Allen Greenberg v. Food and Drug Administration

803 F.2d 1213, 256 U.S. App. D.C. 135, 1986 U.S. App. LEXIS 32460

• Court: Court of Appeals for the D.C. Circuit
• Decided: October 28, 1986
• Docket: 84-5672
• Status: Published

Opinions

Opinion for the court filed by Senior Circuit Judge J. SKELLY WRIGHT.

Dissenting opinion filed by Circuit Judge BORK.

J. SKELLY WRIGHT, Senior Circuit Judge:

In this case we must determine whether certain documents held by the Food and Drug Administration (FDA) and the Department of Health and Human Services (HHS) are subject to the disclosure demands imposed by the Freedom of Information Act (FOIA). Appellant Allen Greenberg, a staff attorney with the Public Citizen Health Research Group, seeks to compel FDA and HHS to disclose a list of health care facilities that own certain computed axial tomography (CAT) scanners manufactured by appellee Technicare Corporation.¹ Technicare and the FDA resist disclosure of the information on the basis of FOIA Exemption 4, 5 U.S.C. § 552(b)(4) (1982), as containing confidential commercial information. The District Court granted appellees’ motion for summary judgment, holding that the list was confidential commercial information. We conclude that the District Court erred in granting summary judgment for the appellees on this record and remand the case for further proceedings.

I. Background

On February 11, 1983 Greenberg submitted a FOIA request to FDA seeking documents that would disclose the location of all Delta Scan 2005, 2010, and 2020 model CAT scanners manufactured by Technicare. These CAT scanners are extremely expensive and sophisticated x-ray machines used by many hospitals and other health care providers. Because of the dangerous nature of such machines, the FDA requires that any person who assembles, replaces, or installs one or more components into a CAT scanner submit the name and address of each facility served to the FDA. See 21 C.F.R. § 1020.30(d) (1985). Greenberg, together with the Public Citizen Health Research Group, sought the information to assist in an ongoing investigation of allegations that the scanners involved expose patients to dangerous levels of radiation. They intended to use the information to contact the hospitals directly and to gather information about the machines.

The FDA released the locations of three Technicare CAT scanners that had previously been disclosed by a newspaper article. The agency refused to disclose the remaining locations, however, claiming that the information was exempt from the demands of FOIA as confidential commercial information.² Greenberg appealed the FDA’s decision to the Assistant Secretary of HHS, who affirmed. Greenberg then filed a complaint in the United States District Court for the District of Columbia.

In his complaint Greenberg alleged that the information was not confidential commercial information and consequently was not exempt from the disclosure requirements of FOIA. He filed interrogatories on both Technicare and the FDA. After both defendants had responded to the interrogatories, Technicare moved for summary judgment. It supported its motion with several affidavits. In response Greenberg moved for a 60-day enlargement of time to conduct discovery, together with a supporting Rule 56(f) affidavit, moved to compel Technicare to answer certain contested interrogatories, and filed a second set of discovery requests.

Both Technicare and the FDA opposed the motion to extend the time for discovery. They argued that Greenberg had failed to carry his burden of demonstrating a need for further discovery under Rule 56(f). Further, they opposed'his motion to compel discovery on various grounds and moved for an extension of time to respond to the second set of discovery requests until after the District Court had ruled on whether Greenberg had carried his Rule 56(f) burden. The District Court denied Greenberg’s motion to compel discovery, granted Technicare’s motion for an extension of time to respond to the second discovery request, and directed Greenberg to respond to the summary judgment motion. Greenberg opposed the motion for summary judgment, claiming that there were several contested material issues of fact, and filed a Local Rule 1 — 9(i) statement of genuine issues. The District Court granted Technicare’s motion for summary judgment, holding that there were no material facts at issue. District Court Order filed July 30, 1984 and Memorandum filed August 2, 1985, Joint Appendix (JA) 222, 224-227. Greenberg appealed that decision to this court.

