Ruling gives businesses stronger protection from forced public disclosure of confidential data
By NACS Online // June 25, 2019
WASHINGTON, D.C.—In a win for retailers, the U.S. Supreme Court Monday ruled 6-3 against a South Dakota newspaper seeking records under the Freedom of Information Act (FOIA) on stores’ Supplemental Nutrition Assistance Program (SNAP) sales data, finding that the data are confidential and sharing them could harm the companies. NACS members can read a memorandum on the decision here.
“NACS has been fighting this since 2014 and is gratified that the Supreme Court agreed with our contention that store-level data is proprietary,” said Lyle Beckwith, NACS senior vice president, government relations.
The Argus Leader in 2011 filed a FOIA request with the U.S. Department of Agriculture (USDA) asking for five years of store-level redemption data on SNAP for more than 300,000 retailers, but the agency denied the request, saying it was protected confidential business information.
Retailers have argued that store-level SNAP sales data essentially amount to a trade secret, and releasing them would harm their businesses, providing an unfair advantage to their competitors–plus infringe on their customers’ privacy.
The USDA fulfilled part of the newspaper’s FOIA request by supplying store names and addresses, but the agency declined to provide the SNAP data under Exemption 4 of FOIA, which blocks agencies from handing over “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.”
The newspaper sued to obtain the records and originally secured lower court rulings in its favor. In 2017, the USDA decided not to appeal a judge’s ruling that the government had failed to show that releasing the data would cause real competitive harm to retailers. At that point, the Food Marketing Institute (FMI), which represents grocers, stepped in and succeeded in getting the Supreme Court to take the case. NACS filed an amicus brief in support of FMI’s position, along with the National Grocers Association and The National Retail Federation.
Monday, the Supreme Court sided with the Food Marketing Institute and reversed the lower courts’ rulings. The Court concluded that the store-level SNAP data qualify as “confidential” under this standard.
Writing for a six-justice majority, Justice Neil Gorsuch wrote, “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.”
The opinion reverses a 1974 interpretation of that term, first articulated by the D.C. Circuit, which determined private information would not be deemed “confidential” under the FOIA unless its disclosure would cause “substantial competitive harm.”
Joining the majority were Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, Elena Kagan and Brett Kavanaugh. Dissenting were Justices Stephen Breyer, Ruth Bader Ginsburg and Sonia Sotomayor. They said FOIA’s principles of public access should apply unless there was “some genuine harm” to a company’s economic or business interests.
“FMI is grateful that the Court clarified FOIA’s Exemption 4 to prevent the disclosure of confidential commercial information that would put businesses at competitive disadvantages,” FMI said in a statement following the ruling.