In Defense of Animals v. United States Department of Agriculture

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
IN DEFENSE OF ANIMALS, )
)
Plaintiff, )
)
v. ) Civil Action No. 02-557 (RWR)
)
UNITED STATES DEPARTMENT )
OF AGRICULTURE, et. al., )
)
Defendants. )
______________________________ )

MEMORANDUM OPINION

Plaintiff In Defense of Animals (“IDA”) brought this action

against the United States Department of Agriculture (“USDA”)

seeking to compel the disclosure of records relating to the

USDA’s investigation of Huntingdon Life Sciences, Inc. (“HLS”)

under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552.

Life Sciences Research, Inc. (“LSR”), the parent company of HLS,

later intervened as a defendant in this action. At trial, the

defendants carried the burden to prove that information contained

in the 1017 pages of agency records remaining in issue had been

properly withheld under FOIA Exemption 4 exempting release of

records that would cause substantial competitive harm to HLS.

Because the defendants have not carried their burden to

demonstrate that the records at issue were properly withheld

under Exemption 4, with all reasonably segregable material

disclosed, judgment will be entered for the plaintiff.
 -2-

BACKGROUND FINDINGS OF FACT

IDA, an animal protection organization, brought this FOIA

action against the USDA seeking the disclosure of records

concerning the USDA’s investigation of HLS, a contract research

organization (“CRO”) with a registered research facility located

in New Jersey that is regulated by the USDA under the Animal

Welfare Act (“AWA”). IDA submitted a FOIA request to the USDA

requesting “all records relating to the agency’s investigation of

HLS.” (Stip. Facts ¶ 17.) In response, the USDA released

thirty-one pages to IDA, including a report of violation, the

administrative complaint against HLS and the consent decision and

order. (Id. ¶ 18.) IDA brought this action to compel the USDA

to provide IDA with additional records responsive to their FOIA

request. (Id. ¶ 19.) The USDA informed IDA that it had

identified 2778 pages of responsive records, of which it released

228 pages in full; released 146 pages in part, with personal

information withheld under FOIA Exemption 6; withheld 19 pages in

full and one page in part under FOIA Exemption 5, and sent 2384

pages to HLS to obtain HLS’ views as to whether such records were

exempt from disclosure under FOIA Exemption 4. (Id. ¶ 21.)

During the course of litigation, the parties reduced the

number of documents at issue and narrowed the scope of issues for

trial. The USDA released additional documents to IDA. IDA

“agreed to forgo test protocols and protocol amendments; animal
 -3-

tracking and assessment records; the identification of any

compound or product; and the identity of any customer of HLS; and

dosing charts.”1 (Id. ¶ 25.) The parties filed cross-motions

for summary judgment which were denied without prejudice because

the defendants failed to provide an adequate Vaughn index2 or

other evidence upon which the court could assess whether the

information withheld was properly exempted. The defendants were

ordered to prepare “a comprehensive Vaughn index describing the

documents withheld (and to the extent necessary, portions

thereof), the reasons for nondisclosure, and the reasons for non-

segregability.” (Mem. Op. & Order at 2, 34 (Sept. 28, 2004).)

The defendants provided a Vaughn index to IDA and the parties

renewed their cross-motions for summary judgment.

After in camera review of a sampling of these documents at

issue, Judge Oberdorfer denied the parties’ renewed cross-motions

1
In addition, IDA also agreed before trial not to seek
information withheld under Exemptions 5, 6, and 7(C). (Stip.
Facts ¶ 38(f).)
2
A Vaughn index, which derives its name from Vaughn v.
Rosen, 484 F.2d 820 (D.C. Cir. 1973), describes with specificity
the documents withheld or redacted and the proffered
justification for the nondisclosure. Id. at 826-27. It “usually
consists of a detailed affidavit, the purpose of which is to
‘permit the court system effectively and efficiently to evaluate
the factual nature of disputed information.’” John Doe Agency v.
John Doe Corp., 493 U.S. 146, 149 n.2 (1989) (quoting Vaughn, 484
F.2d at 826). At the least, the agency must provide an examining
court with sufficient detail to permit de novo review of the
agency’s explanations. See Judicial Watch, Inc. v. U.S. Postal
Serv., 297 F. Supp. 2d 252, 257 (D.D.C. 2004).
 -4-

for summary judgment, concluding that there was a disputed

material fact as to whether disclosure of documents withheld

under FOIA Exemption 4 would cause substantial competitive harm

to HLS. In Def. of Animals v. USDA, 501 F. Supp. 2d 1, 8 (D.D.C.

2007). He advised the parties that “[a] trial on the merits

would be greatly facilitated by expert testimony on the ability

of competitors to reverse engineer proprietary information from

the disputed documents, as well as the likelihood of effective

advantage to a competitor from the redacted data.” Id.

