Kahn v. Federal Motor Carrier Safety Administration ( 2009 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JEREMY KAHN,
Plaintiff,
v. Civil Action 07-02323 (HHK)
FEDERAL MOTOR CARRIER
SAFETY ADMINISTRATION,
Defendant.
MEMORANDUM OPINION
Jeremy Kahn, an attorney proceeding pro se, brings this action against the Federal Motor
Carrier Safety Administration (“FMCSA”) under the Freedom of Information Act, 5 U.S.C. §
552 (“FOIA”), seeking to obtain three FMCSA decisions that Kahn contends the FMCSA
wrongfully withheld from him in violation of FOIA; namely: P.A.M. Transport, Inc., FMCSA
Docket MC-150496 (Oct. 2, 2007) (“P.A.M.”); Celadon Trucking Services, Inc., FMCSA Docket
MC-185116 (Dec. 28, 2007) (“Celadon”); and Con-Way Truckload, Inc., FMCSA Docket MC-
119399 (Jan. 14, 2008) (“Con-Way”).1 Before the Court are Kahn’s motion for summary
judgment [#11] and FMCSA’s cross-motion for summary judgment [#24]. Upon consideration
of the motions, the oppositions thereto, and the record of this case, the Court concludes that
Kahn’s motion must be denied, and FMCSA’s motion must be granted.
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During summary judgment briefing, Kahn informed the Court that he requested five
more self-insurance decisions: LS Transp., Inc., FMCSA Docket MC-221057 (Jan. 23, 2008);
Averitt Express, Inc., FMCSA Docket MC-121600 (Apr. 15, 2008); Swift Transp. Co., Inc.,
FMCSA Docket MC-136818 (May 29, 2008); Knight Transp. Co., Inc., FMCSA Docket MC-
227271 (Sept. 3, 2008); Swift Transp. Co., Inc., FMCSA Docket MC-136818 (Sept. 29, 2008).
Kahn’s complaint, however, makes no mention of these decisions. Therefore, they are not before
the Court.
I. BACKGROUND
To qualify for federal registration, commercial motor carriers must maintain liability
insurance in prescribed amounts. 49 U.S.C. § 13906(a)(1). This security must be sufficient to
pay for bodily injury resulting from the negligent operation, maintenance, or use of commercial
motor vehicles and for property damage or loss (“BI & PD”). Id. As an alternative to acquiring
insurance, commercial motor carriers may qualify as “self-insurer[s]” by showing that they have
sufficient financial resources to satisfy certain specified security requirements. Id. at § 13906(d);
49 C.F.R. § 387.309. Specifically:
The FMCSA will consider and will approve, subject to appropriate and reasonable
conditions, the application of a motor carrier to qualify as a self-insurer, if the carrier
furnishes a true and accurate statement of its financial condition and other evidence
that establishes to the satisfaction of the FMCSA the ability of the motor carrier to
satisfy its obligation for bodily injury liability, property damage liability, or cargo
liability. . . . [A]pplicants for authority to self-insure against bodily injury and
property damage claims should submit evidence that will allow the FMCSA to
determine:
(1) The adequacy of the tangible net worth of the motor carrier in relation to the
size of operations and the extent of its request for self-insurance authority.
(2) The existence of a sound self-insurance program.
(3) The existence of an adequate safety program.
(4) Additional information . . . as the FMCSA may require.
49 C.F.R. § 387.309. The FMCSA has administered the self-insurance program since 2000.
Until then, the Federal Highway Administration (“FHWA”) had administered the program.
Before the FHWA, the Interstate Commerce Commission (“ICC”) administered the program.
The FMCSA prepares written decisions on applications for self-insurance authorization
and publishes notices of these decisions in the FMCSA Register. Whereas the written decisions
explain the rationale for FMCSA action, the notices merely state what final action the FMCSA
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took with respect to a given self-insurance application. The practice of the ICC and the FHWA,
and for a time the FMCSA, was to provide the full written self-insurance decisions to the public
upon request. In October 2007, the FMCSA reversed course and discontinued the practice of
providing full written self-insurance decisions to the public. According to the FMCSA, this
practice change was motivated by a concern that the financial information contained in full
decisions might expose commercial motor carriers to competitive harm. Therefore, the FMCSA
began treating such financial information as confidential and propriety and referring public
requests for self-insurance decisions to the FMCSA FOIA office.
