February 13, 2012

Mr. Cory S. Hartsfield

Adams, Lynch & Loftin, P.C.

3950 Highway 360

Grapevine, Texas 76051-6741

OR2012-02245

Dear Mr. Hartsfield:

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# 445293 (Tarrant County Hospital District File No. 11477).

The Tarrant County Hospital District (the "district"), which you represent, received a request for a copy of the contract and all submitted proposals associated with eight specified items. ⁽¹⁾ You state that, although the district takes no position with respect to the requested information, it may implicate the interests of third parties. Accordingly, you state, and provide documentation demonstrating, the district notified the third parties of the request for information and of their right to submit arguments stating why their information should not be released. ⁽²⁾

See Gov't Code § 552.305 (permitting interested third party to submit to attorney general reasons why requested information should not be released); 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 applicability of exception in certain circumstances). We have reviewed the submitted information and the arguments submitted by an attorney for Spacelabs.

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, this office has received comments from only Spacelabs explaining why its information should not be released to the requestor. Thus, we have no basis to conclude that the release of any portion of the requested information would implicate any of the remaining third parties' interests. See id. § 552.110; 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. Accordingly, we conclude that the district may not withhold any of the requested information on the basis of any interest the remaining third parties may have in the information.

Spacelabs submits arguments against disclosure of its information 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. Gov't Code § 552.110. Section 552.110(a) protects the proprietary interests of private parties by excepting from disclosure information that is trade secrets obtained from a person and information that is privileged or confidential by statute or judicial decision. Id. § 552.110(a). The Texas Supreme Court has adopted the definition of a "trade secret" from section 757 of the Restatement of Torts. Hyde Corp. v. Huffines, 314 S.W.2d 763, 776 (Tex. 1958); see also Open Records Decision No. 552 at 2 (1990). Section 757 provides a trade secret to be as follows:

[A]ny 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) (citation omitted); 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. ⁽³⁾ See 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 5-6. 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. Id. § 552.110(b); Open Records Decision No. 661 at 5-6 (1999) (business enterprise must show by specific factual evidence that release of information would cause it substantial competitive harm).

Upon our review, we find that Spacelabs has failed to demonstrate that any of its information for which it asserts section 552.110(a) meets the definition of a trade secret, nor has it demonstrated the necessary factors to establish a trade secret claim for this information. Additionally, we note pricing information pertaining to a particular proposal or contract is generally not a trade secrete 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 (citation omitted); see also Huffines, 314 S.W.2d at 776. As such, we conclude the district may not withhold any of Spacelabs' information under section 552.110(a) of the Government Code.

Spacelabs also argues the release of its information would cause it substantial competitive injury under section 552.110(b) of the Government Code. We note the pricing information of winning bidders of a government contract, such as Spacelabs, is generally not excepted under section 552.110(b). Open Records Decision No. 514 (1988) (public has interest in knowing prices charged by government contractors); see ORD 319 at 3 (information relating to organization and personnel, market studies, professional references, qualifications and experience, and pricing is not ordinarily excepted from disclosure under statutory predecessor to section 552.110). 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). Moreover, we believe the public has a strong interest in the release of prices in government contract awards. See ORD 514. Furthermore, we find that Spacelabs has not made the specific factual or evidentiary showing required by section 552.110(b) that release of any of its information would cause the company substantial competitive harm. Accordingly, the district may not withhold any of Spacelabs' information on the basis of section 552.110(b) of the Government Code. As no further exceptions to disclosure are raised, the district must release the submitted 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,

Lindsay E. Hale

Assistant Attorney General

Open Records Division

LEH/ag

Ref: ID# 445293

Enc. Submitted documents

c: Requestor

(w/o enclosures)

Ms. Susan E. Adams

Locke Lord L.L.P.

Counsel for Spacelabs Healthcare, Inc.

2200 Ross Avenue, Suite 2200

Dallas, Texas 75201-6776

(w/o enclosures)

Mr. Christopher J. Aluotto

Counsel

Philips Healthcare

595 Miner Road

Highland Heights, Ohio 44143

(w/o enclosures)

Mr. Matthew Bray

Senior Client Director

GE Healthcare

7710 Twisted Oaks Circle

Dallas, Texas 75231

(w/o enclosures)

Siemens Medical Solutions USA

ATTN: Legal Department

51 Valley Stream Parkway, Mail Stop K14

Malvern, Pennsylvania 19356

(w/o enclosures)

Mr. Brian Temple

Lumenate

16633 Dallas Parkway, Suite 450

Addison, Texas 75001

(w/o enclosures)

Footnotes

1. You state the district received clarification from the requestor. See Gov't Code § 552.222(b) (stating if information requested is unclear to governmental body or if large amount of information has been requested, governmental body may ask requestor to clarify or narrow request, but may not inquire into purpose for which information will be used). You inform us the district provided the requestor with an estimate of charges and a request for a deposit for payment of those charges on November 14, 2011. See id. §§ 552.2615, .263(a). You state the district received a deposit for payment of the anticipated costs on November 22, 2011. Thus, November 22, 2011 is the date on which the district is deemed to have received the request. See id. § 552.263(e) (if governmental body requires deposit or bond for anticipated costs pursuant to section 552.263, request for information is considered to have been received on date that the governmental body receives deposit or bond).

2. The third parties notified pursuant to section 552.305 are: GE Healthcare; Lumenate; Philips Healthcare; Siemens Medical Solutions USA; Spacelabs Healthcare, Inc. ("Spacelabs").

3. There are six factors the Restatement gives as indicia of 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 the 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 Nos. 319 at 2, (1982), 306 at 2 (1982), 255 at 2 (1980).

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