1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 10 AMERICAN SMALL BUSINESS LEAGUE, No. C 18-01979 WHA 11 Plaintiff, 12 v. 13 UNITED STATES DEPARTMENT OF ORDER ON MOTION TO 14 DEFENSE and UNITED STATES CONTINUE HEARING ON DEPARTMENT OF JUSTICE, DEFENDANTS’ MOTION FOR 15 SUMMARY JUDGMENT Defendants, UNDER RULE 56(D) 16 and 17 LOCKHEED MARTIN CORPORATION, 18 Defendant-Intervenor. 19 / 20 In this FOIA action, defendants United States Department of Defense and Department of 21 Justice and defendant-intervenor Lockheed Martin Corporation (collectively, “defendants”) 22 jointly move for summary judgment on the issue of whether the information they seek to 23 withhold is “confidential” within the meaning of Exemption 4 (Dkt. No. 107). Plaintiff 24 American Small Business League opposes the summary judgment motion and separately moves 25 under Rule 56(d) for a continuance of a ruling on defendants’ motion for summary judgment 26 (Dkt. No. 114). This order follows full briefing. Pursuant to Civil Local Rule 7-1(b), this order 27 finds plaintiff’s motion under Rule 56(d) suitable for submission without oral argument and 28 hereby VACATES the hearing scheduled for September 18. 1 A prior order dated March 8 on the parties’ earlier cross-motions for summary judgment 2 has set forth the detailed background of this action (Dkt. No. 58). In brief, plaintiff, a non-profit 3 organization that promotes the interests of small businesses, seeks the disclosure of various 4 documents related to (as relevant here) Lockheed Martin, Sikorsky Aircraft Corporation, and 5 GE Aviation’s involvement with the Department of Defense’s Comprehensive Subcontracting 6 Plan Test Program (see Dkt. No. 20 ¶ 21). Defendants argue that the information plaintiff seeks 7 is exempt from disclosure under Exemption 4 — which, as relevant here, protects from 8 disclosure “trade secrets and commercial or financial information obtained from a person and 9 privileged or confidential.” 5 U.S.C. § 552(b)(4). The prior order on the parties’ cross-motions 10 for summary judgment found that issues of fact regarding whether disclosure would cause 11 competitive harm precluded both parties’ cross-motions for summary judgment on the 12 Exemption 4 issue (Dkt. No. 58 at 9–11). 13 On June 24, the Supreme Court in Food Marketing Institute v. Argus Leader Media, 139 14 S. Ct. 2356 (2019), altered the Exemption 4 standard. The Supreme Court rejected the 15 “competitive harm” test adopted by our court of appeals (among many appellate courts) and 16 held that “[a]t least where commercial or financial information is both customarily and actually 17 treated as private by its owner and provided to the government under an assurance of privacy, 18 the information is ‘confidential’ within the meaning of Exemption 4.” Id. at 2366. 19 In light of Food Marketing, defendants again move for summary judgment on the 20 Exemption 4 issue, and plaintiff seeks discovery under Rule 56(d) and a continuance of the 21 hearing on defendants’ motion. Defendants oppose plaintiff’s Rule 56(d) motion, describing 22 the request as a “fishing expedition” (Dkt. No. 123 at 1). They accuse plaintiff of seeking 23 discovery based on a “speculative, unsupported belief that the declarants are not being truthful” 24 (ibid.). Notwithstanding plaintiff’s overheated rhetoric, however, this order agrees that 25 discovery is warranted here. 26 Rule 56(d) (formerly Rule 56(f)) provides that “[i]f a nonmovant shows by affidavit or 27 declaration that, for specified reasons, it cannot present facts essential to justify its opposition, 28 the court may . . . allow time to obtain affidavits or declarations or to take discovery.” Fed. R. 1 Civ. P. 56(d). Rule 56(d) requires a party to “specifically identify relevant information, and 2 where there is some basis for believing that the information sought actually exists.” Church of 3 Scientology of San Francisco v. I.R.S., 991 F.2d 560, 563 (9th Cir. 1993), vacated in part on 4 other grounds, 30 F.3d 101 (9th Cir. 1994) (directing the district court to, inter alia, “provide 5 the plaintiffs . . . reasonable opportunity to conduct discovery relevant to applicability of the 6 FOIA exemptions” under Rule 56(f)). “In general, a denial of a Rule 56[(d)] application is 7 disfavored where the party opposing summary judgment makes a timely application which 8 specifically identifies relevant information, and where there is some basis for believing that the 9 information sought actually exists.” Id. at 562. 