October 6, 2003
Civil Division-Kent County (739-7641)
Thomas S. Neuberger, Esquire
Two East Seventh Street, Suite 302
Wilmington, DE 19801-3707
Re: Freedom of Information Act Complaint Against New Castle County
Dear Mr. Neuberger:
Our Office received your Freedom of Information Act ("FOIA") complaint on June 23, 2003 alleging that New Castle County ("the County") violated FOIA by not providing you with the names, addresses, and policy numbers of any insurance carriers which underwrite public official coverage for the County.
By letter dated June 30, 2003, we asked the County to respond to your complaint. We received the County's response on July 9, 2003. The County contends that the information you requested is exempt from disclosure under FOIA for two reasons: (1) "the [insurance] coverage information contained in the policy contains confidential commercial or financial details"; and (2) the information requested "falls within the pending or potential litigation exception."
FOIA requires that "[a]ll public records shall be open for inspection and copying by any citizen of the State during regular business hours by the custodian of the records for the appropriate public body." 29 Del. C. § 10003(a).
FOIA exempts from disclosure any "[t]rade secrets and commercial or financial information obtained from a person which is of a privileged or confidential nature." 29 Del. C.
§ 10002(d)(2). FOIA also exempts from disclosure "records pertaining to pending or potential litigation which are not records of any court." Id. § 10002(d)(9).
A. Confidential Commercial or Financial Information
FOIA's exemption for confidential commercial or financial information protects
"'individuals from a wide range of embarrassing disclosures'." Att'y Gen. Op. 87-IO31 (Nov. 4, 1987) (quoting Gregory v. FDIC, 470 F. Supp. 1329, 1334 (D.D.C. 1979)). For example, the "release of information regarding one's assets, profits and losses, stock holdings, loans and collateral" are confidential financial information exempt from disclosure under FOIA. Att'y Gen. Op. 87-IO31. See also Att'y Gen. Op. 96-IB30 (Sept, 25, 1996) (tax returns of parents of children applying for scholarships exempt from disclosure under FOIA).
The FOIA exemption for confidential commercial or financial information may apply "when the government requires a private party to submit information as a condition of doing business with the government." Judicial Watch v. Export-Import Bank, 108 F. Supp.2d 19, 27 (D.D.C. 2000). To fall within the exemption, the government has the burden of showing that disclosure of the information "is likely to cause substantial harm to the competitive position of the person from whom the information was obtained." Judicial Watch, 108 F. Supp.2d at 29. In Judicial Watch, the federal district court held that the government had met its burden. "When an applicant has submitted its export insurance application to the Bank, the requested transaction is in a highly competitive state. Other U.S. exporters and foreign competitors may be competing simultaneously for the same transaction or project. Thus, financial and technical details of the proposed transaction are confidential, and, if released, could harm the submitter's commercial interests." Id. at 29.
There is no evidence in the record to suggest that disclosure of any information contained in the County's public official insurance policy might cause competitive harm to the insurer. The routine information contained in an insurance contract -- premiums, scope of coverage, deductibles -- relate to the expenditure of public funds, a core FOIA function. The public has a right to know whether claims against the County's public officials may be settled "'with public funds or with insurance proceeds generated by publicly financed insurance premiums.'" Att'y Gen. Op. 02-IB24 (Oct. 1, 2002) (quoting Daily Gazette Co. v. Withrow, W.Va. Supr., 350 S.E.2d 738, 743 (1986)). See Associated Builders & Contractors v. Pennsylvania Department of General Services, Pa. Cmwlth., 747 A.2d 962, 966 (2000) ("Because the purchase of insurance constitutes the disbursement of funds by an agency, any construction insurance policies for the Keystone Project are public records.").
We determine that an insurer's name, address, and policy number are not "commercial or financial information obtained from a person which is of a privileged or confidential nature." 29 Del. C. § 10002(d)(2).
