Caseflicks

Supreme Court of the United States • 2019

Food Marketing Institute v. Argus Leader Media

588 U.S. 427 | 139 S. Ct. 2356 | 204 L. Ed. 2d 742 | 2019 U.S. LEXIS 4200

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Takeaway

In short, this case rejected the long-used substantial-competitive-harm test: under Exemption 4, privately held commercial information submitted to the government with an assurance of confidentiality is protected without proof of competitive harm.

Background

Argus Leader Media, a South Dakota newspaper, requested records from the Department of Agriculture under the Freedom of Information Act (FOIA). It sought the names and addresses of stores participating in the Supplemental Nutrition Assistance Program (SNAP), along with each store's annual SNAP-redemption totals from 2005 through 2010. The Department released the store names and addresses but withheld the store-level redemption data under FOIA Exemption 4, which protects commercial or financial information obtained from a person that is "privileged or confidential."

Argus Leader sued to compel disclosure. Applying the Eighth Circuit's version of the D.C. Circuit's National Parks test, the district court asked whether disclosure would likely cause "substantial competitive harm" to the retailers. The evidence showed that retailers closely guard store-level SNAP data and that competitors could use it to improve location, pricing, and marketing decisions. But the court concluded that the likely harm was not substantial enough and ordered disclosure. The Eighth Circuit affirmed.

The USDA did not appeal, but the Food Marketing Institute, a trade association representing grocery retailers, intervened and appealed. The Institute argued that Exemption 4 does not require proof of substantial competitive harm. The Supreme Court granted review after staying the Eighth Circuit's mandate.

Issues

Issue #1

Whether the Food Marketing Institute had Article III standing to appeal when a favorable ruling would restore the USDA's discretion to withhold, rather than require it to withhold, the SNAP data.

Holding

Yes. The Institute had standing because disclosure would likely cause its members financial injury, that injury was traceable to the disclosure order, and reversal would redress it.

Reasoning

The record showed that grocery retailers operate in a highly competitive industry and that disclosure of store-level SNAP-redemption data would likely give competitors useful information for taking business from the Institute's members. That probable financial injury was concrete even if it did not meet the lower courts' heightened standard of "substantial competitive harm."

The injury was directly traceable to the district court's disclosure order. It was also redressable because the USDA unequivocally represented that, consistent with its longstanding practice and assurances to retailers, it would not disclose the data unless a court compelled it to do so. Reversal therefore would prevent the disclosure the Institute sought to avoid.

Issue #2

Whether FOIA Exemption 4 requires proof that disclosure of commercial or financial information is likely to cause substantial competitive harm before the information may be treated as confidential.

Holding

No. Exemption 4 contains no substantial-competitive-harm requirement.

Reasoning

FOIA does not define "confidential," so the Court looked to the term's ordinary public meaning when Congress enacted FOIA in 1966. Contemporary dictionaries defined confidential as private or secret. They indicated that information shared with another can remain confidential when its owner customarily keeps it private and, in one common sense of the word, when the recipient gives an assurance that it will remain private.

The retailers met both conditions identified by the Court. Uncontested evidence established that they actually and customarily keep store-level SNAP data private, even limiting access within their own companies. The government also had long assured participating retailers that it would keep the data confidential, apparently to encourage participation in SNAP and the provision of information useful to administering the program.

Neither the statutory text, ordinary dictionary meanings, nor early Exemption 4 decisions mentioned a requirement that disclosure cause substantial competitive harm. Early appellate decisions instead treated information as protected when the private party would not ordinarily disclose it publicly and had submitted it to the government under an express or implied assurance of confidentiality.

The substantial-competitive-harm test originated in the D.C. Circuit's 1974 National Parks decision. That court looked to legislative purpose and selected legislative-history materials before grounding its interpretation in Exemption 4's text. The Supreme Court held that this approach improperly added a limitation not found in clear statutory language.

National Parks relied heavily on hearing testimony regarding an unenacted bill, a particularly weak form of legislative history. Official committee reports, by contrast, tracked the ordinary meaning of the statute: they described Exemption 4 as protecting information that the submitter would not customarily make public, including business sales statistics.

The Court rejected the newspaper's arguments that a supposed common-law meaning of "confidential commercial information," congressional ratification, or FOIA's general disclosure purpose could preserve the National Parks rule. Congress did not use the asserted common-law term of art, never reenacted Exemption 4 after National Parks, and courts must give FOIA exemptions a fair reading rather than artificially narrow them.

The Court did not decide whether both customary private treatment and a government assurance of privacy are always necessary. It held only that commercial or financial information is confidential, at minimum, when the owner actually and customarily treats it as private and provides it to the government under an assurance of privacy. The store-level SNAP data satisfied that standard.

Concurrences

Justice Breyer

Reasoning

Justice Breyer agreed that the National Parks test demands too much. Exemption 4 should not be limited to harm caused by direct competition, because disclosure can injure a business in other genuine ways, such as discouraging customers, enabling potential competition, or undermining a regulated firm without competitors. Nor should the harm be required to be "substantial," a standard that can generate costly and elaborate litigation over the degree of competitive injury.

But Justice Breyer would retain a narrower harm requirement. In his view, commercial or financial information is confidential only when it is customarily and actually treated as private, submitted under an assurance of privacy, and its release would cause genuine harm to the owner's economic or business interests. The word "confidential" can refer to information whose unauthorized disclosure would be prejudicial, and the commercial-or-financial limitation indicates that mere embarrassment is not enough.

He reasoned that FOIA's central purpose is broad public access to government records, and its exemptions have traditionally been construed narrowly. Privacy practices by a business and a governmental promise of secrecy alone should not control access to records revealing the relationship between government and private industry; otherwise, information could be withheld because of convenience, institutional caution, or bureaucratic inertia.

Justice Breyer would have remanded for a determination whether disclosure would cause genuine economic or business harm. Because the majority held that no showing of harm is required, he concurred in rejecting the substantial-competitive-harm rule but dissented from the Court's ultimate Exemption 4 standard. Justices Ginsburg and Sotomayor joined this opinion.