When inquiring minds want to know, non-profit organizations now have a stronger response.  Last year, we posed the question: Can a non-profit maintain trade secrets and other confidential commercial information? The First Circuit recently answered our question:  “yes.” 

In New Hampshire Right to Life v. U.S. Dep’t of Health & Human Servs., 778 F.3d 43 (1st Cir. 2015), the First Circuit held that Planned Parenthood, a non-profit organization, can possess confidential, commercial information, and protect it from disclosure under the Freedom of Information Act (“FOIA”).  The First Circuit examined Exemption 4 to the FOIA, which shields documents from FOIA disclosure if they constitute “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552(b)(4).  While the First Circuit did not explicitly hold that Planned Parenthood possessed “trade secrets”, it did find that Planned Parenthood possessed information which was both “commercial” and “confidential,” and implicitly found that this confidential, commercial information was valuable to Planned Parenthood (a.k.a. a trade secret).

The First Circuit found not only that non-profits may possess commercial information, but also that a non-profit may suffer competitive injury from the disclosure of certain commercial information, making that information “confidential” and precluding disclosure under the FOIA.

With respect to “commercial” information, the court noted that “[a]ll sorts of non-profits – hospitals, colleges, and even the National Football League – engage in commerce as that term is normally understood.”  Therefore, Planned Parenthood’s Manual and other documents, which outlined its operations and fees, “surely pertain or relate to commerce as that term is ordinarily understood.”

With respect to competitive injury, the court found that a non-profit can and does compete with other similar service providers, and can suffer competitive injury.  The court noted that Planned Parenthood faces “actual competition” in a variety of contexts.  It competes with other community clinics and hospitals for federal grant money and patients.  Planned Parenthood’s Manual contained price lists and institutional knowledge for operating a family planning clinic according to Planned Parenthood’s “unique model of care” and was not generally available to the public.  Disclosure of the Manual would benefit competitors and hurt Planned Parenthood.  Accordingly, the Manual was confidential commercial information protected under Exemption 4 of the FOIA.

The important take-away?  Even though an organization may not be “for profit,” it probably does compete and has the ability to protect confidential information valuable to that competition, regardless of its tax-exempt status.