The case was argued before a panel of this court on May 16,1985. On October 25, 1985 the panel, in a 2-1 decision, affirmed the District Court’s decision. Shortly before the opinion issued, however, Judge Tamm, a member of the majority, died. Because he had concurred in the majority opinion before his death, the panel issued the opinion, together with a dissenting opinion. In light of the circumstances, appellant petitioned the court to rehear the case and to appoint a third judge to consider the petition. The court granted the petition, vacated the panel opinions, and appointed a third judge to reconsider the case. We now reverse the District Court’s grant of summary judgment and remand this case for further proceedings.

II. Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure allows either party to a litigation to move for summary judgment before trial. The purpose of summary judgment is “to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Notes of Advisory Committee on Rules — 1963 Amendments. It is hornbook law that if there is no issue of material fact, summary judgment is appropriate. Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 153, 90 S.Ct. 1598, 1606, 26 L.Ed.2d 142 (1970); First Nat’l Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-289, 88 S.Ct. 1575, 1592, 20 L.Ed.2d 569 (1968). As a threshold matter, the party moving for summary judgment bears the “initial responsibility of informing the district court of the basis for its motion,” and of identifying among the affidavits, depositions, and pleadings those elements which it believes demonstrate the lack of a genuine issue of material fact. Celotex Corp. v. Catrett, --- U.S. ---, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). This does not always require the introduction of supporting affidavits by the moving party. Id. It is only after the moving party has demonstrated the absence of any issue of material fact that the burden shifts to the party opposing the motion to demonstrate that an issue of material fact exists. Fed.R.Civ.P. 56(e); Adickes, supra, 398 U.S. at 153, 159-161, 90 S.Ct. at 1609; First Nat’l Bank, supra, 391 U.S. at 289, 88 S.Ct. at 1592; Davis v. Chevy Chase Financial Ltd., 667 F.2d 160, 172 (D.C. Cir.1981).

Moreover, because summary judgment is a drastic remedy, courts should grant it with caution so that no person will be deprived of his or her day in court to prove a disputed material factual issue. As the Supreme Court has reminded us, the non-moving party is to be given the benefit of the doubt. On a motion for summary judgment, “the inferences to be drawn from the underlying facts contained in such materials [affidavits, depositions, and exhibits] must be viewed in the light most favorable to the party opposing the motion.” United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). See also Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). If the evidence presented on a dispositive issue is subject to conflicting interpretations, or reasonable persons might differ as to its significance, summary judgment is improper. TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 450, 96 S.Ct. 2126, 2133, 48 L.Ed.2d 757 (1976). See also Nat’l Ass’n of Gov’t Employees v. Campbell, 593 F.2d 1023, 1027 (D.C. Cir.1978) (record must leave no room for controversy and must demonstrate that nonmoving party would not be entitled to prevail under any discernible circumstances); Traylor v. Black, Sivalls & Bryson, Inc., 189 F.2d 213, 216 (D.C. Cir.1951) (same). As Professor Wright has stated, “[Sjummary judgment will only be granted in clear cases.” 10A C. Weight, A. Miller & M. Kane, Federal Practice and Procedure § 2725 at 102 (1983).

III. Exemption Four

FOIA Exemption 4 protects from disclosure “commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552(b)(4). Its purpose is to protect persons who submit confidential financial or commercial data from competitive disadvantages that would result from disclosure. Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d 765, 768 (D.C. Cir.1974). Moreover, it is clear that at least in some circumstances customer lists may be considered confidential information protected by the exemption. See H.R.Rep. No. 1497, 89th Cong., 2d Sess. 10 (1966) (Exemption 4" may include “business sales statistics, inventories [and] customer lists”). The exemption, however, does not protect all financial or commercial data. Indeed, the whole purpose of FOIA is to mandate “a broad philosophy of ‘freedom of information.’ ” S.Rep. No. 813, 89th Cong., 1st Sess. 3 (1965). Exemption 4, then, only protects confidential commercial or financial information. Nat’l Parks & Conservation Ass’n, supra, 498 F.2d at 766-767. Greenberg does not contest the fact that customer lists constitute “commercial information”; rather, he argues that the lists do not constitute “confidential information.”

