3rd Circuit Rules Personal Privacy Interest Applies to Corporations

The 3rd Circuit U.S. Court of Appeals ruled in an opinion published Sept. 22, 2009, that corporations have a "personal privacy" interest that may allow their records to be withheld from release under a Freedom of Information Act (FOIA) request for government documents.

The main issue in AT&T Inc. v. FCC, 582 F.3d 490, (3rd Cir. 2009), was the use of the word "personal" in exemption 7(C) of the FOIA, 5 U.S.C. section 552, which protects disclosure of "information compiled for law enforcement purposes" that could constitute "an unwarranted invasion of personal privacy." The FOIA does not define "personal," but section 551(2) of the act defines "person" as "an individual, partnership, corporation, association, or public or private organization other than an agency."

The court agreed with AT&T that exemption 7(C) can apply to corporations since "personal" is the adjectival form of "person" and the FOIA defines person to include a "corporation."

"It would be very odd indeed for an adjectival form of a defined term not to refer back to that defined term," Judge Michael A. Chagares wrote for the unanimous three-judge panel.

The case arose from AT&T's participation in "E-Rate," a program administered by the Federal Communications Commission (FCC) that sought to increase schools' access to advanced telecommunications technology. Under the program, AT&T supplied equipment and services to elementary and secondary schools and billed the government.

AT&T discovered in August 2004 that it may have overcharged the government for its work with the school district in New London, Conn. The corporation reported the matter to the FCC, which began an investigation into AT&T's billing practices under the program. The inquiry led to a December 2004 settlement in which AT&T paid $500,000 and agreed to adopt a corporate compliance program, according to a September 24 report in The Legal Intelligencer.

AT&T gave the commission a variety of documents during the investigation. These documents included invoices, internal e-mails with pricing and billing information, names of employees involved in the overbilling, and AT&T's own assessment of whether employees violated the corporation's code of conduct.

CompTel, a trade association that represents some of AT&T's competitors, filed a FOIA request with the FCC on April 4, 2005, seeking the AT&T documents the FCC acquired during its investigation. AT&T opposed the release of the documents, claiming that the FCC collected the material for law enforcement purposes and that exemption 7(C) prohibited disclosure.

The FCC rejected AT&T's argument, determining that a corporation does not have "personal privacy" under exemption 7(C). The FCC reviewed its ruling at the request of AT&T and reached the same result. AT&T then petitioned the 3rd Circuit to review the FCC's order permitting release of the documents.

In reaching his decision, Chagares said he found little guidance in case law, but noted that neither the Supreme Court nor the 3rd Circuit had ever expressly rejected a corporation's claim to a personal privacy interest. "The most that can be said of the Supreme Court's cases and of our cases is that they suggest that Exemptions 7(C) and 6 frequently and primarily protect -and that Congress may have intended them to protect - the privacy of individuals," Chagares wrote.

The court rejected the FCC and CompTel's text-based argument that the plain meaning of "personal" cannot apply to a corporation. "This argument is unpersuasive," Chagares wrote. "It fails to take into account that 'person' - the root from which the statutory word at issue is derived - is a defined term [in the FOIA]."

The FCC and CompTel also argued that other courts have held that the use of "personal privacy" in other sections of the FOIA does not apply to corporations, specifically noting exemption 6, which protects "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy."

The court rejected this argument. "The phrase 'personnel and medical files' ... limits Exemption 6 to individuals because only individuals (and not corporations) may be the subjects of such files," Chagares wrote. "Therefore, nothing necessarily can be gleaned about the scope of "personal privacy," because Exemption 6 would apply only to individuals even if 'personal privacy,' taken on its own, encompasses corporations."

The court also considered Congress' intent in drafting the FOIA and pointed out that if Congress wanted to limit "personal privacy" to human beings, it could have done so as it did in other parts of the act. The court cited exemption 7(F), which protects information gathered in a law enforcement investigation that "could reasonably be expected to endanger the life or physical safety of any individual."

Although the court concluded that corporate information could be exempted from FOIA requests, it did not grant AT&T's request to prohibit the release of the documents. Instead, the court remanded the case back to the FCC to decide whether the AT&T material should be withheld under exemption 7(C).

"Holding, on the very limited record before us, that Exemption 7(C) protects every reasonably segregable jot and tittle of each document that AT&T submitted would be truly extraordinary, and, in our view, not an appropriate course of action for a reviewing court to undertake in the first instance," Chagares wrote. Earlier in the case, the court cited Chrysler Corp. v. Brown, 441 U.S. 281 (1979), for the principle that the FOIA "does not prohibit disclosure of information falling within its exemptions." The court noted that "[w]hen information falls within an exemption, no party can compel disclosure, but the FCC can still make a disclosure on its own accord unless some independent source of law prohibits the agency from doing so."

Since the court did not determine whether the disputed AT&T records themselves would qualify under exemption 7(C), David Johnson called the ruling a "victory only in principle" for corporate privacy rights in an October 12 post on the Digital Media Lawyer Blog. "This ruling provides corporations with one more arrow in their quiver that they can use to protect corporation documents from competitors or other[s] who might do them harm," Johnson wrote.

In a September 24 post on The FOIA blog, attorney Scott Hodes expressed concern that if the 3rd Circuit ruling remains intact, the public will be less informed about corporate acts investigated by the government. "This will not help the public or stockholders in the long run," Hodes wrote. "Down the road,Congress may need to get involved to stress that 7(C) protection applies only to individuals."

In a previous case, Nat'l Archives and Records Admin. v. Favish, 541 U.S. 157 (2004), the Supreme Court extended the "personal privacy" exemption under 7(C) to include surviving family members even though family members were not specifically listed in the statute.

In Favish, the Court prevented the release of death scene photographs of Vincent Foster, a deputy counsel for President Clinton at the time of his death, whose body was discovered in a Washington D.C.-area park with a gunshot wound to his head. Law enforcement officials concluded that Foster had committed suicide.

In the majority opinion in Favish, Justice Anthony Kennedy wrote that Congress intended the FOIA to protect against "public intrusions long deemed impermissible under the common law and cultural traditions," and recognized a family member's right to control the disposition of a loved one's body and images following death under exemption 7(C). (See "Citing Family Members' Privacy, Supreme Court Allows Government to Withhold Foster Photos," in the Spring 2004 issue of the Silha Bulletin. The Silha Center wrote an amicus brief in support of California attorney Allan J. Favish, who sought release of the photographs. Brief for Respondent Allan J. Favish as Amici Curiae Supporting Respondent, Nat'l Archives and Records Admin. v. Favish, 541 U.S. 157 (2004) (No. 02-954). See "The Silha Center Files Amicus Brief With the United States Supreme Court, Comments with the Council of Europe, And Department of Homeland Security," in the Summer 2003 issue of the Silha Bulletin.)

- Cary Snyder
Silha Research Assistant



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