Hodes v. U.S. Department of Treasury

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
SCOTT HODES, )
)
Plaintiff, )
)
v. ) Civil Action No. 12-1435 (ABJ)
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U.S. DEPARTMENT OF TREASURY, )
)
Defendant. )
____________________________________)

MEMORANDUM OPINION

Plaintiff Scott Hodes brings this lawsuit against defendant United States Department of

Treasury, Financial Management Service (“FMS”), alleging that FMS violated the Freedom of

Information Act (“FOIA”), 5 U.S.C. § 552, by failing to respond adequately to his requests for

documents. Compl. ¶¶ 23–25 [Dkt. # 1]. Plaintiff seeks declaratory relief and an injunction

compelling FMS to release the documents sought. Id. at 7. The parties have filed cross-motions

for summary judgment. See Pl.’s Mot. for Summ. J. [Dkt. # 14] (“Pl.’s Mot.”); Def.’s Mot. for

Summ. J. [Dkt. # 13] (“Def.’s Mot.”). The Court will grant summary judgment in favor of

plaintiff because FMS has not met its burden to establish that the materials withheld are exempt

from disclosure.

FOIA provides that the duty to disclose government records to requesters “does not apply

to matters that are . . . specifically exempted from disclosure by a statute” that leaves the agency

with no discretion on the matter. 5 U.S.C. § 552(b)(3)(A)(i). Here, plaintiff seeks the names of

unsuccessful bidders for a particular set of government contracts, Compl. ¶ 11; Pl.’s Mem. in

Supp. of Pl.’s Mot. (“Pl.’s Mem.”) [Dkt. # 14-2] at 1, and the government has identified
41 U.S.C. § 4702, the prohibition against the release of contractor proposals, as the statute that

supplies the basis for the claimed exemption, Def.’s Mem. in Support of Def.’s Mot. (“Def.’s

Mem.”) [Dkt. # 13-1] at 2; see also Compl. ¶ 14. So the narrow question before the Court is

whether bidders’ names are covered by this ban on an agency’s disclosure of “proposals,” and

the Court concludes that they are not.

I. BACKGROUND

Plaintiff Scott Hodes, a Maryland citizen, “is an attorney licensed to practice in the state

of Maryland and the District of Columbia.” Compl. ¶ 4. FMS is a component of defendant

Department of Treasury, a federal agency. Id. ¶ 5. On March 7, 2012, plaintiff submitted a

FOIA request for information regarding RFP TFMS-HQ-06-Q-011, a government contract for

debt collection services. Id. ¶ 11; Solicitation/Contract/Order for Commercial Item, Ex. A to

Compl.; Pl.’s Mem.at 3. Specifically, plaintiff sought:

1. The complete request for proposal;

2. Any and all addendums issued for the request for proposal;

3. Any and all documents answering vendors questions of the request for
proposal;

4. Documents including but not limited to spreadsheets and e-mails
showing how many companies submitted offers and which companies
submitted offers;

5. Documents including but not limited to spreadsheets and e-mails
showing pricing submitted by all companies that submitted offers;

6. Documents including but not limited to e-mails showing how and why
selected vendor(s) were awarded;

7. Any rankings showing how the government ranked various interested
parties to the contract; and

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 8. A copy of the task order contract or similar document signed with the
selected vendor(s).

Compl. ¶ 11.

On “April 5, 2012, the FMS responded to plaintiff’s FOIA request” by letter. Id. ¶ 12.

FMS stated that plaintiff’s inquiry into RFP TFMS-HQ-06-Q-011 also concerned four other

government contracts. Id. FMS released certain documents but withheld others, citing

Exemption 3 and Exemption 4 of FOIA. Id.; see also 5 U.S.C. § 552(b)(3)–(4). On April 17,

2012, plaintiff filed an administrative appeal. Compl. ¶ 13. Specifically, plaintiff challenged

FMS’s conclusion that the identities of unsuccessful contract bidders and the pricing information

of the winning proposals were exempt from disclosure. Id.; see also Pl. Appeal Letter, Ex. 4 to

Def.’s Mot. at 2.

