Iowa Film Production Services Mississippi Films, Inc. Polynation Pictures, Inc. Field of Screams, LLC Underground Films, Inc. Ticket Out Productions Tricoast Iowa Productions, LLC Gpx Development, LLC September Productions LLC Lucky Mp, LLC and Recess Film Production, LLC v. Iowa Department of Economic Development ( 2012 )

IN THE SUPREME COURT OF IOWA
No. 10–1719
Filed July 27, 2012
IOWA FILM PRODUCTION SERVICES;
MISSISSIPPI FILMS, INC.; POLYNATION
PICTURES, INC.; FIELD OF SCREAMS, LLC;
UNDERGROUND FILMS, INC.; TICKET OUT
PRODUCTIONS; TRICOAST IOWA PRODUCTIONS,
LLC; GPX DEVELOPMENT, LLC; SEPTEMBER
PRODUCTIONS LLC; LUCKY MP, LLC; and
RECESS FILM PRODUCTION, LLC,
Appellees,
vs.
IOWA DEPARTMENT OF ECONOMIC
DEVELOPMENT,
Appellant,
and
DES MOINES REGISTER & TRIBUNE
COMPANY,
Intervenor.
Appeal from the Iowa District Court for Polk County, Artis I. Reis,
Judge.
The State appeals from an order obtained by producers of films
that registered for state tax credits directing that the films’ final budget
summaries be kept confidential. DISTRICT COURT JUDGMENT
REVERSED AND CASE REMANDED.
2
Thomas J. Miller, Attorney General, Jeffrey S. Thompson, Deputy
Attorney General, Adam Humes, Assistant Attorney General, for
appellant.
Jonathan C. Wilson, Scott M. Brennan, and Sarah E. Crane of
Davis, Brown, Koehn, Shors and Roberts, P.C., Des Moines, for
appellees.
3
MANSFIELD, Justice.
This case requires us to decide whether filmmakers receiving tax
credits from the State of Iowa under the State’s tax credit program can
enjoin the State from releasing summaries of their films’ final budgets to
the public. We conclude they cannot. On this record, the budget
summaries do not qualify as trade secrets under Iowa Code section
22.7(3) (2009). Nor can they be considered “[r]eports to governmental
agencies which, if released, would give advantage to competitors and
serve no public purpose” under Iowa Code section 22.7(6). Finally, the
filmmakers have failed to meet section 22.8’s requirements for injunctive
relief by demonstrating disclosure would “clearly not be in the public
interest” and would “substantially and irreparably injure any person or
persons.” Accordingly, we reverse the judgment of the district court and
remand for further proceedings.
I. Facts and Procedural History.
In 2007, the Iowa General Assembly created the Film, Television,
and Video Project Promotion Program (the “Film Program”). 1 See 2007
Iowa Acts ch. 162, § 1 (codified as amended at Iowa Code §§ 15.391–.393
(2009)). The purpose of the Film Program was
to assist legitimate film, television, and video producers in
the production of film, television, and video projects in the
state and to increase the fiscal impact on the state’s
economy of film, television, and video projects produced in
the state.
Iowa Code § 15.392. In the fall of 2009, after an audit uncovered abuses,
the governor administratively suspended the Film Program. The program
1The State has requested that we take judicial notice of various criminal
proceedings and a report of the state auditor relating to the Film Program. We deny the
request and base our factual summary on the record as made below.
4
was legislatively suspended in April 2010. See 2010 Iowa Acts ch. 1138,
§ 5 (codified at Iowa Code § 15.393(5) (2011)).
While it was in operation, the Film Program was administered by
the Iowa Department of Economic Development (IDED). See Iowa Code
§ 15.393(1) (2009). Filmmakers had to register their projects with IDED.
Id. To be registered, a project had to be “a legitimate effort to produce an
entire film . . . or . . . video segment in the state,” had to spend at least
$100,000 in Iowa, and had to “have an economic impact on the economy
... sufficient to justify assistance under the program.” Id.
§ 15.393(1)(a)–(b).
Projects registered with IDED under the Film Program were eligible
to receive two separate twenty-five percent transferable tax credits. See
id. § 15.393(2)(a)(1), (b)(1). 2 The Film Program was promoted
(inaccurately, according to the State) as “half-price filmmaking.”
Plaintiffs Iowa Film Production Services, Mississippi Films, Inc.,
Polynation Pictures, Inc., Field of Screams, LLC, Underground Films,
Inc., Ticket Out Productions, TriCoast Iowa Productions, LLC, GPX
Development, LLC, September Productions LLC, Lucky MP, LLC, and
Recess Film Production, LLC (collectively “Producers”) all sought to take
part in the Film Program. Each of them completed an “Application for
Registration” and submitted it to IDED. See Iowa Admin. Code r. 261—
36.3 (2009).
The application form required information to be provided
regarding: the project title, a synopsis of the project, the production
company to receive incentive, lead production names and contacts,
2The credits could be transferred to “any person or entity” and offset against
various taxes owed to the State of Iowa. Iowa Code § 15.393(2)(a)(3). Typically, they
would be sold through a broker to a person or entity with existing state tax liability.
5
production dates, production type, format, distribution, current
production budget, qualified in-state expenditures, and a schedule of
project investors.
In addition, the application asked the filmmaker to indicate
whether there was information in the application “for which the business
[was] requesting confidential treatment.” If so, the application referred
the filmmaker to the following notice:
NOTICE TO APPLICANTS—OPEN RECORDS
PLEASE NOTE: UPON SUBMISSION OF A SIGNED
APPLICATION, THE CONTENTS AND ATTACHMENTS TO
THIS APPLICATION FOR REGISTRATION IN THE IOWA
FILMS TELEVISION AND VIDEO PROJECT PROMOTION
PROGRAM ARE PUBLIC RECORDS WHICH ARE AVAILABLE
FOR PUBLIC INSPECTION AND COPYING.
INFORMATION SUBMITTED WITH THIS APPLICATION MAY
BE TREATED CONFIDENTIAL IF:
(1) IT MEETS THE LEGAL REQUIREMENTS FOR
CONFIDENTIAL STATUS, AND
(2) THE APPLICANT FILES A WRITTEN REQUEST FOR
CONFIDENTIALITY, AND
(3) THE DEPARTMENT ISSUES WRITTEN
CONFIRMATION THAT THE INFORMATION MEETS THESE
REQUIREMENTS AND WILL BE TREATED AS
CONFIDENTIAL.
