PAUL HASTINGS 1(202) 551-1894 tammydaub@paulhastings.com September 29, 2017 VIA EMAIL: OFCCP_NO_FOIA@DOL.GOV" AND U.S. MAIL Candice Spalding Deputy Director U.S. Department of Labor Office of Federal Contract Compliance Programs Division of Management and Administrative Programs 200 Constitution Avenue, N.W . Washington , D.C. 20210 Re: Palantir Technologies- FOIA Request Tracking No. 838133 Dear Ms. Spalding: I write in response to the Office of Federal Contract Compliance Programs' ("OFCCP") September 1, 2017 letter, received on September 6, 2017, in which Palantir Technologies ("Palantir") was given the opportunity to respond to a Freedom of Information Act ("FOIA") request from Mr. Will Evans of The Center for Investigative Reporting, seeking Equal Employment Opportunity Employer Information Reports ("EE0-1 reports") submitted by Palantir for the year 2015. Palantir requests that OFCCP deny this request and objects to the disclosure of the EE0-1 reports for two primary reasons. First, Palantir considers all of the information contained in the EE0-1 reports to be confidential commercial information , the disclosure of which would cause substantial harm to the Company's competitive position. Indeed, the EE0-1 reports would effectively provide a roadmap to our competitors. Both the case law and the Department of Labor's own decisions support denying FOIA access to the type of confidential, commercially sensitive information found in the in the EE0-1 s. As a result, the disclosure of these reports should be denied under Exemption 4 of FOIA, 5 U.S.C. Section 552(b)(4), which protects " . . . trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential. " Second, requiring disclosure of the EE0-1 reports could hamper OFCCP's ability to collect employee information from federal contractors. Obtaining reliable employee data in the EE0-1 forms turns on a robust self-reporting regime. If employees perceive that their private information could be disclosed through the FOIA production of EE0-1 forms, their willingness to self-report and, in turn, the accuracy of those reports could be diminished. For this additional reason, OFCCP should deny the FOIA request here. Palantir Operates in a Highly Competitive Industry Palantir is a privately-held software company in Silicon Valley specializing in integrating , securing, and analyzing data. In the rapidly changing world of technology, the growth of the data analytics market is being driven by growing data generation which needs real time analysis. See CognWve Analytics Market Is Being Drivef"'. t y Increasing demand for Real-Time Analysis, ReleaseWire (Aug . 31 , 2017). An important input to the technology industry is staff with appropriate technical knowledge and expertise, and Paul Hastings LLP I 1170 Peachtree Street N.E. I Suite 100 I Atlanta. GA 30309 t: + 1.404.815.2400 I www.paulhastings.com PAUL HASTINGS Candice Spalding September 29, 2017 Page2 competition for talented software engineers is strong among the major players. See IT Services in the United States, Marketline, at p. 15 (March 2017). Legal Standard A commercial or financial matter is confidential under Exemption 4 if disclosure of the information is likely: (1) to cause substantial harm to the competitive position of the person from whom the information was obtained; or (2) to impair the government's ability to obtain necessary information in the future." Nat'/ Parks and Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). Courts long have recognized that EE0-1 reports contain confidential, competitive information about an employer's workforce, and thus should not be disclosed pursuant to FOIA. See Westinghouse E/ec. Corp. v. Schlesinger, 542 F.2d 1190, 1196 (4th Cir. 1976) (upholding district court's determination that EE0-1 reports were confidential and disclosure of them would give information of substantial value to competitors; citing district court's ruling that disclosure would reveal information of "substantial value to the plaintiffs competitors in performing cost-price analyses of plaintiffs' pricing practices, in monitoring plaintiffs' development of new products and processes, in identifying plaintiffs' customers in their consumption needs, in analyzing plaintiffs' production by product line, and in developing competitive bidding strategies to be used against the plaintiffs"); Rubbermaid v. Kleppe, 1976 U.S. Dist. LEXIS 12421 (D. Md. Nov. 5, 1976) (recognizing confidential nature of EE0-1 reports and competitive harm of disclosure); see a/so Lion Raisins v. U.S. Dep 'tof Agric., 354 F.3d 1072, 1081 (9th Cir. 2004) , overruled in part by Animal Legal Defense Fund v. USDA , 836 F.3d 987 (9th Cir. 2016) (affirming decision to withhold information under Exemption 4, finding that the information sought would reveal "critical information about [the companies'] volume, market share, and marketing strategy"). As explained further below, Palantir firmly believes that disclosure of its EE0-1 reports will likely reveal sensitive information of value to the Company's competitors, as well as hamper OFCCP's ability to collect meaningful employee information from federal contractors. For these two independent reasons, Palantir respectfully requests that OFCCP withhold releasing its EE0-1 reports. I. Disclosure of Palantir's EE0-1 Reports Would Cause Substantial Harm to Palantir's Competitive Position Commercial or financial matter is confidential for purposes of Exemption 4 if disclosure of the information is likely to cause substantial harm to the competitive position of the person from whom the information was obtained. Nat'/ Parks, 498 F.2d at 770. As discussed below, information contained in Palantir's EE0-1 reports is confidential