March 23, 2012

Mr. Stanton Strickland

Acting Associate Commissioner

c/o Ms. Cynthia Villarreal-Reyna

Office of Agency Counsel

Texas Department of Insurance

P.O. Box 149104

Austin, Texas 78714-9104

OR2012-00311A

Dear Mr. Strickland:

This office issued Open Records Letter No. 2012-00311 (2012) on January 6, 2012. We have determined the prior ruling should be corrected for purposes of due process. See id. §§ 552.306, 552.352. Accordingly, we hereby withdraw the prior ruling. This decision is substituted for Open Records Letter No. 2012-00311 and serves as the correct ruling. See generally Gov't Code § 552.011 (Office of Attorney General may issue decision to maintain uniformity in application, operation, and interpretation of Public Information Act (the "Act"), chapter 552 of the Government Code). This ruling was assigned ID# 450865 (ORR# 116813).

The Texas Department of Insurance (the "department") received a request for all viatical or life settlement reports from 2002 through 2011. ⁽¹⁾ You state the department has released or withheld some of the requested information in accordance with previous open record letter rulings. ⁽²⁾ See Open Records Decision No. 673 (2001) (so long as law, facts, and circumstances on which prior ruling was based have not changed, first type of previous determination exists where requested information is precisely same information as was addressed in prior attorney general ruling, ruling is addressed to same governmental body, and ruling concludes that information is or is not excepted from disclosure). You inform us the department has redacted personal e-mail addresses from the information that has been released under section 552.137 of the Government Code pursuant to the previous determination issued in Open Records Decision No. 684 (2009). ⁽³⁾ You do not take a position as to whether the submitted information is excepted from disclosure under the Act. However, you state, and provide documentation showing, you notified the interested third parties of the department's receipt of the request for information and of each party's right to submit arguments to this office as to why the requested information should not be released to the requestor. ⁽⁴⁾ See Gov't Code § 552.305(d); see also Open Records Decision No. 542 at 3 (1990) (statutory predecessor to section 552.305 permits governmental body to rely on interested third party to raise and explain applicability of exception in the Act in certain circumstances). We have received correspondence from the following interested third parties objecting to the release of some of the information at issue: Coventry, FairMarket, FIIS, FLS, GWG, Habersham, Legacy, Life Equity, LSC, LSS, Magna, Maple, RiverRock, and ViaSource. We have considered the submitted arguments and information.

Initially, you inform us the requestor has withdrawn his request for information pertaining to Proverian. Thus, the submitted information pertaining to Proverian is not responsive to the request for information, and the department is not required to release it under the Act.

We note some of the submitted information includes identifying information of insurers and their beneficiaries. These types of information are not included in the annual statements that life settlement contractors must provide to the department and that were requested here. See Ins. Code § 1111A.006(a) (life settlement contract provider must submit to department annual statement containing total number, aggregate face amount, and life settlement proceeds of policies settled during preceding year). Thus, because the identifying information of the insured and their beneficiaries is not part of the requested life settlement reports, this information is not responsive to the request. Accordingly, the department is not required to release this information, which we have marked, pursuant to the request, and we do not address the submitted arguments to withhold this information from release under the Act.

Next, you acknowledge, and we agree, that you failed to comply with the procedural requirements of section 552.301 of the Government Code. A governmental body's failure to comply with the procedural requirements of section 552.301 results in the legal presumption the requested information is public and must be released unless the governmental body demonstrates a compelling reason to withhold the information from disclosure. See Gov't Code § 552.302; Simmons v. Kuzmich, 166 S.W.3d 342, 350 (Tex. App.--Fort Worth 2005, no pet.); Hancock v. State Bd. of Ins., 797 S.W.2d 379, 381 (Tex. App.--Austin 1990, no writ); see also Open Records Decision No. 630 (1994). The presumption that information is public under section 552.302 can generally be overcome by demonstrating the information is confidential by law or third-party interests are at stake. See Open Records Decision Nos. 630 at 3 (1994), 325 at 2 (1982). Accordingly, because third-party interests are at stake, we will consider whether the information at issue must be withheld under the Act.

