Supreme Court Declares Private Commercial and Financial Information “Confidential” Under FOIA Exemption 4

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The Supreme Court recently ruled that when commercial or financial information is treated as private by its owner and is provided to the government under an assurance of privacy, the information is “confidential,” and thus, should not be disclosed, pursuant to Freedom of Information Act’s (FOIA) Exemption 4.

A media group filed a FOIA request in order to obtain information from the U.S. Department of Agriculture (USDA) about the retail stores that participate in the national food-stamp program and each store’s program redemption data.  To avoid providing the information, the USDA invoked FOIA Exemption 4, which shields “trade secrets and commercial financial information obtained from a person and privileged or confidential” from disclosure. 

The media group sued in federal district court to compel disclosure.  To determine whether the information was “privileged or confidential” such that Exemption 4 applied, the district court applied the “competitive harm” test, which does not deem commercial information “confidential” unless disclosure is “likely to cause substantial harm to the competitive position of the person from whom the information was obtained.”  The district court ordered disclosure of the information, finding that revealing the requested information could cause some “competitive harm,” but probably not “substantial” competitive harm.  A grocery retailer trade association intervened and appealed the case.  The Eighth Circuit affirmed, (i) rejecting the trade association’s argument that the court should use the “ordinary public meaning” of “confidential,” not the “competitive harm” test definition; and (ii) stating that the trade association could not show a likelihood of substantial harm from the information’s disclosure.

The Supreme Court disagreed with the lower courts’ characterization of the potential harm or disclosure here as “unsubstantial.”  Instead, the Court found that disclosure of the contested data would cause the trade association members “concrete” financial injury in the highly competitive grocery industry, and that said injury would be “directly traceable” to the disclosure.  The Court stated that the plaintiffs’ arguments were unpersuasive, explaining the definition of “confidential” has not traditionally required a determination of harm from disclosure, but has applied to information customarily “kept private.”  Accordingly, the Court stated that 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” for purposes of FOIA’s confidentiality exemption.  The Court reversed and remanded the case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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