United States Court of Appeals Fifth Circuit F I L E D REVISED APRIL 23, 2003 March 3, 2003

Charles R. Fulbruge III IN THE UNITED STATES COURT OF APPEALS Clerk

FOR THE FIFTH CIRCUIT

____________________

No. 02-10817

Summary Calendar ____________________

FLIGHTSAFETY SERVICES CORPORATION

Plaintiff - Appellant

v.

DEPARTMENT OF LABOR; ET AL

Defendants

DEPARTMENT OF LABOR

Defendant - Appellee

_________________________________________________________________

Appeal from the United States District Court for the Northern District of Texas 3:00-CV-1285-P _________________________________________________________________

Before KING, Chief Judge, and BARKSDALE and STEWART, Circuit Judges.

PER CURIAM:

This action arises from an unsuccessful request by

FlightSafety Services Corporation to the Department of Labor for

statistical information regarding salaries and wages under the

-Page 1- Freedom of Information Act,

(1996 & Supp. 2001).

After requiring the Bureau of Labor Statistics, a component of the

Department of Labor, to submit a Vaughn index to the court

justifying its decision to withhold the requested documents and

requiring the Bureau of Labor Statistics to submit, for in camera

review, the withheld documents, the district court granted summary

judgment in favor of the Bureau of Labor Statistics. Upon review,

we affirm the judgment of the district court.

FACTUAL HISTORY

FlightSafety Services Corporation (“FSSC”) is a publicly held

company under contract (the McNamara-O’Hara Service Contract Act

(“SCA”)) with the United States Air Force Air Mobility Command to

provide student aircrew academic and simulator instruction. Under

the terms of this contract, employee wage rates are determined in

accordance with Department of Labor (“DOL”) Wage Determination

schedules. The SCA requires the DOL to issue prevailing wage rates

and fringe benefits for service employees who are working under a

covered SCA contract. To meet this requirement, cross-industry

surveys of occupational wages and benefits conducted by the Bureau

of Labor Statistics (“BLS”) are relied upon to develop SCA Wage

Determinations.

The request by FSSC that engendered the current suit sought a

redacted electronic copy of all raw data collected to create

(1) specified wage determinations for Wichita Falls, Texas and

-Page 2- Oklahoma City, Oklahoma, (2) the 1997 Occupations Employment

Statistics for Lawton, Oklahoma and Wichita Falls, Texas, and

(3) the 1995 Occupational Compensation Survey, National Summary.

The DOL denied the FSSC’s request, contending that because these

surveys were procured by the BLS with a pledge of confidentiality

to the individual businesses contributing to the surveys, the data

is exempted from disclosure under the Freedom of Information Act

(“FOIA”).

FSSC appealed the denial administratively to the DOL; however,

after being told of a two-year backlog on appeals, FSSC brought

suit in federal court against the DOL and the BLS in three separate

cases under the FOIA. The district court consolidated the cases,

and FSSC voluntarily dismissed the DOL. Both FSSC and the BLS then

moved for summary judgment. The district court held that the

information sought was generally exempted from disclosure under the

FOIA. However, in order to determine if the exempt portions of the

documents could be reasonably segregable from the rest of the

information contained in the documents, the district court ordered

the BLS to produce a Vaughn index to justify the agency’s

withholding of documents, under which the BLS was required to

correlate each document withheld with a particular FOIA exemption,

and to submit the withheld documents under seal for in camera

review by the district court. Vaughn v. Rosen,

(D.C.

Cir. 1973). The district court reviewed the documents submitted

under seal and the Vaughn index prepared by the BLS and determined

-Page 3- that summary judgment in favor of the BLS was appropriate. Final

judgment in favor of the BLS was thereafter granted on May 16,

2002. FSSC appeals this judgment.

On appeal, pursuant to a court-requested supplemental letter

brief by the BLS to this court, FSSC became aware, allegedly for

the first time, that the BLS had submitted a “representative

sample” of withheld documents to the district court for its in

camera review rather than submitting all the withheld documents, as

requested by the district court.1 In response, FSSC requests that

we “order the DOL to comply with the District Court’s order [to

produce all withheld documents] so that the full in camera review

may be conducted by this Court.”

STANDARD OF REVIEW

As is the case here, most FOIA cases are resolved at the

summary judgment stage. Cooper Cameron Corp. v. United States

Dep’t of Labor,

(5th Cir. 2002). This court

reviews de novo the district court’s grant of summary judgment

under the FOIA, using the same standard used by the district court

in reviewing the agency’s decision to, in this case, deny FSSC

1 The BLS also, in its supplemental letter brief to this court, apologized for “inadvertent error” in stating that certain withheld segregable material had already been disclosed to FSSC when, in fact, the information had not yet been disclosed. The BLS then stated that “[i]n a telephone conversation on January 21, 2003, Government counsel informed counsel for [FSSC] that this process would begin promptly.”