In order to assess whether the information is “confidential,” the court must determine whether disclosure is likely “(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.” Id. at 770 (footnote omitted).

In the present case only the latter inquiry is at issue.³ Therefore, we must determine whether there was a contested issue of fact over whether disclosure of the requested information would cause “substantial harm to the competitive position” of Technicare. Technicare supported its motion for summary judgment with several detailed affidavits. It argued that disclosure of the customer lists would cause it great competitive harm and that the lists were not available from other sources. Specifically, Technicare’s affidavits demonstrated that the market for CAT scanners is small and highly competitive. In 1983 between 600 and 650 units were sold in the United States at an average price of $1 million. Technicare’s share of this market is approximately 14 percent. Technicare also argued that the list sought by appellant was particularly sensitive because it contained the names of the owners of older, obsolete models. Those customers were most likely to be in the market for newer models. Such return business, Technicare’s affidavits stated, accounted for as much as 40 percent of its yearly business.

In addition, Technicare demonstrated that it considers the lists confidential and spends a great deal of time and money to maintain the confidentiality of the lists. Affidavit of Harry Weiss, January 20, 1984, at 5-7, JA 74-76. Within the company only those upper-level employees with a need to know have access to the lists. Further, the company requires its employees to sign an employment agreement binding them not to reveal any of Technicare’s confidential information. Technicare established that its competitors also consider their customer lists to be confidential. Id. at 9, JA 78. Although it acknowledged that a partial list could be constructed through other means, such a task, according to Technicare, would be prohibitively expensive.

From this evidence the District Court concluded that Technicare had carried its burden of establishing the absence of any disputed issue as to whether the contested information was confidential. Thus the court concluded that the burden shifted to appellant to come forward with evidentiary affidavits showing the existence of a genuine issue of material fact, see First Nat’l Bank of Arizona v. Cities Service Co., supra, 391 U.S. at 288-289, 88 S.Ct. at 1591-92; Smith v. Saxbe, 562 F.2d 729, 733-734 (D.C. Cir.1977), or to demonstrate that he was entitled to conduct further discovery pursuant to Rule 56(f).⁴ Because the District Court concluded that appellant had failed to carry this burden of production, the court granted Technicare’s motion for summary judgment.

Assuming arguendo that Technicare carried its initial burden of demonstrating the absence of any material issue of fact, we nonetheless conclude that the District Court erred in finding that appellant had failed to rebut such a showing. Appellant’s evidence put at least two material issues in dispute.

First, appellant’s evidence indicated that potential CAT scanner purchasers compare different manufacturers’ products before making a purchase decision. See Affidavit of Jack I. Eisenman, July 17, 1984, JA 216-218; Affidavit of Thomas N. Young, July 18, 1984, JA 219-221. Indeed, given Technicare’s other evidence, it stands common sense on its head to suggest that these very expensive machines are purchased without a comparison of different manufacturers’ products. Yet if such a practice is common, disclosure may have no effect whatever on Technicare’s repeat sales. It could be, for example, that the repeat sales are generally due to the customers’ favorable experience with the product or with the servicing of the product or due to more favorable terms that they receive from Technicare when they do repeat business with it. Technicare simply introduced no evidence to demonstrate that customer confidentiality, not comparative shopping, underpins its commercial success.⁵ Thus whether disclosure is likely to result in substantial harm is clearly a disputed and material fact.

Second, Greenberg’s affidavits place in dispute the issue whether the information is available by other means. In Worthington Compressors, Inc. v. Costle, 662 F.2d 45, 51 (D.C. Cir.1981), we held that when the requested information is available at some cost from an additional source, the court must analyze “(1) the commercial value of the requested information, and (2) the cost of acquiring the information through other means.” (Emphasis in original.) In that case we held that summary judgment was inappropriate because there was a dispute as to the cost of gaining the sought-after information by “reverse engineering” the product in question. Similarly here, where the cost and availability of the information from alternative sources is contested, summary judgment is inappropriate. See Continental Stock Transfer & Trust Co. v. SEC, 566 F.2d 373, 375 (2d Cir.1977) (summary judgment inappropriate where “confidential information” publicly available).

