WP Co. LLC v. SBA, No. 20-1240, 2021 WL 2982173 (D.D.C. July 15, 2021) (Boasberg, J.)
WP Co. LLC v. SBA, No. 20-1240, 2021 WL 2982173 (D.D.C. July 15, 2021) (Boasberg, J.)
Re: Request for data regarding loans approved pursuant to Paycheck Protection Program ("PPP") and Economic Injury Disaster Loans ("EIDL") program
Disposition: Granting in part and denying in part defendant's supplemental motion for summary judgment; granting in part and denying in part plaintiffs' supplemental motion for summary judgment
- Exemption 4: The court relates that "SBA invoked Exemption 4 to withhold 1) the interim payment status of individual PPP loans (along with additional data that would reveal such status); and 2) DUNS numbers associated with individual PPP borrowers." Regarding the first category, the court finds that "[t]here is no dispute that this information – which describes the extent to which borrowers are current on their loan payments – is 'commercial or financial' data, as required under Exemption 4's initial prong." "Nor do Plaintiffs gainsay that the relevant material was 'obtained from a person' – viz., the PPP lenders who reported it to SBA via Form 1502." Regarding "whether these lenders 'customarily and actually' treat interim PPP loan status as 'private, or at least closely held,'" the court finds that "the critical inquiry for Exemption 4 is 'how the particular party customarily treats the information, not how the industry as a whole treats the information.'" "Notwithstanding the reality that it bears the 'burden of proving the provider's custom,' . . . SBA did not contact a single lender and inquire how it actually and customarily treats interim loan-status information." "Defendant nonetheless actively disclaimed any intent to make the former (mandatory) showing, insisting that it was 'not feasible' to 'conduct[ ] . . . a party-particularized inquiry' because it could not 'obtain from each of the several thousand participating PPP lenders a declaration regarding their confidentiality practices.'" "Yet nowhere does the Government suggest that it could not obtain such statements from some lenders." "A survey of that small yet meaningful subset of lenders, along with credible substantiation of any individual lender's claim of customary and actual confidentiality with respect to interim PPP loan status, would go a long way toward bringing that material within Exemption 4's sweep." "At present, however, the agency's decision to eschew a party-specific inquiry of any scope . . . only raises questions about whether PPP lenders truly consider and treat the relevant information as confidential." Regarding defendant's argument based on "FOIA's legislative history that supposedly 'indicates that Congress itself viewed information about the lender-borrower relationship as protected by Exemption 4[,]' the court finds that "[t]he fact that legislators more than fifty years ago believed that FOIA protected certain loan-related information, however, says little about the confidentiality practices of PPP lenders today vis-à-vis interim PPP loan status." "Nor do the agency's non-binding, decades-old cases from different contexts have much to offer on that critical question." Additionally, the court relates that "the agency points to its own FOIA regulations, under which 'loan status, other than charged-off or paid-in-full,' is 'generally exempt from disclosure.'" The court finds that "the fact that SBA might largely refrain from disclosing interim loan-status information does not resolve whether participating PPP lenders customarily and actually do the same." Overall, "[t]he Court . . . will provide SBA another opportunity to explain 'with reasonably specific detail' how the information at hand 'logically falls within' Exemption 4."
