The SCOTUS Case that will Reexamine What “Confidential” Means to You

By: Leslie G. Sarasin, President and CEO, Food Marketing Institute

Remember the days when having a competitor moving in across the street was an indicator of a hot market? Now, competitors are across the street, around the corner and also in the ether; intellectual property flows as fast as data through high-speed wireless, making businesses hyper-sensitive to keeping their confidential business information just that – secret and confidential. 

A legal case heading to oral argument before the U.S. Supreme Court this spring has far-reaching implications when it comes to something you hold near and dear -- your confidential commercial information. FMI is a named party in the case because we believe strongly that it is FMI’s role to defend our industry’s right to compete on a level playing field as well as its ability to serve a customer base as diverse as the nation’s palate. 

How – and why – FMI got involved

In 2011, a reporter for the Argus Leader, a South Dakota newspaper, filed a Freedom of Information Act (or “FOIA”) request asking the U.S. Department of Agriculture (or “USDA”) to divulge the annual Supplemental Nutrition Assistance Program (SNAP) individual sales figures reflective of each and every retail location in the country. USDA, which had historically refused to release the requested data attributed to an individual store, again declined to release it based on two FOIA exemptions. The newspaper sued, and USDA defended its decision in court for years before eventually abandoning the case.  It was at that point that FMI intervened to pursue an appeal on behalf of our members. 

We took this step because throughout the process many FMI members were deeply concerned that releasing this proprietary information would give competitors access to proprietary information that retailers keep confidential for a reason. Our members were also concerned about the precedent such information sharing would set. The Court of Appeals for the Eighth Circuit ruled against FMI, but our case has since gone all the way to the U.S. Supreme Court, which decided on Jan. 11 that it will hear oral arguments. To emphasize the significance of this decision, the Court receives some 7,000-8,000 petitions each year, but typically grants certiorari and hears oral arguments in 70 or fewer.

Our argument is based FOIA’s Exemption 4, which protects from mandatory disclosure of all “confidential” private-sector “commercial or financial information” that comes into the government’s possession. Store-level SNAP sales data clearly fits within that category; no retailer makes public any information about each store’s market share in general, much less specifically for its customers who rely on SNAP. And the ordinary meaning of “confidential” requires only a showing that a business keeps something secret or away from public disclosure. As an industry, it is unquestionably true that retailers keep their stores’ SNAP redemption data confidential.

But federal courts use a very different definition of “confidential”— one that required FMI to prove that releasing this specific information would impose a likelihood of “substantial competitive harm.” FMI believes USDA made this showing at trial, and we believe it is manifestly true that revealing this store-by-store data would assist a retailer’s competitors. Yet we also believe this is the wrong test to be used, and that when Congress used the word “confidential,” it intended its ordinary definition. The core of what the Supreme Court will decide is which definition of “confidential” is correct. 

To be clear, FMI has not attacked FOIA or transparency at all. FMI believes FOIA is a valuable and important statute to ensure governmental accountability and transparency. But as the Court has repeatedly held when reviewing FOIA exemption cases, Congress gave two directives in FOIA: to release information, but also to protect some specific information from disclosure. The Supreme Court has repeatedly interpreted FOIA exemptions using the ordinary meanings of the words Congress used. Until now, however, Exemption 4 has escaped the Court’s review.

Multiple organizations filed amicus briefs in support of FMI’s position (U.S. Chamber of Commerce, Retail Litigation Center, National Association of Convenience Stores, National Grocers Association, National Retail Federation, the Alliance of Marine Mammal Parks & Aquariums, Animal Agriculture Alliance, Fur Information Council of America, Institute for Marine Mammal Studies, National Association for Biomedical Research, Protect the Harvest, United States Association of Reptile Keepers and Zoological Association of America). Their support demonstrates the extent to which this case extends well beyond SNAP sales data in grocery – it’s about how the courts determine that which constitutes confidential commercial information. 

Most SNAP data are already available to the public

Those who have opposed us in litigation have argued that revealing this data is necessary for greater transparency. FMI certainly supports transparency, including when it comes to SNAP, but we’ve consistently argued the public already has access to a great deal of SNAP information that is available on the USDA website.  For example,the amount of SNAP dollars redeemed is public – by month and by state and county, in annual blocks or by comparing one year to the next or one year to five years. Our industry already tracks this public information for business and customer trends. Likewise, the USDA’s website also depicts the locations of stores with licenses and redemptions by category, in addition to where SNAP-authorized stores are located. But FMI maintains that store-level sales data is confidential, in much the same way how much business grocers do in cash, credit, debit, checks, or even gift cards is confidential. Congress expressly exempted confidential commercial information from mandatory disclosure because that disclosure can harm private interests without adding much insight about the government’s own work, and FOIA exists to shine a light on the government, not on private parties.

Implications and next steps

By deciding to hear our appeal, the U.S. Supreme Court has shown this case and issue is an important one that warrants further discussion and that the application of Exemption 4 should extend at least to store-level SNAP sales data. The Court’s decision, which will be released by the end of June, will also provide valuable guidance about how the government intends to protect commercial data more broadly in the future. 

We will continue to offer analysis of the implications of this case. Oral arguments are slated for April 22.

Visit the following page for resources related to the case: FMI.org/SCOTUS