Is information exempt from disclosure under Exemption 4 of the Freedom of Information Act if the disclosure of the information does not cause substantial competitive harm to the third-party submitter?
This case asks the Supreme Court to resolve conflicting interpretations of Exemption 4 of the Freedom of Information Act (“FOIA”). Food Marketing Institute contends that the plain meaning interpretation of Exemption 4 applies the exemption to confidential information, regardless of the competitive harm that will be caused if disclosed. And, if the Court selectively applies Exemption 4 to confidential information that will cause substantive competitive harm if disclosed, Food Marking Institute argues, then a reasonable possibility of competitive harm should satisfy the substantive harm standard. In response, Argus Leader Media asserts that Food Marketing Institute lacks the standing to bring this argument, because the Supreme Court cannot prohibit the disclosure of this information, precluding redressability. Argus Leader Media additionally asserts that the statutory context of Exemption 4—including multiple uses of identical language in other statutes—suggests that the Exemption 4 only applies to information that causes competitive harm. The outcome of this case will have implications on the disclosure of Supplemental Nutrition Assistance Program (“SNAP”) data and other privately-held data, consumer interests, and public health and safety.
Questions as Framed for the Court by the Parties
(1) Whether the statutory term “confidential” in the Freedom of Information Act’s Exemption 4 bears its ordinary meaning, thus requiring the government to withhold all “commercial or financial information” that is privately held and not publicly disseminated, regardless of whether a party establishes substantial competitive harm from disclosure—which would resolve at least five circuit splits; and
(2) whether, in the alternative, if the Supreme Court retains the substantial-competitive-harm test, that test is satisfied when the requested information could be potentially useful to a competitor, as the U.S. Courts of Appeals for the 1st and 10th Circuits have held, or whether the party opposing disclosure must establish with near certainty a defined competitive harm like lost market share, as the U.S. Courts of Appeals for the 9th and District of Columbia Circuits have held, and as the U.S. Court of Appeals for the 8th Circuit required here.
Respondent Argus Leader Media (“Argus Leader”) is a daily newspaper published in Sioux Falls, South Dakota. In February 2011, Argus Leader filed a Freedom of Information Act (“FOIA”) request with the U.S. Department of Agriculture (“USDA”) in order to investigate the effectiveness of the federally-subsidized Supplemental Nutrition Assistance Program (“SNAP”). Argus Leader Media v. U.S. Dep’t. of Agriculture at 915. Specifically, Argus Leader sought the amount of yearly redemptions for each food retailer participating in the SNAP program. Id. The government compensates the individual retailer for the redemption amount. See Argus Leader Media v. U.S. Dep’t. of Agriculture at 1173.
The USDA released the names and addresses of participating retailers to Argus Leader, but withheld the other requested information under FOIA Exemption 3 (concerning information exempted by statute) and Exemption 4 (exempting “confidential” commercial or financial information). Id. at 1174. After Argus Leader unsuccessfully appealed the decision to the USDA’s Office of Hearings and Appeals, it brought suit against the USDA in the United States District Court for the District of South Dakota, arguing that the USDA had violated FOIA by failing to release all the requested information. See id. at 1173. The district court granted summary judgment for the USDA, finding that that because 7 U.S.C. § 2018 (“Section 2018”) “limit[s] the use or disclosure” of benefits information provided by a retailer the information was exempted from disclosure by statute under FOIA Exemption 3. Id. at 1174–75.
The Eighth Circuit reversed and remanded the district court’s decision, finding that the requested information did not fall under FOIA Exemption 3 because the USDA, not the retailer mentioned in Section 2018, was the party which generated and stored the information. Id. at 1176.
On remand, the district court agreed the information was not protected by FOIA Exemption 4. Argus Leader Media v. U.S. Dep’t. of Agriculture at 916. The district court noted that the USDA failed to demonstrate that releasing the information would likely substantially injure the retailer. Id. The USDA chose not to appeal. Id.
