Opinion · Court of Appeals for the Eighth Circuit

General Dynamics Corp. v. Marshall

Gen. Dynamics Corp. v. Marshall, 607 F.2d 234 (8th Cir. 1979)

Type: Opinion
Court: Court of Appeals for the Eighth Circuit
Jurisdiction: Federal
Date: 1979-11-30
Topic: bankruptcy

PER CURIAM. This court’s earlier opinion was remanded by the Supreme Court for consideration in the light of its opinion in Chrysler Corp. v. Brown, 441 U.S. 281, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979). We held previously that General Dynamics’ only recourse to prevent disclosure to a third party of information it submitted to a federal agency was review of the agency’s decision under the Administrative Procedure Act; this was in accord with the Chrysler v. Brown decision.

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GENERAL DYNAMICS CORPORATION v. MARSHALL,607 F.2d 234(8th Cir. 1979)

GENERAL DYNAMICS CORPORATION, APPELLEE, v. RAY MARSHALL, SECRETARY, UNITED

STATES DEPARTMENT OF LABOR; ROGERS C. B. MORTON, SECRETARY, UNITED STATES

DEPARTMENT OF COMMERCE; PHILIP J. DAVIS, DIRECTOR, OFFICE OF FEDERAL

CONTRACT COMPLIANCE PROGRAMS, UNITED STATES DEPARTMENT OF LABOR; ROBERT J.

BLACKWELL, ASSISTANT SECRETARY FOR MARITIME AFFAIRS, UNITED STATES

DEPARTMENT OF COMMERCE; JOHN M. HENEGHAN, DIRECTOR, OFFICE OF CIVIL RIGHTS,

MARITIME ADMINISTRATION, UNITED STATES DEPARTMENT OF COMMERCE; WILLIAM P.

CLEMENTS, DEPUTY SECRETARY, UNITED STATES DEPARTMENT OF DEFENSE; FREDERICK

A. SCHREIBER, DIRECTOR, CONTRACTS COMPLIANCE, DEFENSE; CONTRACT

ADMINISTRATION SERVICES REGION, LOS ANGELES, CALIFORNIA, DEFENSE SUPPLY

AGENCY, UNITED STATES DEPARTMENT OF DEFENSE; LT. GEN. WALLACE H. ROBINSON,

JR., DIRECTOR, DEFENSE SUPPLY AGENCY, UNITED STATES DEPARTMENT OF DEFENSE;

AND JAMES W. CISCO, ADMINISTRATION CHIEF, CONTRACTS ADMINISTRATION SERVICES,

DEFENSE CONTRACT ADMINISTRATION SERVICES, DEFENSE SUPPLY AGENCY, UNITED

STATES DEPARTMENT OF DEFENSE, APPELLANTS.

No. 77-1192.

United States Court of Appeals, Eighth Circuit.

Submitted September 11, 1979.

Decided November 30, 1979.

Page 235

Douglas N. Letter, Atty., Civ. Div., App. Section, Dept. of Justice, Washington, D.C. (argued), Stuart E. Schiffer, Acting Asst. Atty. Gen., Washington, D.C., Robert Kingsland, U.S. Atty., St. Louis, Mo., and Leonard Schaitman, Atty., Civ. Div., App. Section, Dept. of Justice, Washington, D.C., on brief, for appellants.

Thomas E. Douglass, Coburn, Croft, Shepherd, Herzog Putzell, St. Louis, Mo. (argued), Richmond C. Coburn, St. Louis, Mo., on brief, for appellee.

Charles E. Hill, Washington, D.C., for amicus curiae Consumer Federation of America.

Appeal from the United States District Court for the Eastern District of Missouri.

Before GIBSON, Chief Judge, and LAY and STEPHENSON, Circuit Judges.

PER CURIAM.

[1] This court's earlier opinion was remanded by the Supreme Court for consideration in the light of its opinion inChrysler Corp.v. Brown,441 U.S. 281,99 S.Ct. 1705,60 L.Ed.2d 208(1979).

[2] We held previously that General Dynamics' only recourse to prevent disclosure to a third party of information it submitted to a federal agency was review of the agency's decision under the Administrative Procedure Act; this was in accord with theChrysler v. Browndecision. We also held the agency's record was inadequate for review. We therefore remanded for the district court to have the agency supplement its record or make further determinations as to whether exemptions to the Freedom of Information Act (FOIA),5 U.S.C. § 552, were applicable and if so, whether under the agency's regulations disclosure would be in the public interest and would not impede the discharge of agency functions.General Dynamics Corp. v. Marshall,572 F.2d 1211,1218(8th Cir. 1978). In light ofChrysler v. Brown,we now modify our earlier order and instruct the district court to remand to the agency for determination of whether under the agency's regulations disclosure would be in the public interest and would not impede the discharge of agency functions and, in the event that the agency finds that disclosure is desirable, for the additional determination of whether disclosure is forbidden by the provisions of the Trade Secrets Act,18 U.S.C. § 1905.

