CARLO BIANCHI & CO., INC. ENG. BCA NO. 3243 (1973) supra p. 712 SECTION 8. FREEDOM OF INFORMATION ACT WESTINGHOUSE ELECTRIC CORPORATION V. SCHLESINGER, et al. USDC, ED Va. No. 118-74-A (1974) MEMORANDUM OPINION This is an action brought by a corporation (Westinghouse) and its subsidiary (Fraser & Johnston) to prevent threatened disclosure of certain documents which those, entities have filed with governmental agencies. The documents are an Employer Information Report (EEO-1) filed by a Westinghouse facility in East Pittsburg, Pennsylvania, and an Affirmative Action Program (AAP) filed by Fraser & Johnston with the Defense Supply Agency or the Office of Federal Contract Compliance (OFCC) or a Joint Reporting Committee. The EEO-1 is required to be filed by 41 CFR § 60-1.7 and the AAP is required to be developed by 41 CFR § 60-1.40. These regulations were promulgated by the Secretary of Labor pursuant to Executive Orders 11246 and 11375 and relate to the "promotion and insuring of equal opportunities for all persons, without regard to race, color, religion, sex, or national origin, employed or seeking employment with Government contractors. " 41 CFR § 60-1.1. rigi The Hill House Association (Hill), on October 17, 1973, requested the release of the latest EEO-1 form filed by the Westinghouse facility. Earlier the Legal Aid Society of Alameda County (Alameda) had requested release of Fraser & Johnston's 1972 AAP. The recipients of the requests in each instance notified Westinghouse and Fraser & Johnston of the requests. These companies objected to the releases and after an exchange of correspondence and meetings between the companies and the agencies, the later determined on November 30, 1973, to release the AAP of Fraser & Johnston and on February 13, 1974, to release the EEO-1 of Westinghouse. This action was filed on March 6, 1974. By agreement of the parties, a temporary restraining order was entered on March 8, 1974, and the case was set forth for hearing of the application for a preliminary injunction on March 27, 1974, the Court also advancing the trial of the action on the merits to that date and consolidating it with the hearing on the application. The case was tried on March 27, 1974 as scheduled, Alameda and Hill having in the meantime moved to intervene as parties de fendant. The other parties consented to the intervention and the intervenors participated in the trial. Initially the defendants contest the jurisdiction of the Court. While numerous grounds of jurisdiction are asserted by the plaintiffs, the Court finds that jurisdiction exists under 28 U.S.C. § 1331, the injury sought to be prevented being sufficiently alleged in the complaint as being in excess of the requisite jurisdictional amount, and the action arising under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, under the Civil Rights Act of 1964, 42 U.S.C. § 2000e, and under 18 U.S.C. § 1905. The defendants also, of course, raise the defense of sovereign immunity. They say that while the action is nominally against the federal officers who head the agencies involved it is actually one against the United States. The Court concludes that the relief sought, if granted, would not "expend itself of the public treasury or domain, or interfere with the public administration" to the extent that the Government would be "stopped in its tracks." Land v. Dollar 330 U.S. 731, 738 (1947); Larson v. Domestic & Foreign Corp. 337 U.S. 682, 704 (1949); and that the actions of the federal officers arc sufficiently alleged to be beyond their statutory powers so that those actions would not be the actions of the sovereign. Dugan v. Rank, 372 U.S. 609, 621 (1963). Plaintiffs base their claim for relief on certain exemptions from required disclosure contained in 5 U.S.C. § 552, and on 18 U.S.C. § 1905 which, although a criminal statute making unlawful certain disclosures, is invoked civilly to effectuate the congressional purpose. Wyandotte Co. v. United States, 389 J.S. 191, 202 (1967); J. I. Case Co. v. Borak, 377 U.S. 426 (1964). Insofar as the exemptions provided by the Freedom of Information Act are concerned, the Court does not base its decision on the exemption contained in 5 U.S.C. § 552(b)(3) for matters "(3) specifically exempted from disclosure by statute," although the plaintiffs' argument here does raise substantial questions. The statute they invoke as specifically prohibiting disclosure is § 709 (e) of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-8 (e). This statute created the Equal Employment Opportunity Commission, and by its terms applies only to that agency. The Joint keporting Committee and the OFCC were created by regulations promulgated by the Secretary of Labor pursuant to Executive Order 11246, which, of course, mentions neither a Joint Reporting Committee nor an OFCC. That order purports, at least in part, to effectuate the provisions of 42 U.S.C. § 2000e insofar as firms having contracts with the Government are concerned. It is therefore arguable that the ultimate authority for the Joint Reporting Committee and OFCC is 42 U.S.C. § 2000e; that they are alter egos of the EEOC; and that they should be subject to the disclosure restriction of 42 U.S.C. § 2000e-8(e). Conciliation is the preferred policy for matters coming within the jurisdiction of the EEOC, a policy which is subverted by public disclosure. There would arguably be a circumvention of that policy if defendants were allowed, by virtue of an Executive Order grounded on § 2000e, to set up separate agencies which collected the same or similar data as the EEOC, but which were not bound by restrictions against disclosure. Weighed against this, of course, would be the policy of liberally interpreting the FOIA in favor of disclosure and consequently of narrowly interpreting statutory exemptions. However, it is not at all clear that § 2000e was the basis for Executive Order 11246. Moreover the existence of Executive Order 10925, 1961 U.S. Code Cong. & Ad. News 1274, promulgated prior to passage of § 2000e, lends support to the argument that Executive Order 11246 has a basis independent of § 2000e, being grounded instead in another statute or in an inherent power