Petitioner Food Marketing Institute (“FMI”), a trade group representing food retailers and wholesalers, successfully moved to intervene in the suit after the USDA notified retailers of its intent to disclose the store-level SNAP data. Brief for Petitioner, Food Marketing Institute (“FMI”) at 10–11. FMI argued that the district court erred in finding that releasing the data would not by stigmatize the store or provide critical information to competitors. Argus Leader Media v. U.S. Dep’t. of Agriculture at 916.
The Eighth Circuit nevertheless affirmed the district court’s decision, finding that the SNAP data did not fall within Exemption 4 because the potential commercial harm to food retailers from disclosure was too speculative or marginal. Id. In reaching that decision, the Eighth Circuit relied on the “substantial competitive injury,” or National Parks test, which requires the party resisting disclosure to show evidence that substantial competitive injury will likely result. Id. at 915–16; National Parks & Conservation Ass’n v. Morton at 770. FMI then appealed to the Supreme Court and simultaneously asked to stay the judgment of the Eighth Circuit citing irreparable harm to the retailers if the information were disclosed while the appeal was pending. Brief for Petitioner at 13. The Supreme Court issued an order staying judgment and subsequently granted FMI’s petition for writ of certiorari. Id.
STATUTORY INTERPRETATION OF EXEMPTION 4
Petitioner Food Marketing Institute argues that the Court is required by precedent to interpret the plain meaning of the term “confidential” in Exemption 4 of the Freedom of Information Act (“FOIA”). Brief for Petitioner, Food Marketing Institute at 16. Specifically, FMI asserts that the Court’s general statutory interpretation principal begins with the plain meaning of a word at the time the statute was enacted, and this is enough insofar as the definition of the term is plain. Id. at 16–17. Additionally, FMI posits that the Supreme Court has previously in U.S. Department of Justice v. Landano applied the plain meaning interpretation of “confidential” in Exemption 7 of FOIA. Id. at 20–21. After examining the various dictionary definitions and case law usage of the term “confidential,” FMI concluded that the ordinary plain meaning of ‘confidential’ in the context of the statute is “private and not publicly used.” Id. at 21–22. FMI also points out that the Senate and House reports accompanying FOIA interpret “confidential” by this ordinary plain meaning of the term. Id. at 22–23.
Furthermore, FMI argues that the United States Court of Appeals for the D.C. Circuit erroneously looked beyond the plain meaning of “confidential” in National Parks and Conservation Association v. Thomas S. Kleppe, Secretary, U. S. Department of the Interior. Id. at 23–24. Specifically, FMI contends that the D.C. Circuit in National Parks contravened precedent by requiring a showing that the interpretation of Exemption 4 conforms with the legislative purpose behind the exemption. Id. at 24–25. Also, FMI asserts that the D.C. Circuit cited congressional subcommittee witness statements from an unenacted predecessor bill of FOIA to conclude that the legislative purpose of FOIA is not consistent with the plain meaning of Exemption 4. Id. at 26–27. Because the Supreme Court does not give weight to statements made by members outside of Congress and statements made outside official congressional reports when evaluating legislative history, FMI maintains that the D.C. Circuit’s usage of legislative history was not consistent with the Supreme Court’s precedent. Id.
FMI also explains that the information at issue here falls under the plain meaning of “confidential” and is therefore protected by Exemption 4 of FOIA. Id. at 43. FMI points out that the information at issue here is not disclosed publicly, and measures were taken to prevent the public disclosure of the information at issue. Id. at 43–46. For example, FMI asserts that retailers had implemented computer-network security measures and trained employees extensively on information security. Id. Additionally, FMI argues that for the last 40 years the USDA has not released SNAP redemption data because they interpreted 7 U.S.C. § 2018 of the Food Stamp Act to restrict the disclosure of such data. Id. at 5-6. Thus, FMI maintains that retailers operate with the expectation that the government is restricted from releasing the information at issue here. Id. at 45. Lastly, FMI contends that there is no Article III standing issue here because the USDA has already promised to not disclose the information at issue if the court rules against mandatory disclosure here. Id. at 11.