10 Relevant to defendants’ motion for summary judgment, defendants must show, at a 11 minimum, that the relevant companies customarily and actually treated as private all of the 12 information at issue to prevail on the Exemption 4 issue. Food Marketing, 139 S. Ct. at 2363. 13 In support, defendants filed numerous declarations by various declarants who testified that the 14 relevant companies customarily and actually kept said information private and disclosed the 15 information to the government under the assurances of privacy. Plaintiff seeks to depose those 16 declarants.* 17 Defendants make much of their assertions that discovery in FOIA litigation is typically 18 limited; that the government’s burden of demonstrating the application of an exemption is met 19 where the agency submits declarations that “contain reasonably detailed descriptions of the 20 documents and allege facts sufficient to establish an exemption,” Lane v. Dept. of Interior, 523 21 F.3d 1128, 1135–36 (9th Cir. 2008) (quoting Lewis v. IRS, 823 F.2d 375, 378 (9th Cir. 1987)); 22 and that declarations submitted by an agency “are presumed to be in good faith,” Hamdan v. 23 U.S. Dep’t of Justice, 797 F.3d 759, 772 (9th Cir. 2015) (Dkt. No. 123 at 2). In other words, 24 25 * Specifically, plaintiff seeks the following discovery (Dkt. No. 114 at 4–5): 26 ASBL noticed (and subpoenaed, in the case of Ms. Buffler) depositions of: (1) Susannah Raheb (an LMC employee and declarant); (2) Janice Buffler (a former DOD employee 27 and declarant); (3) Martha Crawford (a Sikorsky employee and declarant); (4) Maureen Schumann (an LMC PR employee); (5) William Phelps (an LMC PR employee); (6) a 28 Person Most Qualified from LMC pursuant to Rule (30)(b)(6); and (7) a Person Most Qualified from DOD pursuant to Rule (30)(b)(6) [sic]. 1 defendants argue that discovery in FOIA litigation “is never justified absent a demonstration by 2 the moving party that the sworn declarations submitted in support of the other side’s motion for 3 summary judgment are lacking in good faith or otherwise not trustworthy” (id. at 4). 4 Even assuming these standards apply, plaintiff has met them. Take, for example, the 5 declaration of Susannah L. Raheb, Lockheed Martin’s Senior Manager for Supplier Diversity 6 and Regulatory Compliance. Raheb states that Lockheed Martin keeps compliance reports 7 (such as the 640 audits), which “detail[] all aspects of the [Lockheed Martin] Supplier Diversity 8 program, initiatives, performance to goals, strategic supplier partnerships, success stories of 9 supplier contract awards, etc.,” private (Dkt. No. 107-5 ¶ 49). But then she later waffles, further 10 stating that (id.
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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 10 AMERICAN SMALL BUSINESS LEAGUE, No. C 18-01979 WHA 11 Plaintiff, 12 v. 13 UNITED STATES DEPARTMENT OF ORDER ON MOTION TO 14 DEFENSE and UNITED STATES CONTINUE HEARING ON DEPARTMENT OF JUSTICE, DEFENDANTS’ MOTION FOR 15 SUMMARY JUDGMENT Defendants, UNDER RULE 56(D) 16 and 17 LOCKHEED MARTIN CORPORATION, 18 Defendant-Intervenor. 19 / 20 In this FOIA action, defendants United States Department of Defense and Department of 21 Justice and defendant-intervenor Lockheed Martin Corporation (collectively, “defendants”) 22 jointly move for summary judgment on the issue of whether the information they seek to 23 withhold is “confidential” within the meaning of Exemption 4 (Dkt. No. 107). Plaintiff 24 American Small Business League opposes the summary judgment motion and separately moves 25 under Rule 56(d) for a continuance of a ruling on defendants’ motion for summary judgment 26 (Dkt. No. 114). This order follows full briefing. Pursuant to Civil Local Rule 7-1(b), this order 27 finds plaintiff’s motion under Rule 56(d) suitable for submission without oral argument and 28 hereby VACATES the hearing scheduled for September 18. 