Samuel Watkins v. United States Bureau of Custom
Filing
FILED OPINION (PAMELA ANN RYMER, N. RANDY SMITH and DONALD E. WALTER) The parties will bear their own costs. AFFIRMED IN PART, and REVERSED IN PART. Judge: PAR Concurring & Dissenting, Judge: NRS Concurring & Dissenting, Judge: DW Authoring. FILED AND ENTERED JUDGMENT. [7742473]
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SAMUEL R. WATKINS,
Plaintiff-Appellant,
v.
UNITED STATES BUREAU OF CUSTOMS
AND BORDER PROTECTION,
Defendant-Appellees.
No. 09-35996
D.C. No.
2:08-CV-01679-JLR
OPINION
Appeal from the United States District Court
for the Western District of Washington
James L. Robart, District Judge, Presiding
Argued and Submitted
July 13, 2010—Seattle, Washington
Filed May 6, 2011
Before: Pamela Ann Rymer and N. Randy Smith,
Circuit Judges, and Donald E. Walter, District Judge.*
Opinion by Judge Walter;
Partial Concurrence and Partial Dissent by Judge Rymer;
Partial Concurrence and Partial Dissent by
Judge N.R. Smith
*The Honorable Donald E. Walter, Senior United States District Judge
for the Western District of Louisiana, sitting by designation.
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COUNSEL
Samuel R. Watkins, Fall City, Washington, proceeding pro se
as plaintiff-appellee.
Kayla C. Stahman, Assistant United States Attorney, Western
District of Washington, for defendant-appellee United States
Bureau of Customs and Border Protection.
OPINION
WALTER, District Judge:
Appellant, Samuel Watkins (“Watkins”), a copyright and
trademark attorney, appeals pro se the district court’s sum-
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mary judgment in favor of the United States Bureau of Customs and Border Protection (“CBP”) in his eight Freedom of
Information Act (“FOIA”), 5 U.S.C. § 552, requests for 19
C.F.R. § 133.21(c) Notices of Seizure of Infringing Merchandise (“Notices of Seizure” or “Notices”) from the Ports of San
Francisco, Miami, El Paso, Seattle, Newark/New York, Los
Angeles/Long Beach, and Boston. Watkins’s FOIA request to
the Port of Seattle sought “[a]ll notices to trademark owners
required to be made pursuant to 19 C.F.R. Section 133.21(c),
dated during the period January 1, 2005 through July 31,
2007, regarding merchandise seized at the Port of Seattle as
being counterfeit, as defined in 19 C.F.R. Section 133.21(a).”
Watkins made almost identical requests to the remaining six
ports identified above.
According to Watkins, he did not receive any response or
acknowledgment of the FOIA requests he sent to the Ports of
San Francisco and Miami, as well as a second request to the
Port of Seattle. He further contends that the Port of El Paso
only informed him that his request had been sent to the FOIA
division in Washington D.C., without providing any further
information on the status of the request. The Ports of Newark/New York, Los Angeles/Long Beach, and Boston
demanded, as a prerequisite to responding to Watkins’s
request, that he make an advance payment to cover the processing fees for his FOIA request. The Ports required advance
processing fees ranged from $500 to almost $30,000. In order
to avoid paying what he deemed to be exorbitant processing
fees for his various FOIA requests, Watkins limited the
breadth of his FOIA requests to cover a shorter time-period.
Commercial importers provide the information revealed in
the Notices of Seizure to the Agency when they “make entry”
into the United States. “Making entry” consists of providing
information to the Agency, including the port of entry,
description of the merchandise, the quantity of merchandise,
and the name and address of both the exporter and the
importer. The Agency largely maintains the confidentiality of
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this information because it is important that it receive accurate
information from importers. The Agency gives this information in the Notices of Seizure only to notify trademark owners
upon the seizure of goods bearing a counterfeit mark “that
infringe upon their trademark that has been recorded with [the
Agency].”
The Notices of Seizure include the following information:
(1) the date the merchandise was imported; (2) the port of
entry; (3) description of the merchandise; (4) quantity of the
merchandise; (5) country of origin of the merchandise; (6)
name and address of the exporter; (7) name and address of the
importer; and (8) the name and address of the manufacturer.
The eighth item of information is not always known to the
Agency and is therefore sometimes excluded from the Notice
of Seizure. In addition to the above information, the Notices
of Seizure also include the name of the individual responsible
for receiving the Notices on behalf of the trademark holder.
After considerable back and forth between Watkins and the
Ports, the Ports provided Watkins heavily redacted Notices of
Seizure sent during the relevant time periods, citing FOIA
exemptions 5 U.S.C. § 552(b)(2), (b)(4), (b)(6), and (b)(7)(A)
and (C).
