Ctr. for Digital Democracy v. FTC, No. 14-02084, 2016 WL 3093369 (D.D.C. June 1, 2016) (Mehta, J.)

Wednesday, June 1, 2016

Ctr. for Digital Democracy v. FTC, No. 14-02084, 2016 WL 3093369 (D.D.C. June 1, 2016) (Mehta, J.)

Re: Request for annual reports submitted to FTC by safe harbor programs which enforce Children's Online Privacy Protection Rule

Disposition: Granting defendant's motion for summary judgment; denying plaintiff's motion for summary judgment

  • Exemption 3:  The court finds that "FOIA Exemption 3 and Section 6(f) of the [Federal Trade Commission] Act are 'coextensive' with FOIA Exemption 4."  The court relates that "the relevant statute invoked is Section 6(f) of the FTC Act."  "Section 6(f) prohibits the FTC from 'mak[ing] public any trade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential.'"  The court explains that "[b]y adopting such parallel text, Congress intended for Section 6(f) 'to remove any discretionary authority that the Commission has to make public any information which is exempt from disclosure under the Fourth Exemption of the Freedom of Information Act.'"
  • Exemption 4:  The court holds that defendant's use of Exemption 4 was appropriate.  First, the court finds that "the parties agree that the National Parks mandatory-disclosure test applies, because the safe harbor programs submitted the contested information pursuant to the FTC's annual report filing rule." 

    Second, regarding "[a]nnual reports [which] contain an 'aggregated summary' of a safe harbor program's independent assessment of its members' compliance with the program's guidelines," the court finds that "[d]efendant has shown both 'actual competition' among the safe harbor programs . . . and a likelihood of substantial competitive injury if the programs' analyses were to be disclosed[.]"  "Defendant's in-house expert on the COPPA Rule and the safe harbor program marketplace, in consultation with agency economists, has predicted, without contradiction, that if [] rivals . . . could obtain [the] . . . nonpublic analyses of the COPPA Rule, the rivals could improve their oversight functions and compliance advice, thereby causing [the safe harbor programs] to become competitively disadvantaged.  The court also finds that "[t]he fact that the safe harbor programs' guidelines and commentary are public does not divest a company's specific application of those guidelines of commercial value."  Regarding "[p]laintiff's central argument . . .  that it would be good policy to release these withheld legal analyses because, if they were public, safe harbor programs could use their competitors' analysis of the COPPA Rule to improve their own enforcement of COPPA, thereby promoting overall effectiveness and transparency in enforcement," the court finds that "the law does not allow this sort of 'consequentialist' argument to defeat the otherwise proper withholding of information under Exemption 4."  "The court also agrees with Defendant that the programs' non-public analyses are confidential for purposes of Exemption 4 because disclosure of that information likely would impair the FTC's ability to obtain such information in the future."  The court notes that, "[g]iven the rule's limited mandatory disclosures, the FTC has relied on voluntary disclosures to acquire more information" and "the text of the annual filing rule leaves plenty of room for interpretation" and finds that "it is reasonable to conclude that the prospect of public disclosure provides a disincentive to safe harbor programs to provide information to the FTC." 

    Third, regarding "the number of members, annual changes in membership, and market shares of each safe harbor program," the court finds that this information "constitute[s] 'sensitive' and 'non-public' information that is "precisely the kind of information that other courts have found to be protected under Exemption 4's commercial-information privilege.'"  "The court finds persuasive Defendant's concern that, if each safe harbor program's share of the market became public, competitors could (1) use that information to poach customers from smaller programs; and (2) combine it with mandatorily-disclosed disciplinary information to tabulate safe harbor programs' rates of discipline, a fact that could easily be used to sway customers wary of facing remediation."  The court also finds that "[p]laintiff's argument that the information at issue here is already public because certain safe harbor programs make representations about how many customers they have, and because certain customers display seals of the safe harbor program they use on their websites, is unavailing."  "While it is true that the government cannot withhold information under FOIA that already is in the public domain, . . . it is not enough that 'the same general type' of information is public."  "Rather, the information sought through FOIA must be 'identical' to the information already public."

    Fourth, regarding "the rate of safe harbor programs' members that were subject to remediation or discipline," "[t]he court agrees with Defendant's determination that the disclosure of discipline rates is likely to cause substantial competitive harm because competitors could use that information to convince potential customers that a rival is either too strict or too lenient."  "The court also concurs with Defendant's assertion that disclosure of [the] remediation rate would discourage other safe harbor programs . . . from disclosing it in the future."  "As already discussed, the annual filing rule provides safe harbor programs with wide latitude in determining what information to supply as part of its 'aggregated summary' of compliance assessments."
  • Litigation Considerations, "Reasonably Segregable" Requirements:  "The court is satisfied that Defendant has shown that it produced all non-exempt information to Plaintiff and only segregated and redacted that which it (rightly) believed to be exempt from disclosure."  "The combination of the Vaughn index, the detailed review and redaction process employed by the FTC, and the sworn statements of an FTC attorney is sufficient to fulfill the agency's obligation to show with 'reasonable specificity' why the documents in question cannot be further segregated."
District Court
Exemption 3
Exemption 4
Litigation Considerations
Updated September 16, 2016