Aldf v. Fda

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ANIMAL LEGAL DEFENSE FUND, No. 13-17131
Plaintiff-Appellant,
D.C. No.
v. 3:12-cv-04376-
EDL
FOOD AND DRUG ADMINISTRATION,
Defendant-Appellee. OPINION
Appeal from the United States District Court
for the Northern District of California
Elizabeth D. Laporte, Magistrate Judge, Presiding
Argued and Submitted
December 9, 2015—San Francisco, California
Filed April 11, 2016
Before: Susan P. Graber, Kim McLane Wardlaw,
and Mary H. Murguia, Circuit Judges.
Opinion by Judge Graber;
Per Curiam Concurrence
2 ALDF V. FDA
SUMMARY*
Freedom of Information Act
The panel affirmed the district court’s summary judgment
in favor of the Food and Drug Administration (“FDA”), and
its holding that under Freedom of Information Act (“FOIA”)
Exemption 4, the FDA properly withheld categories of
information requested by the Animal Legal Defense Fund
regarding egg-production farms in Texas.
FOIA Exemption 4 applies to “trade secrets and
commercial or financial information obtained from a person
and privileged or confidential.” 5 U.S.C. § 552(b)(4). The
district court concluded that the FDA had established that the
release of five categories of redacted information – total hen
population, number of hen houses, number of floors per
house, number of cage rows per house, and number of cage
tiers per house – was likely to result in substantial
competitive harm due to underbidding among egg producers;
and the information was protected under Exemption 4.
The panel held that the district court had an adequate
factual basis to reach its decision. The panel also held that
the district court did not clearly err in finding that disclosure
of the redacted information was likely to cause substantial
competitive harm to the affected egg producers and farmers.
Finally, the panel held that the district court did not abuse its
discretion by denying third-party discovery.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
ALDF V. FDA 3
In a concurring per curiam opinion, the panel wrote
separately to explain why it thought that the court should
reconsider en banc the standard of review that is applied to
appellate review of summary judgments in FOIA cases.
COUNSEL
Monte M.F. Cooper (argued), Derek F. Knerr, and Scott
Lindlaw, Orrick, Herrington & Sutcliffe LLP, Menlo Park,
California, for Plaintiff-Appellant.
Lindsey Powell (argued), Dara S. Smith, and Michael S.
Raab, Civil Division, Stuart F. Delery, Assistant Attorney
General, and Victoria R. Carradero, Assistant United States
Attorney, United States Department of Justice, Washington,
D.C., for Defendant-Appellee.
OPINION
GRABER, Circuit Judge:
Plaintiff Animal Legal Defense Fund filed a Freedom of
Information Act (“FOIA”) request with the Food and Drug
Administration (“FDA”) regarding egg-production farms in
Texas. The FDA released almost 400 pages of documents but
redacted data regarding total hen population, number of hen
houses, number of floors per house, number of cage rows per
house, number of cage tiers per house, and number of birds
per cage for each farm in question. Plaintiff filed this FOIA
action seeking to compel the FDA to release the redacted
data. The district court ordered the release of information
regarding the number of birds per cage at each farm. But the
4 ALDF V. FDA
court held on summary judgment that, under FOIA
Exemption 4, the FDA properly withheld the other categories
of information because its release was “likely to cause
substantial competitive harm.” See 5 U.S.C. § 552(b)(4). We
affirm.
FACTUAL AND PROCEDURAL HISTORY
In late 2011, Plaintiff submitted a FOIA request to the
FDA that sought the following:
• All FDA documents since April 26, 2011, relating
to egg safety in Texas, egg production in Texas,
or egg-production facilities in Texas;
• All FDA communications with Texas state
government agencies since April 26, 2011,
relating to egg safety, egg production, or egg-
production facilities; and
• All communications between the FDA and egg
producers in Texas since April 26, 2011.
The FDA released records related to inspections of eleven
chicken egg-production facilities; one quail egg-production
facility and food manufacturer; one food warehouse; and one
food distribution center. But redactions appeared on 277 of
the 398 pages that the FDA produced.