1 A prior order dated March 8 on the parties’ earlier cross-motions for summary judgment 2 has set forth the detailed background of this action (Dkt. No. 58). In brief, plaintiff, a non-profit 3 organization that promotes the interests of small businesses, seeks the disclosure of various 4 documents related to (as relevant here) Lockheed Martin, Sikorsky Aircraft Corporation, and 5 GE Aviation’s involvement with the Department of Defense’s Comprehensive Subcontracting 6 Plan Test Program (see Dkt. No. 20 ¶ 21). Defendants argue that the information plaintiff seeks 7 is exempt from disclosure under Exemption 4 — which, as relevant here, protects from 8 disclosure “trade secrets and commercial or financial information obtained from a person and 9 privileged or confidential.” 5 U.S.C. § 552(b)(4). The prior order on the parties’ cross-motions 10 for summary judgment found that issues of fact regarding whether disclosure would cause 11 competitive harm precluded both parties’ cross-motions for summary judgment on the 12 Exemption 4 issue (Dkt. No. 58 at 9–11). 13 On June 24, the Supreme Court in Food Marketing Institute v. Argus Leader Media, 139 14 S. Ct. 2356 (2019), altered the Exemption 4 standard. The Supreme Court rejected the 15 “competitive harm” test adopted by our court of appeals (among many appellate courts) and 16 held that “[a]t least where commercial or financial information is both customarily and actually 17 treated as private by its owner and provided to the government under an assurance of privacy, 18 the information is ‘confidential’ within the meaning of Exemption 4.” Id. at 2366. 19 In light of Food Marketing, defendants again move for summary judgment on the 20 Exemption 4 issue, and plaintiff seeks discovery under Rule 56(d) and a continuance of the 21 hearing on defendants’ motion. Defendants oppose plaintiff’s Rule 56(d) motion, describing 22 the request as a “fishing expedition” (Dkt. No. 123 at 1). They accuse plaintiff of seeking 23 discovery based on a “speculative, unsupported belief that the declarants are not being truthful” 24 (ibid.). Notwithstanding plaintiff’s overheated rhetoric, however, this order agrees that 25 discovery is warranted here. 26 Rule 56(d) (formerly Rule 56(f)) provides that “[i]f a nonmovant shows by affidavit or 27 declaration that, for specified reasons, it cannot present facts essential to justify its opposition, 28 the court may . . . allow time to obtain affidavits or declarations or to take discovery.” Fed. R. 1 Civ. P. 56(d). Rule 56(d) requires a party to “specifically identify relevant information, and 2 where there is some basis for believing that the information sought actually exists.” Church of 3 Scientology of San Francisco v. I.R.S., 991 F.2d 560, 563 (9th Cir. 1993), vacated in part on 4 other grounds, 30 F.3d 101 (9th Cir. 1994) (directing the district court to, inter alia, “provide 5 the plaintiffs . . . reasonable opportunity to conduct discovery relevant to applicability of the 6 FOIA exemptions” under Rule 56(f)). “In general, a denial of a Rule 56[(d)] application is 7 disfavored where the party opposing summary judgment makes a timely application which 8 specifically identifies relevant information, and where there is some basis for believing that the 9 information sought actually exists.” Id. at 562. 10 Relevant to defendants’ motion for summary judgment, defendants must show, at a 11 minimum, that the relevant companies customarily and actually treated as private all of the 12 information at issue to prevail on the Exemption 4 issue. Food Marketing, 139 S. Ct. at 2363. 13 In support, defendants filed numerous declarations by various declarants who testified that the 14 relevant companies customarily and actually kept said information private and disclosed the 15 information to the government under the assurances of privacy. Plaintiff seeks to depose those 16 declarants.* 17 Defendants make much of their assertions that discovery in FOIA litigation is typically 18 limited; that the government’s burden of demonstrating the application of an exemption is met 19 where the agency submits declarations that “contain reasonably detailed descriptions of the 20 documents and allege facts sufficient to establish an exemption,” Lane v. Dept. of Interior, 523 21 F.3d 1128, 1135–36 (9th Cir. 2008) (quoting Lewis v. IRS, 823 F.2d 375, 378 (9th Cir. 1987)); 22 and that declarations submitted by an agency “are presumed to be in good faith,” Hamdan v. 23 U.S. Dep’t of Justice, 797 F.3d 759, 772 (9th Cir. 2015) (Dkt. No. 123 at 2). In other words, 24 25 * Specifically, plaintiff seeks the following discovery (Dkt. No. 114 at 4–5): 26 ASBL noticed (and subpoenaed, in the case of Ms. Buffler) depositions of: (1) Susannah Raheb (an LMC employee and declarant); (2) Janice Buffler (a former DOD employee 27 and declarant); (3) Martha Crawford (a Sikorsky employee and declarant); (4) Maureen Schumann (an LMC PR employee); (5) William Phelps (an LMC PR employee); (6) a 28 Person Most Qualified from LMC pursuant to Rule (30)(b)(6); and (7) a Person Most Qualified from DOD pursuant to Rule (30)(b)(6) [sic]. 