-Page 4- access to requested documents.2

Further, the FOIA “expressly

places the burden ‘on the agency to sustain its action.’”

(quoting United States Dep’t of Justice v. Reporters Comm. for

Freedom of the Press,

(1986).

ANALYSIS UNDER THE FOIA

2 The parties dispute the standard with which this court should review the finding of the district court, after conducting an in camera review of the withheld documents, that the non- exempt portions of the documents could not be reasonably segregated from the exempt portions. At least one circuit has stated that such a determination should be reviewed for clear error given its apparent roots in a factual determination. See Nat’l Wildlife Fed. v. United States Forest Serv.,

(9th Cir. 1988) (“In reviewing a district court’s judgment under the FOIA, we ‘must determine whether the district judge had an adequate factual basis for his or her decision’ and, if so, we ‘must determine whether the decision below was clearly erroneous.’”) (quoting Church of Scientology v. United States Dep’t of the Army,

(9th Cir. 1979)); but see Simmons v. United States Dep’t of Justice,

(4th Cir. 1986) (“Congress provided in the FOIA that courts should make a de novo review of any claimed exemption by an agency, review documents in camera if necessary, and release any reasonably segregable non-exempt portion of a document that an agency claims is exempt.”) (internal citations omitted); Goland v. CIA,

(D.C. Cir. 1978) (“This rationale [to utilize a deferential standard of review] violates the court’s statutory responsibility to undertake de novo review for ‘reasonably segregable material.’). This case does not require us to weigh in on the debate whether the statutory mandate that a district court must review an agency’s determination that non- exempt portions of exempt documents are not reasonably segregable likewise applies to our review of the district court’s determination on this issue. Our conclusion here remains the same whether the district court’s judgment is reviewed de novo or for clear error. See also Halloran v. Veterans Admin.,

(5th Cir. 1989) (stating that “[b]ecause the district court based its decision not upon the unique facts of this case, but upon categorical rules regarding what does and does not constitute an [exemption] for FOIA purposes, we treat its conclusions as conclusions of law, and thus review them de novo,” in a case that reviewed the district court’s conclusion that certain information was reasonably segregable).

-Page 5- Congress created nine exemptions (found under

(b)) to its general policy of full agency disclosure under the

FOIA “because it ‘realized that legitimate governmental and private

interests could be harmed by release of certain types of

information.’” United States Dep’t of Justice v. Julian,

(1988) (quoting FBI v. Abramson,

(1982));

Halloran v. Veterans Admin.,

(5th Cir. 1989). At

issue here is the exemption found under § 552(b)(4), which protects

“trade secrets and commercial or financial information obtained

from a person and privileged or confidential.”

(b)(4) (1996 & Supp. 2002).

To demonstrate that this exemption shelters the relevant

documents here from disclosure, the BLS is required to show that

the information contained in the documents is (1) commercial or

financial, (2) obtained from a person and (3) privileged or

confidential. Cont’l Oil Co. v. Fed. Power Comm’n,

(5th Cir. 1975).

The district court correctly held that the business

establishments surveyed by BLS fall within the FOIA’s definition of

“person,” statutorily defined to “include[] an individual,

partnership, corporation, association, or public or private

organization other than an agency.”

(2) (1996 and

Supp. 2002).3 FSSC does not dispute the accuracy of this finding.

3 The BLS asserts that the source data for the Occupational Compensation Survey consisted of about 25,000

-Page 6- The district court also properly held that the documents at

issue (in unredacted form) include “confidential” and “commercial”

information, thus allowing the documents to fall within the

confines of the “trade secrets” exemption under § 552(b)(4). See

Calhoun v. Lyng,

(5th Cir. 1988) (stating that

information is confidential under

(b)(4) if its

disclosure would likely (1) impair the government’s ability to

obtain necessary information in the future, or (2) cause

substantial competitive harm to the person from whom it was

obtained). As cogently stated by the district court:

The BLS is the principal data-gathering agency of the federal government in the broad field of labor economics, which includes information on employment, unemployment, wages, productivity, prices and occupational safety and health. Because it is not empowered with any statutory right to procure the data it needs, it must give the source of information a pledge of confidentiality. Moreover, being a specifically designated statistical agency within the Executive Branch, whose activities are predominately the collection, compilation, processing, or analysis of information for statistical purposes, it also subject [sic] to the requirements of the Office of Management and Budget’s (“OMB”) Order Providing for the Confidentiality of Statistical Information. . . . In addition, the Wage Survey, National Compensation Survey, and Occupation Employment Survey forms at issue in this case all contain pledges to the non-government

establishments collected annually in a sample representing the contiguous United States, and an additional 7,000 establishments in surveys required for administering the SCA. The National Summary, which replaced the Occupational Compensation Survey, called for a 36,000-establishment survey, with one-half providing wage date information and the remaining one-half providing both wage date and benefit information. The source data for the Occupations Employment Statistics survey consisted of a total of 1.2 million establishments collected over three years.