The district court first addressed Watkins’s claim that the
Agency improperly relied on the DHS’s FOIA fee regulations
instead of its own in order to increase Watkins’s costs.
According to the court, upon becoming a component of DHS,
CBP needed DHS’s approval to maintain its previouslypromulgated FOIA regulations. Because CBP did not seek
DHS’s approval, DHS’s FOIA regulations properly governed
Watkins’s requests. The district court discounted the amendments CBP made to its FOIA fee regulations after becoming
a component as merely technical amendments, which were
not enough “evidence that the Agency reviewed its FOIA fee
schedule and affirmatively determined that they would remain
in the regulations.”
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The district court next addressed the Agency’s redaction of
the Notices of Seizure pursuant to 5 U.S.C. § 552(b)(4), or
Exemption 4. First, the court found “that information redacted
in the Notices does constitute ‘confidential’ information.” The
court was persuaded that Notices of Seizure do not always
pertain to counterfeit goods, and it noted that the issuance of
a Notice does not by itself demonstrate the importer was (1)
liable for trademark infringement and (2) aware of the counterfeit nature of the goods. As a result, importers of goods
seized are not “unworthy of protection from competitive
harm.” Second, the court noted that although an agency ordinarily provides “affidavits from the submitters of the information objecting to disclosure, . . . the Ninth Circuit has carved
out exceptions in cases where the Agency submits a declaration from a declarant that is ‘very familiar’ with the industry
at issue.” The court concluded that this exception was met
because the Agency’s declarants had “extensive knowledge of
commercial enforcement and intellectual property affecting
the nation’s borders.” Third, the court found that the Agency’s release of the Notices to affected trademark holders did
not waive Exemption 4. The Agency was statutorily obligated
to provide such “limited disclosure[s] to interested thirdparties.” Fourth, the court found that the Agency “c[ame]
forth with more than adequate information detailing the various harms that could befall importers if the Notices of Seizure
were disclosed.” Consequently, the court granted the Agency’s Motion for Summary Judgment and its request for a Protective Order.
STANDARD OF REVIEW
As we recently held in Electronic Frontier Foundation v.
Office of the Director of National Intelligence, ___ F.3d ___,
2010 WL 1407955 (9th Cir. Apr. 9, 2010), FOIA was enacted
to create a “judicially enforceable public right to secure” government documents. EPA v. Mink, 410 U.S. 73, 80, 93 S.Ct.
827, 35 L.Ed.2d 119 (1973); see also U.S. Dep’t of State v.
Ray, 502 U.S. 164, 173, 112 S.Ct. 541, 116 L.Ed.2d 526
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(1991) (FOIA “was enacted to facilitate public access to Government documents.”). The statutory scheme provides public
access to government information “shielded unnecessarily”
from the public and establishes a “judicially enforceable public right to secure such information from possibly unwilling
official hands.” Dep’t of Air Force v. Rose, 425 U.S. 352,
361, 96 S.Ct. 1592, 48 L.Ed.2d 11 (1976) (internal quotation
marks omitted). FOIA’s purpose was thus to “ensure an
informed citizenry, vital to the functioning of a democratic
society, needed to check against corruption and to hold the
governors accountable to the governed.” John Doe Agency v.
John Doe Corp., 493 U.S. 146, 152, 110 S.Ct. 471, 107
L.Ed.2d 462 (1989) (internal quotation marks omitted).
“At the same time, FOIA contemplates that some information may legitimately be kept from the public.” Lahr v. NTSB,
569 F.3d 964, 973 (9th Cir. 2009). The statute contains nine
exemptions, pursuant to which the government can withhold
information otherwise available for disclosure. See 5 U.S.C.
§ 552(b)(1)-(9) (2006). “FOIA’s ‘strong presumption in favor
of disclosure’ means that an agency that invokes one of the
statutory exemptions to justify the withholding of any
requested documents or portions of documents bears the burden of demonstrating that the exemption properly applies to
the documents.” Lahr, 569 F.3d at 973 (quoting Ray, 502 U.S.
at 173). Because of its overarching goal of public disclosure,
FOIA “exemptions are to be interpreted narrowly.” Id.
