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August 3, 1998

Ms. Ruth A. Keating
Counsel
Niagara Frontier Transportation Authority
181 Ellicott Street
Buffalo, NY 14203

The staff of the Committee on Open Government is authorized to issue advisory opinions.
The ensuing staff advisory opinion is based solely upon the information presented in your
correspondence.

Dear Ms. Keating:

As you are aware, I have received your letter of July 22 and the correspondence
attached to it. You have sought an advisory opinion concerning a request by the Niagara
Gazette for information maintained by the Niagara Frontier Transportation Authority (the
Authority).

On July 10, the Gazette requested records "containing the number of flights by Kiwi
Airlines flying in and out of Niagara Falls International Airport to Newark, and any other
destination Kiwi flies to and from that area." Having learned of the request, a letter was sent
by Kiwi's General Counsel in which strong objection was raised to disclosure of the
information sought. He expressed the understanding that similar statistical information
relating to carriers serving the Buffalo Airport is not available, and he contended that:

"[t]o release the aforementioned information on Kiwi when no
similar information is available for other carriers serving the
same relevant market is discriminatory and will result in
significant economic harm to Kiwi by providing Kiwi's
competitors with unfair competitive advantages."

In this regard, I offer the following comments.

First, as a general matter, the Freedom of Information Law is based upon a
presumption of access. Stated differently, all records of an agency are available, except to the
extent that records or portions thereof fall within one or more grounds for denial appearing
in §87(2)(a) through (i) of the Law.

Second, the only ground for denial of apparent relevance, §87(2)(d), authorizes an
agency to withhold records that:

"are trade secrets or are submitted to an agency by a
commercial enterprise or derived from information obtained
from a commercial enterprise and which if disclosed would
cause substantial injury to the competitive position of the
subject enterprise;"

From my perspective, it is unlikely that records sought could justifiably be withheld.
The concept and parameters of what might constitute a "trade secret" were discussed in
Kewanee Oil Co. v. Bicron Corp., which was decided by the United States Supreme Court
in 1973 (416 (U.S. 470). Central to the issue was a definition of "trade secret" upon which
reliance is often based. Specifically, the Court cited the Restatement of Torts, section 757,
comment b (1939), which states that:

"[a] trade secret may consist of 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" (id. at 474, 475).

In its review of the definition, the court stated that "[T]he subject of a trade secret must be
secret, and must not be of public knowledge or of a general knowledge in the trade or
business" (id.). The phrase "trade secret" is more extensively defined in 104 NY Jur 2d 234
to mean:

"...a formula, process, device or compilation of information
used in one's business which confers a competitive advantage
over those in similar businesses who do not know it or use it.
A trade secret, like any other secret, is something known to
only one or a few and kept from the general public, and not
susceptible to general knowledge. Six factors are to be
considered in determining whether a trade secret exists: (1)
the extent to which the information is known outside the
business; (2) the extent to which it is known by a business'
employees and others involved in the business; (3) the extent
of measures taken by a business to guard the secrecy of the
information; (4) the value of the information to a business and
to its competitors; (5) the amount of effort or money
expended by a business in developing the information; and (6)
the ease or difficulty with which the information could be
properly acquired or duplicated by others. If there has been a
voluntary disclosure by the plaintiff, or if the facts pertaining
to the matter are a subject of general knowledge in the trade,
then any property right has evaporated."

In my view, the nature of record, the area of commerce in which a commercial entity
is involved and the presence of the conditions described above that must be found to
characterize records as trade secrets would be the factors used to determine the extent to
which disclosure would "cause substantial injury to the competitive position" of a commercial
enterprise. Therefore, the proper assertion of §87(2)(d) would be dependent upon the facts
and, again, the effect of disclosure upon the competitive position of the entity to which the
records relate.

As I understand the situation, there is nothing secret about the cancellation of flights.
By observing information posted at airports or by listening to announcements made at
airports, members of the public and others can know or be made aware of canceled flights.
Certainly those members of the public who reserved seats prior to cancellation would know
of cancellations, and those who attempted to purchase tickets after cancellation would know
of cancellations. While similar or equivalent information is apparently not compiled with
respect to other carriers, the data itself is essentially made known and could be compiled by
any persistent observers or callers.

Also relevant is a decision rendered by the Court of Appeals, which, for the first time,
considered the phrase "substantial competitive injury" [(Encore College Bookstores, Inc. v.
Auxiliary Service Corporation of the State University of New York at Farmingdale, 87 NY2d
410 (1995)]. In that decision, the Court reviewed the legislative history of the Freedom of
Information Law as it pertains to §87(2)(d), and due to the analogous nature of equivalent
exception in the federal Freedom of Information Act (5 U.S.C. §552), it relied in part upon
federal judicial precedent.

In its discussion of the issue, the Court stated that:

"FOIL fails to define substantial competitive injury. Nor has
this Court previously interpreted the statutory phrase. FOIA,
however, contains a similar exemption for 'commercial or
financial information obtained from a person and privileged or
confidential' (see, 5 USC § 552[b][4]). Commercial
information, moreover, is 'confidential' if it would impair the
government's ability to obtain necessary information in the
future or cause 'substantial harm to the competitive position'
of the person from whom the information was obtained...

"As established in Worthington Compressors v Costle (662
F2d 45, 51 [DC Cir]), whether 'substantial competitive harm'
exists for purposes of FOIA's exemption for commercial
information turns on the commercial value of the requested
information to competitors and the cost of acquiring it through
other means. Because the submitting business can suffer
competitive harm only if the desired material has commercial
value to its competitors, courts must consider how valuable
the information will be to the competing business, as well as
the resultant damage to the submitting enterprise. Where
FOIA disclosure is the sole means by which competitors can
obtain the requested information, the inquiry ends here.

"Where, however, the material is available from other sources
at little or no cost, its disclosure is unlikely to cause
competitive damage to the submitting commercial enterprise"
(id. 419-420).

Again, unless my assumptions are inaccurate, a competitor, or any person, could with
a moderate degree of effort acquire the information in question by being present at an airport
or through telephone inquiries. If that is so, I do not believe that a denial of access could be
justified.

Lastly, it is emphasized that the courts have consistently interpreted the Freedom of
Information Law in a manner that fosters maximum access. As stated by the Court of
Appeals more than decade ago:

"To be sure, the balance is presumptively struck in favor of
disclosure, but in eight specific, narrowly constructed
instances where the governmental agency convincingly
demonstrates its need, disclosure will not be ordered (Public
Officers Law, section 87, subd 2). Thus, the agency does not
have carte blanche to withhold any information it pleases.
Rather, it is required to articulate particularized and specific
justification and, if necessary, submit the requested materials
to the courts for in camera inspection, to exempt its records
from disclosure (see Church of Scientology of N.Y. v. State
of New York, 46 NY 2d 906, 908). Only where the material
requested falls squarely within the ambit of one of these
statutory exemptions may disclosure be withheld" [Fink v.
Lefkowitz, 47 NY 2d 567, 571 (1979)]."

I hope that I have been of assistance. If you would like to discuss the matter, please
feel free to contact me.

Sincerely,

 

Robert J. Freeman
Executive Director

RJF:tt

cc: Steven Markhoff
Teresa Hoshell
Edward Perlman