIETY OF THE UNITED STATES,
                     APPELLEES

        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:10-cv-01683)

     Ira T. Kasdan argued the cause for appellants. With him on
the brief was Elizabeth C. Johnson.

    Alan Burch, Assistant U.S. Attorney, argued the cause for
appellee. With him on the brief were Ronald C. Machen Jr.,
U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney.

     Aaron D. Green and Jonathan R. Lovvorn were on the brief
for intervenor The Humane Society of the United States in
support of appellee.

    Before: GARLAND, Chief Judge, ROGERS, Circuit Judge,
and SENTELLE, Senior Circuit Judge.
                                 2

    Opinion for the court by Circuit Judge ROGERS.

      ROGERS, Circuit Judge: In this reverse-FOIA case, dog
breeders and dealers in Missouri challenge the Department of
Agriculture’s decision to release information in their annual
reports relating to their gross revenue and business volume.
They contend the information requested by the Humane Society
of the United States under the Freedom of Information Act
(“FOIA”) is covered by Exemptions 4 and 6, which protect
confidential commercial or financial information and personal
privacy, respectively, and that the Department’s reasoning was
arbitrary and capricious. For the following reasons, we affirm
the grant of summary judgment to the Department and the
Humane Society.

                                 I.

     The Animal Welfare Act requires dealers of animals,
including dogs, to obtain an annual license from the Department
of Agriculture. 7 U.S.C. § 2134. The Department must charge
a licensing fee that is “reasonable” and “adjusted on an equitable
basis taking into consideration the type and nature of the
operations to be licensed.” Id. § 2153. Under Department
regulations, dealers renew their licenses by paying the required
fee and filing an application and annual report, Form 7003, with
the Animal and Plant Health Inspection Service (“the Service”).
9 C.F.R. § 2.5(b). Block 8 (or Block 10 in some versions) of
Form 7003 asks for (1) the total number of animals purchased
and sold in the last year; (2) the gross revenue from regulated
activities; and (3) for dealers that are not breeders, the difference
between the purchase price and sale price of the animals sold.
In addition, the Service conducts on-site inspections of licensed
breeders and dealers and publishes the inspection reports on its
website; those reports include the number of dogs counted at the
time of the inspection.
                               3

      In 2009, the Humane Society submitted three FOIA
requests for copies of Form 7003s received by the Service. The
first two named specific licensees; the third requested Form
7003s for “all dog breeders and dealers” in Missouri. Initially,
the Department determined that Block 8 information was
covered by Exemptions 4 and 6, and redacted it before releasing
the forms to the Humane Society. The Humane Society
appealed in May 2010, and when it failed to receive a response,
it filed suit in October 2010. While this lawsuit was pending,
the Department solicited comments from the affected licensees
on whether they thought releasing Block 8 information would
cause substantial competitive harm. Upon reviewing the
responses, the Department concluded the information should be
released and notified the licensees in March 2011.

     In April 2011, appellants, who are (or whose members are)
licensed dog breeders and dealers in Missouri, sued to prevent
release of the Block 8 information. The Department moved for
a voluntary remand upon discovering an error in the March 2011
decision letter, which was granted. On remand, the Department
solicited additional comments. After review of these comments,
the Department again concluded that no FOIA exemption
applied to the Block 8 information and that the information
should be released. Appellants filed a second amended
complaint, and the parties filed cross motions for summary
judgment. The district court granted summary judgment to the
Department and the Humane Society. Appellants appeal, and
this court directly reviews the Department’s decision under the
Administrative Procedure Act, 5 U.S.C. § 701 ff. See Enterprise
Nat’l Bank v. Vilsack, 568 F.3d 229, 233 (D.C. Cir. 2009).

                              II.

    Under FOIA, “each agency, upon any request for records
which (i) reasonably describes such records and (ii) is made in
                               4

accordance with published rules . . . , shall make the records
promptly available to any person.” 5 U.S.C. § 552(a)(3)(A).
Certain categories of information are exempt from this general
disclosure requirement, but the exemptions are to be “narrowly
construed.” Dep’t of the Air Force v. Rose, 425 U.S. 352, 361
(1976). Appellants contend the Department’s decision to release
the Block 8 information is arbitrary and capricious in concluding
release of the total number of animals bought and sold by
appellants, and their gross revenues, would not cause them
substantial competitive harm. They rely on Exemption 4, which
covers “trade secrets and commercial or financial information
obtained from a person and privileged or confidential.” 5 U.S.C.
§ 552(b)(4). Likewise, appellants contend that the public
interests identified by the Department would not be served by
release and, alternatively, the Department failed to give
appropriate weight to their private interests in balancing the
public and private interests. They rely on Exemption 6, which
covers “personnel and medical files and similar files the
disclosure of which would constitute a clearly unwarranted
invasion of personal privacy.” Id. § 552(b)(6).

