United States: Confidential Commercial Or Financial Information Is Exempt From FOIA. No Showing Of Substantial Competitive Harm Is Necessary.

Key Points

  • The Supreme Court held that the ordinary meaning of “confidential”—used at the time Congress enacted the Freedom of Information Act (FOIA) in 1966—should control its meaning. Where commercial or financial information is treated as private by its owner and provided to the government under an assurance it will be kept confidential, the information is exempt from disclosure under FOIA Exemption 4.
  • The Court rejected the requirement created by the D.C. Circuit in National Parks that “substantial competitive harm” must be shown.

Food Marketing Institute v. Argus Leader Media, No. 18-481

Background

The U.S. Department of Agriculture (USDA) issues participants of the Supplemental Nutrition Assistance Program (SNAP) cards—like a debit card—to buy food from participating retailers. When a participant buys food using their SNAP card, the USDA receives a record of that transaction, which is called a SNAP redemption. Respondent Argus Leader Media (“Argus”), which runs a newspaper in South Dakota, sought, under FOIA, annual SNAP redemption totals for stores that participate in the SNAP program. The USDA refused to provide the information, citing numerous exemptions to FOIA.

Argus sued the USDA in federal district court, which found that the USDA properly withheld the information under FOIA Exemption 3, which applies to information prohibited from disclosure by another federal law. On appeal, the 8th Circuit reversed, finding that Exemption 3 did not apply, and remanded the case to the district court.

On remand, the issue before the district court was whether Exemption 4—which covers “trade secrets and commercial or financial information obtained from a person and privileged or confidential”—applied. The district court adopted the test used in the D.C. Circuit in National Parks, finding that “substantial competitive harm” is established if there is evidence of “actual competition and the likelihood of substantial competitive injury.” National Parks & Conservation Assn. v. Morton, 498 F.2d 765, 767 (D.C. Cir. 1974). Applying this standard, the district court entered judgment for Argus.

The 8th Circuit’s Opinion

The 8th Circuit affirmed, applying the same test. It held that disclosing the information sought would not cause substantial competitive harm, but instead would “allow grocery retailers to make better business decisions.” The 8th Circuit reasoned that “[i]f [commercial usefulness] were enough to invoke Exemption 4, commercial data would be exempt from disclosure any time it might prove useful in a competitive marketplace.”

The U.S. Supreme Court’s Opinion

In a 6-3 opinion by Justice Gorsuch, the Supreme Court reversed and remanded. The Court held that principles of statutory interpretation require courts first to construe undefined statutory terms using their common and ordinary meaning at the time the statute was enacted. If that inquiry yields an answer, courts must stop their analysis and accept that definition.

FOIA Exemption 4 shields from mandatory disclosure of “commercial or financial information obtained from a person and privileged or confidential.” But FOIA nowhere defines “confidential.” The Court found that, at the time FOIA was enacted in 1966, “confidential” meant (as it does now) “private” or “secret.” Information communicated to another is confidential if two conditions are satisfied: (1) it is customarily kept private, or at least closely held, by the person imparting it, and (2) the party receiving it provides some assurance that it will remain secret.

The Court found that both conditions were satisfied. (The Court therefore did not need to decide whether satisfying only the first condition would qualify information as “confidential.”) First, there is uncontested testimony that Petitioner’s grocery retailers do not disclose store-level SNAP data or make it publicly available “in any way.” Second, the government has long promised grocery retailers that it will keep their information private.

The Court added that no ordinary definition of “confidential” requires “substantial competitive harm.” The Court rejected this definition, reasoning that the D.C. Circuit’s statutory analysis in National Parks was improper, the decision has been met with widespread criticism (despite being adopted by other courts), and even the D.C. Circuit has distanced itself from National Parks.

The Court rejected Respondent’s policy argument that “substantial competitive harm” should be required because FOIA exemptions should be narrowly construed. The Court reasoned that it has “no license to give statutory exemptions anything but a fair reading.”

Conclusion

This decision greatly expands the type of information the government can refuse to provide in response to a FOIA request. This decision lowers the risk to private entities that the information they share with the government will later be publicly disclosed, especially to business competitors. However, to ensure confidentiality, anyone disclosing information to the government should seek the government’s agreement that the information will remain confidential.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions