The Food Marketing Institute (FMI) prevailed in a U.S. Supreme Court decision today that involved the confidentiality of store-level sales data for the Supplemental Nutrition Assistance Program (SNAP), or food stamps.
In the case, Food Marketing Institute v. Argus Leader Media, the Supreme Court ruled 6-3 that the U.S. Department of Agriculture wasn’t required to release stores’ SNAP redemption data under the Freedom of Information Act (FOIA). The court determined that the SNAP data was provided to the government “under an assurance of privacy” and that the release of that information also would cause competitive harm to retailers.
The case arose in 2011, when a South Dakota newspaper, the Argus Leader, filed a FOIA request with the USDA for the names and addresses of all retail stores participating in SNAP and each store’s annual redemption data for the fiscal years 2005 to 2010.
USDA declined to provide the data, and the Argus Leader sued. For years, the USDA defended its decision in court before ultimately abandoning the case and warning retailers that their SNAP redemption data could be subject to disclosure. The case ended up in the U.S. Court of Appeals for the Eighth Circuit ruled and then back to federal court in South Dakota, which ruled in favor of releasing the information. FMI said that marked the point it intervened on behalf of its membership. FMI appealed the case again to the Court of Appeals, which in 2018 ruled against the institute, leading to the Supreme Court challenge. The high court began hearing oral arguments on Jan. 11 and then on June 24 remanded and reversed the judgment against FMI.
“We agree with the U.S. Supreme Court’s ruling today that a 45-year-old interpretation of what constitutes ‘confidential commercial and financial information’ required re-examination,” FMI President and CEO Leslie Sarasin, left, said in a statement Monday.
“Our industry’s commitment to the shopper remains constant amidst seismic marketplace shifts. The nation’s grocery stores have long kept confidential the amount consumers spend at individual stores whether through payment by cash, credit, debit or the Supplemental Nutrition Assistance Program, or SNAP. This store-level sales data undoubtedly must be considered confidential because its release would provide an unfair advantage to competitors,” Sarasin explained.
“Legislative history tells us the Freedom of Information Act, or FOIA, was created to shine a light on actions by the government, not on that of private parties, and the court’s expressed desire to refer our case back to the lower courts demonstrates that our case sets an important precedent well beyond disclosing store-level SNAP sales in grocery.”
The opinion reversed a 1974 interpretation of FOIA’s Exemption 4, which had established that private information wouldn’t be considered “confidential” unless its disclosure would cause “substantial competitive harm.” The Supreme Court’s ruling on Monday rejected that approach.
In the majority opinion for the court, Justice Neil Gorsuch affirmed that the SNAP data is private business information and retailers shouldn’t be required to demonstrate the likelihood of “substantial” competitive harm to prevent its release.
“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,” Gorsuch wrote. “Because the store-level SNAP data at issue here is confidential under that construction, the judgment of the court of appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.”
In reviewing the history of the case, Gorsuch noted that disclosure of store-level SNAP data could “create a windfall for competitors” of those retailers.
“At trial, witnesses for the USDA testified that retailers closely guard store-level SNAP data and that disclosure would threaten stores’ competitive positions. They explained that retailers use models of consumer behavior to help choose new store locations and to plan sales strategies. Competitors’ estimated sales volumes represent an important component of these models and can be time-consuming and expensive to generate. And a model’s accuracy and utility increase significantly if it includes a rival’s actual sales data rather than mere estimates,” Gorsuch wrote.
“Stores with high SNAP redemptions could see increased competition for SNAP customers from existing competitors, new market entrants could use SNAP data to determine where to build their stores, and SNAP redemption data could be used to discern a rival retailer’s overall sales and develop strategies to win some of that business, too.”
Amicus briefs in the case also were filed by the National Grocers Association (NGA), National Retail Federation (NRF) and National Association of Convenience Stores (NACS).
“NGA welcomes the Supreme Court’s decision that will protect store-level SNAP sales data from public disclosure. NGA has maintained that a retailer’s SNAP store data should remain private because its release would harm competition in the food retail industry,” said NGA President and CEO Peter Larkin Monday. “Knowing that their confidential business information will remain protected by the government, independent supermarkets will continue to be strong partners in the SNAP food delivery system, serving the millions of American families who rely on domestic food assistance.”