FOIA Exemption 4 prevents disclosure of “trade secrets and

commercial or financial information obtained from a person and

privileged or confidential[.]” 5 U.S.C. § 552(b)(4). Remaining

at issue in this case are 1017 pages of agency records created

before or during 1998 that relate to seven animal studies

conducted at HLS. (Stip. Facts ¶¶ 39-40.) The USDA has withheld

503 pages in full and 514 pages in part under Exemption 4. (Id.

¶ 36.) The 1017 pages are grouped into the following eleven

categories: (1) Institutional Animal Care and Use Committee

(“IACUC”) records (56 pages withheld in part); (2) HLS memoranda

(33 pages withheld in full and 7 pages withheld in part); (3)

USDA investigatory memoranda (27 pages withheld in part); (4)

necropsy and postmortem examination reports (23 pages withheld in

full); (5) viability records (58 pages withheld in full and 397

pages withheld in part); (6) veterinary treatment requests and
 -5-

logs (94 pages withheld in full and 20 pages withheld in part);

(7) observation sheets (28 pages withheld in full); (8)

miscellaneous records pertaining to animal cages (7 pages

withheld in part); (9) final test reports and related records

(124 pages withheld in full); (10) clinical observation reports

(121 pages withheld in full); and (11) interim test reports (22

pages withheld in full). (Id.)

The parties conducted a two-day trial. LSR called as

witnesses Michael Caulfield, the General Manager of HLS, and

Dr. Robert Szot, an expert in the fields of toxicology, early-

stage drug development, and the relationship between the

pharmaceutical industry and CROs.

LEGAL FRAMEWORK

FOIA requires each federal agency to make available for

public perusal government records unless the requested documents

fall under one of nine categories of exemptions. 5 U.S.C.

§§ 552(a)-(b). FOIA exemptions “must be narrowly construed” and

“the burden is on the agency to sustain its action.” John Doe

Agency v. John Doe Corp., 493 U.S. 146, 152 (1989) (internal

quotation marks omitted); 5 U.S.C. § 552(a)(4)(B).

A. Exemption 4

FOIA Exemption 4 prevents disclosure of “trade secrets and

commercial or financial information obtained from a person and

privileged or confidential[.]” 5 U.S.C. § 552(b)(4). The
 -6-

parties have previously agreed that trade secret protection does

not apply in this case and that the information withheld under

Exemption 4 is “commercial” and “obtained from a person.” In

Def. of Animals, 501 F. Supp. 2d at 6. The remaining question,

then, is whether the withheld commercial information is

“confidential.”3

In the District of Columbia Circuit, commercial information

is “confidential” under Exemption 4 if “disclosure would either

‘(1) . . . impair the Government’s ability to obtain necessary

information in the future; or (2) . . . cause substantial harm to

the competitive position of the person from whom it was

obtained.’” Pub. Citizen Health Research Group v. FDA, 704 F.2d

1280, 1290-91 (D.C. Cir. 1983) (alteration in original) (quoting

Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d 765, 770

(D.C. Cir. 1974) (footnote omitted)). Where the government

obtains information involuntarily, disclosure does not impair the

government’s ability to obtain similar information in the future.

See Nat’l Parks, 498 F.2d at 770. In this case, the defendants,

conceding that the documents at issue were obtained

involuntarily, allege that the records are properly withheld

under the second prong of the National Parks test because

3
The defendants do not contend such information is
“privileged.” (See USDA’s Mem. in Support of Its Renewed Mot.
for Summ. J. at 4.)
 -7-

disclosure of the information withheld would cause substantial

harm to HLS’s competitive position.4

The type of competitive injury covered under Exemption 4 is

limited to “that which may flow from competitors’ use of the

released information[.]” Ctr. to Prevent Handgun Violence v.

U.S. Dep’t of the Treasury, 981 F. Supp. 20, 23 (D.D.C. 1997)

(emphasis in original) (rejecting the Bureau of Alcohol, Tobacco,

and Firearms’ argument that releasing reports would subject

licensed gun dealers to “unwarranted criticism and harassment” as

irrelevant to the competitive harm analysis); see Worthington

Compressors, Inc. v. Costle, 662 F.2d 45, 51-52 (D.C. Cir. 1981)

(inquiring “whether release of the requested information, given

its commercial value to competitors and the cost of acquiring it

through other means,” will create a “windfall for competitors”

that puts the disclosing entity at a commercial disadvantage).

As the court of appeals has explained:

“[t]he important point for competitive harm in the FOIA
context . . . is that it be limited to harm flowing
from the affirmative use of proprietary information by
competitors. Competitive harm should not be taken to

4
On the eve of trial, after more than four years of
litigation and two rounds of summary judgment where it conceded
that the USDA obtained the documents at issue involuntarily, LSR
attempted to argue for the first time that the documents at issue
were disclosed voluntarily to the USDA and are properly withheld
under the first part of the National Parks test on the basis that
disclosure “would impair the Government’s ability to obtain
necessary information in the future.” LSR was judicially
estopped from raising this untimely argument that was clearly
inconsistent with the position it maintained for years. See In
Def. of Animals v. USDA, 589 F. Supp. 2d 41, 43 (D.D.C. 2008).
 -8-

mean simply any injury to competitive position, as
might flow from customer or employee disgruntlement or
from the embarrassing publicity attendant upon public
revelations concerning, for example, illegal or
unethical payments to government officials or
violations of civil rights, environmental or safety
laws.”

