Wickwire Gavin, P.C. v. U.S. Postal Service

356 F.3d 588

WICKWIRE GAVIN, P.C., Plaintiff-Appellant, v. UNITED STATES POSTAL SERVICE, Defendant-Appellee.

No. 02-2310.

United States Court of Appeals, Fourth Circuit.

January 30, 2004.

Argued: September 25, 2003.

Decided: January 30, 2004.

Appeal from the United States District Court for the Eastern District of Virginia, James C. Cacheris, Senior District Judge.

ARGUED:

David P. Hendel, Wickwire Gavin, P.C., Vienna, Virginia, for Appellant. Steven E. Gordon, Assistant United States Attorney, Alexandria, Virginia, for Appellee.

ON BRIEF:

Stephanie M. Himel-Nelson, Wickwire Gavin, P.C., Vienna, Virginia, for Appellant. Paul J. McNulty, United States Attorney, Alexandria, Virginia, for Appellee.

Before WILKINSON, TRAXLER and GREGORY, Circuit Judges.

Affirmed by published opinion. Judge GREGORY wrote the opinion in which Judge WILKINSON joined. Judge TRAXLER wrote a separate concurring opinion.

OPINION

GREGORY, Circuit Judge:

Wickwire Gavin, P.C., ("WG") serves as counsel for T & S Products, Inc. ("T & S"), a former supplier of packing supplies to the United States Postal Service ("USPS" or "Postal Service"). In 2000, T & S lost its bid to supply packaging materials to the Postal Service. Thereafter, WG represented T & S in an unsuccessful bid protest action. See T & S Prods. Inc. v. United States, 48 Fed.Cl. 100 (2000). On July 3, 2001, WG submitted a request pursuant to the Freedom of Information Act ("FOIA") seeking USPS's contract with Hallmark Cards, Inc., whose former subsidiary was the successful bidder for the packaging contract, as well as other documents related to purchases under the contract. USPS produced the contract and other responsive documents, but citing exceptions to FOIA, USPS withheld thirteen pages of spreadsheets detailing quantity and pricing information. WG initiated a challenge in federal court to USPS's with-holding. On cross-motions for summary judgment, the district court held that USPS properly invoked FOIA Exemptions 3 and 4 in withholding the spreadsheets. For the reasons stated below, we affirm.

I.

In the bidding process through which T & S unsuccessfully bid to become USPS's exclusive provider of mailing supplies, USPS chose the Ensemble Company (hereinafter "Hallmark"), a former subsidiary of Hallmark Cards, Inc., which Hallmark has now fully absorbed, to be the exclusive provider. As noted above, WG then represented T & S in an unsuccessful bid protest action following USPS's decision to award the contract to Hallmark. See T & S Prods., Inc. v. United States, 48 Fed. Cl. 100 (2000).

On July 3, 2001, WG submitted a FOIA request seeking a copy of USPS's contract with Hallmark and other documents related to the sales and revenue generated under the contract.¹ USPS provided documents responsive to the first three requests on August 1, 2001, and forwarded the other two requests to another internal department. On August 29, 2001, USPS denied access to items four and five, citing 39 C.F.R. §§ 265.6(b)(3), 265.6(b)(5). On November 26, 2001, USPS denied WG's administrative appeal.

Thereafter, WG filed a complaint in federal court, seeking review of USPS's partial denial of the FOIA request. The withheld information at issue is redacted from thirteen pages of spreadsheets relating to USPS's Ready Post Initiative ("RPI"), a program through which Hallmark is the exclusive supplier of packaging products to USPS for sale at its facilities.² The spreadsheets concern purchase information pursuant to the Hallmark/USPS contract. Specifically, they include income statements under the RPI and list item retail value of the products shipped. Through the RPI, postal consumers can purchase packing materials and arrange for shipment at one location. Thus, USPS's services are directly pitted against competitors such as Mail Boxes Etc., UPS, and other all-in-one outlets.

USPS and WG both filed motions for summary judgment. The district court denied the parties' cross-motions for summary judgment pending completion of discovery. Thereafter, the parties renewed their motions for summary judgment, and both parties submitted affidavit testimony and other evidence relevant to the data in question.