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 it should be withheld from disclosure. See Gov't Code § 552.305(d)(2)(B). As of the date of this letter, none of the interested third parties besides Coventry, FairMarket, FIIS, FLS, GWG, Habersham, Legacy, Life Equity, LSC, LSS, Magna, Maple, RiverRock, and ViaSource has submitted to this office any reasons explaining why the requested information should not be released. We thus have no basis for concluding any portion of the submitted information constitutes proprietary information of any of the remaining interested third parties, and the department may not withhold any portion of the submitted information on that basis. 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, 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.

We understand LSS to assert its information is not subject to the Act. The Act is applicable to "public information." See id. § 552.021. "Public information" is defined as information that is collected, assembled, or maintained under a law or ordinance or in connection with the transaction of official business:

(1) by a governmental body; or

(2) for a governmental body and the governmental body owns the information or has a right of access to it.

Id. § 552.002(a). Thus, virtually all information in the physical possession of a governmental body is public information that is encompassed by the Act. Id. § 552.022(a)(1); see also Open Records Decision Nos. 549 at 4 (1990), 514 at 1-2 (1988). LSS asserts, "Because [its] information does not contain any 'information about the affairs of government and the official acts of public officials and employees,' it is not of the type intended to be covered by the Act[.]" However, upon review, we find the department maintains the submitted information in connection with the transaction of official business by or for the department. Accordingly, we conclude the responsive information is subject to the Act.

We also understand LSS to argue its information is confidential because it was marked as "confidential" when submitted to the department. We note information is not confidential under the Act simply because the party submitting the information anticipates or requests that it be kept confidential. See Indus. Found. v. Tex. Indus. Accident Bd., 540 S.W. 2d 668, 677 (Tex. 1976). In other words, a governmental body cannot, through an agreement or contract, overrule or repeal provisions of the Act. See Attorney General Opinion JM-672 (1987); Open Records Decision Nos. 541 at 3 (1990) ("[T]he obligations of a governmental body under [the predecessor to the Act] cannot be compromised simply by its decision to enter into a contract."), 203 at 1 (1978) (mere expectation of confidentiality by person supplying information does not satisfy requirements of statutory predecessor to Gov't Code § 552.110). Consequently, unless the information at issue comes within an exception to disclosure, it must be released, notwithstanding any expectation or agreement to the contrary.

Section 552.101 of the Government Code excepts from disclosure "information considered to be confidential by law, either constitutional, statutory, or by judicial decision." This section encompasses the doctrine of common-law privacy, which protects information that (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. Indus. Found., 540 S.W.2d at 685. The types of information considered intimate or embarrassing by the Texas Supreme Court in Industrial Foundation included information relating to sexual assault, pregnancy, mental or physical abuse in the workplace, illegitimate children, psychiatric treatment of mental disorders, attempted suicide, and injuries to sexual organs. Id. at 683. This office has also found the personal financial information not relating to the financial transaction between an individual and a governmental body is excepted from required public disclosure under common-law privacy. E.g., Open Records Decision Nos. 600 (1992), 545 (1990). However, the doctrine of common-law privacy protects the privacy interests of individuals, not of corporations or other types of business organizations. See Open Records Decision Nos. 620 (1993) (corporation has no right to privacy), 192 (1978) (right to privacy is designed primarily to protect human feelings and sensibilities, rather than property, business, or other pecuniary interests); see also FCC v. AT&T Inc., 131 S.Ct. 1177, 1185 (2011) ("The protection in FOIA against disclosure of law enforcement information on the ground that it would constitute an unwarranted invasion of personal privacy does not extend to corporations."). We understand LSS to assert its information is excepted under common-law privacy. However, upon review, we find none of the responsive information is highly intimate or embarrassing. Therefore, the responsive information is not confidential under common-law privacy, and the department may not withhold it under section 552.101 on that ground.