information and its disclosure would provide competitors with the ability to undermine Palantir's leadership in the market. A The Competitive Advantage Palantir Gains From Its Workforce Design Strategy Would Be Lost if Competitors Had Access to the EE0-1 Reports Disclosure of the information contained in the EE0-1 reports will cause substantial harm to Palantir's competitive position by providing the Company's competitors with insights into Palantir's business and human resource strategies. Competitors will be able to identify changes in relative staffing levels and the mix of job categories such as managers, administrative workers and professionals. From there, competitors can gain insight into business strategies that otherwise would not be publicly available. PAUL HAST IN GS Candice Spalding September 29, 2017 Page 3 For example, in the last few years, Palantir has spent billions of dollars in research and development of their commercial products. With the information contained in the EE0-1 reports, a competitor could track changes in the composition of Palantir's workforce against when certain products are released . From this, it may be possible for a competitor to gain insight into how Palantir is staffing its workforce and modify their own workforce accordingly to gain a competitive advantage against Palantir. Moreover, labor costs are a significant factor in the Company's competitive position in the marketplace. Competitors could gain insights into how the Company manages labor costs by carefully scrutinizing the information contained in the EE0-1 reports. For example, by comparing the ratio of managerial employees (First!Midlevel Officials and Managers) to non-managerial employees, a competitor could gain insight into the management span of control used by Palantir. Competitors could correspondingly modify the management span of control in their own workforces and thereby reduce their labor costs. With these reduced labor costs, a competitor would be in a better position to underbid Palantir when competing for a client's business. B. The Competitive Advantage of Palantir's Workforce Diversity Strategy Would Be Lost if the EE0-1 Reports Are Disclosed Workforce diversity is more to Palantir than just a legal concept; it is a business imperative. The diversity of cultures, people, thoughts, and ideas within Palantir's workforce are essential to the company's ability to deliver innovative, superior technologies to the marketplace. In addition, having a workforce which reflects the demographics of the company's clients and the communities in which it does business is a critical element in Palantir's overall success. To meet this business imperative, Palantir has expended substantial time, money, and resources in the recruiting, hiring, training , and mentoring of its workforce. In Rubbermaid, 1976 U.S. Dist. LEXIS 12421 , a FOIA request was made for workforce information the company was required to submit as a federal contractor, including the company's EE0-1 reports. Rubbermaid objected to disclosure under FOIA Exemption 4(b)(4). The court found that the documents requested were exempt from disclosure under Exemption 4. With regard to the EE0-1 reports, the court was persuaded by the company's argument that competitive harm would occur because "a competitor could identify employees with the particular skills, race, and sex it needs to meet its own minority hiring requirements. Loss of such employees would be costly because Rubbermaid would lose skilled employees, the time and money spent on recruitment and training , and possibly a cohesive workforce." See id. at *6. Similar to Rubbermaid, providing Palantir's competitors with the racial and gender makeup of Palantir's employees will provide unique opportunities for them to develop strategies to raid Palantir's workforce. For example, competitors could identify where Palantir has made significant progress in hiring women and minorities and target recruitment strategies at specific job categories to steal this talent from Palantir. This not only would result in the loss of talent for Palantir and impact the Company's ability to provide services and other products to our clients, but the significant investment made by Palantir in recruiting, hiring, and training its workforce would be lost as well. If competitors can target their recruiting of Palantir's diversity talent by accessing information in the EE0-1 reports, Palantir's competitive advantages will be diminished. It will impact the Company's ability to successfully bid on new work. It also will impact Palantir's ability to attract new employees which PAUL H A ST IN GS Candice Spalding September 29, 2017 Page4 in turn will interfere with the Company's efforts to meet its obligations as a federal contractor to recruit a diverse workforce. C. OFCCP and DOL Have Refused to Disclose EE0-1 Reports of Other Contractors' EE0-1 Reports in Nearly Identical Circumstances OFCCP has already determined that disclosure of employers' EE0-1 reports in response to a media outlet's FOIA request will cause competitive harm to the employers and is precluded under FOIA Ex emption 4. Those determinations have been upheld on appeal to the Solicitor of Labor. In 2008, the San Jose Mercury News requested disclosure of EE0-1 reports from companies in the information technology industry. In order to protect their confidential information and competitive position , companies such as Google, Apple, Yahoo, Oracle, and Applied Materials objected to the requests. OFCCP agreed with the companies and found that the EE0-1 reports were protected from disclosure under FOIA Exemption 4. Despite OFCCP's finding , the Mercury News appealed. OFCCP was upheld on appeal. According