Plaintiff filed a complaint for injunctive and declaratory
relief under FOIA, 5 U.S.C. § 552, seeking to compel the
production of the following information regarding inspected
egg-production facilities: total hen population; number of
hen houses; number of floors per house; number of cage rows
ALDF V. FDA 5
per house; number of cage tiers per house; and number of
birds per cage. The FDA moved for summary judgment on
the ground that FOIA Exemption 4—which applies to “trade
secrets and commercial or financial information obtained
from a person and privileged or confidential,” id.
§ 552(b)(4)—protected the redacted data. In support of its
motion, the FDA submitted several declarations from experts
who stated that releasing the requested information would
enable competitors to learn a given egg producer’s production
rate, which in turn would allow the competitors to undercut
the egg producer’s prices and lure away customers. Plaintiff
filed a cross-motion for summary judgment, supported by its
own declarations from an economist and a food industry
consultant. Those experts attested that releasing the withheld
information would not facilitate competitive underbidding.
Plaintiff also asked to suspend briefing of FDA’s
summary judgment motion in order to permit discovery
directed to whether the information sought was publicly
available. The district court denied that request because,
among other things, Plaintiff had not shown that the
discovery it sought “is essential to litigating the motion for
summary judgment.”
After briefing and oral argument, the district court granted
in part and denied in part both parties’ summary judgment
motions. The district court held that the FDA had fallen short
of showing how releasing the number of birds per cage would
“threaten any competitive harm” and ordered disclosure of
that information. But the court concluded that the FDA had
established that the release of the other five categories of
redacted information—total hen population, number of hen
houses, number of floors per house, number of cage rows per
6 ALDF V. FDA
house, and number of cage tiers per house—was likely to
result in substantial competitive harm due to underbidding.
Plaintiff timely appeals the court’s grant of summary
judgment in favor of the FDA on the redaction of those five
categories of information, as well as the denial of third-party
discovery.
STANDARDS OF REVIEW
“Our review of a grant of summary judgment in a FOIA
case . . . is slightly different than for other types of cases
. . . .” Yonemoto v. Dep’t of Veterans Affairs, 686 F.3d 681,
688 (9th Cir. 2012). We first determine, de novo, whether an
adequate factual basis supports the district court’s decision.
Id. “Whether a particular set of documents gives the court an
adequate factual basis for its decision is a question of law that
the court reviews de novo.” Lion Raisins, Inc. v. U.S. Dep’t
of Agric., 354 F.3d 1072, 1078 (9th Cir. 2004). If no
adequate factual basis exists, the case must be remanded for
further development of the record. Yonemoto, 686 F.3d at
688.
If such a factual basis exists, we next treat the judgment
as “if it were a bench trial,” so that “the district court’s
conclusions of fact are reviewed for clear error.” Id. (internal
quotation marks omitted). On the other hand, “legal rulings,
including [the district court’s] decision that a particular
exemption applies, are reviewed de novo.” Id. As we noted
in Lion Raisins, whether withheld information could be used
by a food producer to undercut competitors is a determination
that is “grounded in . . . findings of fact.” 354 F.3d at 1078.
Therefore, if we determine that the district court had an
adequate factual basis for reaching its decision, we must
ALDF V. FDA 7
review for clear error the district court’s conclusion that
releasing the redacted information likely would cause
substantial competitive harm. Id.
We review for abuse of discretion a district court’s denial
of discovery before ruling on summary judgment. U.S.
Cellular Inv. Co. of L.A., Inc. v. GTE Mobilnet, Inc., 281 F.3d
929, 934 (9th Cir. 2002).
DISCUSSION
A. Disclosure Under FOIA
“Disclosure, not secrecy, is the dominant objective of
FOIA.” Shannahan v. IRS, 672 F.3d 1142, 1148 (9th Cir.
2012) (internal quotation marks and brackets omitted). “We
construe narrowly FOIA’s nine exemptions.” Id. The FDA
relies on Exemption 4, 5 U.S.C. § 552(b)(4), “which is
available to prevent disclosure of (1) commercial and
financial information, (2) obtained from a person or by the
government, (3) that is privileged or confidential.”1 GC
Micro Corp. v. Def. Logistics Agency, 33 F.3d 1109, 1112
(9th Cir. 1994). Commercial information qualifies as
“confidential” when disclosure is “likely . . . to cause
1
Title 5 U.S.C. § 552(b)(4) specifically provides:
This section [requiring disclosure of information]
does not apply to matters that are—
....