On summary judgment, we employ a two-step standard of
review in FOIA cases. Lion Raisins Inc. v. U.S. Dep’t of
Agric., 354 F.3d 1072, 1078 (9th Cir. 2004). First, whether,
de novo, “an adequate factual basis exists to support the district court’s decisions.” Milner v. U.S. Dep’t of the Navy, 575
F.3d 959, 963 (9th Cir. 2009). If so, “ ‘then we review the district court’s conclusions of fact for clear error, while legal rulings, including its decision that a particular exemption
applies, are reviewed de novo.’ ” Id. (quoting Lane v. Dep’t
of Interior, 523 F.3d 1128, 1135 (9th Cir. 2008)). The burden
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rests on the government to justify its decision to exclude disclosures under FOIA. U.S. Dep’t of Justice v. Reporters
Comm. for Freedom of the Press, 489 U.S. 749, 755, 109
S.Ct. 1468, 103 L.Ed.2d 774 (1989).
A.
FOIA Exemption Four
[1] The trade secret exemption to FOIA states, “[t]his section does not apply to matters that are (4) trade secrets and
commercial or financial information obtained from a person
and privileged and confidential.” 5 U.S.C. § 552(b). In order
to invoke Exemption 4 in the Ninth Circuit, the government
agency must demonstrate that the information it sought to
protect is “(1) commercial and financial information, (2)
obtained from a person or by the government, (3) that is privileged or confidential.” GC Micro Corp. v. Defense Logistics
Agency, 33 F.3d 1109, 1112 (9th Cir. 1994).
The terms “commercial or financial” are given their ordinary meanings. See Pub. Citizen Health Research Group v.
FDA, 704 F.2d 1280, 1290 (D.C. Cir. 1983).
“To summarize, commercial or financial matter is ‘confidential’ for purposes of the exemption if disclosure of the
information is likely to have either of the following effects:
(1) to impair the Government’s ability to obtain necessary
information in the future; or (2) to cause substantial harm to
the competitive position of the person from whom the information was obtained.” G.C. Micro Corp., 33 F.3d at 1112
(adopting the standard from National Parks and Conservation
Ass’n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974)). The
only issue before this court is the second prong “substantial
harm.”
[2] Information is “confidential” for the purposes of the
“trade secrets” exemption where disclosure of that information could cause “substantial harm to the competitive position
of the person from whom the information was obtained.” G.C.
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Micro Corp., 33 F.3d at 1112-13 (9th Cir. 1994) (citing Nat’l
Parks & Conservation Ass’n v. Morton, 498 F.2d 765
(D.C.Cir. 1974)). The government need not show that releasing the documents would cause “actual competitive harm.” Id.
at 1113. Rather, the government need only show that there is
(1) actual competition in the relevant market, and (2) a likelihood of substantial competitive injury if the information were
released. Id.
“This Court must first determine whether the district court
had an adequate factual basis for its decision. Courts can rely
solely on government affidavits so long as the affiants are
knowledgeable about the information sought and the affidavits are detailed enough to allow the court to make an independent assessment of the government’s claim.” Lions Raisins
v. U.S. Dept. Of Agriculture, 354 F.3d 1072, 1079 (9th Cir.
2004) (citing Church of Scientology v. United States Dept of
the Army, 611 F.2d 738, 742 (9th Cir. 1979)) (“If the agency
supplies a reasonably detailed affidavit describing the document and facts sufficient to establish an exemption, then the
district court need look no further in determining whether an
exemption applies.”). See Bowen v. U.S. Food & Drug
Admin., 925 F.2d 1225, 1227 (9th Cir. 1991) (holding that
affidavits that described documents withheld, the statutory
exemptions claimed, and the specific reasons for the agency’s
withholding provided adequate factual basis for application of
“trade secrets” exemption). Lions Raisins, 354 F.3d at 1080.
If the district court had adequate factual basis for its decision then this court must decide whether the district court
clearly erred in determining that the Notices of Seizure fell
within the “trade secrets” exemption to FOIA.
Competitive harm analysis “is . . . limited to harm flowing
from the affirmative use of proprietary information by competitors. Competitive harm should not be taken to mean simply any injury to competitive position . . . .” Pub. Citizen
Health Research Group, 704 F.2d at 1291-92 & n. 30 (quota-
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tion omitted; emphasis in original). Although “the court need
not conduct a sophisticated economic analysis of the likely
effects of disclosure[,] . . . [c]onclusory and generalized allegations of substantial competitive harm . . . are unacceptable
and cannot support an agency’s decision to withhold
requested documents.” Id. at 1291 (internal citation omitted).
1.
[3] Watkins argues that the information contained in
Notices of Seizure cannot be commercial because it pertains
to “the unlawful importation of counterfeit goods, and not any
sort of legitimate commercial activity.” The district correctly
rejected this argument because Notices of Seizure are not
final determinations that goods seized are counterfeit. Instead,
the issuance of a Notice is akin to a finding of probable cause.