1 defendants argue that discovery in FOIA litigation “is never justified absent a demonstration by 2 the moving party that the sworn declarations submitted in support of the other side’s motion for 3 summary judgment are lacking in good faith or otherwise not trustworthy” (id. at 4). 4 Even assuming these standards apply, plaintiff has met them. Take, for example, the 5 declaration of Susannah L. Raheb, Lockheed Martin’s Senior Manager for Supplier Diversity 6 and Regulatory Compliance. Raheb states that Lockheed Martin keeps compliance reports 7 (such as the 640 audits), which “detail[] all aspects of the [Lockheed Martin] Supplier Diversity 8 program, initiatives, performance to goals, strategic supplier partnerships, success stories of 9 supplier contract awards, etc.,” private (Dkt. No. 107-5 ¶ 49). But then she later waffles, further 10 stating that (id. ¶ 50 (emphasis added)): 11 On occasion, where LMC receives a positive performance evaluation, LMC may choose to publicize certain limited details of such evaluation to tout its 12 success in an attempt to attract more small businesses with which to subcontract. These decisions are made on a case-by-case basis, however, 13 and LMC’s decision in a particular instance to waive the confidentiality of a positive adjectival rating contained within a performance evaluation does 14 not change the confidential nature of performance evaluations generally, which LMC does not make public. 15 That is, when it made Lockheed Martin look good, the company issued press releases 16 “recogniz[ing] . . . small business suppliers that made exemplary contributions” to its products 17 and services (e.g., Dkt. No. 113-1 at 1). Those press releases included both the names of the 18 small business suppliers and Lockheed Martin’s performance rating for that year (e.g., id. at 1–2 19 (“The company was recognized with the Defense Contract Management Agency’s highest 20 possible rating for its 2017 performance and commitment to a diverse and inclusive supplier 21 base.”)). 22 As plaintiffs point out, Lockheed Martin’s selective disclosure of supposed confidential 23 information (i.e., supplier names, performance to goals, strategic supplier partnerships, success 24 stories of supplier contract awards) undercuts its vague contention that the company 25 “customarily” treats said information as confidential (Dkt. Nos. 114-1 ¶ 2a; 125 at 7). The 26 trustworthiness of the Raheb declaration is further chipped away by her statement in the next 27 breath that Lockheed Martin customarily keeps purchase orders, including supplier names 28 (among other things), private “because it could be used by competitors to target and award work 1 || to [Lockheed Martin] suppliers, thereby making them unavailable, or less available, to work on” its contracts (Dkt. No. 107-5 9] 51-53). In other words, according to Raheb, Lockheed Martin simultaneously keeps private its supplier names to protect against poaching and freely discloses 4}| its “exemplary” suppliers to attract more suppliers. These explanations do not square. Vague 5 || statements and discrepancies such as these sufficiently demonstrate that certain limited 6|| discovery is warranted under Rule 56(d). 7 Accordingly, plaintiffs motion is GRANTED to the following extent. Plaintiff may take 8 || up to THREE DEPOSITIONS. Plaintiff must file a supplemental brief in connection with defendants’ motion for summary judgment by OCTOBER 18 AT NOON. Defendants may file a 10 || response by OCTOBER 25 AT NOON. Both sides’ briefs shall be limited to FIVE PAGES and all 11 || attachments, exhibits, and declarations shall be limited to FIFTY PAGES. Defendants’ motion for 12 || summary judgment on the Exemption 4 issue is HELD IN ABEYANCE pending discovery and will 3 13 | be heard on NOVEMBER 14 AT 8 A.M. 14 a IT IS SO ORDERED. 5 15 Dated: September 15, 2019. wit at sce 17 UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28