United States: Texas Supreme Court Allows Private Party To Challenge Release Of Information In Hands Of Government That Is Competitively Sensitive

The Texas Public Information Act (the "PIA") "guarantees access to public information, subject to certain exceptions." Tex. Dep't of Pub. Safety v. Cox Tex. Newspapers, L.P., 343 S.W.3d 112, 114 (Tex. 2011). Public information includes information that is collected, assembled, or maintained by or for a governmental body. TEX. GOV'T CODE § 552.002(a). Such information is available on request unless an exception applies. In re City of Georgetown, 53 S.W.3d 328, 331 (Tex. 2001). One such exception protects information "that, if released, would give advantage to a competitor or bidder." TEX. GOV'T CODE § 552.104.

The Texas Attorney General has long taken the position that section 552.104's exception protects the purchasing interests of a governmental body when conducting competitive bidding, but not those of a private party that competes in the process. Recently, in Boeing Co. v. Paxton, No. 12-1007, 2015 Tex. LEXIS 583 (Tex. June 19, 2005), the Supreme Court of Texas disagreed with the Attorney General and held that a private party may assert section 552.104's exception to protect its competitively sensitive information from disclosure.

The Boeing decision is noteworthy because it provides private entities an effective means by which to prevent their competitively sensitive information from becoming available to the general public, including their competitors. Boeing is also significant in that it allows governmental bodies to defer to private entities to protect their own competitively sensitive information, without waiving the private entity's right to judicial review of the Attorney General's opinion regarding disclosure.

The Boeing Factual and Procedural Background

In 1998, Boeing signed a lease with the Port Authority of San Antonio (the "Port") for 1.3 million square feet at Kelly Air Force Base for a term of twenty years (the "Kelly Lease"). Boeing, 2015 Tex. LEXIS 583, at *5. Several years after signing the Kelly Lease, a former Boeing Employee, Robert Silvas, submitted a PIA request to the Port for various Boeing corporate information, including the Kelly Lease. Id. at *6. The Port notified Boeing of Silvas' request and Boeing's right to seek relief from the Attorney General. Boeing provided a redacted version of the Kelly Lease to Silvas and filed objections with the Attorney General as to the redacted portions. Id. at *6-7. Boeing asserted that the information withheld was competitively sensitive information regarding its overhead costs at Kelly that—if disclosed—would provide its competitors an advantage. According to Boeing, a competitor could take the detailed information in the Kelly Lease and determine Boeing's physical plant costs at Kelly, allowing the competitor to underbid Boeing on government contracts by enticing another landlord to offer a lower lease rental. Id. at *7.

After considering Boeing's objections, the Attorney General concluded in an Open-Records Letter Ruling that none of the withheld information was exempt from disclosure under the PIA. Id. at *8. Boeing sought judicial review of the Attorney General's opinion, seeking declaratory and injunctive relief. The trial court denied Boeing's requested relief and ordered the Port to disclose the withheld information. In support of its decision, the trial court determined that Boeing—as a private entity—did not have standing to assert section 552.104's disclosure exception.¹ Id. at *8-9.

The Boeing Section 552.104 Arguments

The Attorney General argued that—when considered in the context of the PIA as a whole—the "better reading" of section 552.104's exception is that it is limited to governmental bodies and may only be invoked by a governmental body in its discretion. According to the Attorney General, reading section 552.104 in isolation and pursuant to its minimalist text would create a super exception "so lenient that it would override the other exceptions." Id. at *11-12.

Boeing responded by arguing that the Attorney General was attempting to rewrite rather than harmonize the PIA's provisions. Boeing claimed that nothing in the PIA bars private standing to prevent public disclosure generally and nothing in section 552.104 specifically limits its application to governmental bodies. Rather, the PIA grants standing to any "person who claims to be the victim of violation" of the Act. Id. at *12-13 (citing TEX. GOV'T CODE § 552.3215(a)(1), (b), (e)).

The Boeing Holding

As an initial matter, the Court held that the Port was not required to raise the exception before the Attorney General, and that the Port's failure to do so did not waive Boeing's ability to object to the disclosure of its competitively sensitive information. Id. at *15-17. As a general rule, the PIA requires a governmental body to raise and argue any applicable disclosure exception to the Attorney General as a prerequisite to judicial review. Id. at *15 (citing TEX. GOV'T CODE §§ 552.301-.303). It is quite significant that the Court also held that such general rule does not apply when the requested information implicates another person's privacy or property interests.

The Court held that such general rule does not apply when the requested information implicates another person's privacy or property interests. Id. at *16 (citing TEX. GOV'T CODE § 552.305(a), (c)). The Court explained that, under those circumstances, a governmental body is free to defer to the person whose interests are at stake. Id. The Court determined that the Port had simply and appropriately deferred to Boeing to protect its own interests. Id.

With regard to the issue of Boeing's standing to assert section 552.104's exception, the Boeing court agreed with the concurring court of appeals justice who provided the following: "Considering this statutory scheme, I would hold that the Legislature intended private parties whose 'competitors' or rival 'bidders' would be 'advantaged' by disclosure to have standing or the right to protect their interest in the information protected by section 552.104 through the judicial remedy provided in section 552.325." Id. at *19 (citing 412 S.W.3d at 21 (Pemberton, J., concurring)). Accordingly, the Supreme Court of Texas held that section 552.104's exception applies to both government bodies and private parties and may be invoked by either to protect the privacy and property interests of a private party. Id.²

The Boeing Takeaway

The Boeing case empowers private entities to raise their own challenges to PIA requests that seek competitively sensitive information instead of relying on governmental entities exclusively to fight that battle. Companies should be in a better position to articulate the reasons that the information is proprietary and would give competitors an unfair advantage if released. Governmental entities only have the burden of notifying third parties when a PIA request implicates their information. Private organizations should take advantage of this opportunity when they receive such notifications to challenge release of information that could cause competitive harm and unfair practices.

Footnotes

1 The trial court also held that the requested information was not exempt under section 552.110 of the PIA because it was not Boeing's proprietary information, a trade secret, or otherwise the type of commercial or financial information to which that exception applied.

2 The Boeing court also determined that the information at issue was competitively sensitive and would give advantage to its competitors if released. Boeing, 2015 Tex. LEXIS 583, at *28.   

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