Pub. Citizen Health Research Group, 704 F.2d at 1291 n.30

(quoting Mark Q. Connelly, Secrets and Smokescreens: A Legal and

Economic Analysis of Government Disclosures of Business Data,

1981 Wis. L. Rev. 207, 235-36 (emphasis and alteration in

original)).

To satisfy Exemption 4, an agency need not prove “actual

competitive harm” but must show (1) actual competition and (2)

the “likelihood of substantial competitive injury.” Id. at 1291

(internal citation omitted). While “the court need not conduct a

sophisticated economic analysis of the likely effects of

disclosure, [c]onclusory and generalized allegations of

substantial competitive harm . . . cannot support an agency’s

decision to withhold requested documents.” Id. (internal

citation omitted); see Founding Church of Scientology of Wash.,

D.C., Inc. v. Nat’l Sec. Agency, 610 F.2d 824, 830 (D.C. Cir.

1979) (finding an agency’s “conclusory and generalized

allegations of exemptions” insufficient to support summary

judgment for the agency (internal quotation marks omitted)).

“The defendant must show exactly who [is likely to be] injured by

the release of [the] information and explain the concrete
 -9-

injury.” Delta Ltd. v. U.S. Customs & Border Protection Bureau,

393 F. Supp. 2d 15, 19 (D.D.C. 2005).

B. Segregability

In addition to establishing that information is properly

withheld under the claimed FOIA exemption, an agency seeking to

withhold information bears the burden of establishing that all

reasonably segregrable non-exempt portions of records are

disclosed. Keys v. Dep’t of Homeland Sec., 510 F. Supp. 2d 121,

130 (D.D.C. 2007) (“The burden is on the agency to adequately

demonstrate that all reasonably segregable, non-exempt material

was disclosed.”) Because “[t]he focus of the FOIA is

information, not documents . . . non-exempt portions of a

document must be disclosed unless they are inextricably

intertwined with exempt portions.” Mead Data Central, Inc. v.

U.S. Dep’t of the Air Force, 566 F.2d 242, 260 (D.C. Cir. 1977);

see 5 U.S.C. § 552(b) (stating that an agency must disclose

“[a]ny reasonably segregable portion of a record . . . after

deletion of the portions which are exempt.”). “[A]n agency

cannot justify withholding an entire document simply by showing

that it contains some exempt material.” Mead Data Central, 566

F.2d at 260. Instead, an agency must provide “a detailed

justification” that “describe[s] what proportion of the
 -10-

information in a document is non-exempt and how that material is

dispersed throughout the document.”5 Id. at 261.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

I. SUBSTANTIAL COMPETITIVE HARM

A. Findings of fact

The defendants presented the testimony of two witnesses,

Caulfield and Szot, to explain why the records at issue are being

properly withheld under Exemption 4.

1. Caulfield testimony

Caulfield, HLS’s General Manager, testified that he had

general familiarity with all the categories of documents being

withheld in full or withheld in part. He testified that he had

been involved in HLS’s determinations and communications with the

USDA as to what records should be withheld from disclosure.

(Trial Tr. Day 1 (“Day 1 Tr.”), 87:18-24, Dec. 16, 2008.) On

cross-examination, however, Caulfield clarified that while “he

was very familiar with the categories of documents[,]” he had

“not looked at [all of] the documents themselves for some

significant period of time.” (Day 1 Tr. 90:10-13.) He stated

that he reviewed only “certain documents” in preparation for

5
A court may also consider “the information content of the
non-exempt material which a FOIA plaintiff seeks to have
segregated and disclosed” and “may decline to order an agency to
commit significant time and resources to the separation of
disjointed words, phrases, or even sentences which taken
separately or together have minimal or no information content.”
Id. at 261 n.55.
 -11-

trial. (Day 1 Tr. 90:16-19.) As background, Caulfield testified

that the majority of HLS’s business consists of “pre-clinical

safety assessment” or “toxicology” work for customers in the

pharmaceutical and biotech sectors. He explained that such

research “largely rel[ies] on animal tests to determine whether a

drug is safe to proceed into clinical trials” using human

subjects. (Day 1 Tr. 23:2-6, 16-20, 22.)