IF NO REQUEST FOR CONFIDENTIAL TREATMENT OF
RECORDS IS MADE, THE DEPARTMENT WILL PROCEED
AS IF THE APPLICANT HAS NO OBJECTION TO
DISCLOSURE TO MEMBERS OF THE PUBLIC.
Iowa’s Open Records Law. The Iowa Department of
Economic Development (IDED) is a state agency and it is
subject to Iowa’s Open Records law (Iowa Code, Chapter 22).
Treatment of information submitted to IDED in this
application is governed by the provisions of the Open
Records law. All public records are available for public
inspection. Some public records are considered confidential
and will not be disclosed to the public unless ordered by a
court, the lawful custodian of the record, or by another
person duly authorized to release the information.
6
Legal requirements for confidential treatment of public
records.
The information submitted as part of this application
information will be available for public inspection, unless a
request for confidentiality has been submitted by the
applicant in the required form and approved in writing by
IDED. Following are the classifications of records which are
recognized as confidential under Iowa law and which are
most frequently applicable to business information
submitted to IDED:
Trade secrets [Iowa Code § 22.7(3).]
Reports to governmental agencies which, if released,
would give advantage to competitors and serve no public
purpose. [Iowa Code § 22.7(6).]
....
Communications not required by law, rule or
regulation made to IDED by persons outside the government
to the extent that IDED could reasonably believe that those
persons would be discouraged from making them to the
Department if they were made available for general public
examination. [Iowa Code § 22.7(18).]
In addition, the notice listed “Helpful Resources,” which included links to
the Iowa Open Records law, IDED administrative rules, and the Iowa
Attorney General’s website.
After this notice, the application set forth instructions for
completing a “Request for Confidential Treatment Form.” Both an
example of a completed form and a blank form were provided. The
instructions stated, “IDED will review the request and provide written
confirmation to you of its approval or denial.”
The form required the filmmaker to “state which section(s) of the
application you want kept confidential” and to indicate a “[l]egal basis for
[the] request.” Several potential grounds for confidential treatment could
be checked including the three statutory grounds already noted—Iowa
Code sections 22.7(3), (6), and (18). A catchall option was also provided:
7
“Other (provide legal citation e.g. reference to a state or federal law not
listed above).”
The sample completed form included a request that “[b]udget and
in-state expenditures sections and all investor contact names and
numbers” be kept confidential. It had only the section 22.7(18) box
checked, with the following explanation:
Releasing the exact amounts budgeted for “talent”,
“producer” or “director” or other above-the-line costs would
give an unfair advantage to competitors and serves no public
purpose. If our competitors knew how much of the total
project budget was allocated to these categories they would
be able to undercut negotiating strength otherwise present in
private agreements.
The ensuing paragraphs of the application contained various
statements and certifications. Among other things, the filmmaker was
required to acknowledge and agree that its books would be subject to
audit and that it would be required to sign a contract. Finally, just
before the signature block, the application contained a multiparagraph
“Certification & Release of Information”:
Certification & Release of Information
....
I [the applicant] understand that certain information
submitted to IDED related to this application may be subject
to Iowa’s Open Record Law (Iowa Code, Chapter 22).
I understand this application is subject to final approval by
IDED and the Project may not be initiated until final
approval is secured.
I hereby certify that all representations, warranties, or
statements made or furnished to IDED in connection with
this application are true and correct in all material
respect[s].
Below the signature block was a section entitled, “For IDED use
only.” In that section, IDED could indicate “Application approved” or
8
“Application denied.” As noted, each of the Producers submitted at least
one completed application to IDED. In several instances, but not all,
IDED completed this internal use section and marked “Application
approved.” In any event, it is not disputed that each of the Producers’
applications was approved. 3
Each of the Producers also completed a “Request for Confidential
Treatment” form as part of its application. The legal grounds given for
the requests were either section 22.7(6)—“[r]eports to governmental
agencies which, if released, would give advantage to competitors and
serve no public purpose”—or section 22.7(18):
[c]ommunications not required by law, rule or regulation
made to IDED by persons outside the government to the
extent that IDED could reasonably believe that those
persons would be discouraged from making them to the
Department if they were made available for general public
examination.
Although section 22.7(3)’s exemption for trade secrets was provided as
an additional option, none of the Producers checked this box as a
requested ground for keeping their information confidential.
As noted above, each Producer was required to execute a contract
with IDED upon approval of its application. See Iowa Admin. Code r.
261—36.5(2). Among other things, the contract required the Producer to
submit a schedule of qualified expenses, known as a “FORM Z: Final
Budget Expenditure Report,” once the project was completed. The Form
Z was not part of the application itself, nor logically could it be, since
actual expenses would not be known until the film had been made.
Form Z’s were used by IDED to verify the eligibility of expenditures
for the tax credits. See Iowa Code § 15.393(2)(a)(3); Iowa Admin. Code r.
3Apparently, when an application was approved, IDED issued an award letter.
9
261—36.7(4). A completed Form Z detailed all qualified expenditures on
the film project.
In addition, each Form Z contained a two-page summary (the Form
Z Summary). Instead of the detail provided in the Form Z itself, the
Form Z Summary set forth totals for forty-six categories of expenses,
such as “STORY & RIGHTS,” “WRITING,” “PRODUCER & STAFF,”
“DIRECTOR & STAFF,” and “TALENT & STAFF.”
Of the Producers, six of them—Iowa Film Production Services,
Mississippi Films, Inc., Polynation Pictures, Inc., Ticket Out Productions,
Field of Screams, LLC, and Underground Films, Inc.—submitted at least
one Form Z. However, only the first four of these Producers—Iowa Film
Production Services, Mississippi Film, Inc., Polynation Pictures, Inc., and
Ticket Out Productions—received certificates granting the qualified
expenditure tax credits. See Iowa Code § 15.393(2)(a)(3). These tax
credits totaled over $14 million. It is not disputed that the overall dollar
amount of tax credits awarded to any project by IDED is public
information.
In the fall of 2009, public interest in the Film Program began to
mount as certain irregularities came to light. Consequently, IDED
received requests for public records regarding the Film Program from two
television stations, a Des Moines attorney, and the Des Moines Register
& Tribune Company, the intervenor in this case. 4 Based on these
requests, IDED sent letters to all registrants in the Film Program to
inform them how IDED planned to move forward with the release of their
information. In its initial letter dated November 20, 2009, IDED
acknowledged that the registrants had “requested confidential treatment
4The Des Moines Register intervened in the action in support of IDED’s position.
