Court Opinion

ID: 4273303
Source: CourtListenerOpinion
Date Created: 2018-05-08 16:00:23.860882+00
Date Added: 2024-06-11T14:33:28.162670
License: Public Domain

United States Court of Appeals
                         For the Eighth Circuit
                     ___________________________

                             No. 17-1346
                     ___________________________

            Argus Leader Media, doing business as Argus Leader

                     lllllllllllllllllllll Plaintiff - Appellee

                                        v.

                  United States Department of Agriculture

                          lllllllllllllllllllll Defendant

                          Food Marketing Institute

              lllllllllllllllllllllIntervenor Defendant - Appellant

                          ------------------------------

                        National Grocers Association

              lllllllllllllllllllllAmicus on Behalf of Appellant(s)
                                    ____________

                 Appeal from United States District Court
               for the District of South Dakota - Sioux Falls
                               ____________

                         Submitted: March 14, 2018
                            Filed: May 8, 2018
                             ____________

Before GRUENDER, BEAM, and KELLY, Circuit Judges.
                          ____________
KELLY, Circuit Judge.

      This case returns to us after a bench trial. Intervenor Food Marketing Institute
(FMI) argues the district court1 erred in finding that Exemption 4 to the Freedom of
Information Act (FOIA) is inapplicable to data held by the U.S. Department of
Agriculture (USDA).

       Most of the relevant facts are set out in our previous opinion. See Argus
Leader Media v. U.S. Dep’t of Agric., 740 F.3d 1172, 1173–75 (8th Cir. 2014). The
data in question come from the Supplemental Nutrition Assistance Program (SNAP).
The USDA issues SNAP participants a card (like a debit card) to use to buy food from
participating retailers. When a participant buys food using their SNAP card, the
USDA receives a record of that transaction, which is called a SNAP redemption.
Argus Leader Media, a South Dakota newspaper, asked the USDA for annual SNAP
redemption totals for stores that participate in the SNAP program (the “contested
data”). The USDA refused, citing several FOIA exemptions. In our previous
opinion, we held that Exemption 3 did not apply to the contested data, and remanded
the case to the district court. Id. at 1176–77.

       On remand the only issue was whether FOIA Exemption 4, which covers “trade
secrets and commercial or financial information obtained from a person and
privileged or confidential,” 5 U.S.C. § 552(b)(4), applies to the contested data. Argus
Leader and the USDA agreed that the contested data were commercial or financial
information, and that they were not privileged.2 To show the contested data were

      1
       The Honorable Karen E. Schreier, United States District Judge for the District
of South Dakota.
      2
       The district court found that the contested data were obtained from a person,
and neither party contests that finding on appeal.

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“confidential,” the USDA had to prove that releasing the data was likely “(1) to
impair the Government’s ability to obtain necessary information in the future; or (2)
to cause substantial harm to the competitive position of the person from whom the
information was obtained.” Madel v. U.S. Dep’t of Justice, 784 F.3d 448, 452 (8th
Cir. 2015) (quoting Contract Freighters, Inc. v. Sec’y of U.S. Dep’t of Transp., 260
F.3d 858, 861 (8th Cir. 2001)). The USDA argued only the competitive position
prong, so the question before the district court was whether releasing the contested
data was likely to cause substantial harm to the competitive position of SNAP
retailers.

       The case went to bench trial. Both parties called experts to testify about the
risks of disclosing the contested data. In its findings of fact and conclusions of law,
the district court adopted a definition of competitive harm from the D.C. Circuit:
“[C]ompetitive harm may be established if there is evidence of ‘actual competition
and the likelihood of substantial competitive injury . . . .’” Argus Leader Media v.
U.S. Dep’t of Agric., 224 F. Supp. 3d 827, 833 (D.S.D. 2016) (alteration in original)
(quoting Pub. Citizen Health Research Grp. v. FDA, 704 F.2d 1280, 1291 (D.C. Cir.
1983)). Applying that standard, the district court found that the grocery retail
industry was highly competitive, but that the USDA had not proved a likelihood of
substantial competitive injury. Id. at 833–35. The court found the USDA’s claims
of competitive injury were “speculative at best” because grocery retailers already had
access to large quantities of data about their competitors, and existing models
explained the majority of grocery customers’ behavior. Id. at 834. The court also
found speculative the USDA’s assertion that stores with high SNAP redemptions
would face stigma. Id.3

      3
       In addition, the district court opined that stigma “is not relevant in an
Exemption 4 analysis because it is not a harm caused by a competitor.” Id. We need
not determine the relevance, if any, of stigmatic injury in Exemption 4 cases because,
as we explain, the evidence of stigma was insufficient to support a finding of
substantial competitive harm alone or in combination with other evidence presented.

