Supreme Court Rules That Corporations Do Not Have "Personal Privacy" Interests Protected under the Freedom of Information Act
By Patricia Millett & Anne Lee, Akin Gump Strauss Hauer & Feld LLP
In a unanimous decision of an 8-member Supreme Court issued Tuesday, March 1, 2011, the Court rejected the notion that corporations enjoy a right to "personal privacy" for purposes of protection against the disclosure of information under the Freedom of Information Act ("FOIA"). FOIA requires federal agencies to publicly disclose records and documents upon written request, subject to the statutory exemptions listed in 5 U.S.C. § 552(b). Exemption 7(C) protects "records or information compiled for law enforcement purposes," where disclosure "could reasonably be expected to constitute an unwarranted invasion of personal privacy." 5. U.S.C. § 552(b)(7)(C). Finding that "personal privacy" as used in Exemption 7(C) applies only to individuals, the Court held that a corporation could not invoke that Exemption to block the public release of requested agency records containing confidential, internal corporate information.
Background
The case, Federal Communications Commission v. AT&T Inc., No. 09-1279, stemmed from an investigation by the Federal Communications Commission's Enforcement Bureau of an AT&T subsidiary after it voluntarily reported billing irregularities for services provided under a government program. During that investigation, AT&T provided the Bureau with extensive records, including responses to interrogatories, invoice forms, internal emails, documents describing discussions with customers, the names and job descriptions of employees involved in the potentially improper billing, and AT&T's written assessment of whether those employees had violated the company's code of conduct. In December 2004, the FCC resolved the investigation through a consent decree under which AT&T did not formally admit any wrongdoing but paid $500,000 to the Treasury and instituted a compliance plan to prevent future over-billing.In April 2005, CompTel, "a trade association representing some of AT&T's competitors," submitted a FOIA request for "[a]ll pleadings and correspondence" in the Bureau's investigative file for the AT&T matter. AT&T Inc. v. Federal Communications Commission, 582 F.3d 490, 493 (3d Cir. 2009). The Bureau determined that some of the requested information was confidential "trade secrets and commercial or financial information" barred from disclosure under FOIA Exemption 4, which protects against the disclosure of confidential corporate information and trade secrets, 5 U.S.C. § 552(b)(4). The Bureau also determined that the individuals identified in the records had "privacy rights" protected under FOIA Exemption 7(C). The Bureau refused, however, to apply Exemption 7(C) to AT&T itself and its internal records not protected by Exemption 4, reasoning that "businesses do not possesses 'personal privacy' interests as required for application" of that exemption. SCT Slip op. at 3. On AT&T's application for review, the FCC agreed with the Bureau.
The Court of Appeals for the Third Circuit reversed. In reversing the FCC's decision, the court held that, since FOIA defines the term "person" to include corporations, the "personal privacy" interest protected by Exemption 7(C) likewise extends to corporations. The court of appeals then remanded the matter to the FCC to determine whether disclosure "could reasonably be expected to constitute an unwarranted invasion of [the] personal privacy" of AT&T. 582 F.3d at 499-500.
The Solicitor General petitioned the Supreme Court for review, and the Court agreed to hear the case. Before the Supreme Court, the FCC took issue with the Third Circuit's interpretation of "personal privacy," contending that "the text of Exemption 7(C), FOIA's broader context, and the statute's drafting history * * * make clear that Congress intended the Exemption to protect individuals, not corporations." FCC Opening Br. 13. AT&T responded with arguments parsing the "plain text" of the statute. "By expressly defining the noun 'person' to include corporations," the company asserted, "Congress necessarily defined the adjective form of that noun - 'personal' - also to include corporations." AT&T Br. 14.
