FOI-led: Supreme Court Restricts Public Access to Confidential Business Information

In Food Marketing Institute v. Argus Leader Media, the United States Supreme Court expanded the meaning of “confidential” information exempt from disclosure under Exemption 4 of the Freedom of Information Act (FOIA). In doing so, the Court reversed the decision of the Court of Appeals for the Eighth Circuit and definitively rejected the “competitive harm” requirement adopted by the D.C. Circuit in National Parks & Conservation Assn. v. Morton.

Respondent Argus Leader Media filed a FOIA request with the United States Department of Agriculture (USDA), seeking the names and addresses of all retail stores that participate in a federal food stamp program known as SNAP. Argus Leader also sought each store’s annual redemption data from 2005 to 2010. The USDA declined to disclose store-level SNAP data based on Exemption 4 of FOIA, which precludes disclosure of “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” Argus Leader sued the USDA.

The district court ordered disclosure based upon the failure to satisfy the “competitive harm” test, which requires a party to establish confidentiality by proving that disclosure is “likely … to cause substantial harm to [its] competitive position.” The Eighth Circuit affirmed the judgment.

In a 6-3 decision delivered by Justice Gorsuch, the Court rejected the competitive harm test and adopted a broad definition of “confidential” aligned with the term’s plain meaning. The Court held: “[w]here commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within Exemption 4’s meaning.” In reaching its decision, the Court reiterated the canons of statutory construction, which, according to Justice Gorsuch, courts have “casually disregarded” by following the competitive harm test. The Court criticized the approach set forth in National Parks as a “relic from a bygone era of statutory construction,” erroneously informed by legislative committee testimony – some of the “least illuminating forms of legislative history.”

For businesses, the upshot of the Court’s decision is that their data, proprietary information, and documents are safe from disclosure under FOIA as long as such information falls within the broader definition of “confidential.” As contemplated by Justice Breyer in his concurring opinion, however, the decision may “deprive the public of information for reasons no better than convenience, skittishness, or bureaucratic inertia.”

In terms of the broader impact of the decision, it is conceivable that the Supreme Court’s broad interpretation of confidentiality will seep into state courts’ construction of the term in public-access cases. However, at least with respect to New Jersey’s Open Public Records Act, it is unlikely that the Supreme Court’s construction of “confidential” will affect access to proprietary, commercial, or financial information because such information is exempt from disclosure irrespective of any claimed confidentiality.

Charlotte Howells, an Associate in the Gibbons Commercial & Criminal Litigation Department, authored this post.
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