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interpreting the OUTSA and finding persuasive a comparable case in another jurisdiction that adopted the UTSA
Summary of this case from Allied Erecting & Dismantling Co. v. Genesis Equip. & Mfg., Inc.Opinion
No. 99-394.
Submitted November 16, 1999.
Decided January 19, 2000.
In Mandamus.
Law Office of Kenneth R. Besser and Kenneth R. Besser, for relators.
Betty D. Montgomery, Attorney General, Mark R. Weaver, Special Counsel to the Attorney General, Lisa Wu Fate and Jan Alan Neiger, Assistant Attorneys General, for respondents.
On February 17, 1999, relator Kenneth R. Besser ("Besser"), an attorney, filed a civil lawsuit in the Court of Claims on behalf of his wife, relator Susan L. Besser, M.D., against respondent Ohio State University ("OSU"), challenging OSU's acquisition of Park Medical Center, a private Columbus hospital.
On February 18, Besser sent a letter to OSU stating that he represented his wife and Bexley Family Medicine in their lawsuit against OSU and that he was requesting under R.C. 149.43, Ohio's Public Records Act, that OSU make available for his inspection "all records of OSU concerning or relating to OSU's acquisition of Park Medical Center." Besser noted in his letter that at least one copy of these records was maintained in the office of respondent Manuel Tzagournis, M.D., OSU Vice-President for Health Sciences, and that he would accept permission to inspect Dr. Tzagournis's file on the Park Medical Center transaction as a good faith effort by OSU to comply with his public records request. OSU had created and collected records concerning its acquisition of Park Medical Center.
On February 19, OSU advised Besser that it would not comply with his request because (1) he was limited to civil discovery in his pending Court of Claims lawsuit to obtain the requested records and could not use the Public Records Act to circumvent such discovery, and (2) the requested records were exempt from disclosure because they constituted trade secrets. OSU later additionally asserted that the Bessers' request was not sufficiently specific.
Shortly thereafter, Besser requested to inspect OSU's "Feasibility Study concerning the purchase of Park Medical Center," as well as the minutes of OSU Hospitals Board and OSU Hospitals Strategic Planning Committee meetings from January 1, 1980 through the dates of his requests.
On February 23, relators, Besser and his wife, filed this action for a writ of mandamus to compel respondents, OSU, OSU Hospitals Board, Grayce M. Sills, Chairperson of the OSU Hospitals Board, R. Reed Fraley, M.D., Secretary of the OSU Hospitals Board and Executive Director of the Ohio State Hospital Systems, and Dr. Tzagournis, to provide access to the requested records under R.C. 149.43. The Bessers also requested an award of relator Susan Besser's attorney fees. On March 1, the Bessers voluntarily dismissed their Court of Claims lawsuit and subsequently agreed that nothing relating to that case affected their mandamus action. Upon dismissal of the lawsuit, respondents provided the Bessers with access to the requested minutes of OSU Hospitals Board and OSU Strategic Planning Committee meetings.
After respondents filed an answer and the parties filed motions for judgment on the pleadings, the matter was referred to the court's mediation program. During the mediation process, OSU publicly announced its acquisition of Park Medical Center, and the parties clarified their understanding of the Bessers' records requests to mean a search for records only in Dr. Tzagournis's files and including records scrutinizing the practicability of OSU's acquisition of Park Medical Center.
Following mediation, the matter was returned to the court's regular docket. We denied the parties' motions for judgment on the pleadings, granted an alternative writ, and issued a schedule for the presentation of evidence and briefs. 86 Ohio St.3d 1439, 713 N.E.2d 1050. We also dismissed as moot the Bessers' claims relating to the OSU Hospitals Board and OSU Strategic Planning Committee minutes.
The parties filed an agreed statement of facts establishing that after respondents received the clarification of the Bessers' records requests, respondents provided them with some responsive records relating to the Park Medical Center acquisition and studies of the feasibility of the acquisition. Respondent withheld some responsive records, claiming that R.C. 149.43(A)(1)(p) exempted these records from disclosure. Respondent Fraley refers to these exempt records as:
1. February 4, 1999 memorandum from an OSU staff attorney to Fraley concerning the asset purchase of Park Medical Center.