10
of some or all of the budget and investor information relating to [their]
project[s]” and that “[i]nitially, IDED agreed to maintain the information
as confidential as [they] requested.” However, the November 20 letter
went on to state:
In light of recent events, IDED has reassessed the
information you submitted with a request for confidential
treatment and has concluded that the budget and investor
documents you submitted should no longer be kept
confidential. In making this decision, IDED considered
several factors, in addition to the strong public interest in
disclosure . . . . These factors include: (1) whether the
records contain the type of information that qualifies for
confidential treatment, (2) whether the records contain
information that could be used by a competitor to gain an
economic advantage, and (3) whether release of the
information would result in an adverse financial impact. On
balance, IDED has concluded that the need for
confidentiality of budget and investor information is
outweighed by the public’s right to information about IDED’s
activities in connection with the Film Program.
In this initial letter, IDED explained its plan to release “all of the budget
and investor documents [registrants] submitted as part of [their]
application in the Film Program and either Form Z or another final
budget expenditure report.” IDED advised that the information would be
released on December 8, 2009, ten business days from the date of the
letter, unless the registrants filed a petition requesting an injunction
under Iowa Code section 22.8.
However, on December 8, 2009, IDED did not disclose the records
but instead sent another letter to the registrants, which stated:
Since [November 20, 2009], IDED and the AG’s Office
have been in discussions both with some of the entities that
made public records requests and with members of the film
industry. Based on these discussions, IDED, again in
consultation with the AG’s Office, has decided to change its
plans in an effort to address the concerns raised by
representatives of the film industry, while still meeting
IDED’s responsibilities under Iowa’s Public Record Laws.
Specifically, IDED only will release the summary section of
11
Form Z for film projects that have submitted information to
IDED in order to receive tax credits. . . . A generic summary
section of a Form Z has been attached for your review.
These records will be released on December 11, 2009,
unless you file a petition to request an injunction pursuant
to Iowa Code section 22.8 prior to that date.
A number of registrants responded that they consented to the
release of their Form Z Summaries. The Producers, however, filed an
action for a temporary injunction and other relief in the Polk County
District Court.
In their petition, the Producers maintained that their budget and
expenditure information was confidential and exempt from disclosure
under section 22.7(3), (6), (8), and (18) of the Iowa Code. In the
alternative, the Producers argued they were entitled to injunctive relief
under Iowa Code section 22.8, because examination of the records
“would clearly not be in the public interest” and “would substantially and
irreparably injure” the Producers and third parties. See id. § 22.8(1)(a)–
(b). The Producers also sought an award of costs and attorneys’ fees
under section 22.10. 5
IDED responded that none of the confidentiality exemptions in
section 22.7 applied to the Form Z Summaries. IDED further argued
that even if the summaries did qualify as confidential under that section,
either “a court” or IDED as the “lawful custodian of the records” had
5This section provides:
Upon a finding by a preponderance of the evidence that a lawful
custodian has violated any provision of this chapter, a court:
Shall order the payment of all costs and reasonable attorney fees,
including appellate attorney fees, to any plaintiff successfully
establishing a violation of this chapter in the action brought under this
section.
Iowa Code § 22.10(3)(c).
12
discretion to release them. See id. § 22.7 (“The following public records
shall be kept confidential, unless otherwise ordered by a court, by the
lawful custodian of the records . . . .” (emphasis added)). IDED also
contended that granting an injunction under section 22.8 was not
warranted because the Producers had not demonstrated disclosure
“would clearly not be in the public interest” and would result in
“substantial[] and irreparabl[e] injur[y].” IDED further argued that
because a violation under the Open Records Act had not occurred, the
Producers were not entitled to costs and attorneys’ fees under section
22.10.
The district court held a hearing on March 24, 2010. The court
decided initially that only the Form Z Summaries were at issue and,
thus, potentially subject to disclosure. Next, the district court addressed
the Film Program registrants that had received letters from IDED
regarding disclosure of their records but had chosen not to contest the
release of the information. The district court ruled that
as to those filmmakers who are not plaintiffs in this matter,
who were notified by the IDED as to the release of the form Z
summaries and did not participate in this lawsuit, [their]
information could be released by the IDED.
At the hearing, Kip Konwiser testified as a witness on behalf of two
of the Producers, GPX Development, LLC and Recess Film Production,
LLC. Konwiser is a resident of Los Angeles with an M.F.A. from the
University of Southern California cinema school of television and
producing. Konwiser explained that he has been involved in the
entertainment industry for more than twenty years, “in most every aspect
of making movies, television, and music.” He has experience
representing actors and writers and has served as a talent agent,
manager, studio executive, president, and “a full-service producer.”
13
Konwiser maintains membership in the Academy of Motion Picture Arts
and Sciences, the Producers Guild of America, and the Directors Guild of
America; participates in film festivals; and has taught film industry
courses from the high school to graduate school level.
Konwiser testified that he has produced approximately thirty
movies, in addition to television movies and series. He stated that trust
is essential for the film industry to function:
Hollywood, our industry, is built on trust. We’re a small
community. Those of us that are legitimately making movies
that get released around the world on the kind of profile that
the industry needs in order to sustain itself as an industry,
those of us in that industry—and there is not a lot of us—we
rely on the trust and confidence between each other. And
this has never, ever been an issue before, ever, anywhere
else. This is now suddenly a new thing that Iowa is going to
put upon our industry, if this shouldn’t be ruled
appropriately, in our opinion.
Konwiser also testified that “IDED contacted me and asked me to
bring productions to Iowa,” touting the tax credit as an incentive: “[T]hey
were going to guarantee in writing, in contract, a 50 percent return.”6
Konwiser personally submitted two applications to IDED, for movies
entitled “Field Trip” (later renamed “Blackbeard”) and “Soaked.” He
claimed he “had the absolute assurance from the IDED office, prior to
. . . submitting [his applications], that this information would remain
confidential. It was on that confidence that that information was
provided.” Konwiser also testified that no other state to his knowledge
6As noted, the State disputes the “half-price filmmaking” terminology as an
accurate summary of the relevant tax credits. It asserts the maximum potential tax
credit amounted to twenty-five percent of overall expenditures. See Iowa Code
§ 15.393(2)(b)(1) (stating that a taxpayer “shall not claim” the second twenty-five
percent tax credit “for qualified expenditures for which” the first twenty-five percent tax
credit was claimed).