The genesis of the instant action is the issuance of three self-insurance decisions: P.A.M.,
Celadon, and Con-Way. Between October 2007 and January 2008, the FMCSA published
notices for each of these decisions. Below the listing of each decision was printed: “Copies of
Decisions May Be Purchased by Calling DC News and Data, Inc.” Kahn, an attorney who
practices before the FMCSA (and who practiced before its predecessor agencies), alleges that he
called DC News and Data, Inc., but its telephone number had been disconnected. Thereafter,
Kahn sent three separate letters to the FMCSA requesting these decisions. The FMCSA
acknowledged receiving these letters but did not immediately provide the decisions. Kahn filed
the original complaint in this action in December 2007, after the FMCSA did not provide him
with a copy of the P.A.M. decision immediately upon his request. Kahn filed an amended
complaint in January 2008, after the FMCSA did not provide him with copies of the Celadon and
Con-Way decisions immediately upon his request.
Since Kahn filed his complaints, the FMCSA has provided him with all three of the
requested decisions: the Con-Way decision was provided in unredacted form in March 2008; and
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the Celadon and P.A.M. decisions were provided in redacted form in May 2008. The FMCSA
determined that the Con-Way decision did not contain confidential commercial information and
therefore provided it without redaction. The FMCSA believed that the Celadon and P.A.M.
decisions did contain confidential commercial information. Therefore, the FMCSA notified
Celadon and P.A.M. that Kahn had requested copies of their decisions and allowed them an
opportunity “to submit any written objections to release” of their decisions. 49 C.F.R. § 7.17(a).
Celadon and P.A.M. submitted objections. The FMCSA adopted Celadon’s objections, redacted
the Celadon decision accordingly, and released the Celadon decision to Kahn.2 The FMCSA
determined that P.A.M.’s objections were too broad, adopted narrower redactions, and released
the P.A.M. decision to Kahn.3 Notwithstanding the FMCSA’s disclosure of these decisions,
Kahn persists in this suit. Indeed, Kahn has filed a motion for summary judgment, and the
FMCSA has filed a cross motion for summary judgment. The Court now turns to these motions.
2
The FMCSA redacted the following information from the Celadon self-insurance
decision: the dollar amount of Celadon’s self-insured bodily injury and property damage claims
for the quarter ending March 2007; the percentage of Celadon’s revenue during the same quarter
that was represented by these claims; the percentage of Celadon’s net worth during the same
quarter that was represented by these claims; and (4) the percentage of these claims that were
covered by Celadon’s existing collateral during the same quarter.
3
The FMCSA redacted the following information from the P.A.M. self-insurance
decision: operating income; net income; EBITDA, cash flow available for insurance and claims;
cash and short-term investments; working capital; current ratio; tangible net worth; total
liabilities; percentage increases or decreases in the aforementioned financial statistics in 2005-06;
annual savings from self-insurance; BI & PD insurance deductible; outstanding BI & PD claims;
BI & PD claims statistics; cargo claim statistics; percentage of revenue from a major customer;
percentage of revenue generated by transportation services provided to the automotive industry;
and a business decision that affected liquidity and days payable outstanding.
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II. ANALYSIS
Kahn contends he is entitled to the Celadon and P.A.M. decisions in unredacted form
under FOIA, 5 U.S.C. § 552(a)(2)(A), which provides: “[e]ach agency, in accordance with
published rules, shall make available for public inspection and copying -- final opinions,
including concurring and dissenting opinions, as well as orders, made in the adjudication of
cases[.]” FMCSA contends FOIA does not require it to provide the Celadon and P.A.M.
decisions in unredacted form because the decisions contain confidential commercial information
and thus fall within FOIA Exemption 4, 5 U.S.C. § 552(b)(4), which provides: “[t]his section
does not apply to matters that are -- (4) . . . commercial or financial information obtained from a
person and privileged or confidential[.]” The Court agrees with FMCSA and therefore grants its
motion for summary judgment.
In a FOIA suit, an agency is entitled to summary judgment once it bears its burden of
demonstrating that no material facts are in dispute and that all information that falls within the
requests at issue either has been produced, is unidentifiable, or is exempt from disclosure.
Students Against Genocide v. Dep’t of State, 257 F.3d 828, 833 (D.C. Cir. 2001). A court may
award summary judgment to a FOIA defendant solely on the basis of information provided by the
agency in sworn statements so long as the agency provides reasonably specific details that justify
the nondisclosures and demonstrate that the information withheld logically falls within the
claimed exemption unless record evidence or agency bad faith contradicts such statements.
