February 21, 2019
Last month, the U.S. Supreme Court granted certiorari in Food Marketing Institute v. Argus Leader Media (No. 18-481),1 a case that could have significant implications for the protection of trade secrets and other confidential, commercially sensitive business information.
The primary question presented by Food Marketing Institute is the meaning of the term “confidential” in Exemption 4 of the Freedom of Information Act (“FOIA”). Exemption 4 provides for the exemption of two categories of information in the government’s possession from mandatory disclosure under FOIA: (i) “trade secrets”; and (ii) “commercial or financial information” of a person that is “confidential” in nature. More specifically, in this case the Supreme Court has been asked to decide whether, in order to be considered “confidential”—and therefore protected under the second prong of Exemption 4—commercial or financial information must satisfy the so-called “substantial competitive harm” test that has been adopted by nearly every federal court. Under the “substantial competitive harm” test, commercial and financial information is deemed “confidential” within the meaning of Exemption 4 only if the government (or, in the case of a “reverse-FOIA” lawsuit, the private-sector entity whose commercial or financial information is being sought from the government) demonstrates that disclosure of such information would “cause substantial harm to the competitive position of the person from whom [it] was obtained.”
In Food Marketing Institute, the Supreme Court has been urged to abandon the “substantial competitive harm” test in favor of a more “ordinary meaning” approach under which information would be deemed “confidential” and protected against mandatory disclosure upon a mere showing that it has been “confidentially held” and “not publicly disseminated” by its private-sector owner, and that it was shared with the government under an “expectation of confidence.”
Importantly, the federal courts have long embraced a restrictive definition of what constitutes a “trade secret” under the first prong of Exemption 4. The result is that private-sector actors must often rely on Exemption 4’s second prong—i.e., its protection of “commercial or financial information” that is “confidential” in nature—to prevent the public disclosure of information they consider to be (and that likely would qualify under other federal and state law as) a “trade secret.” Consequently, the Supreme Court’s decision in Food Marketing Institute will be of particular interest to companies that do business with the government or otherwise are required to share their commercially sensitive information with government agencies and, as a result, have a particular interest in preventing FOIA from being used as a tool to obtain their prized trade secrets.
Even to those less concerned with possible disclosures under FOIA, the Court’s decision in Food Marketing Institute is still of significant interest because the “substantial competitive harm” test is similar to—and is in effect simply the “flip side” of—the showing required to establish that information qualifies as a “trade secret” under federal and state misappropriation laws. Indeed, under the federal Defend Trade Secrets Act and the Uniform Trade Secrets Act (a version of which has now been adopted in 49 of the 50 states), a “trade secret” generally is defined as confidential information that confers a competitive advantage, and thereby derives independent economic value, from not being generally known. Any pronouncements regarding the contours of the “substantial competitive harm” test could have potentially significant implications for the protection and enforcement of trade secrets generally—even outside the realm of FOIA. In Food Marketing Institute, the petitioner has specifically requested that, if the Court refuses to abolish the “substantial competitive harm” test, it at least clarify the factual showing needed to satisfy that test, which has been described by at least one current member of the high court as an “amorphous” and “convoluted test” that, in practice, has been applied inconsistently and “relies on judicial speculation.”2
The Supreme Court’s decision in Food Marketing Institute has the potential to represent a significant legal development that merits close attention by anyone with an interest in the protection or enforcement of trade secrets.
Background – FOIA and Other “Sunshine Laws”
Whether as contractors bidding on or performing under government-awarded contracts, or as a result of disclosure obligations arising under regulatory regimes or as a consequence of some government investigation, private-sector businesses frequently are called upon to disclose to government agencies some of their most valuable, confidential and commercially sensitive business information. This creates significant challenges for private sector businesses because, under FOIA and other so-called “sunshine laws” intended to promote government transparency, the public has a presumptive right of access to information contained within government records even if those records contain or consist of information collected from private parties. Indeed, under FOIA, federal agencies generally are obligated to release their records to any requesting member of the public—irrespective of the source of those records and regardless of the motive or identity of the party making the request—unless the information requested falls within one of nine specific categories of statutorily exempt information.3 In recent years, it has become commonplace for competitors to try to exploit this obligation and use the government’s mandatory disclosure obligations under FOIA—and FOIA’s policy of government transparency—as a tool to obtain valuable, competitive business intelligence for their private, economic advantage.