For the specific categories of documents at issue, Caulfield

described the withheld one hundred and twenty-one pages of

clinical observation reports as containing data documenting

“detailed physical observation[s]” of animals “that are on active

tests” that are collected to determine the effect of the dose

level of the drug given to the animal. (Day 1 Tr. 48:5-7, 18-

24.) Regarding the pages of veterinary treatment requests and

logs withheld in full and in part, Caulfield explained that they

contain “documentation of a specific effect that was seen in an

animal, whether it be drug related or [otherwise], a recommended

treatment, and in some cases, follow-up observations and

additional treatments.” (Day 1 Tr. 46:22-47:1.) Caulfield

testified that the raw data found in these types of documents are

used by HLS’s toxicologists to create reports for clients for

future submission to the FDA. (Day 1 Tr. 49:16-24.) In

addition, Caulfield testified that the necropsy and postmortem

examination reports withheld in full contain data about an animal
 -12-

at the time of death, and such reports “enable [HLS] to ascertain

[the] gross microscopic effects that a drug may have actually had

on an animal . . . [which] in many cases [are] not evident

through the detailed weekly physical exams.” (Day 1 Tr. 50:7-

21.) Similarly, Caulfield testified that the documents

categorized as “viability records,” which contain twice-a-day

observations of the effects of drugs on animals in a study, are

also “considered raw data.” (Day 1 Tr. 52:4-15.) He stated that

HLS considers all of the raw data contained in these documents to

be confidential according to company policy. (Day 1 Tr. 51:12-

14; 53:2-4.)

Regarding the twenty-two pages of interim test reports

withheld in full, Caulfield testified that the reports are HLS’s

product that it produces to customers and that such reports

“contain the full range of assessments, evaluations and analysis

on the toxic profile of a given compound.” (Day 1 Tr. 55:21-25.)

He continued to explain that the reports

contain individual data for respective animals, group
effects, statistical evaluations and a section called
Materials and Methods, which generally specifies the
methods that [HLS] employed, the equipment that [they]
used, the statistical regimens [they] undertook, the
software that generated and reported the data that’s
contained within that report and any other specifics of
the study that the client might deem relevant.

(Day 1 Tr. 55:25-56:7.) Caulfield testified that the one hundred

twenty-four pages of final test reports and related records

withheld in full are similar to interim test reports insofar as
 -13-

what information they contain and are also produced to HLS

clients. (Day 1 Tr. 57:3-8.) He further testified that the

twenty-eight pages of observation sheets at issue contain

“observations of animals in [a] study over a specified interval

of time,” including body weight and food consumption data, to

demonstrate the effect of a particular drug. (Day 1 Tr. 58:24-

59:4.)

In addition, for the twenty-seven pages of internal USDA

Investigatory Memoranda withheld in part, Caulfield testified

that the portions withheld were “essentially a USDA discussion of

a variety of toxic effects that were either derived from [HLS’s]

study records or [that the USDA] had seen during their on-site

visitations to [HLS’s] laboratory in 1997.” (Day 1 Tr. 54:21-

24.) For the documents categorized as internal HLS memoranda,

Caulfield stated that the pages and portions withheld from these

documents “contain discussions either with internal HLS

scientists or in some instances with [HLS] customers on the

effects of the test compound that were seen in [HLS’s]

studies[.]” (Day 1 Tr. 57:25-58:4.) In addition, Caulfield

recalled that the redacted portions of the fifty-six pages of

IACUC records were “minutes discussing, or program reviews

discussing particular protocols[.]” (Day 1 Tr. 59:17-20.)

Finally, Caulfield testified that information withheld from the

seven pages categorized as miscellaneous records pertaining to
 -14-

animal cages relate to a proprietary design created by HLS for

primate caging. (Day 1 Tr. 53:20-24.) He recalled that the

information redacted was “design schematics and drawings of the

like.” (Day 1 Tr. 53:24-25.)

Caulfield testified that he represented HLS in its

discussions with the USDA as to what information should be

redacted from the pages at issue in this case. (Day 1 Tr. 87:18-

24.) He stated that during his conversations with the USDA about

releasing the records at issue, “his primary concern at the time

was that [they] not release records that were reflective of the

effects of drugs or any of the particulars . . . that were under

the auspices of the confidentiality agreement.” (Day 1 Tr. 88:2-

7.) Caulfield testified that he believed that all of the records

at issue, except for the miscellaneous records pertaining to

animal cages and some IACUC records, would contain information

about HLS’s standard operating procedures (“SOPs”).6 He

explained that SOPs “drive how [data] are collected,” and are

required by the Federal Good Laboratory Practice Regulations “to

ensure the quality and integrity of the data.” (Day 1 Tr. 74:4-

10.) He stated that HLS “do[es] not share them with any of

[their competitors or any other third parties,” except for

regulators and sometimes clients. (Day 1 Tr. 75:10-11.)

6
Caulfield made no attempt to specify which of the withheld
IACUC records at issue did or did not contain information about
HLS’s SOPs.
 -15-

Caulfield further testified that it was his opinion based on his

previous experience writing or approving HLS’s standard operating

procedures and fielding regulatory inspections by the FDA

assessing HLS’ procedures that the withheld records are

“susceptible to a reverse engineering” of HLS’s SOPs.7 (Day 1

Tr. 77:5-22.)

2. Szot testimony

Szot testifying as an expert in toxicology, early-stage drug

development, and “the relationship between [the pharmaceutical

industry] and the retaining of CROs for studies,” (Trial Tr.