Conversely, Respondent Argus Leader argues that even if the Supreme Court was to rule in favor of FMI’s interpretation of Exemption 4 the USDA still has the discretion to release this information because Exemption 4 only determines USDA’s obligation to disclose information but does not prevent disclosure. Brief for Respondent, Argus Leader at 14–17. Therefore, according to Argus Leader, FMI does not have Article III standing to bring suit here because FMI’s claim that they will suffer injury if the USDA discloses the information at issue is not redressable. Id. Also, Argus Leader contends that the Eighth Circuit has already ruled that Section 2018 does not bar the USDA from disclosing the information at issue here. Id. at 17–18.
Additionally, Argus Leader argues that there is no plain dictionary definition of “confidential” and Congress has not explicitly defined the term “confidential.” Id. at 24–26. According to Argus Leader, it is not conclusive whether “confidential” refers to information that is confidential by its nature or information that is confidential because it is treated as confidential by a party. Id. Thus, Argus Leader asserts that the common law uses of “confidential” must be examined. Id. at 26. Argus Leader contends that at the time FOIA was passed, “confidential” was used in the common law to refer to trade secrets and information that if revealed would harm the parties holding the information. Id. at 29–30. Thus, Argus Leader explains that the term “trade secrets” was used interchangeably with “confidential business information” and a showing of likely commercial harm was required in common law unfair competition tort cases. Id. at 29–33. According to Argus Leader, only after the passage of FOIA the term “trade secrets” was formalized to equal “confidential business information.” Id. at 33. Also, Argus Leader points out that, given the judicial consensus that “confidential business information” means information that can harm business competitiveness if disclosed, Congress has expressly incorporated the principle in 60 provisions across 46 statutes. Id. at 36–37.
Furthermore, Argus Leader contends that FMI misinterprets the Court in Landano. Id. at 43–45. Argus Leader asserts that Landano held that the information at issue was private because of its objective nature not because one party believed it to be private information. Id. And finally, according to Argus Leader, the text from the Senate and House reports accompanying FOIA cited by FMI to support their position derives from a quoted snippet of a previously unenacted version of FOIA. Id. at 51–52.
THE NATIONAL PARKS TEST FOR EXEMPTION 4
FMI argues that even under the National Parks test the Eighth Circuit erred by requiring a substantial competitive harm standard rather than a reasonable possibility of competitive harm standard. Brief for Petitioner at 46–47. Specifically, FMI posits that a reasonable possibility of competitive harm standard better conforms with the National Parks court’s desire to protect legitimate private interests when applying Exemption 4. Id. at 47–48. FMI contends that the reasonable possibility of commercial harm standard better protects legitimate private interests because: (1) the standard does not require the showing of a precise, immediate competitive harm; (2) the standard can be applied to parties beyond present commercial competitors; (3) the standard does not differentiate between type of harms; and 4) the standard can take into account factors external to competitive harm, such as if the party took actions to protect the information at issue. Id. at 49–50. FMI points out that it is reasonably possible that the disclosure of the information at issue will harm sales of the retailers involved here. Id. at 51–54. Therefore, FMI maintains that the information at issue here is protected by Exemption 4 of FOIA. Id.
Argus Leader argues that FMI has no basis for opposing the competitive harm standard in favor of a reasonable possibility of harm standard. Brief for Respondent at 62. First, Argus Leader asserts that in common law unfair competition tort cases, rather than the possibility of economic harm, a party had to show that economic harm was likely in order to recover damages. See id. at 62–63. According to Argus Leader, the competitive harm standard is objective, and embarrassment or negative publicity resulting from disclosure of information is not enough to show that legitimate commercial interests are violated. Id. Argus Leader points out that Congress has also repeatedly ratified the competitive harm standard. Id. at 63. Moreover, Argus Leader contends that the competitive harm standard is not overly difficult to meet and, depending on the specific facts of the case, the plaintiff may not always be required to demonstrate precise harm or an immediate injury. Id. at 63–64. Lastly, Argus Leader argues that even under the reasonable possibility of harm standard FMI’s claim would still fail because of the speculative nature of FMI’s injury. Id. at 64.