Exemption From Mandatory Disclosure Under FOIA Exemption 4
While FOIA is animated by “a policy of broad disclosure of Government documents in order to ensure ‘an informed citizenry,’”4 Congress recognized the need to protect the interests of members of the private sector who submit to the government—voluntarily or under compulsion—trade secrets and other confidential and commercially sensitive information.5 Congress specifically included such information among the nine categories of information that are statutorily exempt from the government’s mandatory disclosure obligations under FOIA. In what is known as “Exemption 4,” Congress specifically provided that FOIA’s mandatory disclosure provisions shall “not apply to matters that are … trade secrets and commercial or financial information obtained from a person and privileged or confidential.”6
Under Exemption 4, “trade secrets” are per se exempt from mandatory disclosure under FOIA.7 For decades, however, the courts have adopted an extremely restrictive definition of the term “trade secrets” reasoning that, in light of the policies of transparency and broad disclosure animating FOIA, that term is most appropriately construed to encompass only those secrets that bear a “direct relationship” to the “productive process” by which some “trade commodity” is produced—i.e., a “secret, commercially valuable plan, formula, process or device that is used for the making, preparing, compounding or processing of trade commodities.”8 Consequently, in order to prevent public disclosure under FOIA of vast amounts of competitively sensitive information—including, for example, pricing and sales data, customer and supplier lists, overhead and operating costs, and other information that arguably bears no “direct relationship” to any “productive process” but which nevertheless is believed to represent a valuable “trade secret”—the government and/or private sector actors have been required to demonstrate that such information qualifies as “commercial or financial information” that is “confidential” in nature, so as to be exempt from disclosure under the second prong of Exemption 4.
Notably, the courts have long embraced a broad definition of the term “commercial or financial information,” holding that almost any information can qualify as long as it can be shown to relate to a business or trade.9 However, historically the courts have been unwilling to adopt a similarly indulgent definition of the term “confidential,” routinely refusing to find that information is “confidential” within the meaning of Exemption 4 simply because it had not been, or is of a kind that would not customarily be, disclosed to the public.10 Instead, reasoning that the definition of “confidential” must be informed by the “legislative purpose which underlies [Exemption 4],” the courts typically and almost uniformly have adopted the so-called “substantial competitive harm” test, under which information is considered “confidential”—and thus protected against compelled public disclosure by FOIA Exemption 4—only if its disclosure would “cause substantial harm to the competitive position of the person from whom the information was obtained.”11
Lack of Clear Guidelines and Consistency
Though seemingly straightforward, the so-called “substantial competitive harm” test has actually engendered quite a bit of controversy and, historically, has not been applied uniformly. There is general a consensus among the courts that “[c]onclusory and generalized allegations of substantial competitive harm” are insufficient to satisfy the resisting party’s burden under the “substantial competitive harm” test.12 On the other end of the spectrum, there is widespread agreement that the party seeking to invoke Exemption 4 need not show “actual competitive harm” flowing from disclosure, but may instead satisfy the “substantial competitive harm” test by showing that the owner of the requested information faces “actual competition” and a “likelihood of substantial competitive injury” from its disclosure.13 Beyond that, however, there has been significant variation in the pleading and proof required by the courts, prompting Justice Clarence Thomas—and former Supreme Court Justice Antonin Scalia—to decry the “substantial competitive harm” test as an “amorphous” and “convoluted” test that relies on “nebulous language” and fails to offer sufficient clarity and consistency for litigants and the courts.14
Despite widespread agreement that a showing of “actual competition” is a prerequisite to a finding of “confidentiality,” the courts have, as Justice Thomas observed, been unable to agree on “what kind of ‘actual competition’ must be shown.”15 A number of courts have held that the party resisting disclosure under Exemption 4 “need not conduct a sophisticated economic analysis of the likely effects of disclosure.”16 Some courts, however, have required “factual justifications and market definitions” to demonstrate both the relevant market in which the party resisting disclosure operates and the existence of “actual competition” therein.17 Similarly, while some courts have insisted on proof of existing and identifiable competitors,18 others have found that “actual competition” can be shown based on the mere possibility of competition from hypothetical future competitors.19