Legacy, LSS, and Magna assert some of the information at issue is excepted from disclosure under section 552.104 or 552.112 of the Government Code. However, sections 552.104 and 552.112 are discretionary exceptions that protect only the interests of a governmental body, as distinguished from exceptions that are intended to protect the interests of third parties. See Birnbaum v. Alliance of Am. Insurers, 994 S.W.2d 766, 776 (Tex. App.--Austin 1999, pet. denied) (section 552.112 is permissive exception that governmental body may waive in its discretion); Open Records Decision Nos. 592 (1991) (statutory predecessor to section 552.104 designed to protect interests of a governmental body in a competitive situation, and not interests of private parties submitting information to the government), 522 (1989) (discretionary exceptions in general). The department did not assert section 552.104 or 552.112. Therefore, department may not withhold any of the information at issue pursuant to either of those sections. See ORD 592 (governmental body may waive section 552.104).

Section 552.110 of the Government Code 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. Gov't Code § 552.110 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." Id. § 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 ORD 552 at 2. 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); 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. ⁽⁵⁾ Restatement of Torts § 757 cmt. b. This office 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. ORD 552 at 5-6. 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) 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, 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 release of information would cause it substantial competitive harm). In their section 552.110 arguments, Coventry and GWG rely on the test announced in National Parks & Conservation Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974), concerning the applicability of the section 552(b)(4) exemption under the federal Freedom of Information Act to third-party information held by a federal entity. See Nat'l Parks, 498 F.2d 765. Although this office applied the National Parks test at one time to the statutory predecessor to section 552.110, the Third Court of Appeals overturned that standard in holding National Parks was not a judicial decision for purposes of former section 552.110. See Birnbaum v. Alliance of Am. Insurers, 994 S.W.2d 766, 776 (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 at issue would cause the business enterprise that submitted the information substantial competitive harm. See Open Records Decision No. 661 at 5-6 (discussing Seventy-sixth Legislature's enactment of Gov't Code § 552.110(b)).

Upon review, we conclude Coventry, FairMarket, FIIS, FLS, GWG, Habersham, Legacy, Life Equity, LSC, LSS, Magna, Maple, RiverRock, and ViaSource have established some of the information at issue either consists of trade secrets, which we have marked, or information the release of which would cause substantial competitive injury, which we have also marked. Therefore, the department must withhold the information we have marked under section 552.110(a) and (b) of the Government Code. However, we find none of the third parties has established any of the remaining information at issue meets the definition of a trade secret, nor has any third party demonstrated the necessary factors to establish a trade secret claim for their information. We also find none of the interested third parties has made the specific factual or evidentiary showing required by section 552.110(b) that release of any of the remaining information at issue would cause substantial competitive harm. See Open Records Decision No. 319 at 3 (1982) (statutory predecessor to Gov't Code § 552.110 generally not applicable to information relating to organization and personnel, market studies, professional references, qualifications, and experience). Therefore, we conclude the department may not withhold any of the remaining information under section 552.110(a) or (b) of the Government Code.

The submitted information contains insurance policy numbers that are subject to section 552.136 of the Government Code. ⁽⁶⁾ Section 552.136(b) of the Government Code provides that "[n]otwithstanding any other provision of this chapter, 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." Gov't Code § 552.136. This office has determined an insurance policy number is an access device number for purposes of section 552.136. Open Records Decision No. 684 at 9 (2009). Thus, the department must withhold the insurance policy numbers we have marked under section 552.136.

The remaining information also contains e-mail addresses of members of the public that are subject to section 552.137 of the Government Code. Section 552.137 excepts from disclosure "an e-mail address of a member of the public that is provided for the purpose of communicating electronically with a governmental body" unless the member of the public consents to its release or the e-mail address is of a type specifically excluded by subsection (c). See Gov't Code § 552.137(a)-(c). Section 552.137 does not apply to a government employee's work e-mail address because such an address is not that of the employee as a "member of the public," but is instead the address of the individual as a government employee. The e-mail addresses at issue do not appear to be of a type specifically excluded by section 552.137(c). You do not inform us a member of the public has affirmatively consented to the release of any e-mail address contained in the submitted materials. Therefore, the department must withhold the e-mail addresses we have marked under section 552.137.