2. January 28, 1999 preliminary business plan prepared by a consulting firm concerning the Park Medical Center transaction.
3. January 5, 1999 outline used to negotiate a staffing contract for the Park Medical Center transaction.
4. December 23, 1998 attorney-client communication from a law firm concerning the Park Medical Center transaction.
5. October 16, 1998 staff attorney summary describing goals for the Park Medical Center transaction.
6. December 2, 1998 printout of e-mail message sent between two OSU Hospitals employees concerning underlying Park Medical Center transaction facts.
7. November 5, 1998 pro forma for the transaction, including charts and tables outlining financial calculations and projections.
8. February 5, 1999 transaction status report.
9. January 1999 printed notes of transaction meetings proposed by an OSU Hospitals employee.
10. January 11, 1999 internal memorandum concerning potential Park Medical Center staffing.
11. January 6, 1999 list of working assumptions for the transaction.
12. February 15, 1999 summary analysis of potentially comparable hospitals.
13. December 29, 1998 letter from a law firm concerning the transaction.
The evidence submitted by respondents described the two withheld records from law firms concerning the Park Medical Center transaction as privileged attorney-client communications, and specified that the remaining withheld records "derive[d] potential economic value from not being generally known to, and not being readily ascertainable to, persons who can obtain economic value from its disclosure." This cause is now before the court for a consideration of the merits as well as respondents' request for oral argument.
The Bessers assert that they are entitled to a writ of mandamus to compel respondents to provide access to the withheld records concerning the Park Medical Center transaction. R.C. 149.43 requires complete access to all public records upon request unless the requested records fall within one of the specified exemptions. State ex rel. The Miami Student v. Miami Univ. (1997), 79 Ohio St.3d 168, 170, 680 N.E.2d 956, 958. One of the specified exemptions covers "[r]ecords the release of which is prohibited by state or federal law." R.C. 149.43(A)(1)(p); State ex rel. Nix v. Cleveland (1998), 83 Ohio St.3d 379, 383, 700 N.E.2d 12, 16.
Respondents claim that most of the withheld records constitute trade secrets, which are exempt from disclosure under state law. The Bessers counter that (1) although former R.C. 1333.51 exempted the disclosure of trade secrets under R.C. 149.43, the repeal of former R.C. 1333.51 in 1996 removed any trade-secrets exemption; (2) public entities like OSU cannot have trade secrets; and (3) respondents have not established that the records are trade secrets. The Bessers' contentions are considered seriatim.
Uniform Trade Secrets Act: R.C. 149.43(A)(1)(p) Exemption
Before July 20, 1994, former R.C. 1333.51(C) provided that "[n]o person, having obtained possession of an article representing a trade secret or access thereto with the owner's consent, shall convert such article to his own use or that of another person, or thereafter without the owner's consent make or cause to be made a copy of such article, or exhibit such article to another." 132 Ohio Laws, Part I, 677. Former R.C. 1333.51(C) constituted a state law prohibiting the release of trade secrets under R.C. 149.43. State ex rel. Seballos v. School Emp. Retirement Sys. (1994), 70 Ohio St.3d 667, 670, 640 N.E.2d 829, 832; see State ex rel. Allright Parking of Cleveland, Inc. v. Cleveland (1992), 63 Ohio St.3d 772, 775, 591 N.E.2d 708, 710.
Effective July 20, 1994, the General Assembly enacted the Ohio Uniform Trade Secrets Act, R.C. 1333.61 through 1333.69, which provides for civil remedies, i.e., injunctive relief and damages, for the misappropriation of trade secrets. State ex rel. The Plain Dealer v. Ohio Dept. of Ins. (1997), 80 Ohio St.3d 513, 523, 687 N.E.2d 661, 671. At the time of its enactment, the General Assembly retained the criminal prohibition against the disclosure of trade secrets in a slightly amended version of former R.C. 1333.51(C) ("No person, having obtained possession of or access to an article representing a trade secret with the owner's consent, shall convert the article to his own use or that of another person, shall make or cause to be made a copy of the article without the owner's consent, or shall exhibit the article to another person."). 145 Ohio Laws, Part III, 5404. On July 1, 1996, however, the General Assembly repealed R.C. 1333.51 with the enactment of Am.Sub.S.B. No. 2. 146 Ohio Laws, Part IV, 7136, 7138.
