|
Office of the Attorney General - State of Texas John Cornyn |
|
July 17, 2002 Mr. Steve Aragón
OR2002-3928 Dear Mr. Aragón: You ask whether certain information is subject to required public disclosure under chapter 552 of the Government Code. Your request was assigned ID# 165828. The Texas Health and Human Services Commission (the "commission") received a request for the External Quality Review Organization incumbent's budget. You indicate that the release of the requested information may implicate the proprietary rights of the Texas Health Quality Alliance ("THQA"). Consequently, you notified THQA of the request for information under section 552.305 of the Government Code. Although you do not take a position with regard to the disclosure of the requested information, THQA has submitted briefing to this office in which it contends that the requested information is excepted from disclosure under sections 552.104 and 552.110 of the Government Code. We have considered THQA's claimed exceptions and reviewed the submitted information. Initially, we note that we address the required public disclosure of the information the commission rather than THQA submitted to this office. See Gov't Code § 552.301(e)(1)(D). Thus, this ruling does not address the required public disclosure of any additional information THQA submitted to this office. Accordingly, we will consider the required public disclosure of the following documents submitted by the commission: Budget Proposal Year 1, Budget Proposal Year 2, FMAS Corporation Year 1 Cost Proposal, FMAS Corporation Year 1 Cost Proposal by Month, FMAS Corporation Other Direct Expenses by Month, FMAS Corporation Year 2 Cost Proposal, FMAS Corporation Year 2 Cost Proposal by Month, and FMAS Year 2 Other Direct Expenses by Month. We turn now to THQA's arguments under section 552.104. Section 552.104 excepts information from disclosure if a governmental body demonstrates that the release of the information would cause potential specific harm to its interests in a particular competitive situation. See Open Records Decision Nos. 593 at 2 (1991), 463 (1987), 453 at 3 (1986). Section 552.104 protects the interests of governmental bodies, not third parties. Open Records Decision No. 592 (1991). As the commission does not raise section 552.104, this section is not applicable to the requested information. Id. (Section 552.104 may be waived by governmental body). Thus, the commission may not withhold information pertaining to THQA under section 552.104. Section 552.110 protects the property interests of private persons by excepting from disclosure two types of information: (1) trade secrets obtained from a person and privileged or confidential by statute or judicial decision and (2) commercial or financial information for which it is demonstrated based on specific factual evidence that disclosure would cause substantial competitive harm to the person from whom the information was obtained. With respect to the trade secret prong of section 552.110, we note that the Texas Supreme Court has adopted the definition of trade secret from section 757 of the Restatement of Torts. Hyde Corp. v. Huffines, 314 S.W.2d 763 (Tex.), cert. denied, 358 U.S. 898 (1958); see also Open Records Decision No. 552 at 2 (1990). Section 757 provides that a trade secret is: 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. It differs from other secret information in a business . . . in that it is not simply information as to single or ephemeral events in the conduct of the business . . . . A trade secret is a process or device for continuous use in the operation of the business. . . . [It may] relate to the sale of goods or to other operations in the business, such as a code for determining discounts, rebates or other concessions in a price list or catalogue, or a list of specialized customers, or a method of bookkeeping or other office management. Restatement of Torts § 757 cmt. b (1939). In determining whether particular information constitutes a trade secret, this office considers the Restatement's definition of trade secret as well as the Restatement's list of six trade secret factors. Restatement of Torts § 757 cmt. b (1939).(1) This office has held that if a governmental body takes no position with regard to the application of the trade secret branch of section 552.110 to requested information, we must accept a private person's claim for exception as valid under that branch if that person establishes a prima facie case for exception and no argument is submitted that rebuts the claim as a matter of law. Open Records Decision No. 552 at 5-6 (1990). With respect to the commercial and financial information prong of section 552.110, we note that the exception requires a specific factual or evidentiary showing, not conclusory or generalized allegations, that substantial competitive injury would result from disclosure. Gov't Code § 552.110(b); see Open Records Decision No. 661 (1999). THQA contends that various information in its cost proposal is excepted from disclosure under section 552.110. Specifically, THQA contends that its line item budgets, subcontracting costs, financial