(4) trade secrets and commercial or financial
information obtained from a person and privileged or
confidential[.]
8 ALDF V. FDA
substantial harm to the competitive position of the person
from whom the information was obtained.” Id. 1112–13
(citing Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d
765, 770 (D.C. Cir. 1974)).
B. Adequate Factual Basis
As noted above, we first must determine whether the
district court had an adequate factual basis to reach its
decision. Lion Raisins, 354 F.3d at 1079. “In making this
determination, we may rely solely on 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.” Kowack v. U.S. Forest Serv., 766 F.3d
1130, 1132 (9th Cir. 2014) (internal quotation marks
omitted). That threshold is met here.
Several of the declarations by the FDA’s experts stated
that the egg-production industry was “highly” or “extremely
competitive.” One emphasized that “anything that changes
costs by even a penny can make a huge difference.”
According to the experts, the redacted information was likely
to cause substantial competitive harm because the
competitors of the egg producers in question could use the
information to form accurate estimates of each farm’s or
producer’s rate of production and use those estimates to
underbid. For example, one declarant stated that, once a
competitor knows the production rate at an egg farm, the
competitor is able to “enter the farm’s regional market and
offer to produce the same number of eggs per day for a lower
price or a greater number of eggs per day for the same price
and thereby lure away the farm’s customers.” As in Lion
Raisins, 354 F.3d at 1079–80, the declarations in this case
ALDF V. FDA 9
established an adequate factual basis. The declarations
provided the district court with the identity of the information
sought and the claimed exemption, and provided the
necessary detail about the specific competitive harm that
could arise from the release of the redacted information. See
also Bowen v. FDA, 925 F.2d 1225, 1227–28 (9th Cir. 1991)
(holding that government affidavits that described the
documents withheld, the statutory exemptions claimed, and
the specific reasons for the agency’s withholding provided an
adequate factual basis for application of Exemption 4).
C. Review of District Court’s Analysis for Clear Error
We next must decide whether the district court clearly
erred in determining that the redacted information fell within
Exemption 4’s protection. “[The clear error] standard is
significantly deferential, and we will accept the lower court’s
findings of fact unless we are left with the definite and firm
conviction that a mistake has been committed.” Lentini v.
Cal. Ctr. for the Arts, 370 F.3d 837, 848–49 (9th Cir. 2004)
(internal quotation marks omitted).
“An agency seeking to withhold information under an
exemption to FOIA has the burden of proving that the
information falls under the claimed exemption.” GC Micro
Corp., 33 F.3d at 1113. “While conclusory and generalized
allegations of competitive harm are insufficient to show that
requested information is ‘confidential,’” the government need
not show that releasing the documents would cause “actual
competitive harm.” Id. “Rather, the government need only
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, 354 F.3d at
1079.
10 ALDF V. FDA
Plaintiff does not contest that there is actual competition
in the egg-production market, and it also concedes that the
redacted information could be used to estimate an egg farm’s
production capacity. The parties disagree, however, as to
whether releasing the redacted information would likely
cause “substantial competitive harm” to the affected egg
producers and farmers.
Whether or not releasing the requested data would create
a likelihood of substantial competitive harm was subject to
dispute. But, on this record, the district court did not clearly
err in finding that disclosure of the information was likely to
cause commercial undercutting. The FDA provided
declarations that explained how the information would
facilitate accurate estimates of a farm’s egg-production
capacities and how those estimates could facilitate
undercutting. For example, one declarant explained that the
egg-production industry has a “tight profit margin”; industry
experts estimate that an average profit is approximately 6.7
cents per dozen eggs sold. If a national egg producer were
able to determine the production rates of its smaller
competitors, it could direct its resources toward that market;
and if the national producer were able to offer lower prices,
“even a penny can make a huge difference” in the local
company’s ability to keep its customers.