[3] As the legislative history of the 1976 amendment to FOIA's exemption three,5 U.S.C. § 552(b)(3), makes clear, Section 1905 does not permit withholding of information otherwise required to be disclosed underPage 236FOIA, because the section only prohibits disclosure "not authorized by law." H.R. Rep. No. 880, 94th Cong., 2d Sess., at 23 (1976), 1976 U.S. Code Cong. Admin. News 2183, 2205.¹Therefore, the agency must first determine whether the information comes within an exemption from FOIA's mandate of disclosure; if it does, the agency may proceed with its discretionary decision whether disclosure is in the public interest and not harmful to agency functioning. If it decides disclosure is desirable, it must then determine whether disclosure is forbidden under the Trade Secrets Act.

[4] IT IS SO ORDERED.²

[5] GIBSON, Chief Judge, concurring.

[6] In the interest of most expeditiously resolving this controversy, I wish to emphasize the Supreme Court's holding inChrysler Corp. v. Brown,441 U.S. 281,99 S.Ct. 1705,60 L.Ed.2d 208(1979), that the agency's regulations do not insulate it from the prohibitions of the Trade Secrets Act, and the agency's regulations do not constitute legislative authorization for release of information otherwise restricted by statute. Regrettably, remanding this case back to the agency is necessary because of the inadequacy of the administrative record, which we noted in our earlier opinion.General Dynamics Corp. v.Marshall,572 F.2d 1211,1218(8th Cir. 1978). Obviously, the finding that compliance with the agency's regulations would not render disclosure "authorized by law" within the meaning of18 U.S.C. § 1905does not diminish the need for a better administrative record. The legal basis and factual support for the agency action becomes more important in reviewing the agency's determination.

[7] Furthermore, I wish to reemphasize that this court does not provide guidance on the proper scope of the Trade Secrets Act in the present posture of this case because the issue may become moot upon the remand to the agency.Ante,at 236, n. 2. We recognize, however, that in the context of disclosures that may arguably impair a company's competitive position, it will be difficult to determine precisely which piece of information is necessary to complete the picture of that company's operations that would allow a competitor to undermine the company. Because of this difficulty, I urge the agency to evaluate carefully the requestedPage 237disclosure and recognize the legitimate concerns of General Dynamics.Page 789

In its report on the Government in Sunshine Act, the House Committee on Government Operations commented on the relationship between18 U.S.C. § 1905and FOIA. While the Senate bill's amendment of exemption three passed in lieu of the House bill, no change was indicated in the intended interaction of the two Acts. The committee made the following comments in its report:
Under the amendment, the provision of the Federal Aviation Act of 1958 that was the subject ofRobertson,and which affords the FAA Administratorcarte blancheto withhold any information he pleases, would not come within exemption 3.Similarly, the Trade Secrets Act,18 U.S.C. § 1905,which relates only to the disclosure of informationwhere disclosure is "not authorized by law," wouldnot permit the withholding of information otherwiserequired to be disclosed by the Freedom ofInformation Act, since the disclosure is thereauthorized by law.Thus, for example, if material did not come within the broad trade secrets exemption contained in the Freedom of Information Act, section 1905 would not justify withholding; on the other hand, if material is within the trade secrets exemption of the Freedom of Information Act and therefore subject to disclosureif the agencydetermines that disclosure is in the publicinterest,section 1905 must be considered to ascertain whether the agency is forbidden from disclosing the information.See Charles River Park"A", Inc. v. Dept. of Housing and Urban Development,[171 U.S.App.D.C. 286, 292 n. 7]519 F.2d 935,941n. 7 (D.C. Cir. 1975), and cases there cited.

(Emphasis added). ↩
The agency should have the opportunity to decide in its discretion whether to disclose, using proper standards: the public interest and impediment to agency functioning. If it decides not to disclose, no judicial review will be necessary. If it decides to disclose, both the district court and this court should have the benefit of the agency's interpretation of the Trade Secrets Act and the applicability of FOIA exemptions in their review. Interpretation of the Trade Secrets Act and its application to the information in question here is not a facile determination. The Government finds support in legislative history that suggests disclosure is not barred; General Dynamics urges the contrary. For these reasons, we feel any determination by this court as to the proper scope and ambit of Section 1905 would be premature until the agency has first acted in accord with our remand. ↩