BALANCING CONSUMER INTERESTS
The United States, in support of FMI, argues that individual retailers’ SNAP data should be confidential, because opening SNAP data to FOIA requesters could decrease participation in the program given the government’s previous assurance that the data would be protected. Brief of Amicus Curiae The United States, in support of Petitioner at 27. The United States asserts that decreased retailer participation will limit access for SNAP beneficiaries. Id. The National Association for Convenience Stores (“NACS”), also in support of FMI, argues that even if the Court relies on the “substantial competitive harm” test from National Parks, the requested SNAP data should still be withheld, because information about a retailer’s customer base will give competitors a more complete picture of that retailer’s profitability and overall sales. Brief of Amicus Curiae National Association of Convenience Stores, in support of Petitioner at 26–27. NACS relies on the notion that a retailer’s customer base is a secret asset, and that exposing the customer bases of only SNAP-participating retailers could discourage participation in the program. Id. at 20.
The Reporters Committee for Freedom of the Press (“RCFP”), in support of Argus Leader, responds that the Court must act to preserve public access to information about government contracts with private parties. Brief of Amicus Curiae The Reporters Committee for Freedom of the Press, in support of Respondent at 20. In the case of SNAP data, the RCFP argues, the public should be free to access information about which retailers benefit most from the program in order to effectively evaluate whether the program is being run efficiently. Id. Public Citizen, also in support of Argus Leader, argues that this right of access to information extends to several other important social services programs, including housing benefits, civil rights enforcement, and oversight of workplace conditions. Brief of Amicus Curiae Public Citizen, in support of Respondent at 11–12. In each of these areas, Public Citizen notes, the government contracts heavily with private parties, and a decision to withhold the information in this case could have a spillover effect that would prevent the public from fully understanding and making judgments about these programs. Id. at 12–13.
PUBLIC HEALTH AND SAFETY
The Chamber of Commerce, in support of FMI, argues that requiring disclosure of the requested SNAP information in this case could spill over to harm the efficiency of government agencies tasked with regulating public health and the reputation of private parties that cooperate with these agencies. Brief of Amicus Curiae Chamber of Commerce, for Petitioner at 22. The Chamber of Commerce claims that the confidentiality of data about public-private cooperation is especially crucial in the area of national security, noting that nuclear power plants and nuclear waste disposal companies as private actors which the government depends on for public health and national security. Id. at 21. The Chamber also posits that existing public health disclosure requirements are sufficient to force disclosure about government action on securities, bank, drugs, and food regulations without risking harm to industry or public-private partnerships. Id. at 22.
Public Citizen responds that the public has a right to know about the ways products are regulated by and sold to the government, and that this information is critical to democratic determination of whether the government is meeting its health and safety goals. Brief of Amicus Curiae Public Citizen, in support of Respondent at 12–13. Public Citizen cites information about opioid prescribers and medical device malfunctions collected by the Food and Drug Administration as an example of potentially compromising private-party data that is crucial to keeping the public informed. Id. at 13–17. The AI Now Institute, in support of Argus Leader, applies this same logic to information about artificial intelligence and surveillance technologies developed by private entities. Brief of Amicus Curiae AI Now, in support of Respondent at 9. Since these technologies are increasingly used by executive agencies to perform government functions, AI Now argues, deferring to private companies to determine what information—often including federal data—is “confidential” would create severe privacy concerns for the unaware private citizen. Id. at 11–13, 30.
- Rebecca Edelson & Keith Szeliga, OH SNAP! Supreme Court to Take on Meaning of Key FOIA Exemption, National Law Review (Apr. 14, 2019).
- Edmund Amorosi, High Court May Defend Gov’t Contractors Against FOIA, Law 360 (Mar. 29, 2019).
- Josh Gerstein, Newspaper Presses FOIA Fight for Food Stamp Payment Data, Politico (Oct. 23, 2013).