-Page 7- establishments providing information to the BLS that such information will be used only for statistical purposes and will be held in confidence and will not be disclosed without their written consent, to the full extent permitted by law. The Court finds there can be no doubt on this record that disclosure of the requested information would impair the BLS’ ability to collect data in the future. It is reasonable to conclude that such an opening wedge of disclosure would make it difficult, if not impossible, for the BLS to collect other data which is essential to its efficient operation since not empowered with any statutory right to procure the data it needs.

Plainly, the information sought in this case is the type of

information Congress intended to exempt from disclosure under the

FOIA. See S. REP. No. 89-813 at 9 (1966), reprinted in 1966

U.S.S.C.A.N. 2418 (discussing its goal of “protect[ing] the

confidentiality of information which is obtained by the government

through questionnaires or other inquiries, but which would

customarily not be released to the public by the person from whom

it was obtained”). In order for the DOL to apply its regulatory

authority consistently, it must rely on BLS generated data. The

document disclosure here presents a serious risk that sensitive

business information could be attributed to a particular submitting

business. This attribution would indisputably impair BLS’s future

ability to obtain similar information from businesses who provide

it under an explicit understanding that such information will be

treated confidentially. FSSC does not genuinely dispute this

point.

The real dispute raised by FSSC in this case is whether the

-Page 8- requested documentation contains any reasonably segregable non-

exempt data. The FOIA states that “[a]ny reasonably segregable

portion of a record shall be provided to any person requesting such

record after deletion of the portions which are exempt under this

subsection.”

(b) (1996 & Supp. 2002). FSSC contends

that the BLS should be required to redact any uniquely identifying

private company descriptives and disclose the remainder of the

“reasonably segregable” material. The BLS disagrees, contending

that any disclosable information is so inextricably intertwined

with the exempt, confidential information, that producing it would

require substantial agency resources and produce a document of

little informational value.

Upon independent review of the documentation submitted to the

district court for an in camera inspection, we agree with the

district court that FSSC’s request should be denied. The fact

that only a “representative sample” of the documents rather than

all the withheld documents were submitted to the district court for

an in camera review does not alter our determination. When it

submitted documents for the in camera review, the DOL clearly

stated in a declaration appended to the materials submitted to the

district court, that the BLS was submitting just “a sample of the

withheld records” and a Vaughn index for the court’s in camera

review. The district court was thus aware that only a portion of

the documents withheld by the BLS were submitted for the district

court’s review when it granted summary judgment in favor of the

-Page 9- BLS.4

It is clear to us upon review of these documents (and the

detailed Vaughn index) that any disclosable information is so

inextricably intertwined with the exempt, confidential information

that producing it would require substantial agency resources and

produce a document of little informational value. In addition to

providing an adequate sample of the withheld documents, the BLS

took the time to prepare a Vaughn index to allow the district court

(and us) to satisfy ourselves that the information contained in the

documents is exempt and does not contain reasonably segregable

material. Vaughn v. Rosen,

(D.C. Cir. 1973); see

also Kent Corp. v. NLRB,

, 624 (5th Cir. 1976)

(rejecting claim that documents within the executive privilege

exemption contained “reasonably segregable” material). We thus

agree with the district court’s conclusion that the documents

contain no reasonably segregable information. See, e.g.,

Willamette Ind., Inc. v. United States,

, 867-68 (9th

Cir. 1982). Further, FSSC’s requests that the BLS be required to

simply insert new information in place of the redacted information

requires the creation of new agency records, a task that the FOIA

does not require the government to perform. NLRB v. Sears, Roebuck

Co.,

(1975).

4 We note that a copy of this declaration (and the Vaughn index) were served on counsel for FSSC on July 15, 2002, before its notice of appeal was filed.

-Page 10- CONCLUSION

The exemption found under

(b)(4) shelters the

withheld documents from the requested FOIA disclosure, and we do

not find a portion of those documents that can be reasonably

segregated from the portions which are exempt under this

subsection. We therefore AFFIRM the judgment of the district

court.

-Page 11-