costing Amore Holdings, Inc. money and lost time," (Watt Aff. P 19), and that "denial of future necessary approvals would result in even greater financial hardship and commercial disadvantage." (Sloss Aff. P 17). To hold that Exemption Four is unavailable to the FDIC here would set a bad precedent: the FDIC's entire portfolio of receivership assets would be open to invasive inquiries and financially damaging disclosures.
Under the second part of the National Parks test, confidentiality may be established under Exemption Four if disclosure of the relevant information would have the effect of "causing substantial harm to the competitive position of the person from whom the information was obtained." Continental Stock, 566 F.2d at 375. The FDIC argues that the joint venturers will suffer substantial competitive harm if the redacted passages of the Agreement are released to plaintiffs. Plaintiffs respond that the provider of the information cannot suffer competitive harm here because ASB is defunct, and because any harm would be inflicted by community groups who are not competitors of the joint venturers in the New York City real estate market. (See Pl. Mem. at 14-15)
The argument that there is no harm to "the person from whom the information is obtained" because ASB is defunct mistakes the nature of receivership and is formalistic. Plaintiffs in effect ask this court to hold that all preexisting rights of the bank were destroyed because a corporate reorganization occurred. But as receiver, the FDIC acceded to the rights of the failed financial institution. See 12 U.S.C. § 1821(d)(2)(A)-(B). Moreover, the objections to the release of the information have been raised and maintained by the managers of an existing entity, Amore Holdings, Inc. (See Watt Aff. P 11)
Plaintiffs are correct insofar as they note that the opponents of the joint venture project do not compete with the joint venturers as rival New York City real estate developers. But the economic injury they may inflict on the joint venture is nonetheless a competitive injury. Plaintiffs' avowed goal is to drive the joint venture out of business. Any financial loss by the joint venture will jeopardize both the venture's relative position vis-a-vis other New York City real estate developers and its solvency. Plaintiffs' argument recalls the antitrust refrain that antitrust law protects competition, not competitors. This argument is misplaced when applied to Exemption Four because the exemption is in fact designed to protect competitors who submit information to agencies.
Thus, the FDIC has demonstrated convincingly the existence of substantial competitive harm. The more difficult question is whether "the person from whom the information was obtained" here is within the class of persons protected by the second part of the National Parks test. Nominally, the person who provided the information and who stands to suffer harm is Amore. However, in one sense the provider and sufferer of harm is the FDIC itself because Amore is under the control of the agency. The FDIC is invoking the "substantial harm" prong of the National Parks test ultimately to protect its own interest -- the maximization of the value of a receivership asset. Yet the second part of the National Parks test seems to have been formulated with the interests of private sector third parties in mind.
But even if the literal language of the second part of the National Parks test embraces only private third parties and not the agency itself, the FDIC is not precluded from relying on Exemption Four for at least two reasons. First, as noted above, the FDIC assumes as receiver a separate legal existence. Unlike the FDIC qua agency, the FDIC in its role as receiver may assert the rights of private parties. Cf. O'Melveny & Myers v. Federal Deposit Ins. Corp., 129 L. Ed. 2d 67, 114 S. Ct. 2048, 2054 (1994) (the FDIC as receiver "steps into the shoes" of the failed institution and acquires "the rights that existed prior to the receivership"). Second, the National Parks test does not mark the outer limits of Exemption Four. The FDIC's mission as receiver should be recognized as a legitimate government interest cognizable under Exemption Four even if the National Parks test is not read to include the present situation.
Permitting the FDIC to rely on Exemption Four in aid of its receivership mission will not seriously compromise the policies served by FOIA. The thrust of the FOIA is to create a right of access to official information. Information generally acquires an "official" character either when it is generated by the agency itself or is acquired from private parties whose activities are substantively germane to the agency's "official" mission. Here, the real estate development plans of the joint venture have nothing to do with the FDIC's regulation of the deposit insurance system in this country. The agency's mission as receiver is not to deal in commercial real estate. Rather, it is to obtain the maximum possible proceeds when it disposes of assets. Disclosure here would not enlighten the public as to how the government in its sovereign capacity regulates deposit insurance, but would only frustrate the FDIC's goal of keeping the deposit insurance coffers as full as possible.
Further, this conclusion does no violence to the literal language of the statute, which exempts "commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4). Here, the redacted information is commercial in nature; it was obtained from a person, Amore; and it is confidential in the ordinary sense of the word. Any awkwardness in the application of Exemption Four is attributable only to language in a judicial interpretation of the statute that was formulated with different facts in mind.
Because the FDIC is entitled to withhold the redacted information under Exemption Four, there is no need to reach the issue of whether disclosure of this information also would violate the Trade Secrets Act, 18 U.S.C. § 1905, which imposes criminal penalties on persons who disclose certain government secrets. See 9 to 5, 721 F.2d at 12 ("If the documents are found to be exempt from disclosure under the FOIA, they will not be disclosed and no question will arise under section 1905").
Plaintiffs also have petitioned the court to exercise its discretion under the FOIA to examine the withheld information in camera to determine if an exemption properly may be invoked. See 5 U.S.C. § 552(a)(4)(B). I decline this invitation. The commercial nature of the withheld information has not been challenged, and no purpose would be served by such an examination.
Because the redacted information is confidential within the meaning of Exemption Four, the FDIC was entitled to withhold it from plaintiffs. Therefore, defendant's motion for summary judgment is granted and plaintiffs' cross-motion for summary judgment is denied. The complaint is dismissed.
Michael B. Mukasey,
U.S. District Judge
Dated: New York, New York
September 19, 1995
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