Likewise, courts have not agreed on the type of showing that is required to establish a “likelihood of substantial competitive harm.” Some courts have held that a party resisting disclosure must make a detailed showing that it would suffer some “defined competitive harm (like lost market share)” if competitors were to have access to and use the information at issue.20 Yet, other courts have held that a likelihood of substantial competitive harm can be shown by a competitor’s mere “possible” use of the information at issue, even in the absence of any showing regarding negative consequences that would flow therefrom.21
Finally, some courts have drawn a distinction between cases involving information provided to the government “voluntarily” and those involving information submitted under “compulsion,” and have held that the “substantial competitive harm” test remains applicable to the latter but that information provided to the government on a “voluntary” basis may be deemed “confidential” for purposes of Exemption 4 if it simply is “of a kind that would customarily not be released to the public by the person from whom it was obtained.”22 Other courts, however, have refused to adopt such a distinction.23
In short, as Justice Thomas observed back in 2015, the courts have embraced “varying versions” of the “substantial competitive harm” test over the years.24 The result is that cases involving Exemption 4 have largely been resolved “on a case-by-case basis rather than [on the basis of] general guidelines.”25 Despite this lack of consistency, the Supreme Court surprisingly has not to date weighed in on the proper interpretation and application of Exemption 4.26
The Food Marketing Institute Case
With its decision to grant certiorari in Food Marketing Institute, the Supreme Court is poised to finally bring some clarity to the proper scope and application of FOIA Exemption 4. Indeed, in agreeing to hear the case, the Supreme Court has signaled its apparent intention to opine on: (i) whether immunity from disclosure under Exemption 4 should, in the first instance, hinge on an ability to satisfy the “substantial competitive harm” test (or whether the protections afforded by Exemption 4 should, instead, extend to any information that is “confidentially held” and “not publicly disseminated”); and (ii) the factual showing required to satisfy the “substantial competitive harm” test, assuming that test remains relevant.27
The facts in Food Marketing Institute are relatively straightforward. In 2011, amid increasing public scrutiny of the Supplemental Nutrition Assistance Program (SNAP)—the federal welfare program formerly known as the federal Food Stamp Program—the Argus Leader (Argus), a Sioux Falls, South Dakota-based newspaper, began work on an investigative report intended to expose the identities of individual retailers who were participating in the program and the amount of taxpayer money annually being received under the SNAP program.28 In furtherance of its investigation, Argus submitted a FOIA request to the U.S. Department of Agriculture (USDA), seeking the production of, among other SNAP-related information in the USDA’s possession, “the yearly redemption amounts … for each [SNAP] participating store” between 2005 and 2010 (i.e., the dollar amount of goods that each participating retailer sold to SNAP beneficiaries and redeemed from the federal government in each of those years).29 The USDA produced some of the information requested by Argus, but ultimately refused to produce the requested redemption data on the ground that such information embodied the confidential and competitively sensitive sales figures of individual SNAP-participating retailers and, as a result, represented “commercial or financial information” that was “confidential” in nature and exempt from disclosure under FOIA Exemption 4.30 Argus, therefore, commenced an action in the United States District Court for the District of South Dakota seeking to compel the USDA’s release of the requested redemption information.31
During a two-day bench trial, the USDA offered the testimony of multiple SNAP-participating retailers, who testified that the requested redemption data revealed confidential and competitively sensitive business information that they closely guarded from the public. The participating retailers further testified that disclosure of the requested redemption data would directly threaten their competitive positions in the marketplace because, among other things, it would allow existing competitors and potential market entrants to estimate the total profits earned at each of the various store locations, identify high-dollar SNAP locations and thus where to strategically establish competing stores, and target their existing customers.32 Nevertheless, the district court concluded that the USDA had not met its burden of showing that the requested data was exempt from disclosure under Exemption 4 because it had failed to satisfy the “substantial competitive harm” test.33
Significantly, the court found that there was, without question, “actual competition” in the retail grocery business, and that access to the requested redemption data “may provide [competitors with] some insight into a store’s overall financial health.”34 The court reasoned, however, that the requested redemption data represented only “a small[ ] piece in a much larger picture” of information that was already publicly available to actual and potential competitors, and that disclosure of such information would therefore likely have, at most, “a nominal effect” on the SNAP retailers’ competitive positions, with any actual competitive harm being only “speculative at best.”35 Accordingly, the court concluded that the USDA had not adequately shown a “likelihood of substantial competitive harm” flowing from disclosure of the requested data.36