The Bessers claim that with the repeal of R.C. 1333.51, trade secrets are no longer exempt from disclosure under the R.C. 149.43(A)(1)(p) "prohibited by state or federal law" exemption. "In construing a statute, a court's paramount concern is the legislative intent in enacting the statute." State ex rel. Richard v. Bd. of Trustees of Police Firemen's Disability Pension Fund (1994), 69 Ohio St.3d 409, 411, 632 N.E.2d 1292, 1295. We first look at the statutory language, giving the words used their usual, normal, or customary meaning. Rice v. CertainTeed Corp. (1999), 84 Ohio St.3d 417, 419, 704 N.E.2d 1217, 1218; R.C. 1.42.
"Prohibit" is defined as "[t]o forbid by law" and "[t]o prevent." Black's Law Dictionary (7 Ed. 1999) 1228; Webster's Third New International Dictionary (1986) 1813. The Ohio Uniform Trade Secrets Act, R.C. 1333.61 through 1333.69, forbids the unauthorized disclosure or acquisition of trade secrets by providing specific civil remedies, including injunction, R.C. 1333.62, a civil action for compensatory and punitive damages, R.C. 1333.63, attorney fees, R.C. 1333.64, and court preservation of trade secrets in a civil action under the Act, R.C. 1333.65. The Act also retained criminal remedies, whether or not based on the misappropriation of a trade secret. R.C. 1333.67(B)(3). In fact, the General Assembly has specified in other contexts that trade secrets, as defined by the Ohio Uniform Trade Secrets Act, are not public records for purposes of R.C. 149.43. See R.C. 122.36 and 1555.17.
The legislative history of the pertinent statutes supports this conclusion: that trade secrets remain exempt under R.C. 149.43(A)(1)(p), despite the enactment of R.C. 1333.61 through 1333.69 and the repeal of R.C. 1333.51. The purpose of the enactment of the Uniform Trade Secrets Act was merely "to make uniform the law with respect to their subject among states enacting them." R.C. 1333.68; see, also, Preamble to Am.Sub.H.B. No. 320, 145 Ohio Laws, Part III, 5403. There is also no evidence that the General Assembly intended its 1996 repeal of R.C. 1333.51 as part of Am.Sub.S.B. No. 2 to represent a departure from long-standing precedent exempting trade secrets from disclosure under R.C. 149.43. In other words, if the General Assembly had intended to divest trade secrets of their exempt status under R.C. 149.43, it would have done so with unambiguous language, and because it did not do so, we must presume that the General Assembly intended that trade secrets retain their confidential nature. See State ex rel. Sinay v. Sodders (1997), 80 Ohio St.3d 224, 231-232, 685 N.E.2d 754, 760.
A contrary holding would afford no protection for an entity's trade secrets that are created or come into the possession of an Ohio public office and would render the remedies in R.C. 1333.61 through 1333.69 meaningless when a request for these records is made under R.C. 149.43. "We must also construe statutes to avoid unreasonable or absurd results." State ex rel. Cincinnati Post v. Cincinnati (1996), 76 Ohio St.3d 540, 543-544, 668 N.E.2d 903, 906; R.C. 1.47(C).
