Oral argument: Jan. 19, 2011
Appealed from: United States Court of Appeals for the Third Circuit (Sep. 22, 2009)
FREEDOM OF INFORMATION ACT, PRIVACY, CORPORATIONS, STATUTORY CONSTRUCTION
The Freedom of Information Act (“FOIA”) generally allows access to, and disclosure of, federal information and records to those who requested them, subject to some exceptions, including one for a disclosure that would constitute an invasion of “personal privacy.” Following a recent investigation of Respondent AT&T Inc. (“AT&T”) by Petitioner the Federal Communications Commission (“FCC”), Respondent CompTel, a non-profit trade association, requested under FOIA all of the records and information pertaining to the FCC’s investigation. In allowing disclosure of some of the information, the FCC rejected AT&T’s argument that such disclosure would constitute an invasion of “personal privacy,” holding that this exception was strictly limited to individuals. AT&T appealed to the Third Circuit, which held that a corporation may have “personal privacy” interests and remanded to the FCC. AT&T argues that the term “personal privacy” applies to corporations as well as individuals, and the FCC argues that such a term is limited to individuals. The Supreme Court’s decision in this case will determine the amount of protection given to corporations under FOIA and will likely affect the amount of access the public has to certain private corporate information.
Exemption 7(C) of the Freedom of Information Act, 5 U.S.C. § 552(b)(7)(C), exempts from mandatory disclosure records or information compiled for law enforcement purposes when such disclosure could reasonably be expected to constitute an unwarranted invasion of "personal privacy." The question presented is: Whether Exemption 7(C)'s protection for "personal privacy" protects the "privacy" of corporate entities.
Whether a corporation, like an individual, has “personal privacy” that could be violated by disclosure of facts obtained during a law enforcement investigation.
Under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, federal agencies must disclose records to anyone who requests them, subject to certain exemptions. See AT&T v. FCC, 582 F.3d 490, 492 (3d Cir. 2009). If an agency refuses to disclose this information, the requester may bring an action in district court to compel disclosure. See id. at 493. In this case, there are three relevant exemptions to FOIA’s mandatory disclosure. Exemption 4 allows an agency to refuse to disclose privileged or confidential “trade secrets and commercial or financial information obtained from a person.” See id. at 496. Exemption 6 applies to any personnel and medical files the disclosure of which would "constitute an unwarranted invasion of personal privacy." See id. Exemption 7(C) exempts investigatory files compiled for law enforcement purposes if their production could “reasonably be expected to constitute an unwarranted invasion of personal privacy.” See id. A person who wishes to prevent an agency from disclosing exempted information may seek judicial review of the disclosure. See Brief for Petitioners, Federal Communications Commission, et al., at 5. In deciding whether to disclose otherwise exempted information, the Federal Communications Commission (“FCC”), in accordance with its own regulations, may weigh policy considerations favoring non-disclosure against those favoring disclosure. See id. at 6.
AT&T, a private corporation, participated in the FCC’s “E-Rate Program,” providing telecommunications equipment and services to elementary and secondary schools in exchange for federal reimbursement. See AT&T v. FCC, 582 F.3d at 492. AT&T later informed the FCC that it had violated E-Rate rules and consequently overbilled the government for its services. See Brief for Petitioners at 6. The FCC’s Enforcement Bureau began an investigation and requested that AT&T produce certain information, to which AT&T complied. See id. at 7. The Enforcement Bureau terminated its investigation, and AT&T agreed to pay the FCC $500,000. See id.
In April 2005, CompTel, a non-profit trade association, requested all information which the Enforcement Bureau had procured in its investigation regarding AT&T and the E-Rate program. See AT&T v. FCC, 582 F.3d at 493. AT&T objected to the disclosure. See id. In August 2005, the FCC granted in part and denied in part that request, holding that some of the information sought fell within FOIA’s Exemption 4 in that it constituted “commercial or financial information” that could cause competitive harm to AT&T if disclosed. See Brief for Petitioners at 7. In addition to pricing information, the information withheld from CompTel included materials identifying AT&T’s staff and customers, which the FCC also thought fit within FOIA’s Exemption 7(C) because its disclosure would likely be an invasion of the personal privacy of those individuals. See id. at 8. The FCC decided to disclose all the other records obtained in the investigation, rejecting the argument that AT&T’s own “personal privacy” was protected by Exemption 7(C). See AT&T v. F.C.C., 582 F.3d at 493.