On appeal, the U.S. Court of Appeals for the Eighth Circuit affirmed, holding that, although the evidence suggested release of the requested redemption data would likely enable competitors to “make better business decisions,” it was insufficient to support a finding that disclosure would be likely to cause “substantial competitive harm.”37 Moreover, the Eighth Circuit summarily rejected an argument advanced by the Food Marketing Institute, a trade association of retail grocers that intervened in the case on behalf of its SNAP-participating members. The Food Marketing Institute argued that it was unnecessary for the government to prove that disclosure would likely result in “substantial competitive harm” to participating retailers because the “substantial competitive harm” test finds no support in the text of Exemption 4 itself. On appeal, the Food Marketing Institute vehemently argued that the Exemption 4’s plain language says nothing about “competitive harm,” merely requiring that commercial or financial information be “confidential” in order to be exempt from disclosure,38 and emphasized that the “ordinary meaning” of “confidential” is something that is simply “meant to be kept secret” or “”communicated, conveyed, acted on, or practice in confidence [and] not publicly disseminated.”39 The Food Marketing Institute’s argument was that the Court of Appeals was constrained to conclude that the requested redemption data was protected under Exemption 4 because it had always been “kept secret” by SNAP-participating retailers.40 The Eighth Circuit rejected this argument, asserting that any reading of the statute which equated “confidential” with “secret” would render Exemption 4 too broad and “swallow FOIA whole.”41 The Food Marketing Institute petitioned the Supreme Court for certiorari, which the Court granted on January 11, 2019.42
In its petition for certiorari, the Food Marketing Institute raised two issues for Supreme Court review. First it asked the high court to declare that the term “confidential,” as used in FOIA Exemption 4, should be given its “ordinary meaning” such that all third-party “commercial or financial information” in the government’s possession is exempt from disclosure under FOIA—irrespective of whether a party establishes “substantial competitive harm” from its disclosure—as long as such information is “confidentially held and not publicly disseminated” by its private-sector owner. In effect the Food Marketing Institute asked the high court to abandon the “substantial competitive harm” test altogether.
Second, and in the alternative, the Food Marketing Institute asked the Court to clarify the precise nature of the showing required to satisfy that test. The Institute noted that, at the district court level, the USDA had proffered facts sufficient to demonstrate both the existence of “actual competition” in the retail grocery market and the potential commercial usefulness to competitors of the requested redemption data. This showing would have, in other courts, satisfied the “substantial competitive harm” test and entitled the redemption data to protection under Exemption 4. Owing to the different and more stringent standards applied by the district court and the Eighth Circuit, however, the Food Marketing Institute’s members were deprived of the protections afforded by Exemption 4. Accordingly, the Institute requested that, if the Court refuses to do away with the “substantial competitive harm” test altogether, it at least clarify whether that test requires a showing of some “defined competitive harm” (such as lost market share) that is “near certain” to occur, or whether it instead may be satisfied by a simple showing that, upon disclosure in response to a FOIA request, the information in question could be “potentially useful to a competitor.”43
It remains to be seen whether the Supreme Court will abolish the “substantial competitive harm” test in favor of an “ordinary meaning” approach under which private-sector commercial or financial information in the government’s possession will be deemed “confidential”—and thus exempt from disclosure under FOIA Exemption 4—if it was simply maintained by its owner, and communicated to the government, “in confidence.” Should the Court do so it effectively would abrogate the longstanding restrictive definition of “trade secrets” that historically has applied to FOIA Exemption 4,44 and make it easier for private sector companies to protect a wider scope of potentially sensitive business information shared with a government agency—including, potentially, information that would not even qualify as a “trade secret” under federal and state misappropriation laws.45
Companies that do business with the government or that otherwise are required to share their commercially sensitive information with any government agency will want to pay particular attention to the Supreme Court’s forthcoming decision in Food Marketing Institute, as that decision could have significant implications for whether and how such companies can protect that information from public disclosure under FOIA.
