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Chrysler Corp. v. Schlesinger

filed as amended october 18 1977.: September 26, 1977.

CHRYSLER CORPORATION,
v.
JAMES A. SCHLESINGER, SECRETARY UNITED STATES DEPARTMENT OF DEFENSE; LT. GEN. WALLACE ROBINSON, DIRECTOR, DEFENSE SUPPLY AGENCY; PHILIP J. DAVIS, DIRECTOR, OFFICE OF FEDERAL CONTRACT COMPLIANCE; AND JOHN DUNLOP, SECRETARY UNITED STATES DEPARTMENT OF LABOR; CHRYSLER CORPORATION, APPELLANT IN NO. 76-1970; JAMES A. SCHLESINGER, SECRETARY UNITED STATES DEPARTMENT OF DEFENSE; LT. GEN. WALLACE ROBINSON, DIRECTOR, DEFENSE SUPPLY AGENCY; PHILIP J. DAVIS, DIRECTOR, OFFICE OF FEDERAL CONTRACT COMPLIANCE; AND JOHN DUNLOP, SECRETARY UNITED STATES DEPARTMENT OF LABOR, APPELLANTS IN NO. 76-2238; (D.C. CIVIL ACTION NO. 75-159)



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

Author: Gibbons

Before VAN DUSEN, ADAMS and GIBBONS, Circuit Judges

GIBBONS, Circuit Judge

Plaintiff, Chrysler Corporation (Chrysler), appeals and defendants, federal government officials,*fn1 cross-appeal, from a final judgment of the district court in an action for injunctive and declaratory relief aimed at preventing public disclosure of certain documents furnished by Chrysler to federal governmental agencies. The action was originally prompted by the decision of the defendants to honor a request by third parties*fn2 for public disclosure of the contested documents under the Freedom of Information Act (FOIA).*fn3 The district court, after a trial de novo, permanently enjoined public disclosure of certain portions of the contested documents, but denied the full range of injunctive relief requested by Chrysler, and also denied its request for a declaratory judgment that any future disclosure of similar documents would violate federal law. Chrysler appeals from the denial of the full declaratory and injunctive relief it requested. The federal government defendants in their cross-appeal originally contended (1) that Chrysler has no right to judicial review of an agency decision to disclose information requested by third parties under the FOIA; (2) that even if judicial review is available the scope of review is limited to that defined in the Administrative Procedure Act,*fn4 and does not include a trial de novo; and (3) that even if a trial de novo was proper the district court erred in enjoining disclosure of portions of the contested documents. After the government's initial brief was filed in this court the Solicitor General, in a petition for a writ of certiorari to review the decision of the Fourth Circuit in Westinghouse Elec. Corp. v. Schle-singer, 542 F.2d 1190 (4th Cir. 1976), cert. denied sub nom. Brown v. Westinghouse Elec. Corp., U.S. (1977), took the position that the exceptions to judicial review listed in 5 U.S.C. § 701 were inapplicable to so-called reverse FOIA actions,*fn5 and that Pub. L. 94-574, 90 Stat. 2721, eliminated federal sovereign immunity as a bar to such review. We have been advised by the Justice Department that it is now the government's position that judicial review is available to parties objecting to disclosure of information under the FOIA, but that the Administrative Procedure Act controls our scope of review. Chrysler contended in the district court, and continues to urge here, that any disclosure of the contested documents was prohibited by several federal statutes to which specific reference will be made hereafter and by the due process clause of the fifth amendment. It maintained in the district court, and urges here, that a trial de novo was proper. Because we are in substantial agreement with the government's present position we vacate the judgment of the district court and remand for further proceedings.