14
has ever released information about film projects in a Form Z Summary
format.
Konwiser’s applications included requests for confidential
treatment. These forms were essentially filled out the same way as the
sample form in the application materials. Konwiser testified that IDED
personnel advised him not to deviate from the sample form. Konwiser
also testified that IDED never notified him in writing of an approval or
denial of his request for information to be kept confidential.
When asked why confidential treatment was necessary, Konwiser
gave the example of an actor who usually receives $10 million for a movie
but may act in an independent film for $100,000, expecting this amount
will be kept confidential. Konwiser also noted that if the total cost of a
movie became known, this could undermine the ability of the producer to
make a substantial profit on it or could adversely affect audience
reaction, because the public tends to believe a movie is worth what it
cost to make. Konwiser also explained that industry professionals can
figure out how much certain people are being compensated from the
overall totals set forth in the Form Z Summary. Konwiser said, “When
that trust is violated between us and the State, the trust that we’ve
established within our industry relationships is similarly violated after
the fact.” Konwiser testified, however, that he has not submitted a Form
Z to IDED because neither of his films was completed.
On cross-examination, Konwiser admitted that the budget he
submitted to IDED for one of his Iowa movies was artificially low. He
wanted the guilds and unions to see a lower budget so they would not
seek the premium that is associated with a higher-budget film.
Although Konwiser was the only live witness, the Producers also
filed two affidavits—one from Tim Anderson, the president of plaintiff
15
Mississippi Films, and the other from Isaac Ben-Hamou, the secretary of
plaintiff Underground Films. In his affidavit, Anderson stated that he
had two film projects registered with IDED in 2009—“Five Step Credit
Repair” and “Who’s Your Daddy?” In both applications, he formally
requested that budget and investor information be kept confidential, “as
suggested by IDED.” No one from IDED told him the information “would
not be kept confidential, and I believed that it would remain
confidential.” Additionally, Anderson’s company had oral agreements
with top actors and the director that it would keep salary information
confidential. Anderson believed his company would be irreparably
harmed by release of the Form Z Summary information because buyers
would know the true overall cost of the film and because there is often
little or no staff besides the director, so the “Director and Staff” item
“essentially reveals the director’s salary information.”
In his affidavit, Ben-Hamou stated that his company’s written
agreements with its producer, its director, and one of its actors required
confidentiality. These written agreements were included as attachments.
Each contained a clause providing that “[a]ll terms and conditions of this
agreement are to be confidential with no disclosure and on a non quote
basis other than the financier of the picture and completion bond if any
is used.” According to Ben-Hamou, disclosure of even a Form Z
Summary would put Underground Films in breach of those agreements.
Ben-Hamou added that “public disclosure of the budget expenditure
information would give a competitive advantage to a competing
production.” No other Producers submitted individualized evidence in
support of their claims.
The district court issued its final order on May 19, 2010. The
court found the Form Z Summaries constituted confidential trade secrets
16
under Iowa Code section 22.7(3). The court also concluded that release
of these records would “give advantage to competitors and serve no
public purpose,” thus rendering them confidential under section 22.7(6).
Additionally, the district court found the Producers were entitled to relief
under section 22.8. As the court put it:
How can the State of Iowa expect to attract new
businesses if the businesses cannot rely on the State’s word
to keep confidential information which, if released, could
harm the businesses? Public curiosity cannot override the
public interest in continuing economic development for the
State.
The district court’s order prohibited IDED from releasing the Form
Z Summaries submitted by the Producers. In addition, the court
awarded costs and attorneys’ fees to the Producers, concluding that
[a]ttorney fees are recoverable under Iowa Code section
22.10 by a successful private citizen—any private citizen—
seeking enforcement of Chapter 22, whether the private
citizen seeks to compel disclosure of properly public
information or to enjoin disclosure of information properly
confidential.
The State appeals.
II. Standard of Review.
The Producers brought this action seeking injunctive relief and
attorneys’ fees under chapter 22 of the Iowa Code. Both sides agree that
we should apply de novo review. “Cases commenced under Iowa Code
chapter 22 are ordinarily triable in equity, thus calling for de novo review
on appeal.” Clymer v. City of Cedar Rapids, 601 N.W.2d 42, 45 (Iowa
1999). We review the district court’s interpretation of chapter 22 for
correction of errors at law. Krupp Place 1 Co-op, Inc. v. Bd. of Review,
801 N.W.2d 9, 13 (Iowa 2011) (citing Braunschweig v. Fahrenkrog, 773
N.W.2d 888, 890 (Iowa 2009)).
17
III. Legal Analysis. 7
A. The Basic Statutory Framework. The Iowa Open Records Act
(Iowa Code chapter 22) generally requires state and local entities to make
their records available to the public. See Iowa Code §§ 22.1(3), .2(1).
“The purpose of the statute is ‘to open the doors of government to public
scrutiny [and] to prevent government from secreting its decision-making
activities from the public, on whose behalf it is its duty to act.’ ” City of
Riverdale v. Diercks, 806 N.W.2d 643, 652 (Iowa 2011) (quoting
Rathmann v. Bd. of Dirs., 580 N.W.2d 773, 777 (Iowa 1998)). We have
said the Act establishes “a presumption of openness and disclosure.”
Gabrilson v. Flynn, 554 N.W.2d 267, 271 (Iowa 1996); see also Hall v.
Broadlawns Med. Ctr., 811 N.W.2d 478, 485 (Iowa 2012).
However, when this litigation was brought, the Open Records Act
was subject to sixty-one disclosure exemptions as set forth in section
22.7. The exemptions include “[t]rade secrets which are recognized and
protected as such by law,” Iowa Code § 22.7(3), and “[r]eports to
governmental agencies which, if released, would give advantage to
7Inthis appeal, the State contends that five of the eleven Producers have not yet
submitted Form Zs, and therefore, do not have claims that present a ripe controversy.
The Producers counter that an actual present controversy exists because all the
Producers have actual films that received registration from IDED and all would have to
submit a Form Z to receive tax credits offered by the Film Program.
