Supreme Court Extends Scope Of Confidential Information Disclosure Exemption Under Freedom Of Information Act
Securities Litigation
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  • Supreme Court Expands Scope Of Confidential Information Disclosure Exemption Under Freedom Of Information Act
    On June 24, 2019, the United States Supreme Court, in an opinion by Justice Gorsuch, held that information that “is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy” is protected from disclosure under the Freedom of Information Act (“FOIA”) pursuant to Exemption 4 thereto, which protects “commercial or financial information obtained from a person and privileged or confidential.”  Food Mktg. Inst. v. Argus Leader Media, —U.S.—, 2019 WL 2570624 (June 24, 2019).  The Court thus reversed a decision of the Eighth Circuit that had required an additional showing that disclosure would cause “substantial competitive harm.” 

    The case arose when a South Dakota newspaper filed a FOIA request for data collected by the U.S. Department of Agriculture regarding the names and addresses of all retail stores that participate in the Supplemental Nutrition Assistance Program (“SNAP”) and each store’s annual SNAP redemption data.  Id. at *2.  The district court held a trial to determine, under the rule prevailing in the Eighth Circuit and certain other Courts of Appeals, whether disclosure of store-level SNAP data would cause “substantial competitive harm” to participating grocery stores.  The lower court ultimately held that, while there was evidence that harm could result, the government did not establish that the harm would rise to the level of “substantial competitive harm” and, therefore, ordered disclosure.  Id. at *3.  After the government declined to appeal, a trade association representing grocery retailers intervened and appealed.  The Eighth Circuit affirmed.

    The Court first found that the trade association had standing because (i) it was essentially undisputed that disclosure likely would cause some financial injury to the association’s grocery store members and (ii) that injury was redressable through the appeal because the government had represented that, consistent with “longstanding policy and past assurances of confidentiality to retailers,” it would not disclose the data in question unless compelled to do so.  Id at *4.

    The Court then criticized earlier decisions that had purportedly relied on FOIA’s purpose and legislative history in engrafting onto Exemption 4 a “competitive harm” test, and stressed that, instead, FOIA’s Exemption 4 should be interpreted according to its plain text.  Consulting contemporaneous dictionaries from the period when FOIA was enacted in 1966, the Court held that “confidential” referred to information that has been kept private, or at least closely held, by the person providing it and as to which a person receiving it provides some assurance that it will remain secret.  Id.  The Court held that the first condition was absolutely necessary for information to be considered confidential, and there was no need to consider the second condition because the government here had promised to keep the information private.  Id. 

    In contrast, the Court emphasized that the “substantial competitive harm” requirement imposed by the Eighth Circuit and other Courts of Appeals was not found in contemporaneous dictionaries or early case law.  Rather, it appeared that the requirement may have originated in a 1974 D.C. Circuit decision, National Parks & Conservation Assn. v. Morton, 498 F.2d 765 (DC Cir. 1974), which found the additional requirement was consistent with FOIA’s legislative purpose.  The Court, however, criticized the National Parks court for conducting a “selective tour through the legislative history,” including heavy reliance on witness testimony from congressional hearings years earlier on a different bill that was never enacted.  Id. at *5.  The Court referred to this approach as a “bygone era of statutory construction,” and explained that the court should have conducted “careful examination of the ordinary meaning and structure of the law itself” and “where that examination yields a clear answer, judges must stop.”  Id. at *5.

    Justice Breyer, joined by Justices Ginsburg and Sotomayor, argued in an opinion concurring in part and dissenting in part that the “substantial competitive harm” requirement went too far, but that Exemption 4 should still include a requirement that disclosure would cause “genuine harm” to the submitter’s economic or business interests.  Id. at *7.  Justice Breyer warned that the majority went too far in imposing no “harm” requirement whatsoever, and that the word “confidential” had also been defined in contemporaneous dictionaries to include a risk of harm if the information were disclosed.  Justice Breyer also reasoned that broader disclosure was more consistent with the purpose of FOIA and how FOIA had been interpreted in the past, and that the majority’s rule would encourage private companies to regard all information as secret out of “convenience, skittishness, or bureaucratic inertia.”  Id. at *8.

    The Court’s decision provides additional comfort that confidential information provided by private parties to the government under assurances of confidential treatment will not be publicly disclosed.