AT&T Case Asks U.S. Supreme Court to Assign Privacy Rights to Corporations

A business privacy case that comes before the U.S. Supreme Court today may rekindle a debate among the justices over whether corporations are like people, even to the point of suffering embarrassment.

The case, set to be argued in Washington, pits the Obama administration against AT&T Inc. over the release of documents stemming from a government investigation of the company. The question is whether corporations can invoke a Freedom of Information Act provision that protects against invasions of “personal privacy.”

As with a corporate campaign spending case the court resolved a year ago, the answer may reflect the justices’ differing views about the nature of corporations. In siding with AT&T, a lower court said companies can be embarrassed and stigmatized just like human beings -- a contention the Obama administration scoffed at.

“A corporation itself can no more be embarrassed, harassed or stigmatized than a stone,” acting U.S. Solicitor General Neal Katyal, President Barack Obama’s top Supreme Court lawyer, argued in papers filed with the court.

The debate is both a semantic one about the words Congress used when it enacted FOIA in 1966, and one that touches on misgivings among some justices over past decisions bolstering corporate rights.

‘Corporations as Persons’

The court’s divisions were on display when it considered whether to overturn decades-old restrictions on corporate campaign spending. During arguments in 2009, Justice Sonia Sotomayor said that judges “created corporations as persons” and that they might have been wrong to have “imbued a creature of state law with human characteristics.”

Justice Ruth Bader Ginsburg said that “a corporation, after all, is not endowed by its creator with inalienable rights.”

The court majority disagreed, ruling in a 5-4 decision that corporations have the same constitutional right to spend money on campaign ads as individuals do.

“Government cannot restrict political speech based on the speaker’s corporate identity,” Justice Anthony Kennedy wrote for the majority.

AT&T, the largest U.S. phone company, is trying to block disclosure of what it says are competitively sensitive documents connected to a 2004 Federal Communications Commission investigation into the company’s billing practices under a government school-technology program. AT&T reached a $500,000 settlement with the FCC that year.

Records Sought

CompTel, a trade association representing companies that compete with AT&T and Verizon Communications Inc., filed a FOIA request in 2005, seeking access to the investigation file. The FCC concluded it was obligated to release many of the records, saying the “personal privacy” exemption applied only to individuals.

The Philadelphia-based 3rd U.S. Circuit Court of Appeals disagreed, ruling that the exemption covers corporations as well. The decision sent the case back to the FCC to balance the company’s privacy rights with the public’s interest in disclosure.

The appeals court said the statute’s definition of “person” suggests that “personal” includes corporations.

Embarrassed Companies?

The 3rd Circuit said Congress sought to provide “broad protection” to entities involved in law enforcement investigations. “Corporations, like human beings, face public embarrassment, harassment and stigma because of that involvement,” the three-judge panel said.

The government, backed by CompTel, argues that the most natural meaning of “personal” covers only individuals. The Obama administration contends that companies are adequately protected by a separate FOIA provision that shields disclosure of trade secrets and confidential financial information.

Bloomberg LP, the parent company of Bloomberg News, is one of 23 media organizations urging the court to side with the government. In a separate case that hinges on the trade-secrets exemption, Bloomberg is seeking to force the Federal Reserve Board to release documents identifying banks that might have failed without a U.S. government bailout.

The AT&T dispute isn’t as likely as the campaign-finance case to evoke a direct debate about the nature of corporations, said Stefan J. Padfield, a law professor at the University of Akron School of Law in Ohio who has written about the case.

How Much Privacy

He said the court can rule for AT&T without necessarily affording companies the same protections as individuals, leaving it to the agency handling the FOIA request to consider exactly how much privacy a company should have.

AT&T itself said in a court filing that “in the balancing that takes place under FOIA, corporate privacy interests may not be entitled to the same treatment as individual privacy interests in all cases.”

Some advocates say the court should go further and declare that the exemption applies only to individuals.

Companies “don’t have the same dignity interests as individuals, and their personal privacy as a corporate entity shouldn’t be protected,” said Doug Kendall, president of the Constitutional Accountability Center, a Washington-based group that has criticized the court as being too business-friendly. “An AT&T corporate charter cannot blush.”

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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