B. Pending Litigation
The County contends that the pending litigation exemption under FOIA applies because
Renee Sutton has sued your client, Robert S. Weiner, in Superior Court for invasion of privacy and slander. According to the County, Mr. Weiner has formally notified the County of his "claim that he was being sued for actions allegedly arising from his official duties as an elected official and that he expected the County to assume his client's defense. The County has officially declined to provide representation to Mr. Weiner asserting that these actions did not arise out of his official duties. Therefore, in addition to the existing litigation against Mr. Weiner, litigation against the County for refusing to provide representation in connection with Ms. Sutton's claim is likely to occur in light of his expectation of representation."
FOIA's pending litigation exemption may apply if a party to a lawsuit is trying to use FOIA to circumvent the rules of discovery. See Koyste v. Delaware State Police, Del. Super., C.A. No. 00C-08-088-JEB (Sept. 18, 2001) (Babiarz, J.) (plaintiff "is attempting a circuitous route around the normal discovery rules"). For the pending litigation exemption to apply, there must be a sufficient nexus between the records requested under FOIA and the subject matter of the litigation. Arguably, there may be a nexus between the Sutton litigation and the defendant's entitlement to representation at the County's expense. But if the insurance information you requested from the County is relevant to the Sutton litigation, then your remedy is through third-party discovery. If the County successfully moves to quash a third-party subpoena on the ground of relevance, then necessarily there is no nexus between the insurance information you requested and the subject matter of the lawsuit. In either event, FOIA's pending litigation exemption does not apply.
C. Potential Litigation
For the potential litigation exemption to apply, "FOIA requires a two-part analysis: first, litigation must be likely or reasonably foreseeable; and second, there must be a clear nexus between the documents requested under FOIA and the subject matter of the potential litigation." Att'y Gen. Op. 02-IB30 (Dec. 2, 2002)). If Mr. Weiner sues the County to compel the County to afford him legal representation in the Sutton lawsuit, then there would be a clear nexus between a public official insurance policy and the subject matter of a lawsuit brought by Mr. Weiner. The legal issue, then, is whether such litigation is likely or reasonably foreseeable.
"A realistic and tangible threat of litigation is one that can be characterized with reference to objective factors" such as: (1) a formal demand letter or some comparable writing that represents the party's claim and manifests a solemn attempt to sue; (2) previous or pre-existing litigation between the parties or proof of ongoing litigation concerning similar claims; or (3) proof that a party has retained counsel with respect to the claim at issue and has expressed an intent to sue." Claxton Enterprises, 549 S.E.2d 870, 874 (2001).
By letter dated May 20, 2003, you made a demand on behalf of your client to the County Attorney to "provide counsel to defend [Ms. Sutton's] claim to Mr. Weiner and file a timely answer." We believe that retaining counsel and this demand letter are objective criteria of a reasonable and tangible threat of litigation by Mr. Weiner over the scope of the County's public official insurance coverage policy.
Our determination that the insurance information you requested is exempt from disclosure under FOIA's potential litigation exemption is not at odds with our determination, earlier in this opinion, that a public body's insurance contracts may be public records under FOIA in other contexts. The potential litigation exemption turns on the identity of the requestor and the purpose of the request in light of reasonably foreseeable litigation. Where those criteria are not satisfied, a public body's insurance contracts may be public records unless exempted under another provision of FOIA.
We do not express any opinion whether Mr. Weiner, as a member of the New Castle County Council, might have standing to access the insurance information he has requested as a public official and potential beneficiary under the policy. That is a question of local law which is not within our jurisdiction under FOIA.
For the foregoing reasons, we determine that the County did not violate the public records requirements of FOIA by refusing to provide you with documents that contain the names and addresses of insurers and the insurance policy numbers because the records containing that information fall within the potential litigation exemption under FOIA.
Very truly yours,
W. Michael Tupman
Deputy Attorney General
Malcolm S. Cobin
cc: The Honorable M. Jane Brady
Timothy P. Mullaney, Sr., Esquire
Mr. Phillip G. Johnson, Opinion Coordinator