Day 2 (“Day 2 Tr.”), 20:9-24, Dec. 17, 2008), stated that the

purpose for which he was retained and of his testimony was to

discuss his views on confidentiality. (See Day 2 Tr. 95:18-22.)

Szot testified that his concerns about confidentiality included

whether HLS’s customers would perceive disclosure of information

as a breach of confidentiality, and “the concept that release of

certain types of data can be reverse engineered to find out

additional information[,]” but clarified that reverse engineering

was not the “central purpose” of his testimony. (Day 2 Tr.

95:12-22, 98:8-18.) He testified that in preparation for his

testimony, he had a single visit to HLS that lasted approximately

7
Caulfield, designated only as a lay witness, could not and
did not offer any expert opinion testimony as to how the
information in the records at issue could be reverse engineered
by competitors in relevant industries to recreate HLS’s SOPs.
 -16-

three to four hours at which he had an opportunity to view the

documents at issue in their unredacted form before preparing his

expert report. (Day 2 Tr. 23:1-5, 21-23.) Szot stated that his

purpose during his visit “was not to look at each document and

determine the significance of every one,” but rather “to

determine what type of data was in question and could that data

be harmful to HLS or to anyone else.” (Day 2 Tr. 24:8-14.) He

testified that he used the descriptions of the documents

contained in the Vaughn index to create a random sample of

documents that included approximately four to five documents from

the different categories of documents for a total of

approximately thirty documents, and examined these documents in

their unredacted form to form his opinions. (See Day 2 Tr.

24:14-25:4; 67:2-8; 72:7-12.) Szot recalled “review[ing]

examples of viability records, necropsy and postmortem records,

clinical observation raw data, veterinary treatment requests and

IACUC meetings.” (Day 2 Tr. 28:9-12.) He also recalled seeing

some “documents pertaining to purchasing of animal cages [and]

miscellaneous records.” (Day 2 Tr. 28:12-14.) Szot could not

recall reviewing interim or final test reports but did remember

some Huntingdon memoranda. (Day 2 Tr. 28:14-21.) He also

reviewed some of HLS’s confidential agreements with its

customers. (See Day 2 Tr. 29:2-8.) Upon cross-examination, Szot
 -17-

denied reviewing any USDA investigatory records. (Day 2 Tr.

93:20.)

Szot opined that nonclinical toxicology studies, such as

those done by HLS, play a “critical role” in drug development

because such studies are a necessary precursor to any studies

using human subjects. (Day 2 Tr. 29:16-25.) He testified that

toxicology studies vary by length and complexity, and may take up

to three years, but such studies are “critical for approval from

the FDA to initiate studies in humans.” (Day 2 Tr. 31:15-32:13.)

With respect to HLS’s competitive market, Szot testified that

both large and small pharmaceutical companies might use a CRO for

their toxicology studies. (Day 2 Tr. 33:16-34:3.) He testified

that competition among the CROs that provide toxicology services

is “fierce.” Szot estimated that there are at least 20 CROs in

the United States and noted that in the past five years, similar

entities have emerged in countries like Brazil, China, India,

Russia that are active in the marketplace. (Day 2 Tr. 52:1-10.)

He also opined that there is fierce competition among the

pharmaceutical companies to be the first to get a product to

market because “the first one out there is usually the most

successful in terms of financial gain.” (Day 2 Tr. 53:5-7.) He

posited that the first company to market a drug can “get the

physicians to be aware of their product,” and once physicians
 -18-

begin using a product, “its hard to wean [them] away to another

product.” (Day 2 Tr. 53:7-12.)

Szot explained that a company choosing a CRO typically

considers, among other things, the CRO’s previous experience in

conducting the study to be commissioned; the experience and

qualifications of the CRO’s senior scientist; the qualifications

of the CRO’s technical staff, including how they are trained and

whether they are certified; whether the CRO has been

appropriately certified; the CRO’s facilities; and the CRO’s

quality assurance unit, the independent group of scientists that

monitors the CRO’s studies to ensure they are conducted according

to good laboratory practices. (Day 2 Tr. 34:9-36:6.) Szot also

testified that a potential customer looks for a CRO that can

ensure the confidentiality of a client’s study. (Day 2 Tr.

36:14-37:11.) He explained that confidentiality is important to

a customer because “the information a client would give to a CRO

is proprietary” and might include, for example, the kind of

compound being developed and its chemical name, or information

about the client’s research goals and plans for the future.

(Day 2 Tr. 37:16-25.)

Moreover, Szot testified that based on his review of the

records he selected, he concluded that release “would be of harm

to [HLS] because, for one reason, clients would assume that if

this data were made public, that their confidentiality agreement
 -19-

with the CRO had been breached[,]” and it would be unlikely that

“potential study sponsors would conduct studies at a CRO that

could not maintain the confidentiality of its study data.”

(Day 2 Tr. 43:4-12; 61:12-18.) He stated that if he were working

for a pharmaceutical company and he discovered that data was

released from HLS, he “would never go to HLS again for conducting

another study, regardless of the reason why it was released.”

(Day 2 Tr. 62:8-12.)

