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JCI Metal Products v. United States Dep't of the Navy

May 18, 2010

JCI METAL PRODUCTS, PLAINTIFF,
v.
UNITED STATES DEPARTMENT OF THE NAVY, DEFENDANT.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER DENYING MOTION TO STRIKE [Doc. No. 18]

This is a reverse-FOIA case, with Plaintiff JCI Metal Products ("JCI") seeking to prevent disclosure of certain information relating to its past contract with Defendant United States Department of the Navy ("Navy"). Currently before the Court is Defendant's motion to strike Plaintiff's Supplementation to the Administrative Record. Having considered the parties' arguments, and for the reasons set forth herein, the Court DENIES the motion to strike.

BACKGROUND

I. Factual Background

On June 4, 2002, Fleet and Industrial Supply Centers-San Diego ("FISCSD"), a Navy command in San Diego, awarded Contract No. N00244-02-D-0026 to JCI. (Certified Administrative Record ("CAR"), at 64.) After an initial one-year term, the contract provided for four one-year options, with a maximum contract term of five years. (Id. at 166-68.) The option years were exercised and the contract expired in 2007. In February 2009, FISCSD received a Freedom of Information Act ("FOIA") request from attorney Clinton D. Hubbard, seeking Contract No. N00244-02-D-0026 and related documents. (Id. at 2-3.) Because the requested documents contain JCI's line item prices, FISCSD informed JCI in writing of the FOIA request and provided an opportunity for JCI to establish that its prices are legally exempt from release. (Id. at 5.) FISCSD sent its letter to JCI on February 24, 2009, and indicated that JCI had to respond by March 6, 2009, or JCI would be deemed to have consented to the release of the information. (Id.)

JCI responded with a letter from its counsel, Kevin Cauley, dated March 5, 2009. (Id. at 7-21.) JCI asserted that the unit prices for each contract line item ("CLIN") and the total price amount for each CLIN fell within Exemption 4 of the FOIA, which exempts from disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential." (Id. at 7.) According to JCI, the disclosure of these items would "significantly increase the probability that JCI's competitors would attempt to underbid it when the new contract for the services in Contract N00244-02-D-0026 is bid." (Id. at 8.) Moreover, the disclosure of these items would allow JCI's competitors to determine: (1) the structure of the pricing methods used by JCI; (2) JCI's bottom line prices; and (3) the overall bid strategy of JCI. (Id. at 8.) FISCSD's FOIA Officer, Sherri Dollick, responded with a letter dated March 6, 2009, pointing out that the arguments raised in Mr. Cauley's letter did not establish the likelihood of competitive harm necessary to justify withholding the contract. (Id. at 23-24.) Nonetheless, the FISCSD provided JCI with an opportunity to submit additional information by March 13, 2009. (Id.) Mr. Cauley responded with a letter dated March 13, 2009, reiterating why this information falls within Exemption 4. (Id. at 26-51.) After analyzing JCI's submissions, the FISCSD notified JCI that a final agency decision had been made to release the contract. (Id. at 174.) FISCSD also advised JCI of its right to take court action within 10 days. (Id.)

II. Procedural Background

On September 30, 2009, JCI filed the Complaint in this action and applied for a temporary restraining order to prevent release of the contract. Without admitting the merits of JCI's position, the Navy agreed to delay releasing the contract pending a final decision on the merits by this Court, and the Court entered an order to that effect on October 7, 2009. [See Doc. No. 7]. On January 25, 2010, the Navy filed with the Court a Certified Administrative Record ("CAR") in this matter. [Doc. No. 14]. Following the filing of the CAR, JCI had 45 days to submit any supplementation to the CAR. On March 15, 2010, the Court granted the parties' joint motion for one week extension for JCI to submit supplementation to the CAR. [Doc. No. 16]. On March 18, 2010, JCI filed its Supplementation to the Administrative Record. [Doc. No. 17]. The supplementation consists of a Declaration of Mark Withers and eight work orders allegedly related to the Navy Contract No. N00244-02-D-0026.

III. Present Motion

On April 7, 2010, the Navy filed the present motion to strike JCI's supplementation to the CAR, arguing that these materials were not a part of the agency's record during the administrative process and that FISCSD was not even seeking permission to release the eight work orders included in the supplementation. On May 3, 2010, JCI filed an opposition to the Navy's motion. JCI first argues that supplementation is allowed because the agency's factfinding procedures in this case were inadequate due to the fact that JCI was not allowed an opportunity to appeal the initial disclosure decision. Second, JCI argues supplementation should be allowed because the FISCSD did not provide JCI with a reasonable time to lodge its objections to the disclosure. Finally, JCI asserts that the supplementation documents do not create a new record because: (1) the eight work orders are a part of the Navy Contract No. N00244-02-D-0026 and as such should have been a part of the administrative record; and (2) the Declaration of Mark Withers sets forth essentially the same evidence and argument as the initial two letters from Mr. Cauley. However, JCI admits that the Withers' Declaration also "further explains how a competitor may use JCI's CLINs to determine JCI's multiplier and be able to successfully underbid JCI in future contracts." (See Pl. Opp. to Def. Motion to Strike, at 5 [Doc. No. 51].)

DISCUSSION

A party seeking to enjoin the government from releasing records pursuant to FOIA does not have a cause of action under FOIA itself. Chrysler Corp. v. Brown, 441 U.S. 281, 293-94 (1979). Rather, that party may seek review of the agency's final decision under the Administrative Procedures Act ("APA"), 5 U.S.C. §§ 701-06. Pac. Architects & Engineers Inc. v. U.S. Dep't of State, 906 F.2d 1345, 1347-48 (9th Cir. 1990). In the present case, the parties do not dispute that the district court's standard of review under the APA is whether the agency's action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." See id. at 1348 (quoting 5 U.S.C. § 706(2)(A)). "In determining whether an agency's decision is arbitrary or capricious, the court 'must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. This inquiry must be searching and careful, but the ultimate standard of review is a narrow one.'" Morongo Band of Mission Indians v. F.A.A., 161 F.3d 569, 573 (9th Cir. 1998) (quoting Marsh v. Or. Natural Res. Council, 490 U.S. 360, 278 (1989)).

I. Scope of Review

The parties, however, do dispute the appropriate scope of review. The Navy argues that the Court should limit its review to the administrative record, while JCI argues that the Court can conduct a de novo review in this case ...


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