See generally United States v. 10,510 Packaged Computer
Towers, 152 F. Supp. 2d 1189 (N.D. Cal. 2001) (concluding
the government properly seized and forfeited merchandise
under 19 U.S.C. § 1526(e) because it had probable cause to
believe the merchandise was counterfeit). As the Agency’s
declarations demonstrate, an importer whose merchandise is
seized can challenge the seizure both administratively and in
court. Further, importers sometimes acquiesce in the Agency’s seizure and forfeiture of legitimate goods. As a result, we
cannot conclude that information contained in a Notice of Seizure is non-commercial just because it’s likely — perhaps
even very likely — that the merchandise seized is counterfeit.
[4] In short, the district court’s finding that the Notices
contain plainly commercial information, which discloses intimate aspects of an importers business such as supply chains
and fluctuations of demand for merchandise, is well supported.
2.
[5] The major area of dispute is whether or not the information contained in the Notices of Seizure is privileged or
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confidential. Since the government conceded that importers
are mandated to provide the information to them (AR 93), the
only issue before the court is whether the disclosure would
cause substantial harm to the competitive position of the providers of the information.
To satisfy the harm element, the government needs to show
there is actual competition in the relevant market and a likelihood of substantial injury.
We must ensure the district court had an adequate factual
basis for its ruling. As Lion Raisins demonstrates, a district
court can satisfy this burden with only affidavits from knowledgeable Agency personnel. In this instance, the Agency provided two affidavits from knowledgeable agency employees,
as well as declarations from major trade organizations representing a range of legitimate importers.
[6] Despite Watkins’s arguments that the Agency did not
specify a relevant market, Watkins specified the relevant market by requesting all Notices of Seizure. Therefore, Watkins
established the relevant market as the entire market for
imported goods. There is no set test for determining actual
competition in a relevant market. We embrace a common
sense approach to this issue. The United States import market
exceeds $1 trillion annually. See U.S. Census Bureau U.S.
Bureau of Economic Analysis (last visited July 20, 2010). This leaves little doubt that
there is actual competition. Recognizing “the law does not
require the [Agency] to engage in a sophisticated economic
analysis of the substantial competitive harm to [the importers]
that might result,” GC Micro Corp., 33 F.3d at 1115, the
Agency’s affidavits provide a sufficient factual basis for the
district court to conclude that the disclosure of the information in the Notices of Seizure poses a substantial likelihood of
competitive injury to importers of non-counterfeit goods who
zealously guard their supply chains. Combine this information
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with already public information and importers’ entire distribution network and demand trends could be revealed. See Gilda
Indus., Inc. v. U.S. Customs & Border Prot. Bureau, 457 F.
Supp. 2d. 6, 10-11 (D.D.C. 2006). The district court was not
clearly erroneous in its finding that the information was confidential and privileged. Exemption 4 applies to Notices of Seizure.
3.
[7] Although Exemption 4 applies to Notices of Seizure,
shielding them from public disclosure, CBP waived the confidentiality of the Notices by disclosing them to trademark
owners without any limits on further dissemination. The government “waives” protection under Exemption 4 when it
releases purportedly confidential information to the public.
See Herrick v. Garvey, 298 F.3d 1184, 1193 (10th Cir. 2002)
(“[W]hether ‘information is already in the public domain,’
i.e., waiver of an exemption, is a ‘proposition that if true
would give victory [to plaintiff] independent’ of whether
Exemption 4 properly applies.” (quoting Niagara Mohawk
Power Corp. v. United States Dep’t of Energy, 169 F.3d 16,
19 (D.C. Cir. 1999)); CNA Fin. Corp. v. Donovan, 830 F.2d
1132, 1154 (D.C. Cir. 1987) (“To the extent that any data
requested under FOIA are in the public domain, the [government] is unable to make any claim to confidentiality—a sine
qua non of Exemption 4.” (alteration added)). Indeed, the
“purpose of Exemption 4 is ‘to protect the confidentiality of
information which is obtained by the Government . . . but
which would customarily not be released to the public by the
person from whom it was obtained.’ ” Herrick , 298 F.3d at
1193 (citation omitted).
[8] Here, disclosure of the Notices of Seizure to an
aggrieved trademark owner is mandated by statute. 19 U.S.C.
§ 1526(e). When disclosure is made to a trademark owner, the
government imposes no restrictions on the owner’s use of the
information in the Notice. He can freely disseminate the
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Notice to his attorneys, business affiliates, trade organizations, the importer’s competitors, or the media in a way that
would compromise the purportedly sensitive information
about an offending importer’s trade operations. This nostrings-attached disclosure thus voids any claim to confidentiality and constitutes a waiver of Exemption 4. FOIA accordingly creates an obligation for the government to disclose the
requested documents.