Military Audit Project v. Casey, 656 F.2d 724, 738 (D.C. Cir. 1981). To successfully challenge
such a showing, a plaintiff must do more than establish some “metaphysical doubt”; rather, the
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plaintiff must come forward with “specific facts” demonstrating that a genuine trial issue
remains. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).
For FMCSA to prevail on its motion for summary judgment under Exemption 4, FMCSA
must show that the information redacted from the Celadon and P.A.M. decisions is “(a)
commercial or financial, (b) obtained from a person, and (c) privileged or confidential.”
National Parks and Conservation Ass’n v. Morton, 498 F. 2d 765, 766 (D.C. Cir. 1974)
(“National Parks I”). Because there can be no dispute that persons, namely Celadon and P.A.M.,
submitted the redacted information, see Judicial Watch, Inc. v. Export-Import Bank, 108 F. Supp.
2d 19, 28 (D.D.C. 2000) (observing that the term “‘person’ in the context of Exemption 4 applies
to a wide range of entities, including corporations, associations and public or private
organizations”), the Court need only address whether the redacted information is commercial or
financial and whether the redacted information is privileged or confidential.
The D.C. Circuit has stated that although “not every bit of information submitted to the
government by a commercial entity qualifies for protection under Exemption 4 . . . the terms
‘commercial’ and ‘financial’ should be given their ordinary meanings.” Public Citizen Health
Research Group v. FDA, 704. F.2d 1280, 1290 (D.C. Cir. 1983) (“PCHRG”) (citing Washington
Post Co. v. U.S. Dep’t of Health & Human Servs., 690 F.2d 252, 266 (D.C. Cir. 1982); Board of
Trade v. Commodity Futures Trading Comm’n, 627 F.2d 392, 403 (D.C. Cir. 1980)). Thus, the
question of whether information is “commercial” boils down to a common sense inquiry into
whether the proponent has a business interest in that information. PCHRG, 704 F.2d at 1290.
Similarly, the question of whether information is “financial” is simply the question of whether
that information pertains to money, investments, and the like. Cf. id.
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The Court easily concludes that the information redacted from the Celadon and P.A.M.
decisions — e.g., revenue, net worth, income, and EBITDA — is financial and commercial in
nature because it all concerns the business interests and/or finances of Celadon and P.A.M. Kahn
does not even contend that the redacted information is neither financial nor commercial. Indeed,
Kahn refers to the redacted information as “financial” in numerous places in his briefs. (See e.g.,
Pl.’s Opp. to Def.’s Mot. for Summ. Judg. at 7.) Therefore, the Court concludes that the redacted
information is commercial and financial in nature and proceeds to the final prong of the
Exemption 4 inquiry.
The final prong of the Exemption 4 inquiry asks whether the redacted information is
privileged or confidential. The parties largely ignore the notion of privilege, instead focusing
their arguments on whether the redacted information is confidential. The court follows suit.
FOIA “contains no definition of the word ‘confidential.’” National Parks I, 498 F.2d at 766.
Following a thorough examination of the legislative history of Exemption 4, the D.C. Circuit
adopted the following definition:
[C]ommercial or financial matter is ‘confidential’ for purposes of the exemption 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 I, 498 F.2d at 770. Because commercial motor carriers wishing to qualify for
self-insurance must submit the type of commercial and financial information at issue, the Court
finds it unlikely that upholding the redactions will impair the government’s ability to obtain such
information in the future. Accordingly, the Court need only address the second definition:
whether disclosure may cause substantial harm to the competitive position of Celadon or P.A.M.
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To make an adequate showing of the likelihood of substantial competitive harm, there
need not be “actual competitive harm; evidence revealing ‘[a]ctual competition and the
likelihood of substantial competitive injury’ is sufficient to bring commercial information within
the realm of confidentiality.” PCHRG, 704 F.2d at 1291 (quoting Gulf & Western Indus. v. U.S.,
615 F.2d 527, 530 (D.C. Cir. 1979)). Although “the court need not conduct a sophisticated
economic analysis of the likely effects of disclosure, . . . [c]onclusory and generalized allegations
of substantial competitive harm . . . cannot support an agency’s decision to withhold requested
documents.” PCHRG, 704 F.2d at 1291 (citing National Parks and Conservation Ass’n v.
