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Supreme Court Expands Confidentiality Protections for Private Companies

By Thomas Hubert & Jason Culotta on July 1, 2019
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In Food Marketing Institute v. Argus Leader Media, the U.S. Supreme Court held that government agencies can withhold a private company’s records from public disclosure under Exemption 4 of the Freedom of Information Act (“FOIA”) if the company has treated the information as confidential and also received promises from the government agency to maintain the information’s confidentiality.

The Dispute. The case began with a simple FOIA request sent by a local newspaper in South Dakota to the United States Department of Agriculture (“USDA”). The newspaper wanted to know the names, addresses, and annual sales data for every retail store participating in the Supplemental Nutrition Assistance Program. The USDA released the names and addresses of all participating stores but withheld the annual sales data under FOIA’s Exemption 4, which protects  from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” The South Dakota newspaper was not satisfied with the USDA’s FOIA response and filed suit to compel disclosure of each participating store’s annual sales data.

The Decision. Previously, lower federal courts had created a hurdle for FOIA’s Exemption to apply. A private company would need to show that disclosure of information through a FOIA request would cause “substantial competitive harm.” Both the trial and appellate courts followed this line of cases. They ruled that the USDA must disclose the annual sales data for participating stores. The Supreme Court, however, refused to impose the additional judge-made burden of proving “substantial competitive harm.” Instead, it relied solely on the words of the statute. It found that Exemption 4 protects confidential, commercial, or financial information, and that the ordinary meaning of “confidential” is anything kept private or secret. The Supreme Court concluded that a private company’s information will remain “confidential” and protected from disclosure under Exemption 4, so long as the private company customarily and actually treats the information as private and has received assurance from the government that it will maintain the information’s confidentiality.

The Take Away. The Supreme Court’s ruling adds significant protections for private companies. Companies must be sure to clearly designate information as confidential as well as receive assurances from the government before disclosing it. If the private company does these two simple things, its confidential information is not at risk of being disclosed through a FOIA request.

Photo of Thomas Hubert Thomas Hubert

Thomas Hubert is an Editor and Founder of the Trade Secret Insider and is a senior partner for Jones Walker’s Trade Secret and Non-Compete Team. Mr. Hubert has extensive trial experience in trade secret, non-compete, and unfair competition cases — where he has …

Thomas Hubert is an Editor and Founder of the Trade Secret Insider and is a senior partner for Jones Walker’s Trade Secret and Non-Compete Team. Mr. Hubert has extensive trial experience in trade secret, non-compete, and unfair competition cases — where he has not only obtained and fended off injunctions but also won on the merits at trial. He also counsels clients on best practices for protecting trade secret information and for avoiding liability when hiring talent from a competitor. Mr. Hubert can be reached at thubert@joneswalker.com or 504.582.8384.

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Photo of Jason Culotta Jason Culotta

Jason Culotta is an author for the Trade Secret Insider. He is a partner in the firm’s Labor & Employment Practice Group and practices from the New Orleans office. Mr. Culotta focuses on employment-related litigation, including non-compete and trade secret disputes. He…

Jason Culotta is an author for the Trade Secret Insider. He is a partner in the firm’s Labor & Employment Practice Group and practices from the New Orleans office. Mr. Culotta focuses on employment-related litigation, including non-compete and trade secret disputes. He can be reached at jculotta@joneswalker.com or 504.582.8177.

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  • Posted in:
    Intellectual Property
  • Blog:
    Trade Secret Insider
  • Organization:
    Jones Walker LLP
  • Article: View Original Source

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