e

I

THE REGULATORY FRAMEWORK

Chrysler is a government contractor. As a condition of its doing business with the government it is required by an Executive Order,*fn6 and regulations promulgated there-under by the Secretary of Labor,*fn7 to employ and treat all employees without regard to race, color, religion, sex, or national origin, and to take affirmative action to eliminate discrimination in employment. In order to monitor compliance with these requirements, federal regulations require that every government contractor or subcontractor with fifty or more employees and a contract valued at $50,000 or more prepare and file an annual Employer Information Report, known as an EEO-1 report.*fn8 The EEO-1 report contains data on the number of women and minority group members employed. Contractors must also prepare and make available for inspection by appropriate federal agencies an Affirmative Action Program (AAP), providing detailed information on their past and projected employment of women and minority group members.*fn9 The AAP must contain a "utilization analysis" which describes the occupational levels of minority personnel employed by the contractor and "goals and time tables" by which opportunities for minority group members can be improved.*fn10 The failure of a contractor to comply with the Executive Order and regulations can result in the cancellation, termination, or suspension of existing contracts and debarment from future awards.*fn11

The Secretary of Labor has delegated administrative responsibility for the enforcement of the Executive Order to the Director of the Office of Federal Contract Compliance (OFCC).*fn12 The Director of OFCC has designated various federal agencies as "compliance agencies." These compliance agencies have primary responsibility for assuring adherence to the Executive Order by contractors within certain geographic areas or industrial classifications.*fn13 In Chrysler's case the Defense Supply Agency of the Department of Defense (DSA) is the designated compliance agency. As part of its monitoring duties DSA has conducted "compliance reviews" of Chrysler's employment practices. These reviews consist of an examination of Chrysler's EEO-1 and AAP documents, and on site inspections of its facilities. Compliance reviews result in a compliance review report (CRR), setting forth information supplied by the contractor, an analysis of his performance, and recommendations for sanctions or corrective measures.*fn14 DSA is also responsible for investigation and resolution of complaints of violations of the Executive Order,*fn15 and must file a "complaint investigation report" (CIR) with OFCC within sixty days of the receipt of a complaint.*fn16

Regulations promulgated by the Secretary of Labor contain rules providing for access by the public to information in the records of OFCC or its various compliance agencies.*fn17

These regulations implement 5 U.S.C. § 552, the Freedom of Information Act and supplement the policy and regulations of the Department of Labor, 29 C.F.R. Part 70. It is the policy of the OFCC to disclose information to the public and to cooperate with other public agencies as well as private parties seeking to eliminate discrimination in employment....

41 C.F.R.§ 60-40.1. Consistent with the general policy of disclosure to aid in eliminating employment discrimination, the regulations provide:

[Upon] the request of any person for identifiable records obtained or generated pursuant to Executive Order 11246 (as amended) such records shall be made available for inspection and copying, notwithstanding the applicability of the exemption from mandatory disclosure set forth in 5 U.S.C. 552 subsection (b), if it is determined that the requested inspection or copying furthers the public interest and does not impede any of the functions of the OFCC or the Compliance Agencies except in the case of records disclosure of which is prohibited by law.

41 C.F.R. 60-40.2(a). Thus the regulations contain a blanket waiver of any authority the government might have to resist disclosure of any information which falls into one of the nine categories of information which are exempt from mandatory disclosure under the FOIA.*fn18 OFCC's regulations also provide that "... all contract compliance documents within the custody of the OFFCC and the Compliance Agencies shall be disclosed upon request unless specifically prohibited by law or as limited elsewhere herein." 41 C.F.R. § 60-40.2(b). This blanket and mandatory disclosure requirement with respect to compliance documents is qualified in 41 C.F.R. § 60-40.3(a) which lists six categories of documents or parts thereof which "are exempt from mandatory disclosure by the OFCC and the compliance agencies and should be withheld if it is determined that the requested information does not further the public interest and might impede the discharge of any of the functions of the OFFCC or the Compliance Agencies."*fn19 Thus, even information within these six categories may be disclosed if OFCC determines that such disclosure is in the public interest and does not impede the discharge of the functions of OFCC or its compliance agencies. Finally, 41 C.F.R. § 60-40.4*fn20 provides that EEO-1 reports shall be disclosed, even though the exact same forms are furnished to the Equal Employment Opportunity Commission (EEOC)*fn21 and EEOC is statutorily prohibited from disclosing EEO-1 reports in its possession.*fn22