Even outside the realm of FOIA, the Court’s decision in Food Marketing Institute has potentially significant implications for those interested in the protection and enforcement of trade secrets because the “substantial competitive harm” test is derived from—and is, in effect, just the “mirror image” of—the test for whether information qualifies as a “trade secret” under federal and state misappropriation laws. Indeed, under the federal Defend Trade Secrets Act, a “trade secret” is defined as any “financial, business, scientific, technical, economic, or engineering information … if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.”46 And under the Uniform Trade Secrets Act (UTSA)—a version of which has now been adopted in every State except New York—a “trade secret” is similarly defined as information that (i) “derives independent economic value … from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use,” and (ii) “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”47 In order to invoke the protections and remedies afforded by those statutes, claimants must therefore generally demonstrate that the information they seek to protect constitutes confidential information that confers a competitive advantage and derives independent economic value from not being generally known.48 This, of course, is just the “flip side” of the showing nominally required under the “substantial competitive harm” test, under which a party resisting disclosure under FOIA Exemption 4 must demonstrate that public disclosure of otherwise confidential information would cause it substantial competitive harm.49
The Supreme Court’s decision in Food Marketing Institute may portend significant changes in—or otherwise affect—pleading and proof of trade secret enforcement actions under federal and state misappropriation statutes. Indeed, should the Court endorse continued application of the “substantial competitive harm” test for purposes of Exemption 4, it seems likely that the Court will elaborate on the pleading and proof required to satisfy that test. In doing so, the Court may indirectly affect the pleading and proof required under state and federal misappropriation laws, whose definitions of the term “trade secret” overlap substantially with FOIA Exemption 4’s “substantial competitive harm” test. Accordingly, the Supreme Court’s decision in Food Marketing Institute bears close watching by all those concerned with the protection and enforcement of trade secrets.
1 Food Marketing Inst. v. Argus Leader Media, No. 18-481, 2019 WL 166877 (U.S. Jan. 11, 2019).
2 New Hampshire Right to Life v. Dep’t of Health & Human Servs., 136 S.Ct. 383, 384-85 (2015) (Thomas, J., dissenting).
3 5 U.S.C. §522(a)(3) (“each agency, upon any request for records which (i) reasonably describes such records and (ii) is made in accordance with published rules stating the time, place, fees (if any), and procedures to be followed, shall make the records promptly available to any person”).
4 Critical Mass Energy Project v. Nuclear Reg. Comm’n, 975 F.2d 871 (D.C. Cir. 1992) (en banc).
5 Id.; see also Nat’l Parks & Conservation Ass’n v. Morton, 498 F.2d 765 (D.C. Cir. 1974) (noting that FOIA’s legislative history acknowledged the need to “protect persons who submit financial or commercial data to government agencies from the competitive disadvantages which would result from its publication” and that such protection serves a “twofold” purpose: to “encourage[e] cooperation by those who are not obliged to provide information to the government” and to “protect[ ] the rights of those who must”).
6 5 U.S.C. §522(b)(4).
7 See Cornucopia Inst. v. U.S. Dep’t of Agric., No. 16-148 (RC), 2018 WL 4637004, at *8 (D.D.C. Sept. 27, 2018) (“If the requested documents constitute ‘trade secrets,’ they are exempt from disclosure, and no further inquiry is necessary.’) (quoting Pub. Citizen Health Res. Grp. v. F.D.A., 704 F.2d 1280, 1286 (D.C. Cir. 1983)).