     In a reverse-FOIA case, the court must uphold the
Department’s decision to release the Block 8 information in
appellants’ Form 7003s unless it is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.”
5 U.S.C. § 706(2)(A); see United Techs. Corp. v. Dep’t of Def.,
601 F.3d 557, 562 (D.C. Cir. 2010). Unlike a typical FOIA
case, in which the court would undertake its own analysis of the
interests at stake, see, e.g., Multi Ag Media LLC v. Dep’t of
Agric., 515 F.3d 1224 (D.C. Cir. 2008); Consumers’ Checkbook
Ctr. for the Study of Servs. v. Dep’t of Health and Human Servs.,
554 F.3d 1046 (D.C. Cir. 2009), under this deferential standard
of review, the court does not substitute its judgment for that of
the Department, but the Department must “examine the relevant
data and articulate a satisfactory explanation for its action
                               5

including a ‘rational connection between the facts found and the
choice made,’” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (internal
citation omitted). The court does not defer to “conclusory or
unsupported suppositions.” United Techs., 601 F.3d at 562
(quoting McDonnell Douglas Corp. v. Dep’t of the Air Force,
375 F.3d 1182, 1187 (D.C. Cir. 2004)).

                               A.
     Exemption 4 protects “trade secrets and commercial or
financial information obtained from a person and privileged or
confidential.” 5 U.S.C. § 552(b)(4). The only question here is
whether the Block 8 information, which is “commercial or
financial information” and not “privileged,” is “confidential.”
Here, “confidential” means that “disclosure would be likely
either ‘(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.’” Critical Mass Energy Project v.
Nuclear Regulatory Comm’n, 975 F.2d 871, 878 (D.C. Cir.
1992) (en banc) (quoting Nat’l Parks & Conservation Ass’n v.
Morton, 498 F.2d 765, 770 (D.C. Cir. 1974)). This requires a
showing of both actual competition and a likelihood of
substantial competitive injury. CNA Fin. Corp. v. Donovan, 830
F.2d 1132, 1152 (D.C. Cir. 1987). The court will “generally
defer to the agency’s predictive judgments as to ‘the
repercussions of disclosure.’” United Techs., 601 F.3d at 563
(quoting McDonnell Douglas, 375 F.3d at 1191 n.4).

     The Department determined Exemption 4 did not apply
because the Block 8 information was unlikely to cause
substantial competitive harm to appellants. Decision of Feb. 17,
2012 at 12. It reasoned that competitors would not be able to
use gross revenue and inventory data to undercut licensees’
pricing because there were too many variables, such as breed,
                                6

age, quality, and market demands, to make a price per dog
calculation feasible. See id. at 9. Further, even if the price
could be calculated, the information would be stale. Id. The
Department also determined that release would not significantly
assist competitors in gauging the scale of a licensee’s operation
because similar information is already in the public domain. Id.
at 11–12.

     Appellants contend that the Department’s analysis
improperly ignored the Humane Society’s intended use of this
information in “its crusade to destroy [appellants’] businesses,”
Appellants’ Br. 53. Exemption 4, however, “does not guard
against mere embarrassment in the marketplace or reputational
injury” of the kind appellants describe. United Techs, 601 F.3d
at 564. Additionally, substantial competitive harm must “flow
from the affirmative use of proprietary information by
competitors.” Id. at 563 (quoting CNA Fin. Corp., 830 F.2d at
1154). In asking the court to hold that the competitor rule
should not apply in their case, see Appellants’ Br. 57, appellants
seem to recognize that the Humane Society is not a competitor
of commercial dog breeders and dealers and that this court’s
precedent is against them. This court is bound by the law of the
circuit. See LaShawn A. v. Barry, 87 F.3d 1389, 1393 (D.C. Cir.
1996) (en banc).

     Appellants’ suggestion that the Department’s conclusion on
substantial competitive harm impermissibly relied on the
existence of similar publicly available information is based on
Painting and Drywall Work Preservation Fund, Inc. v.
Department of Housing and Urban Development, 936 F.2d
1300, 1303 (D.C. Cir. 1991). That case addresses Exemption 6
and, consequently, fails to demonstrate that the Department’s
Exemption 4 conclusion was arbitrary or capricious.
                                7