In addition, Szot testified that he believed the records at

issue contain confidential information because they “would show

observations that were related to reactions to the drugs being

tested.” (Day 2 Tr. 41:21-23.) Specifically, he opined that

veterinary treatment requests “would suggest how often toxicity

was observed that was rather significant [and] require attention

of a veterinarian.” (Day 2 Tr. 42:5-7.) Similarly, viability

records would be “a reflection of toxicity.” (Day 2 Tr. 42:12.)

He testified that necropsy and postmortem examination reports

would show “what was happening in the tissues of the animals that

had been given drugs” and observation sheets would “reflect what

was seen by the technician in looking at the animals . . . and

could be reflective of what [a] drug potentially does to

animals.” (Day 2 Tr. 42:8-11, 16-23.) Szot explained that

certain classes of drugs produce “characteristic effects on

toxicity [that] are readily recognizable.” (Day 2 Tr. 44:4-25.)
 -20-

He testified that because certain compounds have “specific types

of toxicity” that are recognizable as a sign of that compound, if

data on toxicity were released, it would be possible for persons

using other information such as a company’s financial documents

or patent-related documents, to determine what compound or group

of compounds are being tested. (Day 2 Tr. 44:23-45:15.) He

further testified a competitor engaged in its own toxicology

study producing similar results might use the information it

could gather about what compounds were being tested to determine

whether to continue its own efforts or alter its strategy.

(Day 2 Tr. 45:16-46:25.) Szot suggested that “astute

scientist[s],” such as senior toxicologists or directors of

toxicology in the pharmaceutical industry are “always looking for

information that would help them identify what is going on with

compounds that they’re testing.” (Day 2 Tr. 60:2-11.) Thus, he

concluded that “[i]t is . . . possible that with knowledge of

approximate study dates and raw data characteristics, competitors

of HLS study sponsors may gain information that could adversely

affect fair competition between the companies.” (Day 2 Tr.

61:19-22.)

Szot also explained that on the other hand, there are other

compounds that do not produce signature toxicology results.

(Day 2 Tr. 47:24-48:1.) He identified an unusual heartbeat, a

necrotic skin flap, and increased or decreased blood pressure as
 -21-

examples of nonunique symptoms that could be caused by different

kinds of substances. (Day 2 Tr. 123:16-124:8.) Similarly, Szot

conceded that data revealing that an animal had an “anaphylactic

response” standing alone wouldn’t reveal information about a

particular compound being tested. (Day 2 Tr. 125:3-7.)

Importantly, Szot conceded on cross-examination that he did not

know what drugs were being tested by HLS during the time frame

covered by the records at issue. (Day 2 Tr. 125:8-10.)

Regarding the usefulness of data over time, Szot explained

that companies generally develop and study a “series of

compounds” with “many different types of molecular entities very

similar to the original” that they begin with and such

development may last a number of years. (Day 2 Tr. 46:10-16.)

Szot also testified that on average, it takes eight to ten years

from the pre-clinical testing stage for a drug to reach the

market, although it could be longer. (Day 2 Tr. 121:12-17.) He

opined that because of the length of toxicology studies and the

considerable time it takes for a drug to reach the market, even

information about a study done ten or fifteen years ago may still

provide an advantage to competitors still developing compounds in

the same series. (See Day 2 Tr. 46:17-25; 48:7-12.)

3. Findings

The defendants have established at least three reasons why

they believe the withheld records should not be disclosed to IDA.
 -22-

One reason both witnesses identified as to why the records at

issue should not be disclosed is that HLS’s customers would

perceive disclosure of the records at issue as a breach of HLS’s

agreements with its customers to keep their toxicology studies

confidential. In addition, Caulfield’s testimony established

that another possible reason the withheld records should not be

disclosed is that the records may contain information about HLS’s

SOPs, and HLS has an interest in preventing disclosure of

information about its SOPs to its competitors because competitors

could arguably use such information to their advantage when

managing their own SOPs. However, Caulfield’s explanation of

SOPs reveals that the Federal Good Laboratory Practice

Regulations are “very specific and particular in terms of what

[any company’s] SOPs need to contain in order to ensure the

quality and integrity of the data” it collects. (Day 1 Tr. 74:4-

9.) Thus, while certain portions of a company’s SOPs, if

revealed, might be capable of providing an advantage to a

competitor, certain portions of a company’s SOPs necessarily will

be reflective only of procedures required by the applicable

regulations. Caulfield’s testimony offers no explanation as to

whether the records at issue would reveal SOPs unique to HLS that

might provide a competitive advantage or would reveal SOPs that

were merely reflective of procedures required under the federal

regulations.
 -23-

A third reason offered by the defendants in support of

nondisclosure is that some of the data contained in the withheld

records, with the exception of the miscellaneous records relating

to animal cages, might reveal the compounds being studied by HLS

at the time the records were created. Szot’s undisputed

testimony established that some toxicology data can, in certain

circumstances, identify the particular compound or series of

compounds being tested, and a competitor engaged in similar

toxicology research might be able to use such information to

decide whether to continue, abandon, or modify its own research

efforts. (See Day 2 Tr. 44:23-46:25.) On the other hand, Szot’s

undisputed testimony also established that certain symptoms and

observations are common for numerous compounds or attributable to

other causes beyond a reaction to a particular compound, and are

not unique to a single or limited number of compounds. As a

result, some research data or recorded observations might not

help a competitor seeking a competitive advantage. (See Day 2

Tr. 123:4-125:1.) Szot did not opine whether the particular data

withheld in this case are data that could be used to identify

certain compounds or if they are benign data that would not

inform a competitor about the specific compound studied.