In its response to plaintiff’s appeal, on May 31, 2012, FMS refined its position and

released additional information. Compl. ¶ 14; Appeal Decision Letter (“Appeal Decision”), Ex.

2 to Def.’s Mot. However, FMS affirmed its decision to withhold the identities of the

unsuccessful bidders contained in the Award Decision Document as well as the requested pricing

information. Compl. ¶ 14; Appeal Decision at 2. FMS informed plaintiff of his right to judicial

review of FMS’s determination. Appeal Decision at 3. FMS also stated that plaintiff could

alternatively engage the Office of Government Information Services (“OGIS”) to resolve his

dispute with FMS. Id. Plaintiff chose the latter route. Compl. ¶ 15.

By letter dated June 13, 2012, plaintiff sought OGIS’s assistance to obtain the release of

information FMS declared exempt from FOIA. Id. “By letter dated August 8, 2012, OGIS

explained that FMS [could] continue to withhold the information.” Id. ¶ 16. OGIS stated that

FMS had “consulted with the Office of Information Policy . . . at the Department of Justice,

which did not disagree with [FMS’s] interpretation” and application of FOIA Exemptions 3 and

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4 to the relevant statute at issue. Id. ¶ 17 (internal quotation marks omitted); see also 41 U.S.C.

§ 4702.

After fully exhausting his administrative remedies under FOIA, plaintiff filed a complaint

in this Court seeking judicial review of FMS’s decision to withhold records revealing the

identities of the unsuccessful bidders for five debt collection contracts as well as the pricing

information submitted by the successful bidders. Compl. at 7. On January 3, 2013, FMS moved

for summary judgment, arguing that 41 U.S.C. § 4702(b) is a FOIA Exemption 3 statute that

offered FMS no discretion to disclose any information regarding unsuccessful bid proposals for

the sought debt collection services contracts. Def.’s Mem. at 4. But FMS acknowledged that it

erred in not releasing the successful bidders’ pricing information, because section 4702(c)

mandates disclosure of any proposals “incorporated by reference” into the ultimate contract. Id.;

see also 41 U.S.C. § 4702(c). Subsequently, FMS released the requested pricing information of

the winning bidders, but redacted the names of the unsuccessful bidders. See Award Decision

Doc., Ex. 3 to Def.’s Mot.

On January 17, 2013, plaintiff responded and filed a cross-motion for summary

judgment. He argues that (1) FMS has not met its burden to show that the disclosure of the

requested information is barred by the prohibition on the dissemination of “proposals” set forth

in 41 U.S.C. § 4702 and, alternatively, (2) that even if FMS’s interpretation of section 4702(a)

was correct, FMS had knowledge of the unsuccessful bidders’ identities through means other

than the submitted proposals themselves. Pl.’s Mem. at 3–7.

II. STANDARD OF REVIEW

Summary judgment is appropriate “if the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

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56(a). The party seeking summary judgment bears the “initial responsibility of informing the

district court of the basis for its motion, and identifying those portions of the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if

any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex

Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks omitted). To defeat

summary judgment, the non-moving party must “designate specific facts showing that there is a

genuine issue for trial.” Id. at 324 (internal quotation marks omitted). The existence of a factual

dispute is insufficient to preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 247–48 (1986). A dispute is “genuine” only if a reasonable fact-finder could find for the

non-moving party; a fact is only “material” if it is capable of affecting the outcome of the

litigation. Id. at 248; Laningham v. U.S. Navy, 813 F.2d 1236, 1241 (D.C. Cir. 1987). In

assessing a party’s motion, the court must “view the facts and draw reasonable inferences ‘in the

light most favorable to the party opposing the summary judgment motion.’” Scott v. Harris, 550

U.S. 372, 378 (2007) (alteration omitted), quoting United States v. Diebold, Inc., 369 U.S. 654,

655 (1962) (per curiam).

“The rule governing cross-motions for summary judgment . . . is that neither party waives

the right to a full trial on the merits by filing its own motion; each side concedes that no material

facts are at issue only for the purposes of its own motion.” Sherwood v. Wash. Post, 871 F.2d

1144, 1147 n.4 (D.C. Cir. 1989) (alteration in original), quoting McKenzie v. Sawyer, 684 F.2d

62, 68 n.3 (D.C. Cir. 1982). In assessing each party’s motion, “[a]ll underlying facts and

inferences are analyzed in the light most favorable to the non-moving party.” N.S. ex rel. Stein v.