8 See Pub. Citizen Health Res. Grp., 704 F.2d at 1288 (“[W]e feel free to repudiate the broad Restatement approach … as inconsistent with the language of FOIA and its underlying policies. In our opinion, the term ‘trade secrets’ in Exemption 4 of the FOIA should be defined in its narrower common law sense, which incorporates a direct relationship between the information at issue and the productive process. Accordingly, we define trade secret, solely for purpose of FOIA Exemption 4, as a secret, commercially valuable plan, formula, process, or device that is used for the making preparing, compounding, or processing of trade commodities and the can be said to be the end product of either innovation or substantial effort.”); see also Cornucopia Inst., 2018 WL 4637004, at *9 (for purposes of FOIA Exemption 4, “[t]rade secret information must relate to the production process itself”).
9 See, e.g., id., 704 F.2d at 1290 (rejecting argument that the second prong of Exemption 4 “should be confined to records that actually reveal basic commercial operations, such as sales statistics, profits and losses, and inventories, or relate to the income-producing aspects of a business,” and noting that “the terms ‘commercial’ and ‘financial’ should be given their ordinary meaning”).
10 See, e.g., Nat’l Parks & Conservation Ass’n, 498 F.2d at 767 (“Whether particular information would customarily be disclosed to the public by the person from whom it was obtained is not the only relevant inquiry in determining whether that information is ‘confidential’ for purposes of section 552(b)(4).”).
11 Id. at 770. See also 9 to 5 Org. for Women Office Workers v. Bd. Of Governors of the Fed. Reserve Sys., 721 F.2d 1, 7-10 (1st Cir. 1983); Cont’r Stock Transfer & Trust Co. v. SEC, 566 F.2d 373, 375 (2d Cir. 1977); OSHA Data/CIH, Inc. v. U.S. Dep’t of Labor, 220 F.3d 153, n.24 (3d Cir. 2000); Acumenics Res. & Tech. v. U.S. Dep’t of Justice, 843 F.2d 800, 807 (4th Cir. 1988); Cont’l Oil Co. v. Fed. Power Comm’n., 519 F.2d 31, 35 (5th Cir. 1975); Gen. Elec. Co. v. U.S. Nuclear Reg. Comm’n, 750 F.2d 1394, 1402 (7th Cir.1984); Contract Firefighters, Inc., 260 F.3d at 861; Pac. Architects & Eng’rs, Inc. v. U.S. Dep’t of State, 906 F.2d 1345, 1347 (9th Cir. 1990); Anderson v. Dep’t of Health & Human Servs., 907 F.2d 936, 946 (10th Cir. 1990); Sharkey v. Food & Drug Admin., 250 F. App’x 284, 286 (11th Cir. 2007). Recognizing that the purpose of Exemption 4 is not merely to protect the rights of those who supply information to the government, but also to protect the government’s interests in the availability of information, the courts have held that information may also be considered “confidential” for purposes of Exemption 4 upon a showing that its disclosure would be likely to “impair the Government’s ability to obtain necessary information in the future.” Nat’l Parks & Conservation Ass’n, 498 F.2d at 769-770. Because most contract-related submissions to the government are considered to be mandatory, however, see, e.g., Judicial Watch, Inc. v. Exp.-Imp. Bank, 108 F. Supp. 2d 19, 28 (D.D.C. 2000) ("when the government requires a private party to submit information as a condition of doing business with the government" the submission is deemed "required")—and because the courts have concluded that “the governmental interest is unlikely to be implicated where the production of information is compelled,” Critical Mass Energy Project, 975 F.2d at 878—most cases implicating the second prong of Exemption 4 turn on the resisting party’s ability to satisfy the “substantial competitive harm test.”
12 See, e.g., Pub. Citizen Health Res. Grp., 704 F.2d at 1291.
13 Id. (emphasis added); Gulf & W. Indus. v. U.S., 615 F.2d 527, 530 (D.C. Cir. 1979) (“Actual competition and the likelihood of substantial competitive injury is all that need be shown.”).