Although the information sought may not provide a
national egg producer with every piece of information that it
would consider before entering a new market, knowing the
production capacity of potential competitors could make the
decision of whether or not to enter a competitor’s market
easier. By becoming aware of potential limitations in its
competitors’ production capabilities, a national producer
could decide to focus all its resources on egg markets in
ALDF V. FDA 11
which it could out-produce local competitors—whether in
terms of efficiency, price, or total quantity. See Lion Raisins,
354 F.3d at 1081 (holding that releasing information that
allows a raisin farmer to “infer the volume of its competitors’
raisin sales” could facilitate undercutting and, therefore,
create a likelihood of substantial competitive harm).
Plaintiff submitted its own declarations, which asserted
that the production information it seeks is insufficient to
affect the market. Nevertheless, under our special standard
of review for FOIA cases, and in view of the extensive FDA
affidavits, we see no clear error. The incomplete data could
allow egg producers to make more accurate—if
imperfect—estimates of their competitors’ production
capabilities and sales than they could without the redacted
information. Due to the competitiveness of the egg-
production industry, where “even a penny can make a huge
difference,” even a slight upgrade in the accuracy of
projections might have a large effect on competition.
Although the information may not afford egg producers their
competitors’ exact profit-per-egg statistics, the FDA need
only establish, as the district court correctly noted, “a
likelihood of substantial competitive harm, not a certainty.”2
2
We are likewise unpersuaded by Plaintiff’s argument that the redacted
information is already publicly available and, therefore, cannot be
considered likely to cause substantial competitive harm. The sought-after
data is more detailed and more specific than anything currently available
in the public domain. For that reason, Plaintiff’s argument fails. See Wolf
v. CIA, 473 F.3d 370, 378 (D.C. Cir. 2007) (“Prior disclosure of similar
information does not suffice; instead, the specific information sought by
the plaintiff must already be in the public domain by official disclosure.”);
Fitzgibbon v. CIA, 911 F.2d 755, 765 (D.C. Cir. 1990) (“[T]he information
requested must be as specific as the information previously released.”).
12 ALDF V. FDA
D. Third-Party Discovery
The district court did not abuse its discretion by denying
third-party discovery. In response to a summary judgment
motion, a non-moving party may obtain relief pursuant to
Federal Rule of Civil Procedure 56(d) if it “shows by
affidavit or declaration that, for specified reasons, it cannot
present facts essential to justify its opposition.” A party
seeking further discovery must show that there is “some basis
for believing that the information sought actually exists.”
Blough v. Holland Realty, Inc., 574 F.3d 1084, 1091 n.5 (9th
Cir. 2009) (internal quotation marks omitted). Further, a
party seeking discovery must show that it lacks the “essential
facts” to resist the summary judgment motion. Cal. Union
Ins. Co. v. Am. Diversified Sav. Bank, 914 F.2d 1271, 1278
(9th Cir. 1990).
Plaintiff here sought additional discovery to show that the
sought-after information was already publicly available. The
district court ruled that the evidence Plaintiff sought was not
sufficiently similar to the information requested through
discovery; Plaintiff’s request was grounded in speculation;
and allowing discovery of “an individual farm’s egg
production could improperly give Plaintiff information that
it could not obtain through its FOIA request.” That ruling fell
within the district court’s range of discretion.
AFFIRMED.
ALDF V. FDA 13
PER CURIAM, concurring:
We write separately to explain why we think that our
circuit should reconsider the standard of review that we apply
to summary judgments in FOIA cases.
We generally review de novo a district court’s grant of
summary judgment. “Summary judgment is appropriate
when, viewing the evidence in the light most favorable to the
nonmoving party, there are no genuine questions of material
fact and the district court correctly applied the underlying
substantive law.” Campbell v. PricewaterhouseCoopers,
LLP, 642 F.3d 820, 824–25 (9th Cir. 2011). Typically, of
course, the district court does not make factual findings at
summary judgment. Rand v. Rowland, 154 F.3d 952, 957 n.4
(9th Cir. 1998) (en banc).
In FOIA cases, by contrast, we allow the district court to
make factual findings, and we review those findings for clear
error. Schiffer v. FBI, 78 F.3d 1405, 1409 (9th Cir. 1996).
That peculiar standard means that a dispute of material fact
does not necessarily defeat summary judgment. See
Yonemoto v. Dep’t of Veterans Affairs, 686 F.3d 681, 688 n.5
(9th Cir. 2012) (“Our cases do not explain why [we review
for clear error], and one can question whether it should be.