In denying AT&T’s administrative appeal from this decision, the FCC rejected AT&T’s further argument that it was a “corporate citizen” with personal privacy rights, and held that Exemptions 6 and 7(C) apply only to individuals. See AT&T v. FCC, 582 F.3d at 493. AT&T sought review in the United States Court of Appeals for the Third Circuit, which held that because a "person" includes a corporation under FOIA, a corporation may have a personal privacy interest within Exemption 7(C)’s meaning. See id. Remanding to the FCC for further proceedings, the court held that a corporation, like a person, can suffer “public embarrassment, harassment, and stigma” due to law enforcement investigations. See id. at 497–98.
The Supreme Court granted certiorari on September 28, 2010, to decide whether corporations may take advantage of Exemption 7(C). See FCC v. AT&T Inc., 131 S. Ct. 61 (2010). CompTel, technically a respondent, supports the FCC in this matter.
The Court’s decision in this case will determine whether a corporation has “personal privacy” for purposes of exemptions from mandatory records disclosure under the Freedom of Information Act ("FOIA"). A decision in favor of AT&T may hinder citizens’ ability to evaluate the actions of corporate entities. On the other hand, a decision in favor of the FCC may inhibit corporations’ ability to remain competitive and cooperative.
Respondent CompTel contends that Congress enacted FOIA to ensure that the citizenry was adequately informed and able to check on government entities, and that interpreting “personal privacy” to include corporations would undermine these goals. See Brief for Respondent CompTel in Support of Petitioners at 33–34. The Reporters Committee for Freedom of the Press and 22 other media organizations worry that allowing corporations to withhold information under Exemption 7(C)’s “personal privacy” provision would seriously impede the “watchdog” function of journalists and news media organizations seeking information about corporations. See Brief Amici Curiae of The Reporters Committee for Freedom of the Press et al. in Support of Petitioners at 18. They argue that the news media have played an important role in the recent past in informing the public of the dangerous safety records and public health violations of corporate entities, a role that the “personal privacy” exemption would have eliminated had it included corporations. See id. Similarly, Citizens for Responsibility and Ethics in Washington (“CREW”) argues that these goals are especially important in informing the public about government’s response to crises and environmental disasters, such as the BP oil spill; therefore, allowing corporate exemptions under FOIA for such information would significantly reduce the access to such information. See Brief of Amici Curiae Citizens for Responsibility and Ethics in Washington, et al. in Support of Petitioners at 16–17. Additionally, CREW argues that allowing corporations to use Exemption 7(C) would offer them more protection under FOIA than is given to individuals, who do not benefit from Exemption 4’s protection of “trade secrets and commercial or financial information.” Id. at 23.
In contrast to the FCC’s position, AT&T asserts that Exemption 7(C)’s purpose was to protect persons or entities subject to the serious consequences of law enforcement investigations, and maintains that mandatory disclosure of a corporation’s private information to the public, which includes its competitors, would undermine this very purpose. See Brief for Respondent AT&T at 43. AT&T additionally argues that news organizations’ “watchdog” role would not be frustrated because, in cases where there is a legitimate public interest in the requested information, the government may weigh the equitable considerations on both sides to determine whether the public interest is strong enough to outweigh the corporation’s privacy interests. See id. at 45. Instead, AT&T contends, disallowing a corporation to claim a personal privacy exemption would harm competition by allowing economic and industry competitors automatic access to the information. See id. at 43.
Further, AT&T argues that corporations, faced with potential disclosure of competitive “personal” information, would be hesitant in voluntarily cooperating with each other in the midst of law enforcement investigations. See Brief for Respondent AT&T at 43. The United States Chamber of Commerce ("Chamber") adds that this would discourage corporate compliance with law enforcement investigations. See Brief of Amicus Curiae the United States Chamber of Commerce in Support of Respondent at 23. The Chamber notes that, in this case, AT&T self-reported its violations to the FCC, and worries that corporations would be reluctant to take such action if it would expose trade secrets. See id. at 24. The Chamber also argues that a ruling for the FCC would cause particular harm to small businesses whose owners’ personal privacy overlaps with the corporation’s. See id.
