In Food Marketing Institute v. Argus Leader Media, the Supreme Court strengthened the federal government’s ability to protect trade secrets and confidential business information from disclosure in response to a Freedom of Information Act (“FOIA”) request. Food Mktg. Inst. v. Argus Leader Media, __ U.S. __, 139 S. Ct. 2356, 2366 (June 24, 2019). Under the facts of that case, the Court held that where the government received a third-party’s commercial and financial information and this information was treated confidentially, the information was exempt from disclosure and the government could not disclose it in response to a FOIA request. Many predict that this decision, which we previewed earlier this year, will help protect companies that provide sensitive information to government agencies and make it more difficult for the general public (including journalists and competitors) to access this information.
In Food Marketing, South Dakota newspaper Argus Leader (“Argus”) filed a FOIA request with the U.S. Department of Agriculture (“USDA”) requesting information about the USDA’s Supplemental Nutrition Assistance Program (“SNAP”). In particular, Argus sought underlying data about retail stores where SNAP benefits are redeemed as part of its investigation into SNAP-related fraud. USDA provided some of the requested information but held back the remainder under FOIA Exemption 4 (5 U.S.C. § 552(b)(4)), which permits government agencies to refuse to disclose information in response to a FOIA request that is “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” Argus brought suit in federal court in the U.S. District Court for the District of South Dakota. The district court ordered disclosure, reasoning that other courts narrowly interpret Exemption 4 and require a showing that information was likely to substantially harm the competitive position of the entity that provided the information. The Food Marketing Institute, a trade association representing grocery retailers, intervened in the case and appealed to the Eighth Circuit but lost. On review, the Supreme Court rejected both the narrow interpretation of Exemption 4 and the competitive harm test. Relying on the plain language of the statute and dictionary definitions, the Court stated that “at least where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of Exemption 4.” Applying this test, the Court ruled for the Food Marketing Institute, reversed the lower courts, and remanded the case.
Food Marketing provides several valuable lessons. Companies that provide confidential information to the government should make it clear that they treat and protect this material internally as confidential. Part and parcel to this, companies should inform the government upon submission that they expect the government to keep this information private. For entities seeking information under FOIA, they will need to tailor their request in light of the Supreme Court’s ruling. It is unclear at this point whether the Supreme Court decision will affect the interpretation of trade secret exceptions to state public records acts, but similar challenges are sure to follow.