By definition, summary judgment may be granted only when
there are no disputed issues of material fact, and thus no
factfinding by the district court.”). But we see no good
reason to depart from our traditional standard of review in
FOIA cases. See generally Rebecca Silver, Comment,
Standard of Review in FOIA Appeals and the Misuse of
Summary Judgment, 73 U. Chi. L. Rev. 731 (2006) (arguing
that de novo review should apply in FOIA appeals).
14 ALDF V. FDA
As a threshold matter, “[s]ummary judgment is the
procedural vehicle by which nearly all FOIA cases are
resolved.” Office of Information Policy, U.S. Dep’t of
Justice, Guide to Freedom of Information Act: Litigation
Considerations 104 (2013). In this case, though, the parties
presented contradictory declarations as to the likelihood of
substantial competitive harm, making summary judgment an
inappropriate vehicle for resolving that issue. See In Def. of
Animals v. U.S. Dep’t of Agric., 501 F. Supp. 2d 1, 8 (D.D.C.
2007) (stating that summary judgment in a FOIA case is
“improper” when a “dispute is genuine and factual,” even
though the contention on which it is based may be “doubtful
on the basis of the evidence before the court”); Pub. Citizen
Health Research Grp. v. FDA, 953 F. Supp. 400, 403 (D.D.C.
1996) (concluding that “contradictory” claims by the parties
made summary judgment “an inappropriate vehicle” for
resolution of a FOIA case and scheduling a bench trial).
Our past cases reasoned that we owe substantial deference
to the district court in FOIA cases because of their unique
nature. See, e.g., Assembly of Cal. v. U.S. Dep’t of
Commerce, 968 F.2d 916, 919 (9th Cir. 1992). “Because
there will rarely be any genuine issues of material fact—the
document says whatever it says—the case may usually be
decided on summary judgment.” Id. To make its decision,
the district court often reviews sensitive documents in
camera, a process that we have described as “a trial on a
hidden record.” Id. The district court’s characterization of
the document in this context “more closely resembles a
finding of fact than a conclusion of law.” Id. Therefore, we
grant substantial deference to the district court. Id.; see also
Schiffer, 78 F.3d at 1409 (“[W]e endorsed the [clear error]
standard because in FOIA cases the district court’s findings
ALDF V. FDA 15
of fact effectively determine our legal conclusions.” (internal
quotation marks omitted)).
Although the FOIA statute requires that district courts
“determine the matter de novo,” it is silent as to the
appropriate standard of review for appellate courts. 5 U.S.C.
§ 552(a)(4)(B).1 We originally adopted our deferential
standard of review in reliance on a D.C. Circuit Court’s
footnote, without explanation. See Church of Scientology of
Cal. v. U.S. Dep’t of Army, 611 F.2d 738, 743 (9th Cir. 1980)
(citing Mead Data Cent., Inc. v. U.S. Dep’t of Air Force,
566 F.2d 242, 251 n.13 (D.C. Cir. 1977)). The D.C. Circuit
has since abandoned the FOIA-specific standard of review,
and it now applies ordinary summary judgment principles in
FOIA cases. See Petroleum Info. Corp. v. U.S. Dep’t of
Interior, 976 F.2d 1429, 1433 & n.3 (D.C. Cir. 1992) (noting
that the D.C. Circuit “applies in FOIA cases the same
standard of appellate review applicable generally to summary
judgments” but that, in contrast, the Ninth Circuit applies “a
clearly erroneous standard”). Likewise, the Second, Sixth,2
1
The relevant portion of the statute reads: “On complaint, the district
court . . . has jurisdiction to enjoin the agency from withholding agency
records and to order the production of any agency records improperly
withheld from the complainant. In such a case the court shall determine
the matter de novo, and may examine the contents of such agency records
in camera . . . .” 5 U.S.C. § 552(a)(4)(B).
2
Like the D.C. Circuit, the Sixth Circuit originally had a deferential
standard of review similar to our own but has since done away with it.
