The Ninth Circuit recently confirmed that predicting the future with near certainty is not required when seeking to protect information from disclosure under Exemption 4 of FOIA. In a recent unpublished decision, the Ninth Circuit concluded that Sikorsky Aircraft’s small business subcontracting plan was “confidential commercial or financial information” exempt from disclosure under Freedom of Information Act, Exemption 4. See Am. Small Business League v. Department of Defense, No. 15-15120, 2017 WL 65399 (9th Cir. Jan. 6, 2017) (ASBL II). Although the non-precedential decision merely reaffirmed the existing standard for determining competitive harm, the decision was significant because it rejected the lower court’s position that Exemption 4 required a party to show that release in effect “would” produce competitive harm rather than simply “could” lead to such harm.  In addition, the ruling confirmed that employee contact information and signatures are protected from disclosure by Exemption 6 (Personal Privacy).


In 2013, the American Small Business League submitted a FOIA request for “[t]he most recent master [C]omprehensive [S]ubcontracting [P]lan submitted by Sikorksy Aircraft Corporation for participating in the Comprehensive Subcontracting Plan Test Program for the Department of Defense.” Am. Small Business League v. Dep’t of Defense, No. C14-02166, 2014 WL 6662427, *1 (N.D. Cal. Nov. 23, 2014) (ASBL I).  Under the DoD Test Program, the Comprehensive Subcontracting Plan must identify “all subcontract amounts awarded to small businesses on all government contracts the prime contractor fulfills.” Id. Most businesses treat this information about their supply chains as proprietary.  After DoD failed to meet the FOIA response deadlines, ASBL filed suit demanding release of the plan. Id.


            In response to the lawsuit, DoD filed a motion for summary judgment, arguing that the plan was protected by FOIA Exemption 4. Id. Exemption 4 prohibits the release of “trade secrets and commercial or financial information [that is] privileged or confidential.”  5 U.S.C. § 552(b)(4).  In support, DoD submitted an affidavit from a Sikorsky employee detailing the competitive harm that Sikorsky could face if the information were disclosed. ASBL I, 2014 WL 6662427, at *3 (“[I]t is my professional opinion that a competitor with similar expertise could readily use the information to determine Sikorsky’s approach to key manufacturing and sourcing decision[s] that are competitively evaluated as part of [the agency’s] contract proposal review.”).

The district court was not persuaded by Sikorsky’s argument.  The court found that “[n]either the lodged document nor [Sikorsky]’s declaration adequately shows how the redacted information is “likely to cause substantial competitive injury” if disclosed. Id. at *4.  Instead, DoD showed “at best” that a competitor “could” use such information to assess the strengths and weaknesses of Sikorsky’s proposals to the agency. Id. In addition, the court said that DoD failed to justify why employee contact information or official signatures were an invasion of privacy. Id. As a result, the court ordered DoD to release an unredacted copy of Sikorsky’s small business subcontracting plan.  DoD appealed.


On appeal, the Ninth Circuit rejected the district court’s position that the use of the word “could” was somehow insufficient to establish competitive prejudice. ASBL II, 2017 WL 65399, at *1. In doing so, it confirmed that “[n]othing more is required to gain protection from disclosure under Exemption 4” than “(1) identifying the entities with which Sikorsky competes for government defense contracts and (2) averring that those entities could use the redacted information to gain a significant competitive advantage over Sikorsky.” Id.

The Ninth Circuit also rejected the district court’s determination that Exemption 6 did not prohibit the release of employee contact information and signatures.  Exemption 6 protects information that, if released, would result in an unwarranted invasion of personal privacy. See 5 U.S.C. § 552(b)(6).  To determine if Exemption 6 is applicable, courts balance the personal privacy interest against the potential public benefit.  Here, the court determined that the information presented risks of harassment and forgery while providing little, if any, public benefit. ASBL II, 2017 WL 65399, at *1. Thus, DoD appropriately withheld this information as subject to Exemption 6. Id.


This decision is significant for two reasons.  First, contractors can breathe a sigh of relief that their small business contracting plans are protected from disclosure (assuming the contractor makes the requisite showing).  Second, and more importantly, the Ninth Circuit provided a clear statement of the type of information required to trigger the protections of Exemption 4: the identity of competitors and a forward-looking statement about how the information could be used to their competitive advantage.  At the same time, the protection is not automatic and this lower threshold must be taken seriously.  DoD prevailed here because it submitted a detailed affidavit from a knowledgeable company official that outlined with some particularity the necessary information.  Going forward, companies should follow a similar blueprint when opposing disclosure pursuant to Exemption 4.

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Photo of Sandy Hoe Sandy Hoe

Sandy Hoe has practiced government contracts law for more than 40 years.  His expertise includes issues of contract formation, negotiation of subcontracts, bid protests, the structuring of complex private financing of government contracts, preparation of complex claims, and the resolution of post-award contract…

Sandy Hoe has practiced government contracts law for more than 40 years.  His expertise includes issues of contract formation, negotiation of subcontracts, bid protests, the structuring of complex private financing of government contracts, preparation of complex claims, and the resolution of post-award contract disputes through litigation or alternative dispute resolution.  His clients include major companies in the defense, telecommunications, information technology, financial, construction, and health care industries.