This holding is also supported by comparable cases in other jurisdictions that have adopted the Uniform Trade Secrets Act. For example, in Progressive Animal Welfare Society v. Univ. of Washington (1994), 125 Wn.2d 243, 884 P.2d 592, the Supreme Court of Washington held that the Washington Uniform Trade Secrets Act prohibited the disclosure of trade secrets under the "other statute" exemption to the Washington Public Records Act, which is comparable to R.C. 149.43(A)(1)(p). The court held:
Wash. Rev. Code 42.17.260(1) provides that "[e]ach agency, in accordance with published rules, shall make available for public inspection and copying all public records, unless the record falls within the specific exemptions of subsection (6) of this section, RCW 42.17.310, 42.17.315, or other statute which exempts or prohibits disclosure of specific information or records." (Emphasis added.)
"[T]he State Uniform Trade Secrets Act (UTSA) defines a trade secret expansively * * *. Given the potential for unfunded biomedical grant proposals to eventuate in trade secrets as broadly defined by the statute, this `other statute' operates as an independent limit on disclosure of portions of the records at issue here that have even potential economic value. The Public Records Act is simply an improper means to acquire knowledge of a trade secret." 125 Wn.2d at 262, 884 P.2d at 603; see, also, Spokane Research Defense Fund v. Spokane (1999), 96 Wn. App. 568, 576-578, 983 P.2d 676, 682 (Uniform Trade Secrets Act qualifies under "other statute" exemption of state public records Act).
Based on the foregoing, given the language of the Ohio Uniform Trade Secrets Act, the manifest purpose behind this Act, the lack of a contrary unambiguous intent by the General Assembly to modify the exempt status of trade secrets under the Public Records Act, and persuasive precedent from another jurisdiction adopting the Uniform Trade Secrets Act, we hold that trade secrets remain exempt from disclosure under the "state or federal law" exemption of R.C. 149.43.
Trade Secrets: Government Entities
The Bessers next contend that even if trade secrets remain a proper exemption under the "state or federal law" provision of R.C. 149.43(A)(1)(p) despite the 1996 repeal of R.C. 1333.51, public entities like OSU and its employees are not entitled to the trade secret exemption for their own records that they created. Before Ohio's adoption of the Uniform Trade Secrets Act, we held that public offices cannot have their own protected trade secrets under former R.C. 1333.51 because "[t]he protection of competitive advantage in private, not public, business underpins trade secret law." State ex rel. Toledo Blade Co. v. Univ. of Toledo Found. (1992), 65 Ohio St.3d 258, 264, 602 N.E.2d 1159, 1163-1164.
Toledo Blade, however, preceded the enactment of the Ohio Uniform Trade Secrets Act, which specifically defines a "person" who can have trade secrets to include "governmental entities." R.C. 1333.61(C); see, also, R.C. 1333.61(B) and (D). In fact, in Toledo Blade, we relied on a case from Pennsylvania, a jurisdiction that has not adopted the Uniform Trade Secrets Act. 65 Ohio St.3d at 264, 602 N.E.2d at 1163-1164, fn. 2, citing Hoffman v. Commw. of Pennsylvania Game Comm. (1983), 71 Pa. Commw. 99, 455 A.2d 731.
In contrast, jurisdictions that have adopted the Uniform Trade Secrets Act hold that public entities like OSU can have their own trade secrets. See, e.g., Scientific Games, Inc. v. Dittler Bros., Inc. (Fla.App. 1991), 586 So.2d 1128, 1131, where the Florida appellate court stated: "[W]e have no difficulty in agreeing that the agency was entitled to and did properly assert a trade secrets privilege as to the examiner's report."; Progressive Animal Welfare Society, supra. Our quotation of the Toledo Blade language in State ex rel. Rea v. Ohio Dept. of Edn. (1998), 81 Ohio St.3d 527, 532, 692 N.E.2d 596, 601, does not alter this result because the enactment in R.C. 1333.61(C) was not considered therein and we relied on OSU's public disclosure of the records it claimed to be protected trade secrets.
Therefore, OSU can have its own trade secrets under R.C. 1333.61.
