The Supreme Court agreed yesterday to rule on the rights of companies to block disclosure of some of their reports to government agencies under the Freedom of Information Act.
The justices will hear arguments next fall or winter on an appeal by Chrysler Corp., which sued to stop the Defense Department from disclosing company records supplied in connection with affirmative action programs at plants in Newark, Del., and Hamtramck, Mich.
Briefs filed by the government and business agreed on the need for the court to "dispel the uncertainty that prevails" as a result of conflicting rulings by federal appeals courts in so-called "reverse FOIA" cases, such as the Chrysler case. More than 130 such suits are pending around the country; 63 were filed in 1977 alone.
At issue are reports that are exempted from mandatory disclosure by the FOIA and are deemed confidential and private under federal criminal laws. They include affirmative action plans, which detail breakdowns of minority and female employment by job classification and department as well as a concern's future hiring plans, and equal employment opportunity reports which list minority and female employes in nine job categories.
In a friend of the court brief supporting Chrysler's position, the U.S. Chamber of Commerce said various courts have compelled employers to reveal commercial, technical and financial information and trade secrets given the government in confidence. Chrysler, which won its lower court suit but lost when the government appealed, had argued that some of the material involved could be used by a competitor in "employe raiding."
In another action, the court agreed to review a decision which the Chamber and the National Association of Manufacturers says is crucially important to thousands of manufacturers, wholesalers and retailers who, for tax purposes, must assign dollar values to large inventories of replacement parts.
At issue was an Internal Revenue Service ruling, upheld by the 7th Circuit U.S. Court of Appeals, on how Thor Power Tool Co. could calculate taxable income, IRS said is could not write down to net realizable value the cost of "excess goods," primarily replacement parts that Thor had in quantities exceeding the number it expected to sell, and that it eventually would scrap.
The government says Thor presented "no evidence" that the method it used - computer market value on the basis of net realizable value - "clearly reflected its income for federal income tax purposes."
Thor relied on generally accepted accounting principles. The government says these principles do not establish "that a taxpaper's method of accounting clearly reflects its income for . . . tax purposes."
The dispute arose when the IRS reduced Thor's "cost-of-goods-sold" for 1964 by $926,952, the sum of its write-down of its closing inventory for excess and unsaleable goods.
By the NAM's count, a similar issue is raised in 371 docketed tax court cases involving alleged tax deficiencies of $25.2 million. An additional 497 cases are pending in the IRS's Appellate Division.