The ripeness doctrine is intended to prevent the courts “ ‘from entangling
themselves in abstract disagreements over administrative policies.’ ” State v. Tripp, 776
N.W.2d 855, 859 (Iowa 2010) (quoting State v. Iowa Dist. Ct., 616 N.W.2d 575, 578
(Iowa 2000)). “A case is ripe for adjudication when it presents an actual, present
controversy, as opposed to one that is merely hypothetical or speculative.” Id. (citing
State v. Wade, 757 N.W.2d 618, 626–27 (Iowa 2008)). Given that some of the Producers
unquestionably have fully developed claims, we believe the controversy is ripe for
adjudication. The State has advanced at most an argument as to why certain
Producers may lack standing. In any event, the State’s specific concern is one of
granting relief to parties who “may never complete their film or submit final
expenditures to IDED.” In light of our disposition of the appeal, we believe that is no
longer a concern.
18
competitors and serve no public purpose,” id. § 22.7(6). Section 22.7
begins with this sentence:
The following public records shall be kept confidential,
unless otherwise ordered by a court, by the lawful custodian
of the records, or by another person duly authorized to
release such information.
Id. § 22.7.
The next section, section 22.8, gives a court authority to “grant an
injunction restraining the examination, including copying, of a specific
public record or a narrowly drawn class of public records.” Id. § 22.8(1).
An injunction may be issued only if the court finds both “the
examination would clearly not be in the public interest” and “the
examination would substantially and irreparably injure any person or
persons.” Id. § 22.8(1)(a)–(b). The section goes on to state:
In actions brought under this section the district court
shall take into account the policy of this chapter that free
and open examination of public records is generally in the
public interest even though such examination may cause
inconvenience or embarrassment to public officials or others.
Id. § 22.8(3).
Section 22.5 confers a general right to injunctive relief. It provides
that the provisions of chapter 22 “and all rights of persons under this
chapter may be enforced by mandamus or injunction, whether or not any
other remedy is also available.” Id. § 22.5.
Additionally, sections 22.5, 22.8, and 22.10 make clear that
judicial review rights under chapter 17A are available to the extent the
entity holding the records is covered by that chapter. See id. §§ 22.5,
.8(4)(f), .10(1).
B. The Parties’ Contentions. In many open records cases, the
agency and the party seeking disclosure are at odds because the agency
19
wants to keep the requested records confidential. See, e.g., Diercks, 806
N.W.2d at 645–46; Gannon v. Bd. of Regents, 692 N.W.2d 31, 33–34
(Iowa 2005); Clymer, 601 N.W.2d at 43–44; Burton v. Univ. of Iowa Hosps.
& Clinics, 566 N.W.2d 182, 183–85 (Iowa 1997); DeLaMater v. Marion
Civil Serv. Comm’n, 554 N.W.2d 875, 876–77 (Iowa 1996); Des Moines
Register & Tribune Co. v. Dwyer, 542 N.W.2d 491, 493 (Iowa 1996);
Hawk Eye v. Jackson, 521 N.W.2d 750, 751 (Iowa 1994); Brown v. Iowa
Legislative Council, 490 N.W.2d 551, 552–53 (Iowa 1992); Des Moines
Indep. Cmty. Sch. Dist. Pub. Records v. Des Moines Register & Tribune Co.,
487 N.W.2d 666, 667–68 (Iowa 1992); AFSCME/Iowa Council 61 v. Iowa
Dep’t of Pub. Safety, 434 N.W.2d 401, 402 (Iowa 1988); City of Sioux City
v. Greater Sioux City Press Club, 421 N.W.2d 895, 896 (Iowa 1988). Here,
however, the State agrees with the Des Moines Register and the other
intervenors that the Form Z Summaries should be disclosed. The
Producers have gone to court to prevent their disclosure. 8
Below and on appeal, the Producers assert that the Form Z
Summaries are shielded from disclosure under section 22.7(3) as “[t]rade
secrets which are recognized and protected as such by law,” and under
section 22.7(6) as “[r]eports to governmental agencies which, if released,
would give advantage to competitors and serve no public purpose.” 9 The
Producers also argue that disclosure of the summaries would “clearly not
8In the federal vernacular, this would be termed a “reverse-FOIA” or “reverse
Freedom of Information Act” suit. See Chrysler Corp. v. Brown, 441 U.S. 281, 285, 99
S. Ct. 1705, 1709, 60 L. Ed. 2d 208, 215 (1979).
9The Producers also alleged in their petition that disclosure was barred by
sections 22.7(8) and 22.7(18). However, they did not submit proposed findings or
conclusions on those contentions, the district court did not discuss them in its ruling,
and we therefore deem them abandoned. Weise v. Land O’ Lakes Creameries, Inc., 191
N.W.2d 619, 621 (Iowa 1971) (“[d]isregarding one division of the [plaintiff’s] petition
which was abandoned at trial”).
20
be in the public interest” and would “substantially and irreparably
injure” a person or persons within the meaning of section 22.8.
The State, by contrast, argues the records do not fall under either
section 22.7 exemption. Moreover, the State maintains that even if the
records came within one of these exemptions, the “lawful custodian”
would still have discretion to order them released under the first
sentence of section 22.7, as quoted above. According to the State, a
party that wishes to enjoin the release of records by a lawful custodian
who intends to release them must meet the requirements of section 22.8.
The State further asserts that the requirements for injunctive relief under
section 22.8 were not met.
We do not reach the State’s argument regarding how the first
sentence of section 22.7 should be interpreted. Instead, on our de novo
review, we conclude the Producers failed to establish that the Form Z
Summaries were confidential under section 22.7(3) or section 22.7(6), or
that they were entitled to relief under section 22.8.
C. Applying Section 22.7(3) to This Case. We first turn to the
question of whether the film budget summaries are exempt from
disclosure under Iowa Code section 22.7(3) as trade secrets. “Although
we should not thwart legislative intent, the specific exemptions contained
in freedom of information statutes are to be construed narrowly.” Hall,
811 N.W.2d at 485.
When applying section 22.7(3), we have previously relied on the
definition of “trade secret” found in our Uniform Trade Secrets Act
(UTSA). See, e.g., US W. Commc’ns, Inc. v. Office of Consumer Advocate,
498 N.W.2d 711, 714 (Iowa 1993); Brown, 490 N.W.2d at 553–54. This
makes sense because the disclosure exemption is for trade secrets
21
“which are recognized and protected as such by law.” See Iowa Code
§ 22.7(3). We will follow the same approach here.
According to Iowa’s codification of the UTSA:
“Trade secret” means information, including but not
limited to a formula, pattern, compilation, program, device,
method, technique, or process that is both of the following:
a. Derives independent economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by a person able to
obtain economic value from its disclosure or use.
b. Is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy.
