I was one of many who traveled (in my case, on foot) to the United States Supreme Court on April 22, 2019 to watch oral arguments in the case of Food Marketing Institute, Inc. v. Argus Leader. I was there because two of my clients joined an amicus brief in support of the newspaper’s fight for access to records about the Supplemental Nutritional Assistance Program (SNAP) and because the case held a greater meaning for anyone interested in the Freedom of Information Act (FOIA), as this was the first time the Court would be exploring the breadth of FOIA Exemption 4 (which I’ll describe in greater detail below). I had a distinctly negative feeling about the likely outcome of the case when the hour was up; my gut instinct was confirmed on June 24, 2019, when the court, in a written by Justice Gorsuch, not only narrowed the scope of Exemption 4 but also appeared to attempt to redefine the fundamental nature of the law itself.
The case actually goes back several years, when the South Dakota paper filed a FOIA request with the United States Department of Agriculture (USDA) in 2011 seeking the names and addresses of retailers participating in SNAP program and each store’s SNAP redemption during the years 2005-2010. SNAP, in case you’re not already aware, is the federal “food stamp” program which allows individuals to receive monthly supplements from the federal government to purchase nutritional food. The USDA agreed to provide the names and addresses of each participating retailer, but not the financial data involving retail sales on a store-by-store level, citing FOIA Exemption 4, which allows the government to withhold information containing (1) trade secrets or (2) commercial or financial information obtained from a person and privileged or confidential in nature. This case involves the second category of documents.
The Argus Leader availed itself of the right to judicial review under FOIA, successfully filing suit in the United States District Court for the District of South Dakota. The District Court held that Exemption 4 requires demonstration that the commercial or financial information involved is not only privileged or confidential in nature but also that release of the information is likely to cause substantial harm to the competitive position of the person from whom the information was obtained.
What happened next was interesting – and integral to the case. The USDA did not appeal the District Court decision but the Food Marketing Institute (FMI), who is an advocate for the retail industry, moved to intervene in the case. In arguments to the United States Court of Appeals for the Eighth Circuit, FMI advocated for discarding the substantial competitive harm requirement in favor of simply applying the ordinary public meaning of the term “confidential.” The United States Court of Appeals for the Eighth Circuit rejected this argument, at which point FMI asked the Supreme Court to take the case.
Justice Gorsuch wrote for a six-member majority of the Court (he was joined by Justices, Roberts, Thomas, Alito, Kavanaugh, and Kagan). His opinion addressed 2 issues: (1) whether FMI had the necessary legal “standing” to step into the shoes of the USDA in defending against the release of this information and (2) whether Exemption 4 was properly applied. The answers to those questions were “Yes” and “No.”
The issue of whether FMI had the standing to represent the interests of the USDA turned on the finding that its members had suffered an actual or imminent injury that is (1) fairly traceable to the judgment below and (2) could be redressed by a favorable ruling. Justice Gorsuch found the existence of both. First, FMI had convincingly shown that release of this information would constitute actual harm to its members, due to the highly competitive nature of the grocery industry and the fact that stores could use information to better position themselves against competitors in terms of opening new stores, marketing to customers and product selection. On the second part of this test, the Argus Leader argued that this harm was not redressable because all the Court could do is restore the government’s discretion to withhold this data, not actually mandate its disclosure. Justice Gorsuch deferred to the fact that the USDA said it would withhold this information if given the opportunity to do so (which was met with significant distress by FOIA advocates who understand that this position is unnecessarily secretive at best, potentially illegal at worse).
Justice Gorsuch thus moved to the merits of the case, the application of FOIA Exemption 4. He noted that the Act itself does not define the word “confidential.” Under his view of statutory construction – shared by many conservative jurists – this requires looking at the “ordinary, common meaning,” of the term, at the time Congress enacted FOIA in 1966. He noted that confidential was understood to mean “private or secret,” with two conditions generally present: (1) the information is customarily closely held and (2) the receiving party promises confidentiality, both of which exist here.