The Federal Communications Commission (“FCC”) argues that FOIA Exemption 7(C)’s “personal privacy” phrase does not protect corporations. See Brief for Petitioners, Federal Communications Commission, et al., at 34. Respondent CompTel agrees and argues that Exemption 7(C) only applies to the privacy interests of individuals. See Brief for Respondent CompTel in Support of Petitioners at 9. Respondent AT&T argues that Exemption 7(C) does in fact protect the privacy of corporations. See Brief for Respondent AT&T at 8.
Plain Meaning of “Personal Privacy”
The FCC argues that the phrase “personal privacy,” in its ordinary lay meaning as found in Webster’s Dictionary, stands only for the privacy of individual human beings. See Brief for Petitioners at 16. According to the FCC, the term’s ordinary meaning should be used because FOIA leaves the phrase undefined. See id. at 17. CompTel supports this argument by noting that the modifier “personal” can only apply to the privacy interests of human beings. See Brief of Respondent CompTel at 21.
AT&T contends that Exemption 7(C)’s “personal privacy” phrase refers to the privacy of both individuals and corporations, relying on the unique definition of “person” seen in other legislation rather than the dictionary definition. See Brief for Respondent AT&T at 14. AT&T defines “personal privacy” according to the statutory definition of “person” in the Administrative Procedure Act (“APA”), which includes both individuals and corporations in the term “person.” See id. at 16. AT&T asserts that Congress’ meaning of the word “person” applies to its adjectival form, “personal,” as well. See id. at 14.
Meaning of “Personal Privacy” Within the Broader FOIA Statute
The FCC claims that FOIA’s broader structure supports the meaning of “personal privacy” as only protecting individuals, not corporate interests. See Brief for Petitioners at 20. In particular, the FCC argues that other FOIA exemptions, particularly Exemptions 6 and 4, confirm this. See id. The FCC asserts that Exemption 7(C)’s “personal privacy” phrase was incorporated from Exemption 6, and Exemption 6 was specifically designed to protect an individual’s right to privacy. See id. at 22. The FCC argues that Exemptions 6 and 7 protect the same privacy rights, especially if the Court follows the interpretive rule that identical phrases within the same statute normally have the same meaning. See id.
AT&T rejects the FCC’s view that Exemption 6 supports the argument that Exemption 7(C) excludes the interests of corporations. AT&T points to the fact that the Attorney General has interpreted Exemption 6’s “personal privacy” phrase as including corporations based on the statutory definition of “persons.” See Brief for Respondent AT&T at 32–33.
The FCC also argues that Exemption 4 supports its view that “personal privacy” applies only to an individual’s interest, asserting that Exemption 4’s use of the word “person” is limited to disclosure of confidential corporate information such as trade secrets and commercial or financial information. See Brief for Petitioners at 24–25. The FCC argues that if Congress wanted Exemption 7(C) to apply to corporations, it would have used language similar to Exemption 4’s “trade secrets” or “commercial or financial information” phrases that would be indicative of corporate privacy interests. See id. at 26. Also, the fact that Congress passed a specific exemption for corporations in Exemption 4 while incorporating individual privacy rights into Exemption 7(C) through Exemption 6 strengthens the argument that Exemption 7(C) was not intended to include corporate privacy interest. See id. at 26–27.
