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FOIL-AO-13747

December 3, 2002

Dear

I appreciate having received your determination of an appeal made pursuant to the Freedom
of Information Law by Mr. Glenn Coin of the Post Standard. The appeal was submitted following
a denial of access to:

" All daily inspection reports made by commission employees
regarding the operation of the Turning Stone Casino, as required
under Section 4(b) of the Nation-State Compact between the Oneida
Indian Nation of New York and the State of New York, for the
calendar year 2002 and

" All patron complaints respecting the gaming operations of Turning
Stone Casino submitted to the board as required under Section 4(b)
of the Nation-State Compact between the Oneida Indian Nation of
New York and the State of New York, for the calendar year 2002."

You sustained the denial, citing a provision within the Nation-State Compact between the Oneida
Indian Nation and the State of New York (hereafter "the Compact"), and §87(2)(a) of the Freedom of Information Law as the basis for your determination

While I am not suggesting that the records must be made available in their entirety, I disagree
with the rationale offered for the denial of access. The denial refers to Section 4(b) of the Compact, which provides that:

"Copies of daily inspection reports made by Commission employees
and copies of any patron complaints respecting the gaming operations
shall be submitted to the Board on a daily basis. In the course of any
investigation by the Board of matters within its jurisdiction, the Board
may request, and the Nation or its operator shall provide to the Board,
business and accounting records of its gaming operations necessary
to the conduct of the investigation. Records provided to the State by
the Nation or its operator pursuant to this obligation shall be deemed
confidential and proprietary financial information belonging to the
Nation and shall not be subject to public disclosure by the State
without the express written consent of the Nation. Such records shall
remain the property of the Nation and shall be returned to the Nation
at the conclusion of the investigation, unless the records constitute
evidence in a criminal proceeding" [emphasis yours].

Based on the language of the section of the Compact quoted above, both you and the records
access officer concluded that the records sought are exempt from disclosure. In this regard, I offer the following comments.

As you are aware, 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.

Section 87(2)(a) pertains to records that "are specifically exempted from disclosure by state
or federal statute." The term "statute", according to judicial decisions, is an enactment of Congress or the State Legislature. A "compact", according to Black's Law Dictionary (Revised Fourth Edition), is "An agreement; a contract." Assuming that the those terms are construed in a manner consistent with their generally accepted meanings, a compact is not a statute, and a compact, therefore, would not exempt records from disclosure by statute. If there is no statute upon which an agency can rely to characterize records as "confidential" or "exempted from disclosure", the records are subject to whatever rights of access exist under the Freedom of Information Law [see Doolan v. BOCES, 48 NY 2d 341 (1979); Washington Post v. Insurance Department, 61 NY 2d 557 (1984); Gannett News Service, Inc. v. State Office of Alcoholism and Substance Abuse, 415 NYS 2d 780 (1979)].

The Court of Appeals expressed its general view of the intent of the Freedom of Information
Law in Gould v. New York City Police Department [87 NY 2d 267 (1996)], stating that:

"To ensure maximum access to government records, the 'exemptions
are to be narrowly construed, with the burden resting on the agency
to demonstrate that the requested material indeed qualifies for
exemption' (Matter of Hanig v. State of New York Dept. of Motor
Vehicles, 79 N.Y.2d 106, 109, 580 N.Y.S.2d 715, 588 N.E.2d 750
see, Public Officers Law § 89[4][b]). As this Court has stated, '[o]nly
where the material requested falls squarely within the ambit of one of
these statutory exemptions may disclosure be withheld' (Matter of
Fink v. Lefkowitz, 47 N.Y.2d, 567, 571, 419 N.Y.S.2d 467, 393
N.E.2d 463)" (id., 275).

There is nothing in the Freedom of Information Law that authorizes a person or agency to
claim, promise or engage in an agreement conferring confidentiality. In a case in which a law
enforcement agency permitted persons reporting incidents to indicate on a form their preference
concerning the agency's disclosure of the incident to the news media, the Appellate Division found
that, as a matter of law, the agency could not withhold the record based upon the "preference" of the person who reported the offense. Specifically, in Johnson Newspaper Corporation v. Call, Genesee County Sheriff, 115 AD 2d 335 (1985), it was found that:

"There is no question that the 'releasable copies' of reports of offenses
prepared and maintained by the Genesee County Sheriff's office on
the forms currently in use are governmental records under the
provisions of the Freedom of Information Law (Public Officers Law
art 6) subject, however, to the provisions establishing exemptions
(see, Public Officers Law section 87[2]). We reject the contrary
contention of respondents and declare that disclosure of a 'releasable
copy' of an offense report may not be denied, as a matter of law,
pursuant to Public Officers Law section 87(2)(b) as constituting an
'unwarranted invasion of personal privacy' solely because the person
reporting the offense initials a box on the form indicating his
preference that 'the incident not be released to the media, except for
police investigative purposes or following arrest'."

Similarly, the Court of Appeals has held that a request for or a promise of confidentiality is all but meaningless; unless one or more of the grounds for denial appearing in the Freedom of
Information Law may appropriately be asserted, the record sought must be made available. In
Washington Post v. Insurance Department, supra, the controversy involved a claim of confidentiality with respect to records prepared by corporate boards furnished voluntarily to a state agency. The Court of Appeals reversed a finding that the documents were not "records" subject to the Freedom of Information Law, thereby rejecting a claim that the documents "were the private property of the intervenors, voluntarily put in the respondents' 'custody' for convenience under a promise of confidentiality" (id., 564). Moreover, it was determined that:

"Respondent's long-standing promise of confidentiality to the
intervenors is irrelevant to whether the requested documents fit within
the Legislature's definition of 'records' under FOIL. The definition
does not exclude or make any reference to information labeled as
'confidential' by the agency; confidentiality is relevant only when
determining whether the record or a portion of it is exempt (see
Matter of John P. v Whalen, 54 NY2d 89, 96; Matter of Fink v
Lefkowitz, 47 NY2d 567, 571-572, supra; Church of Scientology v
State of New York, 61 AD2d 942, 942-943, affd 46 NY2d 906; Matter
of Belth v Insurance Dept., 95 Misc 2d 18, 19-20). Nor is it relevant
that the documents originated outside the government...Such a factor
is not mentioned or implied in the statutory definition of records or
in the statement of purpose..."