                                 B.
     Potentially more favorable to appellants, Exemption 6
protects “personnel and medical files and similar files the
disclosure of which would constitute a clearly unwarranted
invasion of personal privacy.” 5 U.S.C. § 552(b)(6). The
parties agree the Block 8 information is a “similar file,”
disputing only whether “disclosure would constitute a clearly
unwarranted invasion of personal privacy.” To answer this
question, the Department first had to determine whether
“disclosure would compromise a substantial, as opposed to a de
minimis, privacy interest.” Consumers’ Checkbook, 554 F.3d at
1050 (quoting Nat’l Ass’n of Retired Fed. Employees v. Horner,
879 F.2d 873, 874 (D.C. Cir. 1989)). In this context, “[a]
substantial privacy interest is anything greater than a de minimis
privacy interest.” Multi Ag, 515 F.3d at 1229–30. If a
substantial privacy interest exists, then that interest must be
balanced against any public interest in disclosure. Id. “[T]he
only relevant public interest in the FOIA balancing analysis [is]
the extent to which disclosure of the information sought would
‘shed light on an agency’s performance of its statutory duties’
or otherwise let citizens know ‘what their government is up to.’”
Dep’t of Def. v. Fed. Labor Relations Auth., 510 U.S. 487, 497
(1994) (quoting Dep’t of Justice v. Reporters Comm. for
Freedom of the Press, 489 U.S. 749, 773 (1989)). The “use for
which the requestor seeks the information is not relevant for
purposes of determining the public interest.” Multi Ag, 515 F.3d
at 1231 n.2 (citing Nat’l Ass’n of Retired Fed. Employees, 879
F.2d at 875). FOIA’s “strong presumption in favor of
disclosure,” Dep’t of State v. Ray, 502 U.S. 164, 173 (1991), is
“at its zenith” in this Exemption 6 analysis. Nat’l Ass’n of
Home Builders v. Norton, 309 F.3d 26, 37 (D.C. Cir. 2002).
“[U]nless the invasion of privacy is ‘clearly unwarranted,’ the
public interest in disclosure must prevail.” Ray, 502 U.S. at 177.

    The Department concluded that Exemption 6 did not apply.
                                8

First, it found that licensees have a “limited privacy interest” in
their personal financial information (gross dollars earned
through regulated activities) but this interest is “lessened”
because Block 8 shows only gross income and not net profit and
so “does not provide a complete picture of the individual’s
finances.” Decision of Feb. 17, 2012 at 5. Nonetheless, the
Department concluded there was a non-negligible, limited
privacy interest in this information. A much weaker, negligible
privacy interest existed, however, in the number of animals
bought and sold in a given year. The Department acknowledged
that this information “could shed light on the size of a licensee’s
operation,” but stated that similar information is independently
available from the Department’s published inspection reports of
licensee facilities, which include the number of dogs counted at
the time of the inspection. Id. Although the inspection count
does not necessarily reflect the annual totals of animals bought
and sold, it does provide some information regarding the size of
the licensee’s operation. The Department discounted comments
expressing concern about alleged harassment incited by the
Humane Society, explaining that many of the comments
regarding privacy concerns did not address the specific
information at issue, namely the number of dogs bought and
sold and the gross revenue from regulated activities, and that
“the licensees’ association with the industry” is public
knowledge. Id. at 4.

    By contrast, the Department found there was “a significant
public interest in release of the information at issue.” Id. at 5.
Specifically, the Block 8 information would assist the public in
assessing whether the Department is fulfilling its statutory
mandate to charge “reasonable” and “equitable” fees, 7 U.S.C.
§ 2153, and is properly assessing fees in accordance with its
regulations. Decision of Feb. 17, 2012 at 7. In addition, the
public could gauge the effectiveness of inspections by
comparing data on Form 7003 with publicly available inspection
                                9

reports. Id. Balancing the two interests, the Department
concluded that “[t]he public’s interest in the activities of the
[Department] outweigh the negligible privacy interest in the
number of animals bought and sold and the minimal privacy
interest in the gross dollars earned from regulated activities and
the dollars upon which the fee was based.” Id. Therefore, it
concluded, “[a]lthough there is a privacy interest, release of this
information would not constitute a clearly unwarranted invasion
of personal privacy.” Id.

     Appellants contend that the Department’s reasoning is
arbitrary and capricious because they see no valid public interest
in disclosure of the Block 8 information. Even if Block 8
information did provide some information about the
Department, they maintain the Department understated their
privacy interest and overestimated the purported public interests.
The record shows that the Department “examine[d] the relevant
data and articulate[d] a satisfactory explanation” for its
conclusions “including a rational connection between the facts
found and the choice made.” State Farm Mut. Auto. Ins., 463
U.S. at 43 (citation and internal quotation marks omitted);
United Techs, 601 F.3d at 562. Contrary to appellants’ position,
the Department’s characterization of licensees’ privacy interest
in their gross revenue information as “limited” was sufficiently
explained, see Decision of Feb. 17, 2012 at 5, as was the
Department’s conclusion regarding comments about harassment
allegedly incited by the Humane Society. Notably, publicly
available licensee inspection reports and licensees’ own
advertising materials include their names and addresses and
information about the scale of their operations.