In Camera Inspection: Trade Secrets
The Bessers next claim that respondents have not established that the records constitute trade secrets, as that term is defined in R.C. 1333.61(D). "`[W]hen a governmental body asserts that public records are excepted from disclosure and such assertion is challenged, the court must make an individualized scrutiny of the records in question. If the court finds that these records contain excepted information, this information must be redacted and any remaining information must be released.'" State ex rel. Master v. Cleveland (1996), 75 Ohio St.3d 23, 31, 661 N.E.2d 180, 186-187, quoting State ex rel. Natl. Broadcasting Co., Inc. v. Cleveland (1988), 38 Ohio St.3d 79, 526 N.E.2d 786, paragraph four of the syllabus.
We have applied this general rule to require in camera inspections in cases in which a public entity's claim that records are exempt as trade secrets is challenged. See Plain Dealer, 80 Ohio St. 3d at 524, 687 N.E.2d at 671; Seballos, 70 Ohio St.3d at 671, 640 N.E.2d at 832; Allright Parking, 63 Ohio St.3d at 776, 591 N.E.2d at 711, quoting State ex rel. Natl. Broadcasting Co. v. Cleveland (1991), 57 Ohio St.3d 77, 81, 566 N.E.2d 146, 150 ("In cases such as these, `[a]n in camera inspection remains the best procedure' for determining whether records are excepted from disclosure.").
Consistent with the foregoing precedent and after reviewing the conclusory statements in the affidavits submitted by respondents to support their contention that the withheld records constitute trade secrets, an in camera inspection is necessary to determine if respondents' claims have merit.
Intellectual Property; Attorney-Client Privilege
Respondents claim that two of the withheld records that are exempt trade secrets are also exempt from disclosure under R.C. 149.43(A)(1)(m) and (5) as "intellectual property records." Again, an in camera inspection is necessary to determine if this exemption applies. Respondents' affidavits are insufficient to establish that these records constitute intellectual property records.
Respondents further claim that two of the records are exempt from disclosure because they are covered by the attorney-client privilege. The attorney-client privilege, which covers records of communications between attorneys and their government clients pertaining to the attorneys' legal advice, is a state law prohibiting release of these records. Nix, 83 Ohio St.3d at 383, 700 N.E.2d at 16. Here, unlike the claimed exemptions for trade secrets and intellectual property records, respondents have submitted sufficient proof that these records are exempt and the Bessers do not assert that the records claimed by respondents to be covered by the attorney-client privilege are being improperly withheld. Therefore, the Bessers are not entitled to these records.
Attorney Fees
The Bessers request an award of attorney fees for relator Susan Besser, M.D., who is represented by her husband, attorney Kenneth Besser. There is, however, no evidence or argument that Susan Besser actually paid or is obligated to pay attorney fees to her husband for his representation of her in this case. State ex rel. Russell v. Thomas (1999), 85 Ohio St.3d 1488, 709 N.E.2d 1215; State ex rel. Dist. 1199, Health Care Social Serv. Union, SEIU, AFL/CIO v. Lawrence Cty. Gen. Hosp. (1999), 84 Ohio St.3d 1472, 704 N.E.2d 580; State ex rel. Gannett Satellite Info. Network, Inc. v. Petro (1998), 81 Ohio St.3d 1234, 1235, 690 N.E.2d 11, 12 ("[T]he party against whom an award of fees is assessed should be responsible for those fees incurred only as a direct result of that party's failure to produce the public record."). And Kenneth Besser is not entitled to an award for his own attorney fees. State ex rel. McGowan v. Cuyahoga Metro. Hous. Auth. (1997), 78 Ohio St.3d 518, 520, 678 N.E.2d 1388, 1389. Therefore, we deny the Bessers' request for attorney fees.
Conclusion
Based on the foregoing, we hold that trade secrets remain exempt from disclosure under R.C. 149.43(A)(1)(p) and that governmental entities like OSU can have trade secrets, but that respondents should submit the records they claim to be exempt as trade secrets and intellectual property records to the court under seal for an in camera review. We also order respondents to submit the records that they have already provided to the Bessers in response to their public records request. Finally, we deny the Bessers' request for attorney fees and deny respondents' request for oral argument.
Judgment accordingly.
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER, COOK and LUNDBERG STRATTON, JJ., concur.