District of Columbia, 709 F. Supp. 2d 57, 65 (D.D.C. 2010), citing Anderson, 477 U.S. at 247.

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III. ANALYSIS

The purpose of FOIA is to achieve the broad disclosure of government records. CIA v.

Sims, 471 U.S. 159, 166 (1985). The disclosure requirement established by the statute is subject

to nine enumerated exemptions. Wolf v. CIA, 473 F.3d 370, 374 (D.C. Cir. 2007), citing

5 U.S.C. § 552(b). These exemptions represent “a balance struck by Congress between the

public’s right to know and the government’s legitimate interest in keeping certain information

confidential.” Ctr. for Nat’l Sec. Studies v. DOJ, 331 F.3d 918, 925 (D.C. Cir. 2003), citing John

Doe Agency v. John Doe Corp., 493 U.S. 146, 152 (1989). But in light of FOIA’s broad

disclosure mandate, the Supreme Court has “consistently stated that FOIA exemptions are to be

narrowly construed.” DOJ v. Julian, 486 U.S. 1, 8 (1988). In accord with this policy, the burden

is placed on the agency when it seeks to withhold requested information. 5 U.S.C. §

552(a)(4)(B); Dep’t of State v. Ray, 502 U.S. 164, 173 (1991).

In the present case, FMS has withheld the identities of unsuccessful bidders to multiple

government procurement contracts under 5 U.S.C. 552(b)(3), commonly referred to as

Exemption 3. Def.’s Mem. at 4; see also, e.g., Larson v. Dep’t of State, 565 F.3d 857, 861 (D.C.

Cir. 2009). Exemption 3 allows an agency to withhold information that is “specifically

exempted from disclosure by statute,” but only if the statute either leaves the agency with no

discretion or “establishes particular criteria for withholding or refers to particular types of

matters to be withheld.” 5 U.S.C. § 552(b)(3)(A)(i)–(ii).

The statute at issue in this case is 41 U.S.C. § 4702, which specifically regulates the

release of government contract proposals in response to FOIA requests. Section 4702(b) states

that “[a] proposal in the possession or control of an executive agency may not be made available

to any person under section 552 of title 5.” 41 U.S.C. § 4702(b). A “proposal” is defined as “a

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proposal, including a technical, management, or cost proposal, submitted by a contractor in

response to the requirements of a solicitation for a competitive proposal.” Id. § 4702(a). 1

In Hornbostel v. Department of the Interior, the court deemed section 4702(b)’s

predecessor, 41 U.S.C. § 253b(m)(1), to be an Exemption 3 statute because it accords an agency

no discretion to disseminate “proposals” in its possession or control. 305 F. Supp. 2d 21, 29–30

(D.D.C. 2003). Both plaintiff and FMS agree that Exemption 3 applies here. See Def.’s Mem. at

4; see also Pl.’s Resp. to Def.’s Counter Statement of Material Facts [Dkt. # 21-1] ¶¶ 1–2.

However, the parties disagree over the breadth and application of the statutory language.

FMS argues that the term “proposal” in 41 U.S.C. § 4207 includes the identities of

unsuccessful bidders and therefore bars their disclosure. Def.’s Mem. at 5. Plaintiff contends

that the definition of proposal set out in 41 U.S.C. § 4702(a) is silent on the question, and he

submits that it is, at best, ambiguous. Pl.’s Mem. at 6. The Court finds that the text of the statute

does not compel FMS’s interpretation and that adopting the broad reading advanced by the

agency here would be contrary to the purpose underlying FOIA and the requirement that

exemptions be construed narrowly.