The Court also concluded that "just as promises of confidentiality by the Department do not
affect the status of documents as records, neither do they affect the applicability of any exemption"
(id., 567).

In a different context, in Geneva Printing Co. and Donald C. Hadley v. Village of Lyons
(Supreme Court, Wayne County, March 25, 1981), a public employee charged with misconduct and in the process of an arbitration hearing engaged in a settlement agreement with a municipality. One aspect of the settlement was an agreement to the effect that its terms would remain confidential.
Notwithstanding the agreement of confidentiality, which apparently was based on an assertion that "the public interest is benefited by maintaining harmonious relationships between government and its employees", the court found that no ground for denial could justifiably be cited to withhold the agreement. On the contrary, it was determined that:

"the citizen's right to know that public servants are held accountable
when they abuse the public trust outweighs any advantage that would
accrue to municipalities were they able to negotiate disciplinary
matters with its employee with the power to suppress the terms of any
settlement".

In so holding, the court cited a decision rendered by the Court of Appeals and stated that:

"In Board of Education v. Areman, (41 NY2d 527), the Court of
Appeals in concluding that a provision in a collective bargaining
agreement which bargained away the board of education' s right to
inspect personnel files was unenforceable as contrary to statutes and
public policy stated: 'Boards of education are but representatives of
the public interest and the public interest must, certainly at times,
bind these representatives and limit or restrict their power to, in turn,
bind the public which they represent. (at p. 531).

"A similar restriction on the power of the representatives for the
Village of Lyons to compromise the public right to inspect public
records operates in this instance.

"The agreement to conceal the terms of this settlement is contrary to
the FOIL unless there is a specific exemption from disclosure.
Without one, the agreement is invalid insofar as restricting the right
of the public to access."

In short, based on the precedents described above, I do not believe that the language of the
Compact conferring confidentiality is, as you suggest, "equivalent" to a statute that exempts records
from disclosure or that consent by the Nation can serve as a valid condition precedent to disclosure.
It is reiterated, however, that my opinion is not intended to suggest that the Board must disclose the
records in their entirety; on the contrary, it is likely that several of the grounds for denial appearing
in §87(2) of the Freedom of Information Law provide the Board with the authority to withhold
records or portions of records.

The first aspect of the request relates to inspection reports made by "commission employees."
If those persons are employees of the State, i.e., employees of the Racing and Wagering Board, the reports would fall within the scope of §87(2)(g). That provision enables an agency, such as the Board, to withhold records that:

"are inter-agency or intra-agency materials which are not:

i. statistical or factual tabulations or data;

ii. instructions to staff that affect the public;

iii. final agency policy or determinations; or

iv. external audits, including but not limited to audits performed by the comptroller and the federal government..."

It is noted that the language quoted above contains what in effect is a double negative. While inter-agency or intra-agency materials may be withheld, portions of such materials consisting of statistical or factual information, instructions to staff that affect the public, final agency policy or
determinations or external audits must be made available, unless a different ground for denial could appropriately be asserted. Concurrently, those portions of inter-agency or intra-agency materials that are reflective of opinion, advice, recommendation and the like could in my view be withheld.

With respect to complaints, it has consistently been advised that portions of records
identifiable to complainants may be withheld pursuant to §§87(2)(b) and 89(2) on the ground that
disclosure would constitute "an unwarranted invasion of personal privacy." Additionally, when
complaints are made concerning employees, it has been advised and held that their identities need
not be disclosed unless and until there is an agency determination reflective of a finding of
misconduct. Following the deletion of personally identifying details, the substance or nature of the
complaints would be accessible.

Lastly, although I am unaware of the specific nature of the records, also pertinent may be
§87(2)(d), which authorizes the Board 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..."

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."

From my perspective, the nature of the 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.

Relevant to the analysis 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 an 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. On the other hand, as
explained in Worthington:

Because competition in business turns on the relative
costs and opportunities faced by members of the same
industry, there is a potential windfall for competitors
to whom valuable information is released under
FOIA. If those competitors are charged only minimal
FOIA retrieval costs for the information, rather than
the considerable costs of private reproduction, they
may be getting quite a bargain. Such bargains could
easily have competitive consequences not
contemplated as part of FOIA's principal aim of
promoting openness in government (id., 419-420).

The Court also observed that the reasoning underlying these considerations is consistent with
the policy behind §87(2)(d) to protect businesses from the deleterious consequences of disclosing
confidential commercial information so as to further the state's economic development efforts and
attract business to New York (id.). In applying those considerations to Encore's request, the Court concluded that the submitting enterprise was not required to establish actual competitive harm; rather, it was required, in the words of Gulf and Western Industries v. United States, 615 F.2d 527, 530 (D.C. Cir., 1979) to show "actual competition and the likelihood of substantial competitive injury" (id., at 421).

In sum, the extent to which §87(2)(d) could properly be asserted is, in my view, dependent
on consideration of the effects of disclosure vis a vis competitors of Turning Stone, as well as the
impact on the State's "economic development efforts."

I hope that you consider the foregoing to be constructive and ask that you review your
determination to withhold the records sought in their entirety.

Sincerely,

 

Robert J. Freeman
Executive Director

RJF:jm

cc: Glenn Coin