 ATTORNEY GENERAL OF TEXAS GREG ABBOTT | |
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December 7, 2005 Ms. Ashley D. Fourt
OR2005-10987 Dear Ms. Fourt: You ask whether certain information is subject to required public disclosure under the Public Information Act (the "Act"), chapter 552 of the Government Code. Your request was Sassigned ID# 237467. The Tarrant County Purchasing Department (the "department") received a request for all proposals regarding Request for Proposals for Preservation of Historical Documentation "RFP No 2005-154." You state that you will release some of the requested information. You state that the remaining submitted information may be subject to third party proprietary interests. Pursuant to section 552.305 of the Government Code, you notified Cygnus Services, Inc. d/b/a Focal Point Solutions ("Focal"), Conservation Laboratory ("Conservation"), and Brown's River Bindery, Inc. ("Brown's River") of the request and of each company's right to submit arguments to this office as to why the information should not be released. See Gov't Code § 552.305(d); see also Open Records Decision No. 542 (1990) (determining that statutory predecessor to section 552.305 permits governmental body to rely on interested third party to raise and explain applicability of exception to disclosure under the Act in certain circumstances). We have considered all of the submitted arguments and reviewed the submitted information. Initially, we note that an interested third party is allowed ten business days after the date of its receipt of the governmental body's notice under section 552.305(d) to submit its reasons, if any, as to why requested information relating to that party should be withheld from disclosure. See Gov't Code § 552.305(d)(2)(B). As of the date of this letter, this office has not received comments from Conservation explaining how the release of its information will affect its proprietary interests. Thus, we have no basis to conclude that the release of Conservation's proposal would implicate the proprietary interests of Conservation. See, e.g., Open Records Decision Nos. 661 at 5-6 (1999) (stating that business enterprise that claims exception for commercial or financial information under section 552.110(b) must show by specific factual evidence that release of requested information would cause that party substantial competitive harm), 552 at 5 (1990) (party must establish prima facie case that information is trade secret). Accordingly, we conclude that the department must release Conservation's information. Focal claims that information pertaining to the salary of some of its employees is excepted from disclosure under section 552.102. Section 552.102 of the Government Code excepts from disclosure "information in a personnel file, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy." Gov't Code § 552.102(a). This exception only applies to information in the personnel files of governmental employees. As the information at issue does not pertain to government employees, the salary information of Focal's employees may not be withheld under section 552.102 of the Government Code. Focal and Brown's River claim that portions of their proposals are excepted form disclosure under section 552.110 of the Government Code. Section 552.110 protects: (1) trade secrets, and (2) commercial or financial information the disclosure of which would cause substantial competitive harm to the person from whom the information was obtained. See Gov't Code § 552.110(a), (b). Section 552.110(a) protects the property interests of private parties by excepting from disclosure trade secrets obtained from a person and privileged or confidential by statute or judicial decision. See Gov't Code § 552.110(a). A "trade secret" may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives [one] 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, as for example the amount or other terms of a secret bid for a contract or the salary of certain employees. . . . A trade secret is a process or device for continuous use in the operation of the business. Generally it relates to the production of goods, as for example, a machine or formula for the production of an article. It may, however, 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); see also Hyde Corp. v. Huffines, 314 S.W.2d 763, 776 (Tex. 1958); Open Records Decision Nos. 255 (1980), 232 (1979), 217 (1978). There are six factors to be assessed in determining whether information qualifies as a trade secret: (1) the extent to which the information is known outside of [the company's] business; (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 to [its] competitors; (5) the amount of effort or money expended by [the company] in developing this information; and (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 No. 232 (1979). This office must accept a claim that information subject to the Act is excepted as a trade secret if a prima facie case for exemption is made and no argument is submitted that rebuts the claim as a matter of law. Open Records Decision No. 552 (1990). However, we cannot conclude that section 552.110(a) is applicable unless it has been shown that the information meets the definition of a trade secret and