Furthermore, Caulfield testified that it was his understanding

that “all observations have been deleted from [the] documents [at

issue], other than those relating to animals escaping their cages
 -24-

or getting injured in connection with their cages[,]” and

acknowledged that it was outside his area of expertise to

determine which observations might be unique to drugs being

tested and which observations were not unique to any single drug

or limited group of compounds. (See Day 1 Tr. 177:2-178:10.)

Accordingly, neither Caulfield nor Szot established that the

particular data withheld in this case are data from which

competitors could identify specific drugs being tested, rather

than data recording nonunique symptoms.

Moreover, when identifying the possible harms that may flow

from the release of the records at issue, neither Caulfield nor

Szot correlated the potential harms he identified to specific

withheld records. Although both Caulfield and Szot testified

that customers’ perceptions of HLS’s ability to keep its research

confidential was an important factor in their assessments of

whether the records at issue should not be disclosed, neither

identified which records, if released, would be harmful to HLS’s

competitive position solely because the information released

could be used by HLS’s or its customers’ competitors to gain

advantage in the toxicology, pharmaceutical or CRO industries.

B. Conclusions of law

The defendants bore the burden at trial of establishing that

HLS or its clients face actual competition and that there is a

likelihood that HLS or its clients would suffer a substantial
 -25-

competitive injury if the information withheld is released

because the information could be used by their competitors for

commercial gain. See Pub. Citizen Health Research Group, 704

F.2d at 1291. The defendants have carried their burden of

demonstrating that there is actual competition in the contract

research business among CROs that provide toxicology research to

secure study sponsors, and there is actual competition in the

pharmaceutical industry to be the first to get a particular type

of drug to market. The undisputed testimony of both Caulfield

and Szot attested to the presence of multiple CROs competing

against HLS to provide research services to pharmaceutical

clients, and pressure among pharmaceutical clients to be the

first to market a new drug.

On the other hand, the defendants have not carried their

burden with respect to whether the disclosure of the withheld

information in the 1017 pages at issue in this case has a

likelihood of causing substantial competitive injury to HLS or

its clients. As the court of appeals has instructed, the

competitive harm that matters is a competitor’s affirmative use

of proprietary information that could reap a commercial windfall

for the competitor, rather than the harm caused by a customer or

other third party’s negative reaction to disclosure. See id.;

Worthington Compressors, Inc., 662 F.2d at 51-52. Thus, the

defendants’ evidence that HLS would suffer harm by release of the
 -26-

records at issue because their customers or potential customers

would perceive disclosure as a breach of HLS’s confidentiality

agreements with HLS’s customers does not satisfy their burden

under Exemption 4 in this case.

With respect to the defendants’ evidence that competitors

could use the withheld records to identify HLS’s SOPs or the

compounds being tested, the defendants’ evidence provides no more

than the “[c]onclusory and generalized allegations” that the

court of appeals has rejected as insufficient to sustain a

claimed exemption from disclosure. Pub. Citizen Health Research

Group, 704 F.2d at 1291. While Caulfield’s and Szot’s testimony

established that there are at least two potential ways

competitors might be able to use information likely to be found

in the records at issue, neither related competitors’ potential

uses of information to the specific records at issue with

sufficient detail to establish by a preponderance of the evidence

that competitors of HLS or its clients are likely to use the

particular records at issue to cause substantial harm to HLS or

its clients. Szot, having reviewed only approximately 30 of the

1017 pages at issue, made only general statements as to the kind

of information he found in the samples he reviewed, concluded

that the kind of data he reviewed might be able to be used by

competitors, but also conceded that some data would reveal benign

results from which competitors could not draw specific
 -27-

conclusions. Szot’s generalized opinions, unaccompanied by any

assessment of the likelihood that the particular information

withheld from each of the 1017 pages at issue are data that

competitors would be able to use for commercial advantage, rather

than benign data, are an insufficient basis upon which to

conclude that there is a likelihood of substantial competitive

injury in this case. Similarly, Caulfield’s testimony that a

competitor might be able to recreate HLS’s SOPs was merely a

generalized assertion lacking any explanations that suggest that

the withheld records implicated unique SOPs, rather than

procedures required by regulation. Caulfield, testifying as a

lay witness, was not qualified to and did not opine on the

likelihood that competitors in the toxicology, pharmaceutical, or

CRO industries could use the information contained in the

withheld records.

