Going Public?

Some like holes in the ground
Long v. City of Burlington, 2018 VT 103

By Eric Fanning

I’m going to start this post on a somewhat wonky, possibly pedantic, law nerd kick. Just bear with me (or, switch to reddit—your call). The Public Records Act is Vermont’s public-records-transparency law. Not to sound grandiose, but this statute (and others like it in our sister states, and at the federal level) forms part of the bedrock of our constitutional republic. The idea is that government officials, employees, etc. derive any and all of their official power from the people, and therefore are “servants” of the public (this is actually a part of Vermont’s Constitution—one of my favorite Articles of Ch. 1, incidentally). If you take this one step further, then you see that public officers must be accountable to the people in all respects of the performance of their official duties. This concept doesn’t really mean anything unless the public is free to access and inspect documents prepared and used by the government—“even though such examination may cause inconvenience or embarrassment.” Thus, we have the Public Records Act.

Thanks for sticking with me there—now let’s get down to the nitty gritty . . . let’s get this show on the road. The factual background of this case shouldn’t be news to most people (at least those of us who live in the greater Burlington area). The City of Burlington sought to create a public-private partnership with the owners of several downtown blocks which used to comprise the Burlington Town Center Mall, more commonly referred to nowadays as “that giant hole in the ground.” The City and the property owners/developers, BTC Mall Associates want to redevelop said city blocks into a new and improved mix of residential units, office space, retail shops and a parking lot.   

To undertake this project, the City contracted with a consulting firm called ECONorthwest to aid in the nuts and bolts of the public-private partnership. BTC and ECONorthwest signed a nondisclosure agreement (NDA) which basically said that BTC would provide confidential business information to ECONorthwest so that it could complete its assessment of the project, provided that it not release such information to anyone, including the City.
  Plaintiff/appellant The Coalition for a Livable City is opposed to this project (I’ll refer to them as CLC). Specifically in this case, CLC was concerned that Burlington and its developer partners shielded pertinent information about the project and its economic feasibility from the public, and subsequently brought the Public Records Act suit that is the subject of this appeal.

The problem arose when the City and BTC Mall Associates released a redacted copy of a Market Feasibility Assessment prepared by ECONorthwest. The study, as released by the City, contained many redactions which appeared to block out dollar figure amounts for things like estimated rents, revenues, costs and other financial information about the proposed project. CLC demanded that the City release a copy of the unredacted study pursuant to the Public Records Act. The City refused (claiming, in part, that they didn’t actually have an unredacted copy), and CLC sued.

The trial court granted summary judgment for the City and BTC Mall Associates on two grounds: (1) the study is not a “public record” under the PRA; and (2) even if it were a public record, the redacted information is exempt as a “trade secret.” 

 SCOV affirms, but does so without reaching the question of whether the study is a public record.

Just what are the exceptions to disclosure under the PRA? Like the hearsay rule, there are many. If you’d like to dive on in, here’s the statute. For purposes of this case, we’re only interested in one particular exception which reads:
Trade secrets, meaning confidential business records or information, including any formulae, plan, pattern, process, tool, mechanism, compound, procedure, production data, or compilation of information which is not patented, which a commercial concern makes efforts that are reasonable under the circumstances to keep secret, and which gives its user or owner an opportunity to obtain business advantage over competitors who do not know it or use it, except that the disclosures required by 18 V.S.A. § 4632 are not exempt under this subdivision
In case you were wondering, 18 V.S.A. § 4632 refers to the mandated disclosure of expenses and gifts of drug manufacturers to the Attorney General, but that’s not important right now.

SCOV reviews grants of summary judgment de novo, i.e. without deference to the trial court. The ever-enduring standard for summary judgment is that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.

As I noted above, SCOV disposes of this case by ruling on the somewhat narrower issue of whether the redacted portions of the study are trade secrets. Therefore, they don’t have to go any further and attempt to suss out the broader question of whether the study is a public record. Why? Because they don’t need to. Even if they decided the study was a public record, it meets one of the statutory exemptions from disclosure. This is sufficient for a competent ruling on the case, so that’s as far as SCOV chooses to go.

The thrust of CLC’s argument to SCOV is that BTC provided the information contained in the unredacted Study to the City’s contractor in the course of evaluating a public project that would entail substantial taxpayer financing, which is significant enough to raise of presumption in favor of disclosure; and alternatively, it’s not clear that the City did not have the redacted information (contrary to what the City had maintained). Moreover, CLC says the redacted information is not exempt from disclosure because BTC did not take sufficient steps to ensure the secrecy of the information.

SCOV’s not convinced by CLC’s arguments. It comes to the conclusion that based on the plain meaning of the statute, the relevant case law, and the trial record, the withholding of information contained in the Study was lawful. SCOV rests its opinion on two central points: (1) the figures that were redacted are the type of information that “gives its user or owner an opportunity to obtain business advantage over competitors who do not know or use it”; and (2) BTC made reasonable efforts to keep the information secret.

Going to the first point, SCOV says there’s sufficient information in the record to come to the conclusion that BTC would lose a business advantage over competitors if the disclosures were made public. They rely primarily on the uncontested affidavit from BTC’s principal, which states that “the anticipated project costs and revenues, financial projections, and confidential lease terms with a major prospective tenant contained in the document are the types of information considered highly sensitive in the real estate development industry,” and that “if competitors had access to BTC’s financial projections and lease information, they could ‘reverse engineer’ BTC’s pricing and forecasting models and use the information to undercut BTC’s pricing and terms.” Taking the principal at their word, BTC would be put at a substantial economic disadvantage if the figures were made public, and therefore constitute the kind of information that is protected from disclosure.

In response to CLC’s assertion that BTC didn’t take sufficient steps to protect the confidentiality of the information at issue, SCOV believes the record clearly supports the City’s position to the contrary. SCOV again cites an uncontested affidavit from BTC that explains, in pertinent part, that they only shared information when absolutely necessary, and only on the condition that such information not be shared with anyone without BTC’s consent, that they required ECONorthwest to sign the NDA before proceeding, and that BTC asked the City to acknowledge the NDA. SCOV says the evidence shows reasonable efforts to protect the confidential information.

CLC argues that the reasonableness of BTC’s efforts to maintain secrecy are undermined due to the fact that no NDA was entered into with the City, and because the “acknowledgement” of the NDA between BTC and ECONorthwest wasn’t binding on the city. SCOV rejects this argument too, reasoning that there seems to be no requirement in the law that an entity enter into a binding NDA with a government agency before disclosing trade-secret information in order to invoke the PRA exemption. In other words, the statutory exemption from disclosure is not waived just because you didn’t contract with the government to explicitly protect the information from public disclosure.

SCOV affirms summary judgment for the City; and yet we still have a giant hole in the ground.

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