While the “public domain” test articulated by the D.C. Circuit is one persuasive way of determining when the government has waived confidentiality under FOIA, see, e.g.,
Students Against Genocide v. Dep’t of State, 257 F.3d 828,
836 (D.C. Cir. 2001) (requiring information to be “preserved
in a permanent public record” to effectuate waiver), it should
not be the only test for government waiver.
Most cases applying the public domain test have grappled
with requests for sensitive information involving high-level
criminal investigations or matters of national security. See id.
at 35-36 (seeking disclosure of classified CIA documents and
aerial photographs); Cottone v. Reno, 193 F.3d 550 (D.C. Cir.
1999) (seeking FBI wiretap recordings relating to a criminal
investigation of the Colombian and Sicilian Mafia); Fitzgibbon v. C.I.A., 911 F.2d 755 (D.C. Cir. 1990) (seeking disclosure of various CIA documents and the location of a certain
CIA station); Afshar v. Dep’t of State, 702 F.2d 1125 (D.C.
Cir. 1983) (seeking disclosure of CIA and FBI investigation
documents). In such cases, the presumption in favor of disclosure must yield to overriding concerns for public safety and
national security—concerns not relevant to the case at bar.
Moreover, none of these cases presented a scenario in
which the government had already provided a no-stringsattached disclosure of the confidential information to a private
third party.1 In the closest case, Students Against Genocide,
1
Even a case applying the public domain test to Exemption 4 concerned
publicly available SEC forms and a request for Federal Reserve docu-
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the government revealed certain classified photos documenting Bosnian Serb atrocities committed in 1995 to the U.N.
Security Council. 257 F.3d at 836. The photos were displayed
for Council members, but were neither distributed to nor
turned over to members’ possession for further analysis. Id. at
837. This careful procedure prevented Council members from
learning about the highly-classified technical capabilities of
U.S. reconnaissance systems (the basis for the government’s
exemption claim). Id. By contrast, an aggrieved trademark
owner (who receives a Notice of Seizure) can freely disseminate that information in ways that would compromise the purportedly sensitive information about an offending importer’s
trade operations.
[9] Taken to its logical extreme, the “public domain” test
would still shield commercial information under Exemption 4
even if CBP or an aggrieved trademark owner opened up the
phonebook and faxed a copy of the seizure notice to every
importer in the region, provided the disclosures were not preserved in some public record. Therefore, it should make no
difference that the disclosure was not preserved in a “permanent public record” in this case. While the public domain test
will be persuasive in most cases, it does not reach the concerns of confidentiality in circumstances like those presented
in this case. Therefore, when an agency freely discloses to a
third party confidential information covered by a FOIA
exemption without limiting the third-party’s ability to further
disseminate the information then the agency waives the ability
to claim an exemption to a FOIA request for the disclosed
information.
4.
Watkins’s argument that CBP could not assert a claim of
competitive harm without presenting affidavits from entities
ments on a bank merger application, see Inner City Press/Community on
the Move v. Board of Governors of the Federal Reserve System, 463 F.3d
239 (2d Cir. 2006), not a direct disclosure by an agency to a third party.
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named in the Notices of Seizure is foreclosed by Lion Raisins.
See 354 F.3d at 1079.
B.
CBP FOIA Fee Calculations
The CBP’s FOIA fee decision is reviewed for arbitrariness
and capriciousness. Citizens to Preserve Overton Park, Inc. v.
Volpe sets out the standard of review for “arbitrary and capricious” and holds that the reviewing court “must consider
whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” 401 U.S. 402, 416, 91 S.Ct. 814, 823 (1971). The
Court further stated that the inquiry must “be searching and
careful,” but “the ultimate standard of review is a narrow
one.” Id.
CBP’s regulations that set out their FOIA fee schedule can
be found at 19 C.F.R. Part 103.10. According to that section,
“[i]n general, [t]he fees prescribed in this section are for
search and duplication and under no circumstances is there a
fee for determining whether an exemption can or should be
asserted, for deleting exempt matter being withheld from
records to be furnished, or for monitoring a requestor’s
inspection of records made available in this matter.” 19
C.F.R. § 103.10(a)(1). On the other hand, DHS’s fee regulations state a fee must be charged for “the examination of a
record located in response to a request in order to determine
whether any portion of it is exempt from disclosure.” 6 C.F.R.
§ 5.11(b)(7). In addition, DHS’s regulations allow for this fee
to be collected “before sending copies of requested records to
a requestor.” 6 C.F.R. § 5.11(a).