Appellant’s evidence suggested that a customer list could be reconstructed through one of several methods. See Affidavit of Sidney M. Wolfe, July 23, 1984, at 3-4, JA 212-213 (“It is a relatively easy matter to obtain from publicly available sources a complete list of radiologists in a given area and to ascertain rather quickly whether each of them now has and/or is interested in acquiring a CT scanner. As for the remaining users * * *, it would be only slightly more difficult * * *.”). Indeed, appellant noted that he has already obtained from the FDA a list of all CAT scanners ever installed by all manufacturers. See Affidavit of Allen Greenberg, July 23, 1984, at 7-8, JA 181-182. Although such a list obviously differs from the one sought by appellant, when combined with other publicly available information such a list might well provide a close facsimile of the disputed customer list. See Affidavit of Sidney M. Wolfe, supra, at 2, JA 211 (at least 33 states collect such information and would release it upon demand); id. at 3-4, JA 212-213 (complete list of radiologists publicly available). In our view such a showing is enough to rebut Technicare’s summary judgment motion and to allow appellant an opportunity to prove the availability of the information through other means.

Given these factual disputes, we conclude that appellant introduced evidence that placed material issues of fact in dispute. As a result, appellant carried his burden of proof and summary judgment was improper.

IV. Local Rule 1 — 9(i)

Technicare also argues that summary judgment was appropriate because appellant failed to file an adequate Local Rule l-9(i) statement in response to appellees’ motion for summary judgment.⁶ Appellant, in turn, charges Technicare with failing to file a proper Rule 1 — 9(i) statement and claims that his own inability to cite more specific contested factual issues stems from Technicare’s failure to comply with the rule.

The purpose of Local Rule 1 — 9(i) is to isolate “the facts that the parties assert are material, [to] distinguish^ ] disputed from undisputed facts, and [to] identif[y] the pertinent parts of the record.” Gardels v. CIA, 637 F.2d 770, 773 (D.C. Cir.1980). Although this court has held that failure to file a proper Rule 1 — 9(i) statement may be fatal to a party opposing summary judgment, see, e.g., Thompson v. Evening Star Newspaper Co., 394 F.2d 774, 777 (D.C. Cir.), cert. denied, 393 U.S. 884, 89 S.Ct. 194, 21 L.Ed.2d 160 (1968), that determination turns upon a fact-specific evaluation of the statement at issue.

An analysis of appellant’s statement, however, demonstrates that it was proper. Appellant has made plain which facts he disputes and directed the court’s attention to those portions of the record that support his contentions. Clearly his statement was sufficient to put both the parties and the court on notice of the facts that he contested.

The present case is a far cry from Tarpley v. Green, 684 F.2d 1 (D.C. Cir.1982), in which the party opposing summary judgment failed to controvert any of the moving party’s specific denials and failed to cite any record evidence. Rather, the party relied upon the complaint itself. Similarly, the nonmoving party in Gardels v. CIA, supra, failed to refer to the particular facts that he contested. 637 F.2d at 773. Finally, Thompson v. Evening Star Newspaper Co., supra, involved the failure of the party opposing summary judgment to submit any counter-affidavits at all. Rather, the party relied upon the allegations of the amended complaint and, by reference, of his own deposition. 394 F.2d at 777 n. 9. See also NRM Corp. v. Hercules Inc., 758 F.2d 676, 680-681 (D.C. Cir.1985) (summary judgment proper where no mention of issue or of evidence presented to District Court). Cf. Smith v. Saxbe, 562 F.2d 729, 733-734 (D.C. Cir.1977) (summary judgment appropriate where nonmoving party merely relied upon his bare complaint to create issue). In all of these cases summary judgment was proper because the party’s Rule 1 — 9(i) statement failed to put the court on notice as to which facts were contested and what record evidence supported that claim. By contrast, in the present case appellant clearly stated that he contested whether disclosure would result in substantial competitive harm. Moreover, his Rule 1 — 9(i) statement identified the affidavits in the record that supported his view.⁷ Consequently, we hold that appellant’s Rule 1-9(i) statement, while not a model of particularity, satisfied the demands of that rule.

