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Supreme Court Rules in Favor of Baker Botts Client Food Marketing Institute in Landmark FOIA Decision

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WASHINGTON, D.C., June 24, 2019 - The U.S. Supreme Court today issued a landmark Freedom of Information Act (FOIA) decision holding that the word “confidential” in FOIA Exemption 4 must be interpreted according to its plain text.  Its holding adopts the position that Baker Botts client Food Marketing Institute (FMI) has advanced throughout this litigation: that the government is not mandated to disclose private parties’ information if the information is confidential.

The 6-3 decision in Food Marketing Institute v. Argus Leader Media overturns more than four decades of precedent that required proof of a likelihood of substantial competitive harm to invoke the FOIA exemption.

FOIA’s Exemption 4 exempts from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”  Since the 1974 D.C. Circuit opinion in National Parks & Conservation Association v. Morton, every federal circuit to consider the exemption has held that a party resisting disclosure of “confidential” information must prove not only that the information was treated as confidential, but also that the disclosure would likely cause substantial competitive harm.

Today’s decision is the first time that the Supreme Court has ever interpreted Exemption 4.  The Court rejected the National Parks test as relying on grounds that were completed divorced from FOIA’s text.  “We cannot approve such a casual disregard of the rules of statutory interpretation,” Justice Neil Gorsuch’s majority opinion stated, adding that “a court’s proper starting point lies in a careful examination of ordinary meaning and structure of the law itself.”

Because “confidential” means “‘private’ or ‘secret,’” Exemption 4 applies to commercial information that is customarily kept confidential without the need to establish any likelihood of competitive (or other) harm if the information were released.  The fact that the Government promised confidentiality to FMI’s members—retailers who participate in the Supplemental Nutrition Assistance Program, or SNAP, commonly called “Food Stamps”—made the case even easier for the Court.

The opinion has broad implications for a wide range of industries that provide confidential commercial data and information to the government.

“We are pleased that the Supreme Court agreed with our argument that Exemption 4 should be read according to its plain text,” said Baker Botts, L.L.P. partner Gavin R. Villareal, lead counsel for FMI.

The case arose when the Argus Leader, a South Dakota newspaper, filed a FOIA request with the U.S. Department of Agriculture (USDA) seeking release of redemption data for every retailer in the country that participates in SNAP.  USDA resisted releasing the information under Exemption 4, arguing that the information was confidential because it reflected private store-level sales data that would be competitively harmful if disclosed.

After a bench trial, a South Dakota federal court ordered the SNAP data released and USDA indicated that it would not appeal.  FMI, a trade association whose members operate tens of thousands of retail food stores that participate in SNAP, intervened to challenge the ruling and protect its members’ confidential sales information.

The Eighth Circuit affirmed but the Supreme Court issued a stay to allow it to consider FMI’s arguments.  FMI contended that the National Parks test misinterpreted Exemption 4’s plain text and that the statute should apply to private parties’ information as long as that information is customarily kept confidential.  The Supreme Court granted FMI’s petition for certiorari and today reversed the Eight Circuit’s decision.

The Supreme Court expressly rejected the National Parks test, and concluded 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.”  The Court thus held that the store-level SNAP data qualifies as “confidential” under this standard.  Even the three Justices in a partial dissent, written by Justice Stephen G. Breyer, agreed that National Parks was wrong and went too far.

“This carefully written opinion reiterates that the role of federal courts is to apply the law as written,” said Baker Botts, L.L.P. partner Evan A. Young, who argued the case on behalf of FMI and co-chairs the firm’s U.S. Supreme Court practice group.  “At every stage, FMI has asked the courts to just apply FOIA’s plain language, which asks only whether retailers keep their sales data confidential, not why they do so.  We appreciate the Supreme Court’s willingness to accept our case and remove all doubt about what FOIA Exemption 4 means.”

“This is a historic moment for food retail business owners large and small, and a vote of confidence for assuring shopper privacy,” said FMI’s CEO Leslie Sarasin.  Added Sarasin, “Today’s decision affirms that FOIA was created to shine a light on the government, not on private parties, and the Supreme Court’s holding creates an important precedent that will extend well beyond store-level SNAP sales in grocery.”

The Baker Botts team that represented FMI included Gavin R. Villareal, Thomas R. Phillips, Evan A. Young, Scott A. Keller, Stephanie F. Cagniart, and Ellen Springer, all of the firm’s Austin office.

The case is Food Marketing Institute v. Argus Leader Media, No. 18-481, before the Supreme Court of the United States.

 

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