Advertising Law Blog

The Supreme Court's March 1, 2011 decision in Federal Communications Commission et al. v. AT&T, Inc., may significantly limit a corporation's right to assert privacy protections relating to its affairs. While the decision was limited to the "personal privacy" exemption for Freedom of Information Act (FOIA) requests, the Court's harsh criticism of the corporate position may not bode well for future corporate protections.

Background

In 2004, the Federal Communications Commission (FCC) and AT&T entered into an agreement to produce a program called "Education-Rate" that would enhance access for schools and libraries to advanced telecommunications and information services. When AT&T disclosed to the FCC that it might have overcharged the Government for their services, an investigation into AT&T's company documents, including emails, pricing and billing information, employees' names and job descriptions, and responses to interrogatories, was conducted. This matter was resolved between AT&T and the FCC as AT&T agreed to pay the government $500,000 and institute a plan to comply with the program, yet AT&T did not concede liability. Thereafter, a separate company, CompTel, on behalf of AT&T's customers, submitted a FOIA request from the FCC Bureau seeking all pleadings and correspondence between AT&T and the FCC. AT&T objected to the disclosure on the grounds of personal privacy.

The Freedom of Information Act requires federal agencies to make records and documents publicly available upon request, subject to several statutory exemptions. 5 U.S.C. §552. Among the exceptions to this Act include §552(b)(4), which excuses disclosure of trade secrets and commercial or financial information, and §552(b)(7)(C), which exempts law enforcement records that disclosure of would constitute an unwarranted invasion of personal privacy. The FCC Bureau argued that while AT&T should be afforded some protection under §522(b)(4), the exemptions afforded under §522(b)(7)(C) should not be granted to AT&T because a corporation is not considered a person and therefore should not be conferred a benefit it is not owed. Conversely, AT&T argued that Congress has previously defined the word "person" to include corporations, and therefore Corporations are entitled to the exemption.

While the Third Circuit agreed with AT&T, the Supreme Court did not. In a unanimous decision, the Supreme Court found that while corporations may be entitled to personal rights against unreasonable search and seizure under the Fourth Amendment and freedom from double jeopardy, these rights are not extended to FOIA's personal privacy exemption. Additionally, the Court explained that while Congress intended for §522(b)(4) to apply to corporations, §522(b)(7)(C) was intended only to apply to the privacy right of individuals. Accordingly, the exemption afforded under §522(b)(7)(C) is not extended to corporations and the FOIA disclosure was authorized.

Take away: Corporations responding to government investigations should consider that proprietary materials submitted may ultimately be disclosed to third parties pursuant to FOIA requests.