More Business Data May Be Protected from Release Under FOIA

On June 24, 2019, the U.S. Supreme Court (the Court) issued its decision in Food Marketing Institute v. Argus Leader Media. This decision changes the judicial interpretation of Exemption 4 to the Freedom of Information Act (FOIA). In this 6-3 decision written by Justice Gorsuch, the Court broadened the scope of what information can be withheld by a federal agency under the FOIA.

Pursuant to the FOIA, requesters may obtain information in the government’s possession unless an exemption applies. Exemption 4, at issue in Food Marketing, permits agencies to withhold requested documents if they are “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552(b)(4).

Food Marketing started its life as a FOIA request by Argus Media to the U.S. Department of Agriculture (USDA). Argus sought information about all retailer participants in the Supplemental Nutrition Assistance Program (SNAP). In addition to the names and addresses of these retailers, Argus wanted store-level data on SNAP-based sales. The USDA provided the names and addresses of the retailers, but declined to provide the store-level sales data pursuant to Exemption 4. Argus sued in South Dakota federal district court, asking the Court to force the USDA to provide the store-level data. The District Court, citing circuit precedent, held that absent a showing of “substantial competitive harm,” the store-level data had to be disclosed, handing a “win” to Argus Media.

The USDA agreed to provide the data. However, under FOIA it had to notify the retailers that their data would be released, and the USDA did so. The Food Marketing Institute (FMI), a grocer trade group, intervened and appealed to the Eighth Circuit. FMI argued that the term “confidential” in Exemption 4 was not expansive enough to require a showing of “substantial competitive harm.” The Court of Appeals ultimately declined to overturn the “substantial competitive harm” test and affirmed the District Court’s ruling. FMI asked the Supreme Court to review its case. The Supreme Court decided to grant certiorari (review), and stopped the USDA from giving out the information until the Court issued its opinion.

In coming to its decision, the Court looked to the plain language of the FOIA statute to determine whether the store-level data should be exempt from disclosure. The Court noted that the phrase “substantial competitive harm” does not appear in the text of the exemptions, and the only language that appears in Exemption 4 pertains to whether or not the information was “privileged or confidential.” The Court also looked to the contemporary definitions of “confidential” from 1966 when the FOIA exemptions were enacted, noting that the term “meant then, as it does now, ‘private’ or ‘secret.’” That is, the party with the information must not make it public, and if that party provides it to another, it must expect that it will be kept private. The Court found that both of these conditions were met in the case of the store-level SNAP data, and as a result, the information was exempt from disclosure.

The Court’s holding is a departure from the decades-old “substantial competitive harm” test used for Exemption 4, first set forth in National Parks & Conservation Assn. v. Morton, 498 F.2d 765 (D.C. Cir. 1974). The Court noted that the language in National Parks was pulled from legislative histories, and not the statute itself or the committee reports on it. Since the National Parks test was so widely adopted, district and circuit courts routinely fell back on it as law. Argus argued this treatment by the courts was proper because the FOIA exemptions should be narrowly construed, but the Court disagreed. Instead, the Court stood by the plain language of the statute, stating that “just as we cannot properly expand Exemption 4 beyond what its terms permit, we cannot arbitrarily constrict it either by adding limitations found nowhere in its terms.”

Justice Breyer, joined by Justices Ginsburg and Sotomayor, concurred in the result, but dissented from the majority in what they considered too great a restriction on the FOIA’s purpose. They believed that some showing of harm was necessary for documents to be exempt under Exemption 4, because the purpose of the FOIA was to provide access to information the public could not ordinarily obtain. The exemptions, in their view, are to balance the public’s access with the government’s ability to obtain information to execute on its programs, under the promise it will keep such data secret so as not to cause harm to the provider.

The Court’s holding in Food Marketing will make it harder for the public to obtain the information of contractors, grant recipients or others who interact with the government and provide data. If your company’s data is requested pursuant to a FOIA request, this decision gives you greater protections to claim it as exempt from production under Exemption 4 as “confidential.” However, if you are attempting to get information from a government agency, particularly about a specific competitor or program, it will now be more difficult if the provider claims the information is “confidential” and therefore exempt from disclosure under Exemption 4.

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