After in camera review of the withheld documents, the district court granted summary judgment for USPS. The district court held USPS properly withheld the data pursuant to FOIA Exemptions 3 and 4, 5 U.S.C. §§ 552(b)(3), 552(b)(4).³ First, the court found Exemption 3 applicable because the Postal Reorganization Act, 39 U.S.C. § 410(c)(2), contains an exception to the FOIA disclosure requirement whereby the postal service is not required to disclose "information of a commercial nature, including trade secrets, whether or not obtained from a person outside the Postal Service, which under good business practice would not be publicly disclosed." Dist. Ct. Op. at 8 (quoting 39 U.S.C. § 410(c)(2)) (J.A. 697.) This provision comports with Congress's overall purposes in passing the Postal Reorganization Act, which include assuring that USPS "be run more like a business than had its predecessor, the Post Office Department." Franchise Tax Bd. of Cal. v. United States Postal Serv., 467 U.S. 512, 520, 104 S.Ct. 2549, 81 L.Ed.2d 446 (1984); see also Nat'l Ass'n of Greeting Card Publishers v. United States Postal Serv., 462 U.S. 810, 822, 103 S.Ct. 2717, 77 L.Ed.2d 195 (1983) (noting that under the Act "Congress sought to ensure that the Postal Service would be managed in a businesslike way") (internal quotation marks and citation omitted).⁴ Based on USPS's showing that other companies do not disclose such data, the district court held that Exemption 3 was applicable. Dist. Ct. Op. at 17-18 (J.A. 706-07.)

The district court also held that Exemption 4, § 552(b)(4), which protects privileged or confidential trade secrets or other commercial or financial information, was applicable.⁵ The district court reasoned that the contested data was "privileged or confidential" because disclosure would "hamper [USPS's] ability to obtain similar information from other private companies, and would likely also harm Hallmark's competitive position." Dist. Ct. Op. at 21 (J.A. 710.)

II.

We review the district court's decision granting summary judgment de novo. Marshall v. Cuomo, 192 F.3d 473, 478 (4th Cir.1999). FOIA cases are generally resolved on summary judgment once the documents at issue have been properly identified. See, e.g., Miscavige v. IRS, 2 F.3d 366, 369 (11th Cir.1993). FOIA places the burden on the government agency to sustain its action to withhold information under any of the FOIA Exemptions. 5 U.S.C. § 552(a)(4)(B). In reviewing a district court's grant of summary judgment in favor of the government in a FOIA action, we must determine de novo whether, after taking the evidence in the light most favorable to the nonmovant, there remains no genuine issue of material fact and the government is entitled to judgment as a matter of law. Ethyl Corp. v. EPA, 25 F.3d 1241, 1246 (4th Cir.1994). We review factual conclusions that place a document within a FOIA exemption under a clearly erroneous standard. Id. Whether a document fits within one of FOIA's prescribed exemptions is a matter of law, upon which the district court is entitled to no deference. Id. Finally, we narrowly construe the FOIA exemptions in favor of disclosure. See J.P. Stevens Co. v. Perry, 710 F.2d 136, 139 (4th Cir.1983).

III.

Appellant WG first argues that the contested spreadsheet data is not governed by FOIA Exemption 3. WG contends that the district court erred in failing to include an "additional implied requirement of competitive harm" in applying Exemption 3, and generally overstated the scope of the Exemption.

Congress enacted FOIA, 5 U.S.C. § 552, to permit a "policy of broad disclosure of Government documents in order to ensure `an informed citizenry, vital to the functioning of a democratic society.'" FBI v. Abramson, 456 U.S. 615, 621, 102 S.Ct. 2054, 72 L.Ed.2d 376 (1982) (citations omitted); see also Bowers v. United States Dep't of Justice, 930 F.2d 350, 353 (4th Cir.1991) ("FOIA was enacted as a general disclosure statute pertaining to all federal records."). In enacting the statute, Congress also recognized that "legitimate governmental and private interests could be harmed by release of certain types of information." Id. Accordingly, Congress crafted nine exemptions to FOIA. 5 U.S.C. § 552(b).

Exemption 3 provides that FOIA does not apply to matters that are "specifically exempted from disclosure by statute ... provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld. ..." 5 U.S.C. § 552(b)(3) (emphasis added). USPS contends, and the district court held, that the Postal Reorganization Act, 39 U.S.C. § 410(c)(2), satisfies the second requirement of Exemption 3. Section 410(c)(2) of the Postal Reorganization Act provides that under various statutes, including FOIA, USPS may withhold "information of a commercial nature, including trade secrets, whether or not obtained from a person outside the Postal Service, which under good business practice would not be disclosed." 39 U.S.C. § 410(c)(2) (emphasis added).⁶

In reviewing the district court's holding that the "good business practice" exception applied to the spreadsheets, we first recognize that facially there would appear to be some tension between the Postal Reorganization Act and FOIA generally. On one hand, Congress established USPS "intend[ing] that it should operate more like a private business than a governmental agency." National Western, 512 F.Supp. at 462; see also Loeffler v. Frank, 486 U.S. 549, 556, 108 S.Ct. 1965, 100 L.Ed.2d 549 (1988) (noting that Congress designed the Postal Service to run more like a business than had its predecessor). On the other hand, through FOIA, the ...