Id. § 550.2(4). When the legislature originally enacted its version of the
UTSA in 1990, elements (a) and (b) were disjunctive. The party claiming
trade secret status only had to establish one or the other. See 1990 Iowa
Acts ch. 1201, § 2. In the next session, the legislature revised the
definition so that both elements had to be proved. See 1991 Iowa Acts
ch. 35, § 1. 10 The 1991 amendment conformed Iowa’s UTSA to the
uniform act on which it was based. See Uniform Trade Secrets Act
§ 1(4), 14 U.L.A. 538 (1979).
The definition of a trade secret under section 550.2(4) is “a mixed
question of law and fact.” Econ. Roofing & Insulating Co. v. Zumaris, 538
N.W.2d 641, 648 (Iowa 1995). The first part of the definition—
“ ‘information, including but not limited to a formula, pattern,
compilation, program, device, method, technique, or process’ ”—is the
10Iowa’s UTSA is based on a model act passed by the National Conference of
Commissioners on Uniform State Laws in 1979. All but four states have passed some
version of that uniform act. See Thomas W. Foley, Keeping a Company’s Confidences
Secret: Trade Secret Enforcement Under Iowa’s Uniform Trade Secrets Act, 59 Drake L.
Rev. 1, 2 (2010). The four states that have not adopted the uniform act have statutory
or common law tests that employ similar standards. See Matthew J. Frankel, Secret
Sabermetrics: Trade Secret Protection in the Baseball Analytics Field, 5 Alb. Gov’t L. Rev.
240, 252 (2012).
22
legal question. Id. (quoting Iowa Code § 550.2(4)). The two elements—
subsections (a) and (b) of section 550.2(4)—present questions of fact. Id.
at 648–49.
“There is virtually no category of information that cannot, as long
as the information is protected from disclosure to the public, constitute a
trade secret.” US W. Commc’ns, 498 N.W.2d at 714.
Business information may . . . fall within the definition
of a trade secret, including such matters as maintenance of
data on customer lists and needs, source of supplies,
confidential costs, price data and figures. Trade secrets can
range from customer information, to financial information, to
information about manufacturing processes, to the
composition of products.
Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751, 776 (Iowa
1999) (emphasis added). We agree with the district court that the
investor and budget information submitted in the Form Z Summaries
qualifies as “information” under section 550.2(4).
In interpreting their own state freedom of information acts, courts
in other jurisdictions have declined to accord exempt “trade secret”
status to cost or salary information unless the UTSA requirements have
been strictly met. For example, in Medical Mutual Insurance Co. of Maine
v. Bureau of Insurance, a mutual insurance company was required to
disclose information regarding salaries of board members and senior
management to the state superintendent of insurance. 866 A.2d 117,
119 (Me. 2005). The company provided the information but asked that it
be kept confidential. Id. When a policyholder sought the salary
information, however, the Maine Supreme Court ruled that the insurance
company “failed to demonstrate . . . the salary information had
independent economic value from not being generally known and failed
to show that it is in fact subject to secrecy.” Id. at 121; see also Dep’t of
23
Pub. Utils. v. Freedom of Info. Comm’n, 739 A.2d 328, 331–32 (Conn. App.
Ct. 1999) (finding a cost allocation study by a public utility did not
qualify as a trade secret that was exempt from state FOIA disclosure
because the utility had not made reasonable efforts to limit its
dissemination); State ex rel. Toledo Blade Co. v. Ohio Bureau of Workers’
Comp., 832 N.E.2d 711, 716 (Ohio 2005) (concluding that records
showing a state-controlled investment entity’s costs of purchasing
investment coins were not trade secrets exempt from disclosure under
the state’s public records act); State ex rel. Besser v. Ohio State Univ., 732
N.E.2d 373, 380 (Ohio 2000) (finding an electronic mail message
specifying average nursing salary was not a trade secret exempt from
disclosure); Campbell v. Marion Cnty. Hosp. Dist., 580 S.E.2d 163, 167–
69 (S.C. Ct. App. 2003) (concluding a county hospital’s information
relating to physicians’ salaries and to purchase price of physician
practices did not amount to trade secrets for purposes of state freedom of
information act); Wis. Elec. Power Co. v. Pub. Serv. Comm’n of Wis., 316
N.W.2d 120, 123–24 (Wis. Ct. App. 1981) (denying a power company’s
request to bar disclosure of bid specifications submitted to the public
service commission on the ground that such information constituted
trade secrets); cf. Verizon N.Y., Inc. v. Bradbury, 837 N.Y.S.2d 291, 294
(App. Div. 2007) (in a non-UTSA state, finding that draft cable franchise
agreements submitted to a municipality by Verizon were not trade
secrets exempt from disclosure under State Freedom of Information Law
where “Verizon failed to establish the specific harm it would suffer”).
We have interpreted section 22.7(3) in two prior cases. In Brown, a
citizen taxpayer of Iowa sought access to computer databases and
software used in decennial legislative redistricting. 490 N.W.2d at 552.
The databases and software had been provided by an outside vendor,
24
Election Data Services (EDS), under an agreement with the Iowa
Legislative Council. Id. The databases and software enabled
consideration of the effects of moving geographic units into and out of
hypothetical new districts. Id. at 552–53. EDS had developed the
databases originally from publicly available data, by using what it
claimed to be a proprietary process. Id. at 553.
Under the UTSA as it existed at the time of trial, the Legislative
Council only had to prove the information either “[d]erives independent
economic value . . . from not being generally known to, and not being
readily ascertainable by proper means by a person able to obtain
economic value from its disclosure or use” or “[i]s the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.”
Id. at 554 n.2 (internal quotation marks omitted). We found the second
alternative had been established. Id. at 554. The databases had been
encrypted. Id. at 553. EDS’s contract with Iowa required confidential
treatment. Id. at 554. EDS had immediately and consistently asserted
trade secrecy when the databases and software were requested. Id.
Also, the “typical” EDS agreement contained a clause under the heading
“TRADE SECRETS,” which stated:
It is expressly understood by the parties of this
Agreement that the services and information provided by
EDS, Inc. under this Agreement are considered a “trade
secret”, because the services and information are considered
proprietary and disclosure of such services and information
may cause competitive harm to EDS, Inc.
Id. at 554 n.1.
In US West Communications, we analyzed the section 22.7(3) trade
secret exemption for the first time using the current UTSA definition.