AT&T rejects the FCC’s attempt to analogize Exemption 4’s protection of corporate interests to Exemption 7(C). See Brief for Respondent AT&T at 39. AT&T argues that Exemption 4’s purpose of protecting corporate trade secrets and commercial information is distinct from Exemption 7(C)’s purpose to protect a corporation’s reputational interest. See id. AT&T claims that the two Exemptions’ different objectives are attributable to their language differences. See id. at 41. AT&T refers to other FOIA provisions to argue that Congress intended to include corporate interests in Exemption 7(C). AT&T asserts that if Congress had wanted to exclude corporations it would have used the word “individual,” as it did in Exemption 7(F). See id. at 30. AT&T also refers to other related statutes, such as the Privacy Act, where Congress has distinguished the terms “person” and “individual.” See id. According to AT&T, the fact that Congress intentionally chose not to use a term that exclusively refers to an “individual” in Exemption 7(C) is demonstrated by numerous provisions in the United States Code that use the phrase “individual” privacy. See id. In addition, AT&T asserts that the fact that the Court has applied the Double-Jeopardy Clause and the Fourth Amendment of the United States Constitution to corporations is telling because both constitutional provisions serve a similar purpose as Exemption 7(C): protecting privacy and preventing reputational harm. See id. at 20. AT&T argues that the Double-Jeopardy Clause’s purpose of protecting defendants from embarrassment applies equally to corporations in the sense that corporations can suffer from bad publicity, and can be harmed in their good will. See id. at 24–25.
Legislative History and Purpose
The FCC argues that the drafting history of FOIA amendments shows that Congress passed Exemption 7(C) based on the understanding that “personal privacy” only applies to individuals. See Brief for Petitioners at 27. The FCC refers to the floor debate regarding the amendments, where Senator Hart stated that the protections of Exemption 6 would also apply to Exemption 7(C). See id. at 28. The debate also included one Senator’s understanding that corporations cannot be included under Exemption 6’s protection. See id. at 29. CompTel notes that during the debates regarding the 1986 amendment to Exemption 7(C), the Department of Justice published an opinion stating that Exemption 7(C) applied only to individuals, reflecting the commonly understood meaning. See Brief of Respondent CompTel at 29. In an even broader legislative context, the FCC argues that at the time FOIA amendments were being debated, Congress was also working to pass the Privacy Act of 1974. See Brief for Petitioners at 32. The FCC asserts that this parallel development is telling because the Privacy Act protects only an individual’s privacy rights, and Congress refers to “personal privacy” in the Privacy Act in the same way as it did in FOIA. See id. at 33.
In contrast, AT&T argues that Exemption 7(C) is intended to protect corporate privacy interests. See Brief for Respondent AT&T at 41. AT&T claims that Exemption 7(C)’s statutory purpose is to afford privacy rights to suspects, witnesses, and investigators in law enforcement investigations and protect them from any embarrassment resulting from the disclosure of information gathered during the investigation. See id. at 41–42. AT&T argues that this purpose applies equally to corporations. See id. at 42. Corporations are often parties to law enforcement investigations, and they also face the threat of reputational harm as a result of these investigations. See id. Also, AT&T argues that the FCC’s argument regarding Congress’ concern over protecting privacy interests does not address the issue of whether Congress intended to apply privacy interests to protect corporations. See id. at 48. AT&T asserts that a statute’s scope can be broader than the specific harm that Congress intended to remedy; the fact that Congress’ primary goal in Exemption 7(C) was to protect individual’s privacy interests does not necessarily exclude protection of corporate privacy interests. See id. at 48–49.
In this case, the Supreme Court will determine whether FOIA Exemption 7(C)’s protection of “personal privacy” interests also applies to corporations. The FCC argues that the provision’s plain meaning, the statute’s broader context, and the legislative history all point to the fact that “personal privacy” only includes the privacy interests of individuals. AT&T argues that Exemption 7(C) also protects the privacy interests of corporations based on the statutory meaning of “personal privacy,” the legislative purpose, and the recognition of corporate privacy interests in other legal contexts. The Supreme Court’s decision on whether corporations are categorically included or exempted under Exemption 7(C) will decide whether corporations can be protected from disclosing “personal” and confidential information to the public.
Edited by: Sarah Chon
The authors would like to thank former Supreme Court Reporter of Decisions Frank Wagner for his assistance in editing this preview.
· Time, Adam Cohen: Why Companies Don’t Deserve Personal Privacy Rights (Dec. 15, 2010)
· Inside Counsel, Melissa Maleske: Supreme Court Will Decide if "Personal Privacy" under FOIA Applies to Corporations (Nov. 30, 2010)
· United States Department Of Justice: FOIA Request Handbook