March 7, 2011

Ms. Jessica C. Eales

Assistant City Attorney

City of Houston

P.O. Box 368

Houston, Texas 77001-0368

OR2011-03195

Dear Ms. Eales:

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 assigned ID# 410595 (GC No. 18052).

The City of Houston (the "city") received a request for four categories of information related to a city contract for temporary staffing services for information technology, including copies of the proposals submitted by the six awardees. Although you state the city takes no position with respect to the public availability of the submitted information, you state its release may implicate the proprietary interests of six third parties. Accordingly, you notified A-1 Personnel of Houston, Inc. ("A-1"); Bergaila & Associates, Inc.; ExecuTeam Staffing; ObjectWin Technology, Inc. ("ObjectWin"); Precision Task Group; and S&R Professionals, L.P. ("S&R") of the request and of their right to submit arguments to this office as to why their information should not be released. See Gov't Code § 552.305(d); see also Open Records Decision No. 542 (1990) (determining statutory predecessor to section 552.305 permits governmental body to rely on interested third party to raise and explain the applicability of exception to disclose under Act in certain circumstances). We have received correspondence from A-1, ObjectWin, and S&R. We have considered the submitted arguments and reviewed the submitted information.

We note 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 information relating to that party should be withheld from public disclosure. See Gov't Code § 552.305(d)(2)(B). As of the date of this letter, none of the remaining third parties have submitted to this office reasons explaining why their information should not be released. Therefore, the remaining third parties have provided us with no basis to conclude that they have protected proprietary interests in any of the submitted information. See Open Records Decision Nos. 661 at 5-6 (1999) (to prevent disclosure of commercial or financial information, party must show by specific factual evidence, not conclusory or generalized allegations, 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), 542 at 3 (1990). Therefore, the city may not withhold any portion of the submitted information on the basis of any proprietary interest that these companies may have in this information. We will, however, address the arguments of A-1, ObjectWin, and S&R to withhold portions of the submitted information.

S&R raises section 552.104 of the Government Code, which excepts from disclosure "information that, if released, would give advantage to a competitor or bidder." Gov't Code § 552.104. We note section 552.104 protects the interests of governmental bodies, not third parties. See Open Records Decision No. 592 at 8 (1991) (purpose of section 552.104 is to protect governmental body's interest in competitive bidding situation). As the city does not argue section 552.104 is applicable, we will not consider S&R's claim under this section. See id. (section 552.104 may be waived by governmental body). Therefore, the city may not withhold any of S&R's information under section 552.104 of the Government Code.

A-1 and S&R argue that some or all of their submitted information is excepted from disclosure under section 552.110 of the Government Code. We also understand ObjectWin to raise section 552.110 as an exception to disclosure of some its information. Section 552.110 protects the proprietary interests of private parties by excepting from disclosure two types of information: trade secrets and commercial or financial information, the release of which would cause a third party substantial competitive harm. Section 552.110(a) of the Government Code excepts from disclosure "[a] trade secret obtained from a person and privileged or confidential by statute or judicial decision." Gov't Code § 552.110(a). 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. 1958); see also Open Records Decision No. 552 at 2 (1990). Section 757 provides 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); see also Huffines, 314 S.W.2d at 776. 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. ⁽¹⁾ Restatement of Torts § 757 cmt. b (1939). 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. ORD 552 at 5. However, we cannot conclude section 552.110(a) applies unless it has been shown the information meets the definition of a trade secret and the necessary factors have been demonstrated to establish a trade secret claim. See Open Records Decision No. 402 (1983).

Section 552.110(b) of the Government Code excepts from disclosure "[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). Section 552.110(b) requires a specific factual or evidentiary showing, not conclusory or generalized allegations, that substantial competitive injury would likely result from release of the requested information. See ORD 661 at 5-6 (business enterprise must show by specific factual evidence that release of information would cause it substantial competitive harm).

