FALL 2008

Trade Secrets


Course No. 9200-704 (and 804)-801

ID No. 16545

MW 3:00 - 4:30 p.m.
Room L-134
Professor Jay Dratler, Jr.
Room 231D (IP Alcove)
(330) 972-7972
Copyright © 2000, 2002, 2003, 2006, 2008   Jay Dratler, Jr.   For permission, see CMI.

Questions and Notes on Chrysler Corp. v. Brown

1.  What is the primary purpose of the Freedom of Information Act (FOIA)?  Can you tell by reading the statute itself?  Does the legislative history recited in Chrysler Corp. v. Brown help?

Subsection (a)(4)(B) of the FOIA gives people who want records from a federal agency ("requesters") the right to have judicial review of their requests if the agency refuses them.  Is that what this suit was all about?  Does subsection (a)(4)(B) give Chrysler a right to sue to enjoin disclosure?  The Court refers to this case as one of a class of "reverse FOIA" suits.  Can you articulate why?

2.  The FOIA requires federal agencies to disclose most of their records to requesters but allows them to withhold records covered by the exceptions in subsection (b).  Do the exceptions in subsection (b) make sense?   Is governmenal secrecy necessary in some circumstances—even in a democracy—to facilitate the smooth functioning of federal governmental operations?  In other circumstances is it necessary to protect private interests?  Are the governmental and private interests sufficient to justify the statute's exceptions to the general rule of public disclosure and "transparency" in a democracy?

What made this suit different from (and somewhat more complicated than) run-of-the-mill "reverse FOIA" actions was the effect of the special regulations permitting government officials to disclose certain records relating to reports on affirmative action programs even if subsection (b) would exempt them from disclosure.  Can you articulate precisely how this regulation changed the FOIA analysis?

3.  From a procedural perspective, this cases addresses whether Chrysler has a "private right of action" (i.e., a right to sue) to prevent disclosure of the records at issue.  Because there is no such right at common law (for the common law had nothing analogous to the FOIA), Chysler must show that a federal statute provides that right.  Chrysler argues that three statutes give it that right: (1) the FOIA itself, (2) the Trade Secrets Act (18 U.S.C.§ 1905), and (3) the Administrative Procedure Act (APA).  Can you articulate Chrylser's arguments with respect to all three statutes?  With respect to which of these statutes was its argument successful?

4.  Many federal statutes create a private right of action by their express terms.  The FOIA itself does so in Subsection (a)(4)(B).  Yet even if a statute contains no explicit grant of a right of action, a right of action might be implied.  The Supreme Court stated the classic test for determining whether a private right of action is implied in a federal statute in Cort v. Ash, which the Court discusses in connection with the Trade Secrets Act.  Why doesn't the Court apply the test of Cort v. Ash to the other two statutes at issue, the FOIA itself and the APA?  Would its application be necessary?  successful?

5.  Before addressing whether the Trade Secrets Act creates an implied private right of action, the Court addresses whether it even covers the material that Chrylser wishes to protect.  What specific words of the Trade Secrets Act raise this question?  Is there an exemption built into the language of the Trade Secrets Act itself?  Which exemption under the FOIA, if any, does it resemble?

In addressing this question, the Court embarks on an extensive discussion of the effect of the regulations at issue, i.e., the regulations permitting the government to disclose certain records relating to affirmative-action programs even if the FOIA exempted them from disclosure.  The basic question addressed is whether these regulations have the force of law.

In its full generality, the question whether a federal agency's regulations have the force of law occupies a fair portion of courses in administrative law.  Is the authority of an agency' regulations a technicality, or is it an important point of constitutional government?  Does the question have constitutional dignity in terms of the separation of powers?  Does it have practical ramifications for daily life in our complex, highly regulated society?

In the end, does the Court decide whether these particular regulations have the force of law generally, or just whether they have the force of law for the purpose at issue in this case—creating an exception to the Trade Secrets Act?  Why does Justice Marshall write a concurring opinion?  Do you agree with the Court's analysis as to whether the regulations at issue are properly supported by valid congressional authority insofar as creating an exception to the Trade Secrets Act?

6.  Having resolved whether the regulations at issue create an exception to the Trade Secrets Act, the Court goes on to discuss whether the Trade Secret Act provides a private right of action.  Is this part of the Court's decision holding, dictum, or alternative holding?  Do you agree with the court's reasoning as to the existence vel non of the private right of action?

7.  Finally, the Court addresses the Adminstrative Procedure Act and holds that it provides a private right of action to enjoin a federal agency's disclosure of trade-secret material.  What Section of the APA does so?  What precise words of the statute define who may sue and for what?

The APA imposes some conditions upon the private right of action it provides.  What are they, and why are the satisfied here?  Does the statute distinguish between agency action pursuant to well-defined legal standards and agency action committed to the agency's discretion?  Is that an appropriate distinction?  What would be the consequences of a rule that allowed citizens to challenge every discretionary action of a federal agency official?

8.  In addition to restricting the circumstances in which there is a private right of action, the APA specifies the legal standards under which such an action may be brought.  What are those standards?  What must a plaintiff show under the APA in order to have a court reverse or modify an agency action?  On what substantive statute does the Chrysler rely in making that showing here?  Does it rely on the FOIA?

9.  In the end, Chrysler achieves its main goal: it gets its day in court to challenge the government's release of the records, and it does so on trade-secret grounds.  Yet it does so by a rather circuitous route.  Can you articulate precisely upon what specific statutory phrase in what specific statute Chrysler's success depends?

The Supreme Court does not specify precisely what the standard of review of the agency's action should be on remand.  What should it be, and on what words in what statute does it depend?

10.  Suppose you represent a private firm that has submitted trade-secret information to the federal government in response to some statutory or regulatory requirement.  Your client has learned that the government intends to disclose some of that information to the public and instructs you to sue to prevent the disclosure.  Identify the federal statutes on which you would rely for jurisdiction and for the substance of your claim, and the standard of review of the agency action that you would ask the district court to apply.

11.  You cannot take such action, of course, unless you or your client knows in advance that the government intends to make the disclosure.  Fortunately for data submitters, an exective order from the Reagan Administration requires executive-branch agencies to adopt eregulations providing for advance notice to data submitters before their confidential data are released.  The executive order also requires executive agencies to adopt regulations allowing submitters to identify data that are claimed to involve trade secrets or confidential information.  See Executive Order No. 12600, 52 Fed. Reg. 23781 (June 25, 1987).  Submitters must make sure that sensitive data are identified, in accordance with the relevant agency's regulations, at the time of submission; otherwise they may not receive the advance notice that is a practical prerequisite to protection from unauthorized agency disclosure.

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