The National Chamber Litigation Center (NCLC) filed an amicusbrief in support of AT&T. In addition to echoing AT&T's textual arguments, the brief pointed to Supreme Court precedent holding that corporations enjoy a range of constitutional and statutory protections, including privacy rights. NCLC also stressed that non-profit corporations, and especially political advocacy groups, have long been recognized to enjoy privacy protections against governmental intrusion, and that the categorical exclusion of all corporations from Exemption 7(C)'s protection could lead to unwarranted intrusions on expressive and deliberative privacy. Finally, NCLC's brief argued that FOIA was intended to advance the public interest in the government's activities, not that of private individuals and entities. The threat of disclosure, moreover, would chill the ability of corporations to cooperate with law enforcement investigations and disproportionately harm small businesses and associations.
The Supreme Court's Decision
In an opinion joined by all the Members of the Court (except Justice Kagan, who did not participate in the decision), Chief Justice Roberts declared that "the protection in FOIA against disclosure of law enforcement information on the ground that it would constitute an unwarranted invasion of personal privacy does not extend to corporations." SCT Slip op. 11-12.
While "person" is a defined term in the statute, "personal" is not. As such, the Supreme Court explained, the word's "ordinary meaning" controls. Slip op. 5. Contrary to AT&T's analysis, the Court found that the adjective "personal" did not necessarily reflect the direct meaning of the noun "person," - that is, to simply mean "of or pertaining to a particular person." Rather, "personal" is typically used in specific reference to individuals, as in "personal characteristics, personal effects, personal correspondence, personal influence, or personal tragedy." Slip op. 5. The Court further observed that the term often implies the opposite of business-related matters (e.g., personal expenses versus business expenses), and that dictionary definitions suggest that "personal" relates only to human beings, not corporations and other artificial "persons." Slip op. 5-6. Expanding on this reasoning, the Court explained that the full term "personal privacy" meant more than merely "the privacy of a person." Slip op. 7-8. The two words together "suggest[] a type of privacy evocative of human concerns - not the sort usually associated with an entity like, say, AT&T." Slip op. 8.
Even in legal contexts, the Court held, there was "little support for the notion that ["personal"] denotes corporations." Slip op. 6-7. The Court found no other instance in which any other statute or court - the Circuit Court below excluded - had ever expressly referred to a corporation's "personal privacy." The Court also emphasized that Congress used the phrase "personal privacy" in a nearly identical manner in Exemption 6, covering "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy." 5 U.S.C. § 552(b)(6). Enacted eight years before Exemption 7(C), Exemption 6 has consistently been read to refer to an "individual's right to privacy." Slip op. 10. The Court also noted that Exemption 4, which protects confidential commercial information and clearly pertains to corporations, was drafted in language distinctly dissimilar to that used in Exemption 7(C). In reversing the Third Circuit, the Court closed with "[w]e trust that AT&T will not take it personally." Slip op. 12.
The Practical Effect
Because the Court cabined its ruling to the FOIA context and the particular historical usage of the phrase "personal privacy," the effect of the Court's decision should be quite limited. Significantly, the Court explained that it was not addressing the scope of a corporation's "privacy" interests as a broader matter of constitutional or common law, narrowly limiting its decision to interpreting "personal privacy" as a statutory term under FOIA. Even within the narrow context of FOIA, the impact should be limited. Much confidential corporate information already enjoys protection under Exemption 4, while the privacy of individuals within a corporation continues to enjoy protection under Exemptions 6 and 7(C). Nevertheless, the Court's categorical rejection of corporate privacy protection under Exemption 7(C) could have repercussions for non-profit and advocacy corporations whose non-commercial deliberations and internal communications would not be protected under Exemption 4. Smaller businesses and associations, especially sole and profession corporations, may face particular difficulty with the unavailability of Exemption 7(C) given their close ties with the individuals who run them and their vulnerability to the negative publicity that could result from FOIA disclosures.
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Patricia Millett and Anne Lee, both of Akin Gump Strauss Hauer & Feld LLP, served as co-counsel with NCLC on the Chamber's amicusbrief in this case.