     Similarly, appellants fail to show that the Department’s
identification of three public interests in disclosure of the Block
8 information was arbitrary or capricious. Appellants maintain
that a valid public interest under FOIA exists only if the
                               10

information sought would “contribute significantly to public
understanding of the operations or activities of the government.”
Appellants’ Br. 24 (quoting Dep’t of Def. v. Fed. Labor
Relations Auth., 510 U.S. at 495). This misstates the standard.
The quote from Department of Defense v. Federal Labor
Relations Authority on which they rely articulates the “core
purpose of the FOIA,” 510 U.S. at 495 (quoting Reporters’
Comm., 489 U.S. at 775), not the required nexus between the
information at issue and public understanding of government
activity. The proper inquiry is whether the information “sheds
light” on government activities, Ray, 502 U.S. at 177–78
(quoting Reporters’ Comm., 489 U.S. at 773), and whether it
would “appreciably further” public understanding of the
government’s actions, Dep’t of Def. v. Fed. Labor Relations
Auth., 510 U.S. at 497. A public interest exists where the public
“can more easily determine” whether an agency is in compliance
with a statutory mandate, Multi Ag, 515 F.3d at 1232, even if
“the data will not be perfect” with respect to the value of the
information that might be derived from that requested. Am.
Civil Liberties Union v. Dep’t of Justice, 655 F.3d 1, 14 (D.C.
Cir. 2011).

     The gross revenue information in Block 8 does not provide
perfect data concerning whether the Department’s fee schedule
is reasonable and equitable and whether it is properly assessing
fees, but it does add to the public’s knowledge. The Department
could reasonably conclude that it would assist observers in
evaluating the Department’s activity. Similarly, comparisons
between the number of dogs reported on licensing applications
and counted during inspections could assist the public in
determining whether the Department is properly pursuing any
significant discrepancies, which might indicate problems such
as disease, business changes, or fraud in licensing applications.
See Decision of Feb. 17, 2012 at 7. On the other hand,
disclosure of redacted documents, as appellants propose, would
                                11

decrease the utility of the information because comparisons
between individual businesses’ Block 8 information and
published inspection reports would not be possible. In any
event, the suggestion for redaction was not presented to the
Department and is therefore forfeited. See, e.g., Riffin v. Surface
Transp. Bd., 733 F.3d 340, 343 (D.C. Cir. 2013). And, contrary
to appellants’ assertion, the record offers no indication that
members of the public lack the expertise necessary to
meaningfully compare inspection reports and Block 8
information. Moreover, appellants err in suggesting that a
public interest in disclosure of the Block 8 information can only
exist where there is evidence of agency impropriety. Although
in a traditional FOIA case a requester who asserts a public
interest in uncovering Government deficiencies or misfeasance
must produce evidence to support that public interest, see Nat’l
Archives & Records Admin. v. Favish, 541 U.S. 157, 174
(2004); Dep’t of Def. v. Fed. Labor Relations Auth., 510 U.S. at
497 n.6, a reverse-FOIA case presents a different situation. The
Department has reasonably explained why there is a sufficient
public interest and why release of this information would not
constitute a “clearly unwarranted” invasion of personal privacy.
To prevail, appellants must demonstrate that conclusion is
arbitrary and capricious or contrary to law, and they have failed
to do so. See Multi Ag, 515 F.3d at 1233.

     There is no merit in appellants’ alternative procedural
arguments that the Department did not give licensees a
meaningful opportunity to respond to its analysis and that by
failing to “provide the submitter an opportunity to object to any
decision to disclose the information” it violated its regulations,
7 C.F.R. § 1.12. Appellants cite no authority for the procedural
requirements they assert and the regulatory provision on which
they rely applies only to cases in which the Department cannot
readily determine whether Exemption 4, not Exemption 6,
applies. Reverse-FOIA actions “are in the nature of informal
                              12

adjudications,” Occidental Petroleum Corp. v. SEC, 873 F.2d
325, 337 (D.C. Cir. 1989), and in such adjudications, “agencies
must satisfy only ‘minimal procedural requirements,’”
Southwest Airlines Co. v. TSA, 650 F.3d 752, 757 (D.C. Cir.
2011) (citation omitted). Appellants fail to show such
procedural requirements were not met in their case.

    Accordingly, we affirm the grant of summary judgment to
the Department and the Humane Society.