Wednesday, April 1, 2020

SCOTUS Limits Disclosure of Confidential Records Under FOIA

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Richard B. Newmanhttp://www.hinchnewman.com
Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

On June 24, 2019, in the matter of Food Marketing Institute v. Argus Leader Media, the U.S. Supreme Court held that confidential commercial and financial information provided to the U.S. government by private parties is subject to exemption from disclosure under the Freedom of Information Act (“FOIA”), even though disclosure of that information would not cause substantial competitive harm.

The ruling is potentially significant for digital marketers faced with government investigations and enforcement actions by the Federal Trade Commission and FTC attorneys.

FOIA was enacted in 1966 and provides that any person has the right to access federal agency records or information, unless the information falls under an enumerated FOIA exemptions. One exemption is for “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential” are not subject to mandatory disclosure.

However, in 1974 the D.C. Circuit Court of Appeals held in National Parks & Conservation Association v. Morton, that information submitted to government agencies was considered confidential under this FOIA exemption “only if the disclosure is likely to: (i) impair the government’s ability to obtain necessary information in the future; or (ii) cause substantial harm to the competitive position of the person from whom the information was obtained.” The D.C. Circuit subsequently clarified that the substantial harm component only applied to compulsory submissions.

The Food Marketing Institute decision essentially overturns the National Parks test by finding that no basis exists for the D.C. Circuit’s weakening of protection for confidential information required to be provided to the government merely because it may not cause substantial competitive harm.

SCOTUS concluded that “confidential,” as used in the applicable exemption, “meant then as it does now, ‘private’ or ‘secret.’” According to the Court, confidentiality requires: “(i) that the information is kept private or at least closely held by the person providing it; and (ii) that the party receiving it provides some assurances that it will remain secret.”

Practically speaking, the Supreme Court concluded that there exists no basis for including a “substantial competitive harm” requirement in the meaning of “confidential.” “[T]he exemptions are as much a part of [FOIA’s] purposes and policies as the statutes disclosure requirement,” the Court held.

Justices Breyer, Ginsberg and Sotomayor partially dissented from the majority opinion, arguing that a showing of “genuine” harm must be established for information to be protected under the FOIA exemption.

Takeaway: Proprietary commercial and financial information that is actually maintained as confidential and subsequently provided to the government (such as state attorneys general and FTC attorneys) with privacy assurances shall be considered “confidential,” shielded from the public and competitors, and not subject to disclosure under FOIA.

Contact experienced counsel if you are the subject of a government agency investigation or enforcement action.

Richard B. Newman is a digital advertising and compliance lawyer at Hinch Newman LLP. Follow FTC CID attorneys on Twitter.

Attorney Advertising. Informational purposes only. Not legal advice.

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