FROM: Robert Freeman, Executive Director, Committee on Open Government
RE: Advisory Opinion
DATE: January 20, 2016
The staff of the Committee on Open Government is authorized to issue advisory opinions. The ensuing staff advisory opinion is based solely upon the information presented in your correspondence, except as otherwise indicated.
Dear Ms. Rea:
As you are aware, I have received your letter and the materials attached to it. You have sought an advisory opinion concerning the propriety of a partial denial of a request for a contract.
You wrote that the Town of Greenport recently “entered into an agreement with a local resident to build a website for the Town. In response to a copy of the contract between the Town and the developer (“the Developer”) of the website, various elements of the contract were redacted prior to disclosure of the remainder. The cover letter accompanying the agreement states that “the contract is confidential and should not be further shared with any third parties.” Additionally, the response to the request states that “[p]ortions of the document have been redacted in accordance with Public Officers Law, Section 87(2)(d)” and that “[p]ursuant to the terms of the contract (specifically, under Section 8) the contract is confidential and should not be further shared with any third parties.”
From my perspective, based on the language of the law and its judicial interpretation, the entirety of the contract must be disclosed. In this regard, I offer the following comments.
First, perhaps most importantly, the Freedom of Information Law (FOIL) is based upon a presumption of access. Stated differently, all records of an agency are available, except to the extent that records or portions thereof fall within one or more grounds for denial appearing in §87(2)(a) through (l) of the Law.
The Court of Appeals, the state’s highest court, expressed its general view of the intent of FOIL in Gould v. New York City Police Department [89 NY2d 267 (1996)], stating that:
"To ensure maximum access to government records, the 'exemptions are to be narrowly construed, with the burden resting on the agency to demonstrate that the requested material indeed qualifies for exemption' (Matter of Hanig v. State of New York Dept. of Motor Vehicles, 79 N.Y.2d 106, 109, 580 N.Y.S.2d 715, 588 N.E.2d 750 see, Public Officers Law § 89[b]). As this Court has stated, '[o]nly where the material requested falls squarely within the ambit of one of these statutory exemptions may disclosure be withheld' (Matter of Fink v. Lefkowitz, 47 N.Y.2d, 567, 571, 419 N.Y.S.2d 467, 393 N.E.2d 463)" (id., 275).”
As stated by the Court of Appeals more than thirty years ago:
"To be sure, the balance is presumptively struck in favor of disclosure, but in eight specific, narrowly constructed instances where the governmental agency convincingly demonstrates its need, disclosure will not be ordered (Public Officers Law, section 87, subd 2). Thus, the agency does not have carte blanche to withhold any information it pleases. Rather, it is required to articulate particularized and specific justification and, if necessary, submit the requested materials to the court for in camera inspection, to exempt its records from disclosure (see Church of Scientology of N.Y. v. State of New York, 46 NY 2d 906, 908). Only where the material requested falls squarely within the ambit of one of these statutory exemptions may disclosure be withheld" [Fink v. Lefkowitz, 47 NY 2d 567, 571 (1979)].
In another decision, the Court of Appeals found that:
"The Freedom of Information Law expresses this State's strong commitment to open government and public accountability and imposes a broad standard of disclosure upon the State and its agencies (see, Matter of Farbman & Sons v New York City Health and Hosps. Corp., 62 NY 2d 75, 79). The statute, enacted in furtherance of the public's vested and inherent 'right to know', affords all citizens the means to obtain information concerning the day-to-day functioning of State and local government thus providing the electorate with sufficient information 'to make intelligent, informed choices with respect to both the direction and scope of governmental activities' and with an effective tool for exposing waste, negligence and abuse on the part of government officers" [Capital Newspapers v. Burns,67 NY2d 562, 565-566 (1986)].
Second, several controversies have arisen in which agreements or settlements have included provisions requiring confidentiality. Those kinds of agreements have uniformly been struck down and found to be inconsistent with FOIL. In short, it has been held that a promise or assertion of confidentiality cannot be upheld, unless a statute specifically confers confidentiality. In Gannett News Service v. Office of Alcoholism and Substance Abuse Services [415 NYS 2d 780 (1979)], a state agency guaranteed confidentiality to school districts participating in a statistical survey concerning drug abuse. The court determined that the promise of confidentiality could not be sustained, and that the records were available, for none of the grounds for denial appearing in the Freedom of Information Law could justifiably be asserted. In a decision rendered by the Court of Appeals, it was held that a state agency's:
"long-standing promise of confidentiality to the intervenors is irrelevant to whether the requested documents fit within the Legislature's definition of 'record' under FOIL. The definition does not exclude or make any reference to information labeled as 'confidential' by the agency; confidentiality is relevant only when determining whether the record or a portion of it is exempt..." [Washington Post v. Insurance Department, 61 NY 2d 557, 565 (1984)].
Moreover, it was determined that “Respondent’s long-standing promise of confidentiality to the intervenors is irrelevant to whether the requested documents fit within the Legislature’s definition of ‘records’ under FOIL. The definition does not exclude or make any reference to information labeled as ‘confidential’ by the agency; confidentiality is relevant only when determining whether the record or a portion of it is exempt (see Matter of John P. v Whalen, 54 NY2d 89, 96; Matter of Fink v Lefkowitz, 47 NY2d 567, 571-572, supra; Church of Scientology v State of New York, 61 AD2d 942, 942-943, affd 46 NY2d 906; Matter of Belth v Insurance Dept., 95 Misc 2d 18, 19-20). Nor is it relevant that the documents originated outside the government...Such a factor is not mentioned or implied in the statutory definition of records or in the statement of purpose...”