To conclude, the department is not required to release the information we have marked as nonresponsive in response to this request. The department must withhold the information we have marked under sections 552.110, 552.136, and 552.137 of the Government Code. The department must release the remaining information.

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,

James L. Coggeshall

Assistant Attorney General

Open Records Division

JLC/ag

Ref: ID# 450865

Enc. Submitted documents

c: Requestor

(w/o enclosures)

Mr. Aaron Scavron

Life Settlement International

110 East 59^th Street, 6^th Floor

New York City, New York 10022

(w/o enclosures)

National R. Agents, Inc.

CMG Surety

16055 Space Center Boulevard, Suite 235

Houston, Texas 77062

(w/o enclosures)

Q Capital Strategies

21 East 7^th Street, Suite 620

Austin, Texas 78701

(w/o enclosures)

Footnotes

1. The department sought and received clarification of the information requested. See Gov't Code § 552.222 (if request for information is unclear, governmental body may ask requestor to clarify request); see also City of Dallas v. Abbott, 304 S.W.3d 380, 387 (Tex. 2010) (if governmental entity, acting in good faith, requests clarification of unclear or over-broad request, ten-day period to request attorney general ruling is measured from date request is clarified).

2. You inform us none of the submitted is subject to any previous determination.

3. Open Records Decision No. 684 is a previous determination issued by this office authorizing all governmental bodies to withhold ten categories of information, including an e-mail address of a member of the public under section 552.137 of the Government Code, without the necessity of requesting an attorney general decision.

4. The department notified the following third parties: Abacus Settlements; Ali Funding, Inc.; Allied Assurance Services; American Settlement Associates; Ballan Capital; Berkshire Settlements; Caldwell Funding Corporation; Capstone Associated Services; Cato Capital; CMG Surety; Coventry First, LLC and Coventry First of Texas (collectively, "Coventry"); Creative Settlement Solutions; Credit Suisse Life Settlements; D3G, LLC; FairMarket Life Settlements Corp. (FairMarket); Family Insurance Investment Services ("FIIS"); Financial Life Services, LLC ("FLS"); GWG Life ("GWG"); Habersham Funding, LLC ("Habersham"); Imperial Life Settlements; Independent Funding; Institutional Life Services, LLC; J Chapman & Associates, LLP; JG Wentworth Life Settlements, LLC; Kral Chapman & Associates; Legacy Benefits Corporation d/b/a Legacy Settlements Corporation ("Legacy"); Life Equity, LLC ("Life Equity"); Life Partners; Life Settlement Corporation ("LSC"); Life Settlement International; Life Settlement Solutions ("LSS"); Lifetrust; Living Benefits Financial Services; Longmore Capital, LLC; Lotus Life, LLC; Magna Life Settlements, Inc. ("Magna"); Maple Leaf Financial, Inc. ("Maple"); MQ Capital; Natlis Capital; Phoenix Life Solutions; Progressive Capital Solutions; Proverian Capital ("Proverian"); Q Capital Strategies LLC; RiverRock Partners, LLC ("RiverRock"); Secure Growth; Seven Hills Settlement; SLG Life Settlements; South Coast Settlements; Vespers; ViaSource Funding Group, LLC ("ViaSource"); Viatical Benefactors; Viaticare Financial Services; Viaticus, Inc.; and Wm. Page & Associates.

5. The following are the six factors that the Restatement gives 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; see also Open Records Decision Nos. 319 at 2 (1982), 306 at 2 (1982), 255 at 2 (1980).

6. The Office of the Attorney General will raise mandatory exceptions on behalf of a governmental body. See Open Records Decision Nos. 481 at 2 (1987), 480 at 5 (1987); see, e.g., Open Records Decision No. 470 at 2 (1987) (because release of confidential information could impair rights of third parties and because improper release constitutes a misdemeanor, attorney general will raise predecessor statute of section 552.101 on behalf of governmental bodies).

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