Kleppe, 547 F.2d 673, 680-81 (D.C. Cir. 1976) (“National Parks II”); Pacific Architects &
Engineers, Inc. v. Renegotiation Board, 505 F.2d 383, 384-85 (D.C. Cir. 1974)).
The FMCSA contends that the disclosure of the redacted information could cause
competitive harm to Celadon and P.A.M. In support of that contention, the FMCSA cites to
correspondence with representatives of Celadon and P.A.M. (See Def.’s Mot. for Summ. Judg.,
Attach. 2, at ¶¶ 10, 15 (“Coleman Decl.”).) Specifically, the Vice President and General Counsel
of Celadon requested that the redacted information not be released because it “may give the
requesting party some competitive benefit that it is not otherwise entitled to and this information
is not presently public information.” (Coleman Decl., Attach. 1, at 1.) Similarly, P.A.M.’s Risk
Manager requested that the redacted information not be released, stating that it “had been carved
out of [P.A.M.’s] consolidated financial statement,” that it is “extremely proprietary in nature,”
and that “[i]t contains confidential financial information of which its disclosure is of no benefit
other than to possible industry competitors.” (Coleman Decl., Attach. 3, at 1.) Kahn responds
that commercial motor carriers, like Celadon and P.A.M., understand that the self-insurance
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process will result in the publication of some of their financial information. Kahn notes but fails
to explain the relevance of regulations requiring carriers to file reports. See 49 C.F.R. 369.
Finally, Kahn questions the FMCSA’s assertion that carriers have requested that their financial or
commercial information be kept confidential in connection with its submission.
The Court agrees with the FMCSA that it properly withheld the redacted information as
confidential. Although the FMCSA could have done more to explain how the disclosure of the
redacted information could harm the competitive positions of Celadon and P.A.M., the Court
finds applicable here the D.C. Circuit’s conclusion that it is “virtually axiomatic” that the
disclosure of such financial and commercial information is likely to cause competitive harm;
thus, such information is exempt from disclosure under Exemption 4. See National Parks II, 547
F.2d at 684; see also Judicial Watch Inc., 108 F. Supp. 2d at 28-29 (holding that the disclosure of
similar financial information submitted in connection with an export insurance application could
cause substantial competitive harm to the company from whom the information was obtained).
Accordingly, the Court upholds the FMCSA’s decision to release the Celadon and P.A.M
decisions in redacted form.
Kahn raises several additional arguments both in his motion for summary judgment and
in his opposition to the FMCSA’s motion for summary judgment. First, Kahn argues that the
FMCSA “had an obligation to live up to its word” and make the Celadon and P.A.M. decisions
available, (Pl.’s Opp. to Def.’s Mot. for Summ. Judg. at 6), because the notices for the decisions
stated that copies were available upon request. Beyond the fact that Kahn cites no law in support
of this argument, its obvious failing is that the FMCSA did make copies available albeit in
redacted form. Second, Kahn argues that the FMCSA released such orders in the past and should
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not reverse course now. Kahn cites no law in support of this argument. The Court likewise finds
none. To the contrary, the Court notes that FMCSA past practice notwithstanding, the Court has
no power “to require disclosure of materials that are exempt under FOIA.” Maricopa Audubon
Soc. v. U.S. Forest Serv., 108 F.3d 1082, 1087 (9th Cir. 1997). Third, Kahn argues that the
orders must be released in unredacted form because the agency relies on such orders as
precedent. Kahn again cites no law in support of this argument. In any event, the Court finds no
merit in it because the redaction of limited and specific financial information has little bearing on
the FMCSA’s or the public’s ability to consider the precedential effect of prior decisions.
Finally, in several supplemental filings, Kahn argues that redacting the financial and commercial
at issue runs contrary to President Obama’s goal of increasing government transparency. The
Court is not persuaded that the Obama administration’s policy pronouncement somehow alters
the application of a federal statute. Accordingly, the Court rejects all of Kahn’s remaining
arguments.
III. CONCLUSION
For the foregoing reasons, the Court concludes that Kahn’s motion for summary
judgment [#11] must be DENIED, and FMCSA’s motion for summary judgment [#24] must be
GRANTED. An appropriate Order accompanies this Memorandum Opinion.
Henry H. Kennedy, Jr.
United States District Judge
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