Last month, the Department of Justice Office of Information Policy issued new guidance on the definition of confidential information under Exemption 4 of the Freedom of Information Act. This new guidance addresses the meaning of “confidential” in light of the Supreme Court’s decision in Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356 (2019). While not determinative, this DOJ Guidance offers contractors critical insight into how agencies will respond in the first instance to FOIA requests for information that may be subject to Exemption 4. This exemption protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” 5 U.S.C. § 552(b)(4).

As covered in this space earlier this year, in Food Marketing Institute, the Supreme Court jettisoned 40 years of established FOIA case law on how agencies defined confidential under Exemption 4. It rejected the well-established “competitive harm” test from National Parks & Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974) based on the lack of support in the statutory language. In its place, it adopted a “plain language” interpretation of confidential, finding two potential definitions: (1) information “customarily kept private, or at least closely held,” by the submitting party; and (2) information disclosed when the receiving party provides “some assurance that it will remain secret.” The Supreme Court held that the first condition was mandatory but expressly left open whether confidential information could lose that status if provided to the government “without assurances that the government will keep it private.” As a result, contractors and agencies alike were left without clear guidance as to whether, or when, a government “assurance” may be required.
Continue Reading DOJ Issues New Guidance for Treatment of Confidential Information Under Recent Supreme Court FOIA Decision

On Monday, the Supreme Court significantly altered how government agencies will treat confidential commercial information protected from disclosure by Exemption 4 of the Freedom of Information Act (“FOIA”) — an issue that recurs repeatedly with respect to information submitted by contractors to government agencies.  Food Marketing Institute v. Argus Leader Media, No. 18-481 (U.S. June 24, 2019). The Court overturned 45 years of lower-court precedent requiring that the submitter show both that the information was not publicly disclosed, and that its release would cause substantial competitive harm.  The Court’s decision seemingly expands the scope of Exemption 4 by removing the “substantial competitive harm” requirement. However, the effect of this apparent expansion is unclear, because the Court suggested but did not resolve whether Exemption 4 also requires a new element: a showing that the submitter’s information was provided under an assurance by the government that it would keep the information confidential.

Notwithstanding the question left open by the Court, Food Marketing points the way to several steps that contractors can take to protect their commercial and financial information from release under the new interpretation of Exemption 4.


Continue Reading Supreme Court Shakes Up FOIA Exemption for Confidential Information

As previously discussed on this blog, the Supreme Court announced last year that it would resolve a circuit split over when a relator needed to file a qui tam action under the False Claims Act (“FCA”).  Earlier this month, the Court decided in Cochise Consultancy Inc. v. United States ex rel. Hunt, that relators can — in limited circumstances — take advantage of the FCA’s 3-year “alternative” statute of limitations, which means they may file their complaints up to four years after the default 6-year period has expired.

Now that the dust has settled, it is worth stepping back to take stock of the ruling’s practical effect.  We believe that Cochise will have limited impact on most qui tam actions, although it leaves some important questions open.  For FCA aficionados, the ruling by Justice Thomas also foreshadows a plain-reading, textual approach to future questions that may arise.
Continue Reading Supreme Court Extends Statute of Limitations for Relators in FCA Cases, in Limited Circumstances

The motivating force behind the False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”) is its provision for qui tam enforcement, which authorizes private parties (aka relators) to initiate FCA cases on behalf of the United States. Id. § 3730(b)(1). Immediately after re-invigoration of the FCA in 1986, scholars and litigants questioned the constitutional validity of statutory authorization for relators to sue on behalf of the U.S. government. After 15 years of litigation, this debate withered, but has been recently re-invigorated.

This post summarizes four principal challenges to the constitutionality of qui tam enforcement, and then discusses two recent events in which these challenges have reappeared: the confirmation hearings for Attorney General nominee William Barr and a cert petition that asks the Supreme Court to rule on qui tam constitutionality.
Continue Reading Debate Over Qui Tam Constitutionality Resumes After 20-Year Hiatus

When does a private party need to file a qui tam action under the False Claims Act (“FCA”)?  Such a seemingly simple question has resulted in three different answers from six different courts.  This past Friday, November 16, 2018, the Supreme Court announced it would resolve that circuit split — by granting a request to review the Eleventh Circuit’s decision in United States ex rel. Hunt v. Cochise Consultancy, Inc.  The case will merit close attention, as the ultimate outcome could help protect government contractors from intentional and prejudicial delay in litigation.

Continue Reading Time to Resolve a Question About Time: Supreme Court to Consider FCA’s Statute of Limitations

Under Chevron U.S.A. v. NRDC and its progeny, courts show great deference to administrative agencies’ interpretations of statutes and regulations.  However, it does not necessarily follow that courts will provide that same deference to agencies’ interpretations of government contracts.  Last week, in a statement respecting the denial of certiorari in Scenic America, Inc. v. Dept. of Transportation, Supreme Court Justice Neil Gorsuch pointed out this distinction and raised an issue that merits further judicial attention.
Continue Reading Government Contracts and Chevron Deference: Justice Gorsuch Weighs In

Two years ago, in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, the Supreme Court interpreted the “first-to-file” bar of the False Claims Act (“FCA”) in a manner that seemingly authorizes relators to pursue qui tam suits based upon the same allegations made in previously dismissed FCA actions.  On remand from the Supreme Court, the Fourth Circuit recently issued an opinion in Carter in which it took a similarly text-based approach, but reached a different conclusion, holding that the FCA’s first-to-file bar should be interpreted in a manner that promotes finality and prevents copycat lawsuits.  These opinions demonstrate the importance of carefully assessing the FCA’s statutory text in litigation.

Continue Reading The FCA’s First-to-File Bar and The Enduring Importance of Textualism

Two years ago, when the Supreme Court addressed the “first-to-file” bar of the False Claims Act (FCA) in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, it predicted that its holding might “produce practical problems,” as “[t]he False Claims Act’s qui tam provisions present many interpretive challenges, and it is beyond our ability in this case to make them operate together smoothly like a finely tuned machine.”  Immediately validating this prediction, upon remand of the Carter case, a new interpretative challenge emerged in the same case regarding the first-to-file bar.  That challenge was presented to the Fourth Circuit in oral argument last week.
Continue Reading First-To-File Rule of the False Claims Act Continues to Present Interpretive Challenges

Last week, the United States Supreme Court heard argument in State Farm Fire & Casualty Co. v. United States ex rel. Rigsby over the False Claims Act’s (FCA) “seal requirement.”  The controversy highlights an important statutory tool for government contractors who face allegations of making false claims for payment.  It also provides important lessons for those seeking to bring such allegations.
Continue Reading Supreme Court Hears Argument Over False Claims Act’s Seal Requirement

Veteran-owned small businesses scored a win at the Supreme Court with a unanimous ruling in Kingdomware Technologies, Inc. v. United States.  The case involved a law that requires the Department of Veterans Affairs (the “VA” or the “Department”) to restrict competition to service-disabled or veteran-owned small businesses when a contracting officer determines that “at least two of these businesses will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.”  That requirement is known as the “Rule of Two.”  In Kingdomware, the Court held that the Rule of Two covers orders under the Federal Supply Schedule (“FSS”), and that it continues to apply even after the Department has reached its statutorily mandated annual goal of contracting with service-disabled and veteran-owned small businesses. 
Continue Reading Supreme Court Clarifies Broad Scope of the “Rule of Two” in VA Contracting