UPDATES & ANALYSIS

4.19

Eighth Circuit case on food-stamp records to be argued at U.S. Supreme Court April 22

by Rox Laird | April 19, 2019

The U.S. Supreme Court will hear oral arguments Monday in a case from the U.S. Court of Appeals for the Eighth Circuit that likely will decide whether a Sioux Falls, S.D., newspaper should have access to food-stamp spending at specific retail stores.

Considerable interest has been generated by this case. More than a dozen organizations – representing the retail industry, public interest groups and First Amendment advocates – have filed friend-of-the-court briefs in the case. (Go to the U.S. Supreme Court’s docket page to read the briefs and lower court rulings in the case.)

The U.S. Solicitor General, who represents the government in cases before the Supreme Court, filed a brief in support of the Food Marketing Institute and the retailers. The Solicitor General will also participate in Monday’s oral arguments.

The Sioux Falls Argus Leader asked the U.S. Department of Agriculture for records that show how much federal money was paid to reimburse individual food retailers for purchases made by participants in the department’s Supplemental Nutrition Assistance Program, or SNAP, the new name for what was known as the food-stamp program.

The request, made under the federal Freedom of Information Act, grew out of the newspaper’s investigation into the fraudulent practice of “retailer trafficking” where a retailer illegally exchanges SNAP benefits for cash, giving the SNAP beneficiary 50 cents on the dollar in cash, for example, and pocketing the difference in a claim to the government.

After the USDA denied the newspaper’s request, the Argus Leader sued in federal district court in South Dakota, which dismissed the suit on summary judgment. That decision was reversed by a three-judge panel of the Eighth Circuit composed of former Chief Judge William Jay Riley of Omaha, Steven Colloton of Des Moines and Jane Kelly of Cedar Rapids.

Citing a separate federal statute protecting certain financial information collected by the government from disclosure, the USDA argued the information could not be released under the FOI Act. The Eighth Circuit disagreed, saying the plain language of that statute does not exempt the disclosure of SNAP information because the information protected by that statute is submitted to the government by third-party payment processors, not by individual retail food stores.

On remand, the District Court for the Southern Division of South Dakota focused only on whether the SNAP records are covered by a specific FOI Act exemption that covers trade secrets and commercial or financial information. Would releasing the USDA data likely cause substantial harm to the competitive position of retailers that accept payment through SNAP?

Concluding that it would not cause such harm, the trial court ruled in favor of the Argus Leader. This time, however, the USDA chose not to appeal. Instead, the Food Marketing Institute took up the cause, and urged the Eighth Circuit to overturn the lower court.

In its second decision in the case, the Eighth Circuit upheld the lower court.

In an opinion written by Judge Kelly, the Eighth Circuit agreed that the SNAP data would have little negative competitive impact. “The trial evidence showed that the grocery industry is highly competitive, but is already rich with publically-available data that market participants (and prospective market entrants) use to model their competitors’ sales,” Kelly wrote for the court.

The evidence introduced by the USDA “showed only that more accurate information would allow grocery retailers to make better business decisions,” Kelly wrote, and if that were enough to invoke an exemption in the FOI Act, “commercial data would be exempt from disclosure any time it might prove useful in a competitive marketplace.”

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