According to 6 C.F.R. § 5.1(a)(2) these fees apply to all
components of DHS (which includes CBP). However, an
exemption to these fees exists, and it states:
[t]he provisions established by this subpart shall
apply to all Department components that are trans-
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ferred to the Department. Except to the extent a
Department component has adopted separate guidance under FOIA, the provisions of this subpart shall
apply to each component of the Department. Departmental components may issue their own guidance
under this subpart pursuant to approval by the
Department.
6 C.F.R. § 5.1(a)(2) (emphasis added).
[10] “It is a familiar rule of administrative law that an
agency must abide by its own regulations.” Fort Stewart
Schools v. Fed. Labor Relations Auth., 495 U.S. 641, 654
(1990) (citing Vitarelli v. Seaton, 359 U.S. 535, 547 (1959)).
The CBP stated in its reply brief, “the better and cleaner practice may have been to repeal the obsolete fee provisions . . .
,” but it failed to do so. (RB 44-45). The history of the CBP’s
fee regulations demonstrate that they have not been repealed.
They are in effect. The DHS exemption to its fee regulations
states “[e]xcept to the extent a Department component has
adopted separate guidance under FOIA” DHS’s fee regulations will control. 6 C.F.R. § 5.1(a)(2). CBP’s FOIA fee regulation was promulgated in 1981. (GB 18). Since that time,
including the incorporation of CBP into DHS, CBP has continued to keep these regulations active by amending them and
never repealing them. Regardless of the district court’s assertion that the revisions were merely technical (ER 12), they
were revisions that demonstrate that the fee regulations are
still valid. CBP’s website even directs individuals to 19
C.F.R. § 103, and not to DHS’s fee provisions, which are
located at 6 C.F.R. § 5.11.
Until CBP repeals the FOIA fee provisions found at 19
C.F.R. § 103, they remain valid, and CBP must follow them.
[11] The district court’s ruling is affirmed as it regards
FOIA Exemption 4. However, the district court’s conclusion
as to the fees charged to Watkins is reversed. We remand for
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the district court to determine the appropriate relief. The parties will bear their own costs.
AFFIRMED IN PART, and REVERSED IN PART.
RYMER, Circuit Judge, concurring in part and dissenting in
part:
I part company only with respect to whether we should
adopt the “public domain” test for waiver embraced by the
D.C. Circuit and the Second Circuit. See Students Against
Genocide v. Dep’t of State, 257 F.3d 828, 836 (D.C. Cir.
2001); Cottone v. Reno, 193 F.3d 550, 554-55 (D.C. Cir.
1999); Fitzgibbon v. CIA, 911 F.2d 755,765-66 (D.C. Cir.
1990); Afshar v. Dep’t of State, 702 F.2d 1125, 1130-31 (D.C.
Cir. 1983); Inner City Press/Cmty. on the Move v. Bd. of Governors of Fed. Reserve Sys., 463 F.3d 239, 244 (2d Cir. 2006).
I think we should. Not only would adopting this test put us in
line with other circuits, but unlike the majority’s retreat from
the public domain test, it is a clear rule that can be applied
without guesswork.
For the public domain doctrine to apply, the specific information sought must have already been “disclosed and preserved in a permanent public record.” Cottone, 193 F.3d at
554; see Davis v. U.S. Dep’t of Justice, 968 F.2d 1276, 127980 (D.C. Cir. 1992). “[W]e must be confident that the information sought is truly public and that the requester receive no
more than what is publicly available before we find a waiver.”
Cottone, 193 F.3d at 555. In other words, the information
must be “freely available.” U.S. Dep’t of Justice v. Reporters
Comm. for Freedom of the Press, 489 U.S. 749, 764 (1989).
Although the agency is statutorily required to disclose
information contained in the Notices of Seizure to affected
trademark holders, this limited disclosure to interested third-
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parties is not otherwise in the “public domain” or “freely
available.” Thus, in my view, the CBP did not waive Exemption 4.
N.R. SMITH, Circuit Judge, concurring in part and dissenting
in part:
I respectfully dissent from Part A.2 of the majority opinion,
because the government has not borne its burden of showing
that the Notices of Seizure fall within the “trade secrets”
exemption, 5 U.S.C. § 552(b)(4) (“Exemption 4”). Otherwise,
I concur in the majority opinion.
I.
Although FOIA provides nine enumerated exemptions
allowing the government to withhold certain information from
the public, 5 U.S.C. § 552(b), there is a “ ‘strong presumption
in favor of disclosure,’ ” Lahr v. Nat’l Transp. Safety Bd., 569
F.3d 964, 973 (9th Cir. 2009) (quoting U.S. Dept. of State v.