                                         -3-
       After the district court entered judgment for Argus Leader, the USDA decided
not to appeal. FMI, a trade group representing grocery retailers, intervened and filed
this appeal. FMI contests the district court’s findings of fact and application of the
law to those facts.4 “We accept the district court’s factual findings unless they are
clearly erroneous, and we review the applicability of the FOIA exemption de novo.”
Peltier v. F.B.I., 563 F.3d 754, 762 (8th Cir. 2009).

       As to the facts, we see no clear error. FMI argues that the district court erred
in finding that release of the contested data would have little effect on the grocery
industry, and failed to give enough weight to its assertions that releasing the data
would stigmatize some stores and cause stores to stop accepting SNAP. But record
evidence showed that the contested data—which are nothing more than annual
aggregations of SNAP redemptions—lacked the specificity needed to gain material
insight into an individual store’s financial health, profit margins, inventory, marketing
strategies, sales trends, or market share. FMI’s assumption that stores would be
stigmatized was speculative and not supported by any other evidence in the record.
There was also no meaningful evidence that retailers would end their SNAP
participation if the contested data were released.

     Applying the law to the facts, we find no basis for reversal. The trial evidence
showed that the grocery industry is highly competitive, but is already rich with

      4
       FMI also argues in passing that the district court should not have used the D.C.
Circuit standard to decide whether releasing the contested data is likely to cause
substantial competitive harm. But FMI does not propose an alternate standard.
Instead, it argues that the words of the statute—“privileged or confidential,” 5 U.S.C.
§ 552(b)(4)—can be given their dictionary definitions. FMI asserts that
“confidential” means “secret,” so a record falls within Exemption 4 if it has
previously been kept secret. We reject this argument as precluded by “the Supreme
Court’s admonition that FOIA exemptions ‘must be narrowly construed.’” Argus
Leader, 740 F.3d at 1176 (quoting Milner v. Dep’t of Navy, 562 U.S. 562, 565
(2011)). Under FMI’s reading, Exemption 4 would swallow FOIA nearly whole.

                                          -4-
publically-available data that market participants (and prospective market entrants)
use to model their competitors’ sales. The evidence shows that releasing the
contested data is likely to make these statistical models marginally more accurate.
But the evidence does not support a finding that this marginal improvement in
accuracy is likely to cause substantial competitive harm. The USDA’s evidence
showed only that more accurate information would allow grocery retailers to make
better business decisions. If that were enough to invoke Exemption 4, commercial
data would be exempt from disclosure any time it might prove useful in a competitive
marketplace. A likelihood of commercial usefulness—without more—is not the same
as a likelihood of substantial competitive harm. We agree with the district court and
conclude that the USDA failed to establish that release of the contested data falls
within Exemption 4’s ambit.

        In an effort to avoid this conclusion, FMI cites to our opinion in Madel. In that
case, we affirmed Exemption 4’s application to Drug Enforcement Administration
(DEA) records pertaining to oxycodone transactions by private companies. See
Madel, 784 F.3d at 451–53 (noting that one of the requested documents “contain[ed]
information traceable to individual manufacturers and distributors, such as market
shares in specific geographic areas, estimates of inventories, and sales” for the entire
nation-wide market for oxycodone). We cited DEA declarations that the requested
records “could be used to determine the companies’ market shares, inventory levels,
and sales trends in particular areas” which might allow competitors “to target specific
markets, forecast potential business of new locations, or to gain market share in
existing locations, thereby gaining competitive advantage.” Id. at 453 (cleaned up).
While these concerns appear to mirror those raised by the USDA in this case, Madel
is distinguishable. In Madel, the data in question were sufficiently specific (records
of individual companies’ sales of a particular drug) that their release was likely to
provide a tangible competitive advantage. The contested data in this case, by
contrast, are more general, and add little to the information already available to

                                          -5-
retailers. Because the Madel data are not analogous to the data in this case, the result
is different.5

      For these reasons, we affirm the judgment of the district court.
                      ______________________________

      5
        We also note that Madel was decided on summary judgment. The government
is entitled to summary judgment when its “affidavits provide specific information
sufficient to place the documents within the exemption category, if this information
is not contradicted in the record.” Id. at 452 (emphasis added) (quoting Quiñon v.
FBI, 86 F.3d 1222, 1227 (D.C. Cir. 1996)). In Madel, the party seeking disclosure
did not submit any evidence to rebut the government’s proffer. Id. at 453.

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