of the Executive branch to choose the terms of Government contracts. As stated, though, the decision in this case is not based on the exemptions found in 2000e-8(e) and 5 U.S.C. § 552 (b) (3), and the Court need not decide those issues. The Court concludes, however, that the disclosure of the EEO-1 and AAP is prohibited by the exemption contained in 5 U.S.C. § 552 (b) (4) for matters that are "(4) trade secrets and commercial or financial information obtained from a person and privileged or condi fential. . The Court finds here, from the testimony of Professor Rutenberg, that the parts of the AAP hereafter specified and the EEO-1 contain commercial or financial information which is confidential. While he had not viewed the two documents sought by the intervenors, he was in a position, from his familiarity with the regulations which prescribed the contents of the documents, to evaluate the effect of revelation of those contents. His conclusion was that with this information a competitor could deduce labor costs of the plaintiffs, the most difficult area for a competitor to learn in making strategic decisions. From this can be extrapolated a company's profit margin and resulting vulnerability to price change. Moreover, viewing the same documents over a period of time would enable a competitor to obtain a forewarning on new products and process changes being undertaken by the plaintiffs. Comparing this testimony with the EEO-1 and AAP in question confirms the witness's conclusion. The Court relies on the testimony as well as on the nature of the material, not the mere claim of the plaintiffs, in determining that confidentiality exists. In reaching the conclusion the Court has followed the purpose of the exemption as set forth in Bristol-Myers Company v. F. T. C.,424 F. 2d 935, 938 (D.C. Cir 1970): This provision serves the important function of protecting the privacy and the competitive position of the citizen who offers information to assist government policy makers. In Sterling Drug Inc. v. F. T. C. 450 F. 2d 698, 709 (D.C. Cir. 1971), the court apparently adopted the standard for coverage by the exemption which was set forth in the Senate Report on the Freedom of Information Act, namely: This exception is necessary to protect the confi- S. Rep. No. 813, 89th Cong., 2d Sess. 9 (1964). The House Reports It would also include information which is confidential, since a citizen must be able to confide in his Government. Moreover, where the Government has obligated itself in good faith not to disclose documents or information which it receives, it should be able to honor such obligations. H. R. Rep. No. 1497, 89th Cong., 2d Sess. 10 (1964). ? 18 U.S.C. § 1905, which makes it a crime for a governmental official to disclose information if "not authorized by law" to do so, also supports the relief requested by plaintiffs. It can be argued that reliance on this statute begs the question where the Government invokes it to prevent disclosure sought pursuant to FOIA. However, such is not the case where the potentially injured party invokes this statute to prevent the Government from disclosing information to a third party, for this is the precise situation dealt with by § 1905. In view of the finding of confidentially set forth above, and the relation of the information contained in the documents to processes, operations and profit margins, the statute is clearly applicable here. Cf. J. I. Case Co. v. Borak, supra. The defendant argue that the FOIA is authority only for disclosing information, not withholding it, and consequently cannot be used as a vehicle to prevent disclosure; that the exemptions are permissive only, being categories of information which may be exempt by an agency; and that this is a matter largely committed to agency discretion. The Court rejects this argument. It makes the statutory exemption meaningless and flies in the face of the protective purpose of the exemption as enunciated in the Senate and House Reports quoted above as well as in Bristol-Myers Co. v. F. T. C. , supra The Court recognizes that that case, like most of the others arising under the FOIA, involved an instance where a plaintiff sought and the governmental agency contested disclosure. This does not mean, however, that a plaintiff which the exemption is designed to protect may not properly invoke that exemption where disclosure is threatened. Inso far as being committed to agency discretion is concerned, the disclosure portion of the regulations itself recognizes an exemption of confidential information, with and without reference to the FOIA. 41 CFR § 60-40.3. The FOIA cannot permit agency discretion to the extent that such discration precludes de novo determination by a court of the entitlement to an exemption under FOIA. Plaintiffs also contend that the materials in question are "investigatory files" within the meaning of 5 U.S.C. § 552 (b) (7). However, the purpose of that exemption is only "to prevent premature discovery by a defendant in an enforcement proceeding, "Wellford v. Hardin, 444 F. 2d 21, 23 (4th Cir. 1971), and it is inapplicable to the facts of this case. Nor does the Court conclude that the defendants are bound by language of confidentiality which plaintiffs read into the receipts for the AAPS signed by the Contract Compliance Officers. These seem no more than an attempt by plaintiffs to assert their ownership of the documents, an attempt pursued at trial. The ownership of the documents, however, is not determinative of the outcome of this case. In view of the foregoing, reviewability of the agencies' action under the Administrative Procedure Act, 5 U.S.C. § 701, et seq., and whether that action can stand under the standard of review of the Act need not be considered. The Court accordingly concludes that that part of the EE0-1 (Exhibit A) filed by Westinghouse which is under the heading "Section D- EMPLOYMENT DATA" may not be disclosed and that only that part of the AAP (Exhibit C) which appears in Exhibit B may be disclosed. Plaintiffs have requested a declaratory judgment that disclosure of any EEO-1 reports or AAPs of plaintiffs is prohibited. This is further relief than the Court feels is warranted. |