14 New Hampshire Right to Life, 136 S.Ct. at 384-85 (Thomas, J. & Scalia, J., dissenting).
15 Id. at 384.
16 See, e.g., Pub. Citizen Health Res. Grp., 704 F.2d at 1291.
17 See New Hampshire Right to Life, 136 S.Ct. at 384 (citing Watkins v. U.S. Bureau of Customs & Border Protection, 643 F.3d 1189, 1196 (9th Cir. 2011)).
18 See New Hampshire Right to Life, 136 S.Ct. at 384 (citing Hercules, Inc. v. Marsh, 839 F.2d 1027, 1030 (4th Cir. 1988) (finding the prospect of future competitors too speculative to justify invocation of Exemption 4)).
19 See, e.g., People for the Ethical Treatment of Animals v. U.S. Dep’t of Health & Human Sevs., 901 F.3d 343, 351-52 (D.C. Cir. 2018) (finding substantial competitive harm where the requested information could help new competitors enter the market); New Hampshire Right to Life v. Dep’t of Health & Human Servs., 778 F.3d 43, 51 (1st Cir. 2015) (finding “substantial competitive harm” test satisfied because a “potential future competitor could take advantage” of the information at issue).
20 See, e.g., McDonnell Douglas Corp. v. Dep’t of Air Force, 375 F.3d 1182, 1187 (D.C. Cir. 2004); GC Micro Corp. v. Def. Logistics Agency, 33 F3d 1109, 1115 (9th Cir. 1994).
21 See, e.g., New Hampshire Right to Life, 778 F.3d at 51.
22 See Critical Mass Energy Project, 975 F.2d at 889.
23 Bangor Hydro-Elec. Co. v. U.S. Dep't of the Interior, No. 94-0173-B, slip op. at 9 n.3 (D. Me. Apr. 18, 1995) (observing that the "First Circuit . . . has not distinguished between information provided on a voluntary basis and that which must be disclosed" to the government).
24 New Hampshire Right to Life, 136 S.Ct. at 384.
25 See U.S. Dep’t of Justice, Guide to the Freedom of Information Act, “EXEMPTION 4 Competitive Harm Prong of National Parks,” 2005 WL 6339534, at *2 (2009).
26 New Hampshire Right to Life, 136 S.Ct. at 383 (“Though we often have considered other FOIA exemptions, we have never interpreted Exemption 4’s exception for ‘trade secrets and commercial or financial information obtained from a person and privileged or confidential.”).
27 See Food Marketing Inst. v. Argus Leader Media, No. 18-481, 2018 WL 5016257, at *i (8th Cir. Oct. 11, 2018), cert. granted, 2019 WL 166877 (U.S. Jan. 11, 2019).
28 Argus Leader Media v. U.S. Dep’t of Agric., 740 F.3d 1172, 1173 (8th Cir. 2014).
29 Argus Leader Media v. U.S. Dep’t of Agric., 900 F. Supp. 2d 997, 1000 (D.S.D. 2012).
30 Argus Leader Media v. U.S. Dep’t of Agric., 224 F. Supp. 3d 827, 829-30 (D.S.D. 2016).
32 Id. at 830-31.
34 Id. at 833-34.
35 Id. at 834.
36 Id. at 829.
37 Argus Leader Media v. U.S. Dep’t of Agric., 889 F.3d 914, 916-17 (8th Cir. 2018) (emphasis in original).
38 Id. at 916, n. 4. See also Argus Leader Media v. U.S. Dep’t of Agric., No. 17-1345, 2017 WL 3587531, at *45-48 (8th Cir. Aug. 15, 2017) (noting that the “substantial competitive harm” test “arises from judicial gloss,” that the “plain text of the statute protects any ‘confidential’ information,” and that “a construction of “confidential’ that confines the term to something that is ‘likely to cause competitive harm’ … tortures the plain language of the statute”).