More importantly, there was no evidence that for information to be “confidential” it required a demonstration of substantial competitive harm. That requirement was inserted into the Exemption 4 equation via a 1974 decision of the United States Court of Appeals for the District of Columbia Circuit in the case of National Parks & Conservation Assn v. Morton. In that case, the D. C. Circuit read through legislative history and said that confidentiality only exists if disclosure: (1) is likely to impair government’s ability to obtain necessary info in the future or (2) will cause substantial harm to the competitive position of the person from whom the information was obtained.
Though a number of other federal appellate courts quickly adopted this formulation, Justice Gorsuch rejected it: [w]e cannot approve such a casual disregard of the rules of statutory interpretation” going on to say “[i]n statutory interpretation disputes a court’s proper starting point lies in a careful examination of the ordinary meaning and structure of the law itself.”
The Argus Leader also argued that the Court should adopt the “substantial competitive harm” requirement as a matter of policy to comport with the usual narrow construction of FOIA exemptions. Again, Justice Gorsuch disagreed, going in the entirely opposite direction:
FOIA expressly recognizes that “important interests” [are] served by [its] exemptions and [t]hose exemption[s] are as much a part of [FOIA’s] purpose[s and policies] as the [statute’s disclosure] requirement.
He went on to say that “Congress sought a ‘workable balance’ in enacting FOIA, including the need to assure private parties that their proprietary information will be protected if shared with the government.
Justice Breyer, writing for himself, with Justices Ginsburg and Sotomayor concurring in part and dissenting in part. He agreed that, though the National Parks substantial competitive harm standard goes too far, Exemption 4 requires that release must cause “genuine harm” to the owner’s economic or business interests before information can be withheld. Such a requirement, he wrote, is more consistent with the purpose of FOIA:
The whole point of FOIA is to give the public access to information it cannot otherwise obtain. So the fact that private actors have “customarily and actually treated” commercial information as secret, cannot be enough to justify nondisclosure. After all, where information is already publicly available, people do not submit FOIA requests—they use Google. Nor would a statute designed to take from the government the power to unilaterally decide what information the public can view put such determinative weight on the government’s preference for secrecy (what the majority calls the government’s “assurance of privacy”).
For the majority, a business holding information as private and submitting it under an assurance of privacy is enough to deprive the public of access. But a tool used to probe the relationship between government and business should not be unavailable whenever government and business wish it so. And given the temptation, common across the private and public sectors, to regard as secret all information that need not be disclosed, I fear the majority’s reading will deprive the public of information for reasons no better than convenience, skittishness, or bureaucratic inertia. The Exemption’s focus on “commercial” or “financial” information, for instance, implies that the harm caused by disclosure must do more than, say, simply embarrass the information’s owner. It must cause some genuine harm to an owner’s economic or business interests.
The unfortunate result, in this case, will have several impacts. Corporations may cheer or bemoan the broadening of Exemption 4 (or both). This case will make it harder to obtain information on competitors (a not-uncommon use of the Freedom of Information Act and its state counterparts) so those who are seeking a competitive advantage lose out while those with plenty to hide gain more protection. Overall, the public seeking to hold corporations accountable on matters of health and safety issues, as well as waste, fraud, and corruption, will be the biggest losers here. Public oversight of corporate malfeasance has been significantly crippled.
More importantly, this case might turn a core principle regarding FOIA on its head. Justice Gorsuch’s view that FOIA Exemptions are as much a part of the law as the disclosure requirements is flat wrong. As the Supreme Court stated in its very first case interpreting FOIA, EPA v. Mink, [The] limited [FOIA] exemptions do not obscure the basic policy that disclosure, not secrecy, is the dominant objective of the Act.” Thus, in this case, Justice Gorsuch is fundamentally rewriting this law in a way that will have profound consequences on the public’s right to know.