498 N.W.2d at 714. That case arose after a newspaper published a
number of articles relating to sales/leasebacks of commercial real estate
25
by US West and its subsidiaries. Id. at 713. According to the articles,
US West and its subsidiaries were paying inflated lease rates to each
other that were being passed along to increase ratepayers’ costs. Id.
In a pending rate proceeding, the Office of Consumer Advocate
(OCA) filed data requests to obtain information regarding leases and
sales of six buildings rented by US West from a subsidiary. Id. US West
provided the information under a confidentiality agreement, which
provided that OCA would not release the information until US West had
an opportunity to litigate whether it met an exception to disclosure. Id.
US West and its subsidiaries then brought an action to enjoin OCA from
disclosing the information. Id.
We held that the lease/sale information did not qualify for a trade
secret exemption under section 22.7(3) because the “independent
economic value” element had not been met. 11 Id. at 714–15 (citing Iowa
Code § 550.2(4)(a)). Due to its potential applicability here, our reasoning
in that case warrants quotation at some length:
[US] West contends the data involved has an economic
value. It urges that if sale and lease data were disclosed,
competitor lessors would undercut its pricing; their lessees
would gain an unfair bargaining advantage; and when [US]
West was a potential lessee, it would be disadvantaged if
lessors knew what it paid elsewhere.
The record made before the trial court is not as clear
as these contentions. The information sought involves six
buildings located in Colorado and Nebraska. The
intervenor’s affidavit indicates all six buildings have been
sold in the last two years and leased back by [US] West or its
affiliates by long-term leases in an effort to protect its
stockholders at the ratepayers’ expense. While affidavits and
testimony by [US] West and its subsidiary employees provide
opinions concerning the deleterious effects disclosure will
11We therefore did not need to consider whether reasonable efforts had been
made to maintain secrecy. See Iowa Code § 550.2(4)(b).
26
have on [US] West or its affiliates, such evidence is self-
serving and does not contain hard facts.
[US] West provided no evidence concerning the
number of tenants in the buildings, the percentage of
buildings rented to outsiders, the occupancy rates, or [US]
West’s own needs concerning leasing space. While reference
is made to competitors, the record is vague concerning the
extent of the advantage the lease information will provide
competitors. We are uncertain whether [US] West or its
subsidiaries are major players in the competitive real-estate
leasing market or whether most of its leasing is between
affiliates. Furthermore, we question the credibility of the
expressed concern about competitors and lessees gaining
this information. If in fact the sales and leases are in-house
transactions between parent and subsidiary companies
rather than arms-length transactions, we believe the
information would be of little use to [US] West’s competitors.
The burden was on [US] West and its subsidiaries to prove
that a disclosure of the lease and sales information would
put [US] West at an economic disadvantage. In our de novo
review, we conclude [US] West has failed to meet this
burden. Consequently, [US] West failed to establish its
entitlement to an exemption pursuant to section 22.7(3).
Id. We now consider the section 550.2(4)(a) and 550.2(4)(b) elements as
applied to this case.
1. Independent economic value. The economic value inquiry
requires us to consider whether the information at issue “protects the
owner’s competitive edge or advantage.” Id. at 714. “[I]nformation kept
secret that would be useful to a competitor and require cost, time and
effort to duplicate is of economic value.” Id. Additionally, the owner
must demonstrate the information was “unknown to, and not readily
ascertainable by, a person who would profit from [its] disclosure or use.”
205 Corp. v. Brandow, 517 N.W.2d 548, 550 (Iowa 1994).
The Producers articulate essentially two theories of independent
economic value. The first theory, discussed by Konwiser in his testimony
and Anderson in his affidavit, is that public disclosure of the overall cost
of a movie would impair the filmmaker’s ability to resell that movie at a
27
substantial profit. This is a reasonable theoretical argument, but the
Producers offered nothing in support of it other than theory. As in US
West Communications, “hard facts” are missing. 498 N.W.2d at 715.
Although the district court afforded the Producers the opportunity to file
evidence under seal, the Producers submitted only conclusory
statements such as the following paragraph from Anderson’s affidavit:
[R]eleasing this summary information would hurt any
chances of making a profit on the film by letting the buyers
at the distributing companies know the true and exact cost
of making the film. This budget information is not ordinarily
available in the film industry when representing a film for
sale, and it would be difficult to seek a price of more than
cost for the project, inhibiting the ability of the film to secure
a profit.
No examples were given. And several points in the record tend to
undermine this argument. To begin with, when the district court issued
its ruling, the information in the Form Z Summaries at issue was already
months to over a year old. No evidence was offered whether any of these
summaries involved a film whose owners were actively looking for a
distributor. Additionally, Konwiser’s testimony painted a picture of a
highly competitive distribution market where a few movies are successful
and most find no outlet at all. This would suggest that cost is not the
driver; rather, if a movie can be predicted to be a success, distributors
will compete for it and pay much more than cost. If it looks like a box-
office loser, no one will offer to pay even cost. Moreover, Konwiser
testified and the record reflected that tax credits are rampant in the
industry, so the stated cost of a film (if publicly available) would not
reflect true cost. Distributors presumably are aware of these tax credits.
Additionally, a number of other producers told IDED they had no
objection to the release of their Form Z Summaries. Finally, and perhaps
most importantly, there is no dispute that the overall tax credit awarded
28
by IDED to a specific film is known to the public, and Konwiser testified
that based on the Producers’ understanding of a fifty percent credit one
could double that figure to arrive at the overall production cost. 12
The second theory, advanced by both affiants and by Konwiser,
was that release of the summaries could potentially allow the public to
reach a conclusion about the compensation paid to individual actors and
directors who had agreed to work only on the condition that their
compensation would remain confidential. Anderson claimed he had
“verbal agreements” regarding confidentiality; Ben-Hamou filed three
written agreements under seal that contained confidentiality provisions.
The Form Z Summaries do not disclose individual compensation, only
categories such as “DIRECTOR & STAFF” and “TALENT & STAFF.”
Konwiser, however, testified that there is typically only one director, so “it
is easy for someone to assume that all those costs would be attributed to
one person.”
But again, the Producers’ evidence of independent economic value
was more theoretical than real. Konwiser was not involved with any of
the projects that had submitted a Form Z Summary. Anderson and Ben-
Hamou were, but neither of them made any attempt to show how one
could derive any actual person’s compensation from the Form Z
Summaries their companies had submitted. In fact, the record with
respect to Ben-Hamou’s company, Underground Films, suggests
otherwise. 13 On our independent review of the documentary evidence
12As noted, the State disputes that the tax credit legally should have totaled fifty
percent, but the record indicates the Producers and, at least for a time, the Iowa Film
Office operated on that basis.