Upon review, we find S&R has established release of its customer information would cause the company substantial competitive injury. Accordingly, we have marked the information that must be withheld under section 552.110(b). We note ObjectWin has published its customer information on its website, making this information publically available. Thus, ObjectWin has failed to demonstrate how release of this information would cause it substantial competitive harm. Furthermore, we find A-1, ObjectWin, and S&R have made only conclusory allegations that release of the remaining information would result in substantial damage to their competitive positions and have provided no specific factual or evidentiary showing to support such allegations. See ORD 661 at 5-6; see also ORD 319 at 3. In addition, we note that pricing information of a winning bidder, as each of these companies is in this case, is generally not excepted under section 552.110(b). This office considers the prices charged in government contract awards to be a matter of strong public interest; thus, the pricing information of a company contracting with a governmental body is generally not excepted under section 552.110(b). See Open Records Decision No. 514 (1988) (public has interest in knowing prices charged by government contractors); see generally Dep't of Justice Guide to the Freedom of Information Act 344-345 (2009) (federal cases applying analogous Freedom of Information Act reasoning that disclosure of prices charged government is a cost of doing business with government). Therefore, we determine none of the remaining information is excepted from disclosure under section 552.110(b) and it may not be withheld on that basis.

Upon further review, we find A-1, ObjectWin, and S&R have failed to demonstrate how the remaining information meets the definition of a trade secret, nor have A-1, ObjectWin, and S&R demonstrated the necessary factors to establish a trade secret claim for this information. See ORDs 402 (section 552.110(a) does not apply unless information meets definition of trade secret and necessary factors have been demonstrated to establish trade secret claim), 319 at 3 (information relating to organization and personnel, market studies, professional references, qualifications and experience, and pricing are not ordinarily excepted from disclosure under statutory predecessor to section 552.110). We note that pricing information pertaining to a particular proposal or contract is generally not a trade secret because it is "simply information as to single or ephemeral events in the conduct of the business," rather than "a process or device for continuous use in the operation of the business." See Restatement of Torts § 757 cmt. b (1939); Huffines, 314 S.W.2d at 776; ORDs 319 at 3, 306 at 3. Therefore, the city may not withhold any of the remaining information under section 552.110(a) of the Government Code.

S&R asserts that some its information is confidential under section 552.101 of the Government Code, which excepts from disclosure "information considered to be confidential by law, either constitutional, statutory, or by judicial decision." Gov't Code § 552.101. In this instance, S&R does not present any arguments against disclosure under that section nor has the company directed our attention to any law under which any of its information is considered to be confidential for the purposes of section 552.101. See Open Records Decision Nos. 600 at 4 (1992) (constitutional privacy), 478 at 2 (1987) (statutory confidentiality), 611 at 1 (1992) (common-law privacy). In addition, this office has concluded section 552.101 does not encompass other exceptions found in the Act. See Open Records Decision Nos. 676 at 1-2 (2000), 575 at 2 (1990). We note, however, that the remaining information contains tax return information. Section 552.101 encompasses section 6103(a) of title 26 of the United States Code, which renders tax return information confidential. See Attorney General Opinion H-1274 (1978) (tax returns). Section 6103(b) defines the term "return information" as:

a taxpayer's identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments . . . or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary [of the Internal Revenue Service] with respect to a return or with respect to the determination of the existence, or possible existence, of liability . . . for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense[.]

See 26 U.S.C. § 6103(b)(2)(A). Federal courts have construed the term "return information" expansively to include any information gathered by the Internal Revenue Service (the "IRS") regarding a taxpayer's liability under title 26 of the United States Code. See Mallas v. Kolak, 721 F. Supp. 748, 754 (M.D.N.C. 1989), aff'd in part, 993 F.2d 1111 (4th Cir. 1993).

We note the remaining information contains IRS 1065 and 1120S forms, which we find are tax return information that the city must withhold under section 552.101 of the Government Code in conjunction with section 6103 of title 26 of the United States Code. We also note ObjectWin seeks to withhold IRS Form 6559. However, in the context of the 6559 forms, the corporation is not a taxpayer; instead, it is an employer reporting to the Internal Revenue Service the amounts of income tax withheld from employee taxpayer wages in a given time period as required by federal law. See id. § 3402(a) ("every employer making payment of wages shall deduct and withhold upon such wages a tax"). Thus, we find ObjectWin has failed to demonstrate how the 6559 forms constitute "return information" as defined in section 6103(b). Accordingly, we find the 6559 forms do not constitute tax return information for the purposes of section 6103 of title 26 of the United States Code, and the city may not withhold them under section 552.101 of the Government Code on that basis.

We note the remaining records contain information subject to common-law privacy. Section 552.101 also encompasses the doctrine of common-law privacy, which protects information if it (1) contains highly intimate or embarrassing facts, the publication of which would be highly objectionable to a reasonable person, and (2) is not of legitimate concern to the public. See Indus. Found. v. Texas Indus. Accident Bd., 540 S.W.2d 668, 685 (Tex. 1976). To demonstrate the applicability of common-law privacy, both elements of the test must be established. Id. at 681-82.