statements by Advanced Med, Advanced Med's business activities, unit pricing information regarding specific rates THQA included in its bid, scope of consulting work and study methodology, and general and administrative expense rates are trade secrets and / or confidential communications and financial information. According to THQA, release of this information would allow competitors to estimate and undercut its bids. Based on THQA's arguments, we conclude that THQA has established that release of the budget information we have marked would cause it substantial competitive harm. Accordingly, the commission must withhold this information from disclosure under section 552.110(b). However, we do not believe that THQA has established the applicability of section 552.110(a) to the information not excepted under section 552.110(b). Accordingly, THQA must release to the requestor the remainder of the submitted information. In summary, the commission must withhold from the requestor most of the requested budget information based on section 552.110(b). The commission must release the remaining information to the requestor. We have marked the documents accordingly. This letter ruling is limited to the particular records at issue in this request and limited to the facts as presented to us; therefore, this ruling must not be relied upon as a previous determination regarding any other records or any other circumstances. This ruling triggers important deadlines regarding the rights and responsibilities of the governmental body and of the requestor. For example, governmental bodies are prohibited from asking the attorney general to reconsider this ruling. Gov't Code § 552.301(f). If the governmental body wants to challenge this ruling, the governmental body must appeal by filing suit in Travis County within 30 calendar days. Id. § 552.324(b). In order to get the full benefit of such an appeal, the governmental body must file suit within 10 calendar days. Id. § 552.353(b)(3), (c). If the governmental body does not appeal this ruling and the governmental body does not comply with it, then both the requestor and the attorney general have the right to file suit against the governmental body to enforce this ruling. Id. § 552.321(a). If this ruling requires the governmental body to release all or part of the requested information, the governmental body is responsible for taking the next step. Based on the statute, the attorney general expects that, within 10 calendar days of this ruling, the governmental body will do one of the following three things: 1) release the public records; 2) notify the requestor of the exact day, time, and place that copies of the records will be provided or that the records can be inspected; or 3) notify the requestor of the governmental body's intent to challenge this letter ruling in court. If the governmental body fails to do one of these three things within 10 calendar days of this ruling, then the requestor should report that failure to the attorney general's Open Government Hotline, toll free, at 877/673-6839. The requestor may also file a complaint with the district or county attorney. Id. § 552.3215(e). If this ruling requires or permits the governmental body to withhold all or some of the requested information, the requestor can appeal that decision by suing the governmental body. Id. § 552.321(a); Texas Department of Public Safety v. Gilbreath, 842 S.W.2d 408,411 (Tex. App.--Austin 1992, no writ). Please remember that under the Act the release of information triggers certain procedures for costs and charges to the requestor. If records are released in compliance with this ruling, be sure that all charges for the information are at or below the legal amounts. Questions or complaints about over-charging must be directed to Hadassah Schloss at the Texas Building and Procurement Commission at 512/475-2497. If the governmental body, the requestor, or any other person has questions or comments about this ruling, they may contact our office. We note that a third party may challenge this ruling by filing suit seeking to withhold information from a requestor. Gov't Code § 552.325. Although there is no statutory deadline for contacting us, the attorney general prefers to receive any comments within 10 calendar days of the date of this ruling. Sincerely, V.G. Schimmel
c: Ms. Margaret Dehesse
Footnotes 1. The six factors that the Restatement gives as indicia of whether information constitutes a trade secret are: (1) the extent to which the information is known outside of [the company]; (2) the extent to which it is known by employees and others involved in [the company's] business; (3) the extent of measures taken by [the company] to guard the secrecy of the information; (4) the value of the information to [the company] and [its] competitors; (5) the amount of effort or money expended by [the company] in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Restatement of Torts § 757 cmt. b (1939); see also Open Records Decision Nos. 319 at 2 (1982), 306 at 2 (1982), 255 at 2 (1980). POST OFFICE BOX 12548, AUSTIN, TEXAS 78711-2548 TEL: (512) 463-2100 WEB: WWW.OAG.STATE.TX.US |