In addition, Caulfield’s and Szot’s testimony reveals that

they reviewed the records at issue with the belief that the

documents at issue should be withheld from release to prevent

negative customer reaction. There is no evidence suggesting that

either witness analyzed the documents to ascertain whether the

records withheld could be withheld for the sole purpose of

preventing competitors’ use of the information for commercial

advantage. As a result, neither Caulfield nor Szot established a

likelihood that disclosure would cause a competitive harm. Thus,
 -28-

while the defendants have carried their burden of showing that

HLS and its clients experienced actual competition, they have not

shown that there is a likelihood that release of the particular

information withheld in this case would cause HLS or its clients

to suffer a substantial competitive injury.

II. SEGREGABILITY OF NONEXEMPT INFORMATION

Judge Oberdorfer found in 2007 that the Vaughn index is

devoid of any segregability analysis. See In Defense of Animals,

501 F. Supp. 2d at 3. At trial, the defendants introduced no

other evidence on the issue of segregability. Neither

Caulfield’s nor Szot’s testimony spoke to the specifics of

individual documents.

Caulfield’s testimony established that at the time he was

involved in deciding which records were to be withheld in this

case, his redaction decisions were made not solely to prevent the

release of information that competitors could use to their

commercial advantage. He admitted that preventing the release of

information that HLS’s customers viewed as confidential was a

consideration in his discussions with the USDA as to which

records should be withheld. Caulfield offered no testimony

suggesting he ever reviewed the documents at issue again for the

purpose of examining whether the information withheld could
 -29-

actually be used by HLS’s or its clients’ competitors to gain a

commercial advantage over HLS or its clients.8

He further testified that at present, “he was very familiar

with the categories of documents[,]” but he had “not looked at

the documents themselves for some significant period of time.”

(Day 1 Tr. 90:10-13.) He said that he looked at “certain

documents” in preparation for trial, but it had been “some number

of years” since he had reviewed all of the documents. (Day 1 Tr.

90:16-19.) He further testified that he “had little or no

involvement in the Vaughn index and [had] not studied it,” and

could not testify as to whether the Vaughn index prepared

accurately reflects HLS and the USDA’s “joint understanding” of

what materials could be released to IDA. (Day 1 Tr. 88:21-25.)

Caulfield offered no testimony that he ever examined the records

at issue for the purpose of determining whether only that

information which could be used by competitors for commercial

advantage had been redacted and that all other information

reasonably segregated from information that could be used by

competitors had been appropriately released. Accordingly,

Caulfield’s testimony does not provide any evidence on the issue

of segregability.

Similarly, Szot did not offer any testimony on the issue of

segregability. Szot expressly conceded that he could not “say

8
Nor did the defendants establish that Caulfield would be
qualified to give such an opinion.
 -30-

that there is no information in [the USDA reports] that has been

withheld from the plaintiffs that does not contain standard

operating procedures, protocols, or raw data[.]” (Day 2 Tr. 95:5-

11.) He testified that he looked at unredacted versions of the

documents at issue (Day 2 Tr. 25:19-21), and he admitted on

cross-examination that he did not look at the documents “with a

knowledge of exactly what would be deleted from them” and did not

know at the time he was reviewing his sample of documents that

approximately five hundred pages of documents were withheld from

disclosure in their entirety. (Day 2 Tr. 72:13-18; 73:3-14;

73:25-74:4.) Because Szot, by his own admission, did not view

the records at issue for the purpose of assessing whether the

withheld portions were limited to information that could be used

by HLS’s competitors for commercial advantage, his testimony

provides defendants no support on the question of segregability.

B. Conclusions of law

None of the testimony or other evidence admitted at trial

provides any analysis as to whether all information that could

not be used by HLS’s or its clients’ competitors for commercial

advantage has been reasonably segregated from any of the 1017

pages. The defendants have failed to carry their burden of

establishing that all reasonably segregable nonexempt information

has been disclosed with respect to any of the 1017 pages at

issue. Because the defendants have entirely failed to carry
 -31-

their burden on segregability, there is no basis upon which to

conclude that any of the records at issue have been properly

withheld under Exemption 4. Thus, judgment will be entered for

the plaintiff and the USDA will be ordered to release the records

that have been withheld in full or in part.

CONCLUSION

The defendants failed to carry their burden of proving that

there is a likelihood that the information withheld from the 1017

pages at issue, if released, could be used by competitors for

their commercial advantage and that all reasonably segregable

nonexempts portions of the records at issue have been disclosed.

Because the defendants have failed to justify the withholding of

the records at issue under Exemption 4, judgment will be entered

for IDA and the USDA will be ordered to disclose all 1017 pages

remaining at issue in this case. Since IDA has voluntarily

agreed to forego certain information that may be contained in the

withheld records, the USDA will be permitted to redact the

information that IDA has voluntarily agreed to forego. A final

judgment accompanies this Memorandum Opinion directing how

disclosure shall occur.

SIGNED this 18th day of September, 2009.

________/s/_________________
RICHARD W. ROBERTS
United States District Judge