39 Argus Leader Media, 2017 WL 3587531, at *47 & n.15 (citing Black’s Law Dictionary and Merriam-Webster Online Dictionary).
40 Argus Leader Media, 889 F.3d at 916, n.4; Argus Leader Media, 2017 WL 3587531, at * 50 (“This Court should decline to adopt any extra-textual limitations on ‘confidential,’ and hold that the term has its plain meaning when used in FOIA: Exemption 4 protects all commercial or financial information shown to be secret. Here, the witnesses universally agreed that store-level SNAP data is not currently available and is carefully guarded by retailers. It is, therefore, ‘confidential,’ and should remain so.”).
41 Argus Leader Media, 889 F.3d at 916, n.4.
42 Food Marketing Inst., 2019 WL 166877.
43 Food Marketing Inst., 2018 WL 5016257, at *i.
44 If commercial or financial information were deemed “confidential” for purposes of Exemption 4 upon a mere showing that the information was maintained and provided to the government “in confidence,” it would never be necessary for a party resisting disclosure to show that any alleged secret related to a trade commodity’s “productive process” so as to qualify as a “trade secret” under the restrictive definition judicially given to that term as used in the first prong of Exemption 4; every commercial secret would be protected under Exemption 4’s second prong—without regard to whether or not it relates to some “productive process”—simply by virtue of its status and treatment as a “secret.”
45 Notably, in its petition for certiorari, the Food Marketing Institute suggested that, in enacting FOIA Exemption 4, this is exactly what Congress envisaged, and that by interpreting “confidential” to require evidence of competitive harm, the courts—in order to avoid “a surplusage problem”—have been constrained to give the term “trade secrets” an unusual and overly restrictive definition, with the anomalous result that: (i) information qualifying as a “trade secret” under other laws is not considered a “trade secret” for FOIA purposes; and (ii) Exemption 4 provides protection only for information that qualifies as a “trade secret” under other laws—including a narrow subset of trade secrets that relate to a trade commodity’s “productive process”—rather than, as Exemption 4’s statutory text requires, information that qualifies as a “trade secret” as well as information that may not rise to the level of a “trade secret” but which nevertheless constitutes “confidential” private-sector commercial or financial information. See Food Marketing Inst., 2018 WL 5016257, at *20-21.
46 18 U.S.C.A. § 1839(3) (2016).
47 See Uniform Trade Secrets Act § 1(4), 14 U.L.A. 433, 449 (1985). New York law follows the definition of trade secrets set forth in the Restatement of Torts, under which a “trade secret” is similarly defined as any “formula, pattern, device, compilation of information” that is “used in business” and “provides an advantage over competitors who do not know or use it.” See Restatement (First) of Torts, § 757, cmt. b (1939); Softel, Inc. v. Dragon Med. & Sci. Commc'ns, Inc., 118 F.3d 955, 968 (2d Cir. 1997).
48 See, e.g., Am. Student Fin. Grp., Inc. v. Aequitas Cap. Mgmt., Inc., No. 12–cv–2446–CAB, 2015 WL 11237638, at *9 (S.D. Cal. Feb. 12, 2015) (“For confidential information to be a trade secret, it must also “derive[ ] independent economic value ... from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use.”).
49 Indeed, the very reason why the courts adopted the “substantial competitive harm” test in the first place—and one of the principal justifications for their insistence on an even more “restrictive definition” of the term “trade secrets” as used in the first prong of Exemption 4—was because they assumed that Exemption 4’s second prong was intended to protect information that qualified as a “trade secret” under existing law. See, e.g., Nat’l Parks & Conservation Ass’n, 498 F.2d at 768 (noting that Exemption 4 was animated by need to protect private sector confidential business information “which, if not exempt from public disclosure, could be exploited by competitors”); see also Pub. Citizen Health Res. Grp., 704 F.2d at 1289 (reasoning that it was necessary to give the term “trade secrets” as used in the Exemption 4’s first prong a more “restrictive definition” because any other result would “render meaningless the second prong of Exemption 4” as there would be “no information left that could qualify … under the second category”).