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Supreme Court Broadens FOIA Protections for Confidential Information Submitted to the Government

On June 24, 2019, the Supreme Court issued its opinion in Food Marketing Institute v. Argus Leader Media, broadening the protection from disclosure under the Freedom of Information Act (FOIA) for confidential information provided by private parties to federal government agencies.  This decision is a win for government contractors that are required to provide sensitive workforce and compensation data in connection with compliance audits, such as audits by the OFCCP and DCAA, and that provide confidential information to federal agencies as part of their contracting activities.

In the case, a grocery store trade association challenged lower court decisions compelling FOIA disclosure of information concerning food stamp purchases at the individual store level.  The association claimed that the information was exempt from FOIA disclosure under FOIA’s Exemption 4, which prevents the disclosure of “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”  The association argued that its members closely guard their store sales information, which is important in modeling projected individual store sales and deciding where to open new locations.  The lower court, applying prior authority, held that the association had not met an additional requirement under Exemption 4 to demonstrate that disclosure of the sales data would cause “substantial competitive harm.”

As reported in a prior blog, Polsinelli attended oral argument in the case on April 22, 2019.  As predicted in that blog, a seven-member majority of the Supreme Court had little difficulty dispensing with the “substantial competitive harm” requirement, finding it unsupported in either Exemption 4’s text or the plain meaning of the word “confidential.” 

The Court noted in its decision that there were two potential conditions to confidentiality: (1) that the information is kept private or closely held by the person providing it, and (2) that the person receiving it provides some assurance that the information will be kept secret.  The Court noted it was uncontested that grocers met the first requirement by not sharing store-level sales data and providing access to the data only to small groups of employees.  The Court did not resolve whether the second requirement, an assurance of confidentiality from the government, was necessary because it was also uncontested that the USDA consistently assured grocers that their data would be kept confidential.  The level of government confidentiality assurances required, if any, remains an open question.

In situations like compliance audits, contractors sometimes do not have a choice whether to provide confidential information to the government.  However, they can reduce the risk of disclosure of confidential information in response to a FOIA request by implementing best practices to safeguard their data.  When disclosure is not compelled in an audit, contractors should carefully evaluate any confidentiality requirements in their contracts and negotiate, if possible, appropriate confidentiality assurances from the government to avoid running afoul of the unresolved potential second requirement for confidential treatment under Exemption 4. 

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume IX, Number 177


About this Author

Conne Bertram Government Contract Lawyer Polsinelli Law Firm

Connie focuses her practice on whistleblower, trade secrets, government contractors and employee mobility counseling and litigation. She frequently conducts confidential internal investigations involving executive-level employees, including alleged fraud, theft or misuse of company data, trade secrets, sexual harassment and code of conduct violations. She routinely counsels, investigates and litigates restrictive covenant and trade secrets disputes between employers and former employees.

Connie has defended complex whistleblower, trade secrets and restrictive...

Jack Blum Polsinelli Employment Attorney

Jack Blum is an associate in the firm’s Employment Disputes, Litigation, and Arbitration practice, where he represents employers in connection with a wide range of employment law issues. Jack has extensive experience in defending employers against claims by their employees in federal and state courts, as well as before government agencies like the EEOC, Department of Labor, and state human rights commissions. Jack aggressively defends his client’s personnel practices and decisions while not losing sight of their underlying business goals and objectives. Jack represents clients in all aspects of complex employment litigation and has advised and defended employer clients regarding a wide variety of employee claims, including:

• Employment discrimination, harassment, and retaliation
• Wage and hour
• Employment contract disputes
• Independent contractor/employee misclassification audits 
• Tort claims arising out of the employment relationship

Jack also has extensive experience representing parties in litigation arising from employee mobility, including claims involving non-competition, non-solicitation, and confidentiality agreements as well as the misappropriation of trade secrets. Significantly, Jack has experience in both prosecuting and defending these claims and is, therefore, able to offer clients a well-rounded assessment of their options and courses of action. Jack also has experience redressing employee data breaches under the Computer Fraud and Abuse Act.

Jack also has a background in employment counseling, where he has worked closely with in-house counsel, human resources personnel, and business executives to craft personnel policies that meet the client’s business requirements while complying with applicable laws. Jack has particular experience in assisting clients with issues relating to employee/independent contractor classifications, and regularly advises clients regarding the defensibility of classifications, drafts independent contractor agreements to provide the strongest possible arguments in support of the classification, and defends misclassification claims asserted by employees and government agencies. Jack also walks clients through sensitive personnel actions to reduce the potential for litigation or at least best position the client in the event that litigation is inevitable. Jack draws heavily upon this counseling experience in representing clients in litigation.

During law school, Jack served as a legal intern in the U.S. Securities and Exchange Commission’s Office of the Inspector General where he contributed to several high-profile internal investigations, and also interned with the Maryland Attorney General’s Office.