“The plain meaning of legislation should be conclusive, except in the rare cases [in

which] the literal application of a statute will produce a result demonstrably at odds with the

intentions of its drafters.” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989)

(alteration in original), quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982)

(internal quotation marks omitted). Here, the statute does not directly address the question, but it

1 Section 4702(c) provides that the prohibition to disclosure in subsection (b) “does not
apply to a proposal that is set forth or incorporated by reference in a contract entered into
between the agency and the contractor that submitted the proposal.” 41 U.S.C. § 4702(c). So the
prohibition applies to the proposals of unsuccessful bidders, not to proposals of successful
bidders that are incorporated into a contract with the agency.
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does define “proposal” to mean “a proposal, including a technical, management, or cost

proposal, submitted by a contractor in response to the requirements of a solicitation for a

competitive proposal.” 41 U.S.C. § 4702(a) (emphasis added). Defining the “proposal” as an

item “submitted by” the contractor implicitly differentiates the document from the bidding party.

The clause elaborating on the definition to explain that the term “proposal”’ includes technical,

management, or cost proposals and the fact that the clause is set off from “submitted by a

contractor” with a comma, further suggests that the term refers to what is being submitted rather

than who it is submitted by. In other words, the phrase “submitted by a contractor” is meant to

modify the word “proposal.”

This is consistent with the case cited by FMS, Ctr. for Pub. Integrity v. Dep’t of Energy,

191 F. Supp. 2d 187 (D.D.C. 2002), which held that 41 U.S.C. § 4702(b) did not apply to sales

contracts, but only to records of a procurement, because the term “proposal” in the statute was

limited by the phrase “submitted by a contractor.” Id. at 192. FMS attempts to read the case as

standing for the proposition that any record related to a procurement must be covered by the

provision, but the opinion does not go that far. The court did not purport to define the scope of

the word “proposal,” and it focused instead on the use of the word “contractor.” See id. at 192–

93.

The legislative history of section 4702 provides some assistance in resolving the dispute

here. The House Report on the National Defense Authorization Act for Fiscal Year 1997, in

which the provision was first introduced, states:

This section would exempt contractor proposals provided to the federal
government from release under the Freedom of Information Act . . . . The
committee is aware that the current [FOIA] process imposes a significant
administrative burden on federal agencies receiving requests for release of
contractor proposals even though most if not all of the information is
exempt under the FOIA process. This provision is intended to allow

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 federal agencies to dispense with the lengthy line-by-line reviews which
are presently required to arrive at the non-disclosure determination for this
material.

Comm. on Nat’l Sec., National Defense Authorization Act for Fiscal Year 1997, H.R. Rep. No.

104-563, at 327 (1996). Thus, the provision was not intended to implement a broad legislative

intent to keep any information associated with bid proposals secret; rather, the goal was simply

to carve out the physical proposals themselves from the FOIA process given the likelihood that

that they would be largely redacted in any event. Id.; see also 5 U.S.C. § 552(b)(4) (exempting

“trade secrets and commercial or financial information obtained from person and privileged or

confidential”). But here, the information sought is not material that would have been otherwise

exempt, and the disclosure of just the names of unsuccessful bidders would not enable parties to

gain access to proprietary cost or technical information.

FMS further argues it is not required to produce the unsuccessful bidders’ names because

it does not have that information in its control. Def.’s Reply and Mem. in Support of Mot. for

Summ. J. and Opp. to Pl.’s Cross-Mot. for Summ. J. [Dkt. # 18] at 3. It is true that FOIA does

not “impose[ ] [any] duty on the agency to create records,” ACLU v. DOJ, 655 F.3d 1, 4 n.3

(D.C. Cir. 2011) (alteration in original), quoting Forsham v. Harris, 455 U.S. 169, 186 (1980)

(internal quotation marks omitted), but only requires the disclosure of “agency records

improperly withheld,” 5 U.S.C. § 552(a)(4)(B). And it is also true that section 4702 bars the

disclosure of contractor submissions in their entirety. But to the extent FMS is in possession of

other documents containing the requested information – such as the redacted attachment to

defendant’s motion for summary judgment, see Award Decision Doc. – it is required to produce

those responsive records in unredacted form.

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 CONCLUSION

For the reasons set forth above, the Court will grant plaintiff Scott Hodes’s cross-motion

for summary judgment and deny defendant FMS’s motion for summary judgment. A separate

order will issue.

AMY BERMAN JACKSON
United States District Judge

DATE: September 25, 2013

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