In short, insofar as the agreement confers or requires confidentiality, I believe that it is in direct conflict with FOIL and the judicial precedent referenced in the preceding paragraphs. Only to the extent that an exception to rights of access may properly be asserted may an agency deny access to records or portions of records.
Third, as indicated earlier, the Town relied on § 87(2)(d), commonly known as the trade secret exception. That provision permits an agency to withhold records or portions thereof that: “are trade secrets or are submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise...”Therefore, the question under §87(2)(d) involves the extent, if any, to which disclosure would “cause substantial injury to the competitive position” of a commercial entity.
The concept and parameters of what might constitute a “trade secret” were discussed in Kewanee Oil Co. v. Bicron Corp., which was decided by the United States Supreme Court in 1973 (416 U.S. 470). Central to the issue was a definition of “trade secret” upon which reliance is often based. Specifically, the Court cited the Restatement of Torts, section 757, comment b (1939), which states that:
“[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers” (id. at 474, 475).
In its review of the definition, the court stated that “[T]he subject of a trade secret must be secret, and must not be of public knowledge or of a general knowledge in the trade or business” (id.). The phrase “trade secret” is more extensively defined in 104 NY Jur 2d 234 to mean:
“...a formula, process, device or compilation of information used in one’s business which confers a competitive advantage over those in similar businesses who do not know it or use it. A trade secret, like any other secret, is something known to only one or a few and kept from the general public, and not susceptible to general knowledge. Six factors are to be considered in determining whether a trade secret exists: (1) the extent to which the information is known outside the business; (2) the extent to which it is known by a business’ employees and others involved in the business; (3) the extent of measures taken by a business to guard the secrecy of the information; (4) the value of the information to a business and to its competitors; (5) the amount of effort or money expended by a business in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. If there has been a voluntary disclosure by the plaintiff, or if the facts pertaining to the matter are a subject of general knowledge in the trade, then any property right has evaporated.”
In our view, the nature of record, the area of commerce in which a commercial entity is involved and the presence of the conditions described above that must be found to characterize records as trade secrets would be the factors used to determine the extent to which disclosure would “cause substantial injury to the competitive position” of a commercial enterprise. Therefore, the proper assertion of §87(2)(d) would be dependent upon the facts and, again, the effect of disclosure upon the competitive position of the entity to which the records relate.
In my opinion, the terms of a contract, particularly those indicating the amounts to be paid by a government agency and, therefore, the taxpayers, are outside of the considerations described by the courts in relation to the assertion of the exception cited by the Town. Further, historically, contracts between government agencies and the entities with which they do business have been available to the public. By means of example, contracts are specifically referenced as public records in §51 of the General Municipal Law, which has existed for more than a century.
It is reiterated that the courts, and particularly the Court of Appeals, have clearly confirmed that in order to meet the burden of proof in denying access to records, agencies must provide “persuasive evidence” that disclosure would cause the harm envisioned by an exception to rights of access. With specific reference to §87(2)(d), it has been held that a “speculative conclusion that disclosure might potentially cause harm” is insufficient to meet the burden of proof and justifying secrecy (Markowitz v. Serio, 11 NY3d 43, 51, 862 NYS2d 833 ).
Any documentary materials maintained by the Developer for the Town remain Town records, even if they are not in the physical possession of the Town.
Lastly, FOIL is applicable to all agency records, and §86(4) defines the term "record" expansively to mean:
"any information kept, held, filed, produced, reproduced by, with or for an agency or the state legislature, in any physical form whatsoever including, but not limited to, reports, statements, examinations, memoranda, opinions, folders, files, books, manuals, pamphlets, forms, papers, designs, drawings, maps, photos, letters, microfilms, computer tapes or discs, rules, regulations or codes."
In consideration of the language quoted above, documents need not be in the physical possession of an agency to constitute agency records; so long as they are produced, kept or filed for an agency, the courts have held they constitute "agency records", even if they are maintained apart from an agency’s premises.
It has been found, for example, that records maintained by an attorney retained by an industrial development agency were subject to FOIL, even though an agency did not possess the records and the attorney’s fees were paid by applicants before the agency. The Court determined that the fees were generated in his capacity as counsel to the agency, that the agency was his client, that "he comes under the authority of the Industrial Development Agency" and that, therefore, records of payment in his possession were subject to rights of access conferred by the Freedom of Information Law (see C.B. Smith v. County of Rensselaer, Supreme Court, Rensselaer County, May 13, 1993).
In a decision rendered by the Court of Appeals, it was found that materials maintained by a corporation providing services pursuant to a contract for a branch of the State University that were kept on behalf of the University constituted "records" falling with the coverage of the Freedom of Information Law. We point out that the Court rejected "SUNY's contention that disclosure turns on whether the requested information is in the physical possession of the agency," for such a view "ignores the plain language of the FOIL definition of 'records' as information kept or held 'by, with or for an agency'" [see Encore College Bookstores, Inc. v. Auxiliary Services Corporation of the State University of New York at Farmingdale, 87 NY 2d 410. 417 (1995)].
In an effort to encourage understanding of and compliance with FOIL, a copy of this opinion will be forwarded to the Town Board.
I hope that I have been of assistance.