This office has found personal financial information not relating to a financial transaction between an individual and a governmental body is generally protected by common-law privacy. See Open Records Decision Nos. 600 (1992), 545 (1990), 523 (1989), 373 (1983) (sources of income not related to financial transaction between individual and governmental body protected under common-law privacy). Upon review, we find a portion of the remaining information, which we have marked, is highly intimate or embarrassing and not of legitimate public concern. Therefore, the city must withhold this information pursuant to section 552.101 of the Government Code in conjunction with common-law privacy.

We further note the remaining information contains insurance policy numbers. Section 552.136 of the Government Code provides that "[n]otwithstanding any other provision of [the Act], a credit card, debit card, charge card, or access device number that is collected, assembled, or maintained by or for a governmental body is confidential." ⁽²⁾ Gov't Code § 552.136(b); see id. § 552.136(a) (defining "access device"). This office has concluded insurance policy numbers constitute access device numbers for purposes of section 552.136. Accordingly, the city must withhold the insurance policy numbers we have marked under section 552.136 of the Government Code. ⁽³⁾

We note some of the remaining information may be protected by copyright. A custodian of public records must comply with the copyright law and is not required to furnish copies of records that are copyrighted. Open Records Decision No. 180 at 3 (1977). A governmental body must allow inspection of copyrighted materials unless an exception applies to the information. Id.; see Open Records Decision No. 109 (1975). If a member of the public wishes to make copies of copyrighted materials, the person must do so unassisted by the governmental body. In making copies, the member of the public assumes the duty of compliance with the copyright law and the risk of a copyright infringement suit.

In summary, the city must withhold the information we have marked under section 552.110(b) of the Government Code. We have marked the information the city must withhold under section 552.101 of the Government Code in conjunction with (1) section 6103 of title 26 of the United States Code and (2) common-law privacy. The marked insurance policy numbers must be withheld under section 552.136 of the Government Code. The remaining information must be released, but any information that is protected by copyright may only be released in accordance with copyright law.

This letter ruling is limited to the particular information 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 information or any other circumstances.

This ruling triggers important deadlines regarding the rights and responsibilities of the governmental body and of the requestor. For more information concerning those rights and responsibilities, please visit our website at http://www.oag.state.tx.us/open/index_orl.php, or call the Office of the Attorney General's Open Government Hotline, toll free, at (877) 673-6839. Questions concerning the allowable charges for providing public information under the Act must be directed to the Cost Rules Administrator of the Office of the Attorney General, toll free, at (888) 672-6787.

Sincerely,

Cindy Nettles

Assistant Attorney General

Open Records Division

CN/dls

Ref: ID# 410595

Enc. Submitted documents

c: Requestor

(w/o enclosures)

Mr. Christopher Bergaila

President

Bergaila & Associates, Inc.

1880 South Dairy Ashford, Suite 606

Houston, Texas 77077

(w/o enclosures)

Ms. Johanna M. Flournoy

Founder

ExecuTeam Staffing

2401 Fountainview, Suite 800

Houston, Texas 77057

(w/o enclosures)

Mr. Massey Villarreal

CEO/President

Precision Task Group

9801 Westheimer, Suite 803

Houston, Texas 77042

(w/o enclosures)

Ms. Uma Khemka

President

A-1 Personnel of Houston, Inc.

8702 Westpark Drive

Houston, Texas 77063

(w/o enclosures)

Ms. Uma Chidambaram

Executive Vice President

ObjectWin Technology, Inc.

2650 Fountain View Drive, Suite 405

Houston, Texas 77057

(w/o enclosures)

Ms. Radha Thiagarajan

Gaughan, Stone & Thiagarajan

For S&R Professionals, L.P.

2500 Tanglewilde, Suite 222

Houston, Texas 77063

(w/o enclosures)

Footnotes

1. The Restatement of Torts lists the following six factors as indicia of whether information constitutes a trade secret:

(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).

2. The Office of the Attorney General will raise a mandatory exception on behalf of a governmental body. See Open Records Decision Nos. 481 (1987), 480 (1987),470 (1987).

3. We note this office issued Open Records Decision No. 684 (2009), a previous determination to all governmental bodies authorizing them to withhold ten categories of information, including an insurance policy number under section 552.136 of the Government Code, without the necessity of requesting an attorney general decision.

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