The contested documents in this case include Chrysler's EEO-1 reports and information which falls under three of the six exempt categories defined in 41 C.F.R. § 60-40.3(a),*fn23 namely: (1) those parts of Chrysler's AAP's which contain confidential commercial information indicating that a contractor plans major changes or shifts in his personnel requirements not yet publicly disclosed,*fn24 (2) those parts of Chrysler's AAP's which set forth staffing patterns and pay scales the release of which would injure the business or financial position of the contractor,*fn25 and (3) compliance investigation files and related documents to the extent that such information constitutes trade secrets and confidential commercial or financial information.*fn26

II

THE AGENCY PROCEEDINGS

On May 14, 1975, DSA notified Chrysler that third parties had requested under the FOIA the disclosure of the 1974 AAP of Chrysler's Newark, Delaware assembly plant, and the October 1974 CIR for that facility. Chrysler, on May 23, 1975 objected to the requested disclosure of the AAP, relying on the FOIA exemptions and OFCC disclosure regulations. It also requested a copy of the October 1974 CIR, which it had never seen, so that it could determine which parts of it should be treated as confidential. On May 30, 1975, DSA notified Chrysler that it had determined that the Newark AAP and CIR were subject to disclosure under the FOIA and OFCC disclosure rules, that Chrysler would not be furnished with a copy of the CIR prior to disclosure, and that both documents would be disclosed on June 4, 1975.

On July 1, 1975, DSA notified Chrysler that it had received a request under the FOIA for disclosure of the AAP and CRR for Chrysler's Hamtramck, Michigan assembly plant. The July 1 notice indicated that under the recent amendments to the FOIA, Pub. L. 93-502, 5 U.S.C. § 552(a)(6)(A)(i), DSA was required to make a substantive decision on release of these documents within ten working days of receipt of the request, and for that reason could not await the results of an appeal to OFCC under 41 C.F.R. § 60-60.4(d).*fn27 The DSA letter suggested that any comments Chrysler wished to make should be accomplished promptly. Chrysler, by letters dated July 3 and July 11, 1975, objected to the disclosure of the documents relating to its Hamtramck plant, contending that both the AAP and CRR were exempt from disclosure under the FOIA, and also that disclosure of certain information contained in the AAP, including EEO-1 data, was prohibited by 18 U.S.C. § 1905,*fn28 by § 709(e) of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-8(e),*fn29 and by 44 U.S.C. § 3508.*fn30 Chrysler's letter also requested a copy of the Hamtramck CRR, which it had never seen. On July 18, 1975, DSA replied in part:

Full consideration has been given by this agency to your comments and objections. Nevertheless, a determination has been made to release both the Affirmative Action Plan and the Compliance Review Report to the requester, subject to the exceptions noted in the attached list for the reasons given therein. Your assertions of competitive harm were unsupported by any showing of the likelihood of such harm, and only in one context would we agree to the existence of such a likelihood without such a showing. This is reflected in the first ten exceptions on the attached list.

This decision may be appealed to the Office of Federal Contract Compliance, Washington, D.C., 20210, within 10 days, per 41 C.F.R. 60-60.4. However, due to the time constraints imposed by the recent amendments to the Act (Public Law 93-502), we cannot wait for the results of such an appeal. Accordingly, the subject documents, with deletions as noted in the attached list, will be released 5 working days after your receipt of this letter.

(JA-100) The July 18 letter also made clear DSA's position that neither 18 U.S.C. § 1905, 42 U.S.C. § 2000e-8(e) nor 44 U.S.C. § 3508 applied to any part of ...


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