Regarding the second category of information withheld, "DUNS numbers associated with individual PPP borrowers," the court finds that "these withholdings fall squarely under the Exemption 4 umbrella." The court relates that, "[d]eveloped and maintained by [the submitter], DUNS numbers are unique nine-digit identifiers for businesses." "Having contracted with SBA to support the PPP, [the submitter] provides – for a fee – the agency with 'access to and a limited right to use those numbers.'" This, the court finds, "plainly demonstrates that DUNS numbers are 'commercial' information 'obtained from a person.'" The court finds that "Exemption 4's third condition – confidentiality – is likewise satisfied." "The DUNS numbers are proprietary information protected by trademark, [the submitter's] license agreement with SBA does not 'allow distribution or publication of the [DUNS] in any format,' and the company 'has deliberately restricted any possibility of mass accumulation of [DUNS] information' – and even the display of small quantities of such numbers – 'outside of a Licensed customer contract.'" The court relates that "[plaintiffs'] point to three Government websites that assertedly 'make DUNS numbers available on demand and in bulk with no apparent restrictions on their use.'" The court finds that "[the submitter's] decision to provide the Government with limited publication rights for a 'specific subset' of DUNS numbers . . . does not mean that the company has surrendered any claim of customary confidential treatment regarding the overwhelming remainder of its proprietary dataset, particularly the millions of distinct numbers for PPP borrowers that the D&B-SBA license agreement expressly prohibits the agency from disclosing." "In addition, [the court finds that] the Government has carried its burden to show reasonably foreseeable harm from disclosure of the DUNS numbers." "Here, although SBA's discussion is rather cursory, both the agency and [the submitter] assert . . . [that disclosure would cause] harm to the company's business interests."
- Exemption 6; Procedural Requirements, "Reasonably Segregable" Obligation; Litigation Considerations, "Reasonably Segregable" Requirements: The court relates that "[t]he final set of reserved data at issue here comprises PPP borrowers' tax-identification numbers." "As a reminder, the Government withheld [Social Security Numbers ("SSNs")] for individual borrowers and [Employer Identification Numbers ("EINs")] for other businesses." "All agree that SSNs are properly protected under Exemption 6." "No one, meanwhile, contends that EINs themselves fall within the scope of that exemption." "SBA reserved EINS because it assertedly lacked the ability to distinguish between them and SSNs." The court relates that defendants' rationale is that "[b]oth SSNs and EINs – the latter of which are issued by the Internal Revenue Service – are unique nine-digit identifiers." "SSNs usually contain dashes after the third and fifth digit, while EINs often contain a single dash after the second . . . ." "Absent such markings, however, a reader cannot tell the two numbers apart." "The original PPP application form contained a single free-text field labeled 'Business TIN' into which prospective borrowers entered their SSN or EIN, either with or without dashes." "Apart from using those dashes, the form offered no way for borrowers to indicate which of the two numbers they were providing." "Upon receiving borrowers’ applications, lenders transmitted information contained therein to SBA through an electronic interface." "That interface required lenders to input an applicant's tax-identification number as a single nine-digit string (sans dashes) and then to check a box indicating whether such number was an SSN or EIN." "Because the underlying PPP application form did not ask prospective borrowers to indicate which type of number they were providing, however, lenders checking the box in the interface were 'often forced to guess whether they were submitting an EIN or SSN.'" "As some lenders 'must have guessed incorrectly' or made other 'manual errors,' . . . SBA 'has good reason to believe that some indeterminate share of the identification numbers recorded as EINs in its PPP loan database are in fact SSNs, and vice versa.'" "According to the agency, because it has 'no way to check or correct for such errors' or otherwise confirm which numbers are in fact EINs and which are SSNs, an en masse release of numbers identified by lenders as EINs 'would almost certainly result in an erroneous release of numerous social security numbers.'" "It thus elected to withhold the entire data field – EINs and SSNs alike – even though only the latter fell under a FOIA exemption." The court finds that "SBA's present submissions are insufficient to sustain its segregability decision for a simple reason: the agency has not explained why it cannot reasonably segregate EINs from SSNs." "All the Government offers on that score is the conclusory assertion that it has 'no technical way to check or correct for' any SSNs that were incorrectly labeled as EINs." "Plaintiffs, however, have an idea: seek assistance from the Social Security Administration to identify SSNs and from the IRS to identify EINs." "In light of that plausible unaddressed possibility and SBA's thin submissions as to its own inability to distinguish between the numbers, the Court concludes that the Government has not discharged its 'obligation to carry its evidentiary burden and fully explain its decisions on segregability.'"