V. Conclusion

Summary judgment is a drastic step which should not be taken lightly. Although useful as a device to resolve cases involving undisputed factual circumstances, courts should be careful not to use the device to resolve factual disputes themselves. Even in this day of crowded court dockets, every litigant with a well-pleaded complaint and contested material issues of fact deserves his or her day in court. Because we find that appellant carried his burden of production by demonstrating several outstanding material issues of fact, we reverse the grant of summary judgment and remand this case for further proceedings.

Reversed and remanded.

1 . Technicare, in addition to FDA and HHS, is a party to this action pursuant to 21 C.F.R. § 20.53 (1985). Under that regulation, when a challenge is made to an FDA decision to deny a FOIA request under Exemption 4, the party who submitted the information to the agency is required to defend the exempt status of the information or the agency will consider the claim waived.

2 . Because the agency considered such information exempt from FOIA, it noted that it "generally does not create records such as the list at issue * * *. In this case, the document was generated in response to plaintiffs FOIA request." Declaration of Edwin Miller, Jan. 23, 1984, at 3, Joint Appendix (JA) 40.

3 . FDA regulations require that the information in question be filed with the agency. 21 C.F.R. § 1020.30(d) (1985). The first factor is consequently not at issue in this case.

4 . Appellant challenges the District Court’s ruling requiring him to respond to the motion for summary judgment before completing discovery. In appellant’s view, he had carried his burden under Rule 56(f) by submitting an affidavit explaining that he could not adequately support his opposition to the motion for summary judgment without further discovery. Appellant argues that in such circumstances, where the facts are within the exclusive control of the party moving for summary judgment, a trial court should allow the nonmoving party an opportunity to complete relevant discovery in order to respond to the summary judgment motion. Appellant argues that the District Court erred in denying him such additional discovery. Because we conclude that appellant carried his burden of opposing the motion for summary judgment, we do not reach the issue whether the denial of additional discovery was appropriate.

5 . Moreover, given Technicare’s own evidence of a highly competitive market, the court is clearly warranted in presuming that product competition, rather than market imperfections, primarily influences such economic decisions. Therefore, the burden is on Technicare to demonstrate that imperfect information, rather than product competition, is the cause of its commercial success.

6 . Rule l-9(i) provides that a party moving for summary judgment must submit a concise statement of material facts as to which there is no dispute. In addition, the party opposing the motion must submit a concise statement of genuine material issues. United States District Court Rules — District of Columbia, Rule 1 — 9(i) (1983).

7 . Although the court in Gardels held that wholesale incorporation of affidavits in Rule 1-9(i) statements was impermissible, the statement involved in that case failed to mention the specific facts controverted by the party. See 637 F.2d at 773 (purposes of the rule not met when one party “fails in his statement to specify the material facts upon which he relies and merely incorporates entire affidavits and other materials without reference to the particular facts recited therein” (emphasis added)). Moreover, even if we were to read Gardels to bar incorporation of affidavits in Rule 1 — 9(i) statements, it would be patently unfair to apply such a rule to the facts of this case. Greenberg not only objected to Technicare’s statement, see text at p. 1218 supra, but also stated that if the court should disagree with him he would "provide a detailed response, with specific references to his affidavits.” Plaintiffs Statement of Genuine Issues at 2, JA 174. Whether or not Greenberg was correct in his objections to Technicare’s statement, he certainly was entitled to obtain a ruling on the issue before responding to that statement.