Supreme Court Expands Confidentiality Protections for Private Companies
In Food Marketing Institute v. Argus Leader Media, the U.S. Supreme Court held that government agencies can withhold a private company’s records from public disclosure under Exemption 4 of the Freedom of Information Act (“FOIA”) if the company has treated the information as confidential and also received promises from the government agency to maintain the information’s confidentiality.
The Dispute. The case began with a simple FOIA request sent by a local newspaper in South Dakota to the United States Department of Agriculture (“USDA”). The newspaper wanted to know the names, addresses, and annual sales data for every retail store participating in the Supplemental Nutrition Assistance Program. The USDA released the names and addresses of all participating stores but withheld the annual sales data under FOIA’s Exemption 4, which protects from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” The South Dakota newspaper was not satisfied with the USDA’s FOIA response and filed suit to compel disclosure of each participating store’s annual sales data.
The Decision. Previously, lower federal courts had created a hurdle for FOIA’s Exemption to apply. A private company would need to show that disclosure of information through a FOIA request would cause “substantial competitive harm.” Both the trial and appellate courts followed this line of cases. They ruled that the USDA must disclose the annual sales data for participating stores. The Supreme Court, however, refused to impose the additional judge-made burden of proving “substantial competitive harm.” Instead, it relied solely on the words of the statute. It found that Exemption 4 protects confidential, commercial, or financial information, and that the ordinary meaning of “confidential” is anything kept private or secret. The Supreme Court concluded that a private company’s information will remain “confidential” and protected from disclosure under Exemption 4, so long as the private company customarily and actually treats the information as private and has received assurance from the government that it will maintain the information’s confidentiality.
The Take Away. The Supreme Court’s ruling adds significant protections for private companies. Companies must be sure to clearly designate information as confidential as well as receive assurances from the government before disclosing it. If the private company does these two simple things, its confidential information is not at risk of being disclosed through a FOIA request.