to reports published by various media outlets, DOL concluded in its notice of final action that "(s]uch data can demonstrate a company's evolving business strategy[.]" DOL went on to state that "[t]he companies have articulated to us that they are in a highly competitive environment in which less mature corporations can use this EE0-1 data to assist in structuring their business operations to better compete against more established competitors." See Mike Swift, Five Silicon Valley companies fought release of employment data, and won, Mercury News (Feb. 11 , 2010 at 4:52 am) (quoting DOL associate solicitor William W . Thompson II ). The Mercury News request presents nearly identical circumstances as the current request. The Mercury News was seeking disclosure of EE0-1 reports-the same information sought in the current request. The companies at issue were in the same sector and the concerns of competitive harm flowing from disclosure in the Mercury News matter are the same concerns shared by Palantir. Applying its earlier logic, OFCCP should reach the same result here. II. Disclosure of EE0-1 Reports Will Hamper OFCCP's Ability to Collect Meaningful Employee Information from Federal Contractors Another reason to sustain Palantir's objection is the adverse effect routine disclosure of companies' EEO- 1 reports may have on the government's efforts to collect this information. See Hersh & Hersh v. U.S. Dep't of Health and Human Servs., 2008 WL 901539, at *7 (N. D. Cal. Mar. 31 , 2008) (upholding withholding of documents under Exemption 4 where disclosure of documents would "impair the government's ability to secure voluntary execution" of information disclosures in the future). Although Palantir understands it is required to submit annual EE0-1s, the availability and accuracy of data in the reports is based fundamentally on the willingness of each employee to provide voluntarily his or her demographic data. In an environment where privacy concerns are often at the forefront of the average employee's mind, employees may be reluctant to provide any information which they are not required to provide (including race and gender data that federal contractors must solicit, but can not force employees to provide). And while the likelihood of anyone's personal identity becoming discernable from EE0-1 data may be remote, the perception of the employee is what matters in this PAUL HASTINGS Candice Spalding September 29, 2017 Page 5 context. When balancing the personal benefit of voluntarily providing personal Information against the potential drawbacks which individuals may perceive will flow from the government disclosing the information publicly, there simply is no compelling reason for an employee to voluntarily provide any personal Information. Ill. Conclusion As the discussion above makes clear, there are significant negative consequences-both for Palantir and OFCCP-in disclosing EE0-1 reports. FOIA Exemption 4 is designed specifically to avoid these consequences. It protects an employer from having confidential information disclosed. Consequently, Palantir respectfully requests that the FOIA request for the Company's EE0-1 reports be denied. PAUL HA S TINGS Candice Spalding September 29, 201 7 Page6 Palantir's Responses to the Agency's Questions Palantir responds to the agency's specific questions, as follows: 1. What specific information do you consider to be a trade secret or confidential commercial information? Palantir's EE0-1 reports contain confidential information , including the number of its employees, the types of positions they hold , the span of managerial control, and the distribution of those employees with in and across its business units and geography. 2. How would disclosure of this information be valuable to your competitors? (Indicate the nature of the harm to your competitive position that would likely result from disclosure of this information.) The disclosure of Palantir's EE0-1 reports would provide valuable information to competitors in that it would allow them to gather information about Palantir's organization , workforce design, and diversity strategy, and use it to their advantage. Moreover, workforce composition is directly linked to company profitability. As detailed above, revelation of Palantir's EE0-1 reports would give valuable insight into its focus and growth plans and human resources strategies. The makeup of Palantir's workforce ties directly into its business strategy. Thus, the disclosure of this information would give competitors a direct competitive advantage. Further, viewing the EE0-1 reports provide competitors with insight into Palantir's strategies for dealing with particular market conditions and technological innovation, thus allowing competitors to adjust their own business strategies in response. 3. To what extent is this information known to the public or your competitors in products, articles, patents, or other means? If it is known, why would release of the information nevertheless be competitively harmful? Palantir routinely declines requests for disclosure of the type of information contained in the EE0-1 reports. This information is not known to the general public or Palantir's competitors. 4 . What steps have been taken to protect the confidentiality of the data contained in your EE0-1 Reports? Palantir discloses its EE0-1 reports to the Joint Reporting Committee. These reports are not released to the general public, and they are released to individuals within the Company only on a need-to-know basis. *** PAUL HASTINGS Candice Spalding September 29, 2017 Page 7 Please let me know if you have any questions. Very truly yours, TRD Cc: Amy Kurren Palantir Technologies LEGAL_US_E # 130662671.1