Ray, 502 U.S. 164, 173 (1991)). Consistent with the presumption in favor of disclosure, we must construe the exemptions
narrowly. Id. (citation omitted). “An agency that invokes one
of the statutory exemptions to justify the withholding of any
requested documents or portions of documents bears the burden of demonstrating that the exemption properly applies to
the documents.” Id.; see U.S. Dep’t of Justice v. Reporters
Comm. for Freedom of the Press, 489 U.S. 749, 755 (1989).
Here, the parties dispute whether the commercial information in the Notices of Seizure is “confidential” within the
meaning of Exemption 4. The exemption “prevents disclosure
of (1) commercial and financial information, (2) obtained
from a person or by the government, (3) that is privileged or
confidential.”1 G.C. Micro Corp. v. Def. Logistics Agency, 33
1
The Act specifically provides: “(b) This section [requiring disclosure
of information] does not apply to matters that are–
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F.3d 1109, 1112 (9th Cir. 1994). “Confidential” material
means information whose disclosure is “likely to . . . cause
substantial harm to the competitive position of the person
from whom the information was obtained.” Id. Substantial
harm “should not be taken to mean simply any injury to competitive position . . . .” Pub. Citizen Health Research Group
v. F.D.A., 704 F.2d 1280, 1291 n.30 (D.C. Cir. 1983) (quotation marks and citation omitted). Instead, substantial harm is
determined by the “harm flowing from the affirmative use of
proprietary information by competitors.” Id. Although “the
court need not conduct a sophisticated economic analysis of
the likely effects of disclosure[,] . . . [c]onclusory and generalized allegations of substantial competitive harm . . . are unacceptable and cannot support an agency’s decision to withhold
requested documents.” Id. at 1291 (citations omitted); see
G.C. Micro Corp., 33 F.3d at 1115. The parties opposing disclosure need not show actual competitive harm, but must produce “evidence revealing (1) actual competition [in the
relevant market] and (2) a likelihood of substantial competitive injury . . . .” G.C. Micro Corp., 33 F.3d at 1113 (citation
omitted; alteration added).
CBP failed to meet this burden. Even assuming CBP can
establish, a priori, that the markets for all products imported
into the United States are “actually competitive,” it did not
demonstrate in this record a likelihood of substantial competitive injury to importers whose products have been seized as
counterfeit. The Agency asserted in its affidavits to the district
court that disclosure of the Notices of Seizure would:
(1) “provide competitors, presumably other importers, with valuable insight into importers’ supply
....
(4) trade secrets and commercial or financial information
obtained from a person and privileged or confidential . . . .” 5
U.S.C. § 552(b)(4).
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chains, patterns of importation and distribution,
assessments of customer demands and business relationships”; (2) be unfair to importers who “expend
considerable sums of money to locate and establish
business relationships with manufacturers and suppliers of merchandise in the overseas market place”
because “the importer could be cut out entirely of
various business transactions, as consignees or distributors seek to deal directly with the manufacturer,
without the importer’s participation”; and (3) “may
lead consumers to believe that the importer identified in the Notice does business in counterfeit
goods.”
A.
On de novo review, allegations (1) and (2) are meritless,
because they make only speculative and generalized statements about the potential consequences of disclosure. First,
the information in the Notices of Seizure provides questionable added utility to competitors. The Notices include: (1) the
date of importation; (2) the port of entry; (3) a description of
the merchandise; (4) the quantity involved; (5) the name and
address of the manufacturer; (6) the country of origin; (7) the
name and address of the exporter; and (8) the name and
address of the importer. See 19 C.F.R. § 133.21(c). The only
information in the Notice that has not already been publicly
disclosed in the carrier manifest is the name and address of
the importer’s manufacturer and exporter.2 Thus, assuming a
2
Carriers must file manifests with the CBP (which are publicly disclosed) that provide descriptive details of their cargo, including: (1) the
name and address of the importer and the name and address of the shipper;
(2) the general character of the cargo; (3) the number of packages and
gross weight; (4) the name of the vessel; (5) the seaport of loading; (6) the
seaport of discharge; (7) the country of origin of the shipment; and (8) the
trademarks appearing on the goods or packages. See 19 U.S.C. § 1431(c).
Although carriers or importers can file for an exemption to the public disclosure requirements under 19 U.S.C. § 1431(c)(2), or apply for confidential treatment with CBP under § 1431(c)(1)(A), this was apparently not an
issue for any of the shipments in this case.