Compare Ingle v. Dep’t of Justice, 698 F.2d 259, 267 (6th Cir. 1983)
(“Initially, the reviewing court must establish that the district court had an
adequate factual basis for its decision. Secondly, the court on appeal must
ascertain upon the factual foundation developed below if the conclusion
of the trial court is clearly erroneous.”), with Jones v. FBI, 41 F.3d 238,
242 (6th Cir. 1994) (reviewing de novo the district court’s grant of
16 ALDF V. FDA
Eighth, and Tenth Circuits also apply de novo review when
evaluating FOIA summary judgment decisions. See TPS, Inc.
v. U.S. Dep’t of Def., 330 F.3d 1191, 1194 n.5 (9th Cir. 2003)
(collecting cases).
We acknowledge that some other circuits appear to use a
deferential standard of review similar to our own. See Silver,
73 U. Chi. L. Rev. at 740–43. But those circuits all appear to
have adopted the standard without explanation or analysis,
and at least one has questioned whether a deferential standard
of review is appropriate. See Stephenson v. IRS, 629 F.2d
1140, 1144 (5th Cir. 1980); Chilivis v. SEC, 673 F.2d 1205,
1210 (11th Cir. 1982); Antonelli v. DEA, 739 F.2d 302, 303
(7th Cir. 1984) (per curiam); Lame v. U.S. Dep’t of Justice,
767 F.2d 66, 70 (3d Cir. 1985); Willard v. IRS, 776 F.2d 100,
104 (4th Cir. 1985). But see Flightsafety Servs. Corp v. Dep’t
of Labor, 326 F.3d 607, 611 n.2 (5th Cir. 2003) (per curiam)
(noting the circuit split and choosing not to take a firm stand
because the case’s outcome remained “the same whether the
district court’s judgment [was] reviewed de novo or for clear
error”).
De novo review would be consistent with our usual
summary judgment standards. As the Second Circuit has
explained, de novo review also is consistent with FOIA’s
history and purpose:
In striking a balance between the incompatible
notions of disclosure and privacy when it
summary judgment in a FOIA case), and ACLU of Mich. v. FBI, 734 F.3d
460, 465 (6th Cir. 2013) (holding, in a FOIA case, that “[t]he propriety of
the district court’s grant of summary judgment is likewise reviewed de
novo on appeal”).
ALDF V. FDA 17
enacted FOIA in 1966, Congress
established—in the absence of one of that
law’s clearly delineated exemptions—a
general, firm philosophy of full agency
disclosure, and provided de novo review by
federal courts so that citizens and the press
could obtain agency information wrongfully
withheld. De novo review was deemed
essential to prevent courts reviewing agency
action from issuing a meaningless judicial
imprimatur on agency discretion. We are not
unmindful of the institutional pressures that
might make a more deferential standard of
review seem appealing. Yet . . . the de novo
standard is more faithful to the text, purpose,
and history of FOIA . . . .
Halpern v. FBI, 181 F.3d 279, 288 (2d Cir. 1999) (citations,
internal quotation marks, and paragraph break omitted).
Even if we assume that the sensitive nature of documents
withheld under a FOIA exemption calls for deference in some
contexts, why we defer to the district court in cases such as
this one—where the factual inquiry on which the summary
judgment turns is one that does not depend on a review of
withheld information—remains unclear. Here, the district
court found that the release of the egg-production data was
likely to cause substantial competitive harm by reviewing
declarations and testimony that went well beyond, and
depended little on, the redacted information. That review
process did not concern what the documents said; rather, it
centered on what effect their release would have because of
the kind of data involved. The district court ultimately
decided that the FDA’s declarations were more persuasive
18 ALDF V. FDA
than those submitted by Plaintiff. But the district court was
in no better position to make that determination at summary
judgment than we are on appeal. See Grand Cent. P’ship,
Inc. v. Cuomo, 166 F.3d 473, 478 n.2 (2d Cir. 1999) (holding
that, in a FOIA case where “no witnesses were heard and no
credibility findings were made,” “the district court was in no
better position to evaluate the record than” the circuit court).
In sum, if ordinary principles applied, summary judgment
would not be appropriate because the record contains a
disputed issue of material fact, and we would reverse and
remand for further proceedings. Under our current FOIA
standard, however, we must affirm. We urge our court to
take up, en banc, the appropriate standard of review in FOIA
cases.