the necessary factors have been demonstrated to establish a trade secret claim. Open Records Decision No. 402 (1983). Section 552.110(b) protects "[c]ommercial 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[.]" Gov't Code § 552.110(b). This exception to disclosure requires a specific factual or evidentiary showing, not conclusory or generalized allegations, that substantial competitive injury would likely result from release of the information at issue. Gov't Code § 552.110(b); see also National Parks & Conservation Ass'n v. Morton, 498 F.2d 765 (D.C. Cir. 1974); Open Records Decision No. 661 (1999). Focal seeks to withhold its financial information under section 552.110 of the Government Code. Focal states that releasing its financial information would allow a competitor to approach the company's customers with a more lucrative financial arrangement, undercut Focal's pricing, and offer bonuses or other incentives Focal could not match. Thus, after reviewing the information at issue and Focal's arguments, we find that Focal has demonstrated that the release of its financial information would cause the company substantial competitive harm. Thus, the department must withhold Focal's financial information, which we have marked, under section 552.110(b) of the Government Code. Focal also claims that its reference letters are excepted from disclosure under section 552.110 of the Government Code. However, we note that reference letters may not be withheld under section 552.110 of the Government Code. See Open Records Decision No. 319 at 3 (1982) (information relating to professional references not ordinarily excepted from disclosure under statutory predecessor to section 552.110). Accordingly, the department may not withhold any of Focal's reference letters under section 552.110 of the Government Code. Brown's River claims that its financial information is excepted from disclosure under section 552.110(b) of the Government Code. However, Brown's River only makes a generalized allegation that the release of the information at issue would result in substantial damage to the competitive position of the company. Thus, Brown's River has not demonstrated that substantial competitive injury would likely result from the release of the information at issue. However, Brown's River also claims that release of its financial information would adversely affect the department's ability to obtain similar information in the future. This argument, expressing the commercial interests of the department relies on the test announced in National Parks pertaining to the applicability of the section 552(b)(4) exemption of the federal Freedom of Information Act to third party information held by a federal entity. See Nat'l Parks, 498 F.2d 765; see also Critical Mass Energy Project v. Nuclear Regulatory Commission, 975 F.2d 871 (D.C. Cir. 1992), cert. denied, 507 U.S. 984 (1993) (commercial information is excepted from required public disclosure if information is voluntarily submitted to government and information is of a kind that the provider would not customarily make available to the public). Although this office at one time applied the National Parks test to the statutory predecessor to section 552.110, that standard was overturned by the Third Circuit Court of Appeals when it held that National Parks was not a judicial decision within the meaning of former section 552.110. See Birnbaum v. Alliance of American Insurers, 994 S.W.2d 766 (Tex. App.--Austin 1999, pet. denied). Section 552.110(b) now expressly states the standard to be applied and requires a specific factual demonstration that the release of the information in question would cause the business enterprise that submitted the information substantial competitive harm. See Open Records Decision No. 661 at 5-6 (1999) (discussing enactment of section 552.110(b) by Seventy-sixth Legislature). The ability of a governmental body to continue to obtain information from private parties is not a relevant consideration under section 552.110(b). Id. Since Brown's River has failed to demonstrate that release of its financial information will result in substantial competitive harm, we conclude that the department may not withhold Brown's River information under section 552.110(b) of the Government Code. In summary, the department must withhold Focal's financial information under section 552.110(b) of the Government Code. The remaining information must be released. 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, upon receiving this ruling, the governmental body will either release the public records promptly pursuant to section 552.221(a) of the Government Code or file a lawsuit challenging this ruling pursuant to section 552.324 of the Government Code. If the governmental body fails to do one of these things, 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 Dep't of Pub. 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 Office of the Attorney General 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. 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, Jaclyn N. Thompson
c: Pat R. Williams
Janet Remmey
Linda Perry
Joseph Marotti Co., Inc.
POST OFFICE BOX 12548, AUSTIN, TEXAS 78711-2548 TEL: (512) 463-2100 WEB:WWW.OAG.STATE.TX.US |