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competitor could actually discover “patterns of importation
and distribution and assessments of customer demands” from
a single Notice of Seizure, the Notice reveals little information that could not already be gleaned from public shipping
manifests.
Further, CBP fails to explain how revealing an importer’s
supplier of illicit goods creates a “likelihood of substantial
competitive harm.” Notices of Seizure are issued only after
CBP officials discover and detain items with a “spurious
trademark that is identical to, or substantially indistinguishable from, a registered trademark.” 19 C.F.R. § 133.21(a)-(c);
see id. § 133.22(a). If an importer cannot obtain written permission from the trademark owner to import counterfeit articles during the detention period, the articles are forfeited, see
id. § 133.21(b), § 133.22(b)-(c), and the importer incurs substantial civil fines, see 19 U.S.C. § 1526(f).3 The Agency also
makes samples of the counterfeit articles available to the
trademark owner “for examination, testing, or other use in
pursuit of a related private civil remedy for trademark
infringement.” Id. § 133.21(d).
Thus, competitors have a significant incentive not to work
with manufacturers and other supply chain entities implicated
in a counterfeiting seizure. The last supply network a reputable importer would want to mirror is one involving manufacturers and exporters either suspected of or implicated in a
counterfeiting operation, because future shipments from those
entities will be subjected to additional scrutiny from the U.S.
government. The mere suspicion of counterfeiting risks costly
delays and legal entanglements that could jeopardize an
3
The fine for “any person who directs, assists financially or otherwise,
or aids and abets the importation of [counterfeit] merchandise . . . that is
seized” may be up to “value that the merchandise would have had it if
were genuine, according to the manufacturer’s suggested retail price . . . .”
19 U.S.C. § 1526(f)(1)-(2). The fine for a second seizure may be up to
“twice the value that the merchandise would have had if it were genuine
. . . .” Id. § 1526(f)(3).
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importer’s reputation and future business with aggrieved clients. If manufacturers implicated in a Notice of Seizure are
indeed involved in counterfeiting—as most of them presumably are—developing a business relationship with them would
only invite investigations and set importers up for crushing
civil penalties and shipment forfeiture. The notion, then, that
competitors will rush to exploit information about manufacturers and exporters implicated in a Notice of Seizure is, at
best, doubtful.
In the minority of cases where a shipment is seized by mistake, the situation is decidedly different. Disclosing the Notice
of Seizure could plausibly reveal valuable information about
an importer’s legitimate supply chain network. However,
here, the Agency failed to inform us if any of the Notices
requested by Watkins involved mistaken seizures. It simply
explained that “a seizure notice reflects only a suspicion that
the goods at issue are counterfeit.” This explanation ignores
the fact that seizure involves mandatory detention of the
goods, and the importer then bears the burden of proving the
goods are not illicit contraband at the risk of forfeiting the
shipment, incurring substantial fines, and subjecting itself to
civil counterfeiting liability to the rightful trademark owner.
As such, a Notice of Seizure represents much more than mere
“suspicion” of counterfeiting—it creates a rebuttable presumption of counterfeiting liability.
Even if a case could be made for exempting from disclosure those Notices of Seizure that involve mistaken detainment, CBP did not identify which of the Notices would meet
such description. Indeed, the Agency’s affidavits and briefs
provide no details about the specific Notices requested by
Watkins, averring rather that because some of the Notices
might reveal trade secrets, all of the Notices should be
exempted from disclosure. Yet, as even the majority acknowledges, “generalized allegations of substantial competitive
harm . . . are unacceptable and cannot support an agency’s
decision to withhold requested documents.” Public Citizen,
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704 F.2d at 1291 (emphasis added). Therefore, on de novo
review, the Agency failed to rebut the “strong presumption in
favor of disclosure,” see Lahr, 569 F.3d at 973, because its
allegations do not “demonstrat[e] that the exemption properly
applies to [all] the documents” requested by Watkins, id. (citing Ray, 502 U.S. at 173) (alteration added); see Public Citizen, 704 F.2d at 1291 n.30.
B.
Finally, allegation (3)—which complains that consumers
may be led “to believe that the importer identified in the
Notice does business in counterfeit goods”—does not address
a competitive injury cognizable under Exemption 4. It focuses
on the revelation of potentially embarrassing information to
consumers, not the revelation of proprietary information to
competitors. See 5 U.S.C. 552(b)(4); Pub. Citizen Health, 704
F.2d 1280, 1291 n.30 (“We emphasize that . . . competitive
harm in the FOIA context . . . [is] limited to harm flowing
from the affirmative use of proprietary information by competitors.’ ” (citation omitted)).
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