13Anderson did not submit any actual copies of agreements on behalf of his
company, Mississippi Films.
29
that was filed under seal, we do not see a discernible way to trace the
(partly deferred) compensation that Underground Films agreed to pay the
three individuals whose contracts were provided simply by reviewing the
company’s Form Z Summary. See US W. Commc’ns, 498 N.W.2d at 715
(denying relief under section 22.7(3) where “the record is vague
concerning the extent of the advantage . . . lease information will provide
competitors”); see also Sun Media Sys., Inc. v. KDSM, LLC, 564
F. Supp. 2d 946, 965 (S.D. Iowa 2008) (a party seeking to satisfy the
burden of proving a trade secret “cannot rely on generic categories or
assertions, but rather must assert specific allegations that it possessed
information that meets the definition of trade secret”). A confidentiality
commitment is not enough to establish independent economic value.
See Med. Mut. Ins. Co. of Me., 866 A.2d at 121–22 (holding that medical
mutual company failed to demonstrate salary information had
independent economic value where the only information provided in
support of this claim “was a corporate policy that prohibits the
corporation from disclosing compensation information”). For the
foregoing reasons, we conclude the Producers failed to carry their burden
of showing that the information in the Form Z Summaries “[d]erives
independent economic value . . . from not being generally known to, and
not being readily ascertainable by proper means by a person able to
obtain economic value from its disclosure or use.” See Iowa Code
§ 550.2(4)(a).
2. Reasonable efforts to maintain secrecy. Furthermore, the
Producers have not shown that the information was the subject of
reasonable efforts “under the circumstances to maintain its secrecy.”
See id. § 550.2(4)(b); see also Revere Transducers, 595 N.W.2d at 776.
30
The key to this test here is found in the statutory phrase “reasonable
under the circumstances.” 205 Corp., 517 N.W.2d at 551.
With regard to the specific Form Z Summaries at issue, the record
shows only two possible steps were taken to guard confidentiality. First,
all of the Producers requested confidential treatment of the budget,
expenditure, and investor portions of their original tax credit applications
to IDED. None, however, requested such treatment on the basis that
this information was a trade secret protected by section 22.7(3). Cf.
Lockheed Martin IMS Corp. v. State Dep’t of Family Assistance, 681
N.Y.S.2d 656, 658 (App. Div. 1998) (holding that Lockheed Martin waived
the right to claim an exemption under state freedom of information law
for a contract to develop and operate a centralized system for the
collection and disbursement of child support payments where it failed to
request and explain the basis for the exemption at the time of
submission). Additionally, as we discussed above, Underground Films
and Mississippi Films put in evidence that they had written and oral
confidentiality agreements respectively with certain individuals
associated with their films. This evidence is of limited value because, as
we have already noted, it has not been shown disclosure of the Form Z
Summaries would result in breach of those agreements.
The record does not show that the Producers made reasonable
efforts to preserve confidentiality of their financial data as against the
outside world in general. There is no evidence that security measures
were taken. The Producers failed to show, for instance, that individuals
who worked for them and came into contact with this information were
required not to disclose it. And the Producers never asserted trade secret
status for anything they had submitted to IDED until the present dispute
arose. See Brown, 490 N.W.2d at 553–54 (finding this element satisfied
31
where trade secret status was immediately and consistently claimed, all
contracts required confidential treatment, and the source codes at issue
were encrypted).
For the foregoing reasons, we find, on this record, the Producers
have failed to establish that their Form Z Summaries are “[t]rade secrets
which are recognized and protected as such by law.” Iowa Code
§ 22.7(3). Our holding is fact specific. We do not foreclose the possibility
that on a different record, budget summaries for projects awarded tax
credits by the State of Iowa might be considered trade secrets.
D. Applying Section 22.7(6) to This Case. The Producers also
rely on section 22.7(6), the disclosure exemption for “[r]eports to
governmental agencies which, if released, would give advantage to
competitors and serve no public purpose.”
As we have already explained above, the Producers have failed to
come forth with the type of specific, individualized evidence that would
allow us to conclude release of the Form Z Summaries would give an
advantage to their competitors. Moreover, we agree with the State that
release of the Form Z Summaries would serve a legitimate public
purpose. “[T]he legislature has drawn th[is] exception to confidentiality
narrowly by requiring a showing that no public purpose is served by
public disclosure.” Ne. Council on Substance Abuse, Inc. v. Iowa Dep’t of
Pub. Health, 513 N.W.2d 757, 761 (Iowa 1994).
In Northeast Council, a small nonprofit substance abuse treatment
facility (NECSA) received almost three-quarters of its funding from state
program grants. Id. at 758. NECSA had been the recipient of a
department of public health grant for the past twenty years and the only
applicant for that grant for the past ten years. Id.
32
Covenant, a private medical center providing similar substance
abuse treatment services, planned to apply for the grant funds and asked
DPH for NECSA’s past grant applications. Id. at 759.
The prior grant applications include[d], among other
things, (1) descriptions of the number of people served, (2)
the areas served, (3) an analysis of the need for the services
in the area to be served, (4) NECSA’s philosophy or vision for
meeting this need, (5) the allocation of staff hours to various
programs and services, (6) staff salaries, (7) the amounts and
specific sources of revenue NECSA has received, (8) detailed
information about the design and implementation of the
various programs and services it offers, (9) a special design
of NECSA’s functions and how its budgetary lines tie to
those functions, and (10) information relating to services and
programs addressed in NECSA’s current application.
Id. NECSA argued that the past grant applications were confidential
under section 22.7(6). Id. at 760. The district court rejected this
argument. Id.
On appeal we affirmed. Id. at 760–62. In assessing NECSA’s claim
that the release of the grant applications would “serve no public purpose”
within the meaning of section 22.7(6), we noted that $600,000 in public
funds were involved. Id. at 760. We stated, “Because public funds are
involved here, the public has a right to know how those funds have been
spent—what services were provided for these funds and how efficiently
the funds were spent.” Id. at 761. We also acknowledged that
“[k]nowing what types of salaries are being paid would certainly allow the
public to judge for itself whether the salaries are exorbitant.” Id. Thus,
even though Covenant would obtain an economic advantage from release
of NECSA’s previous grant applications, we read the statute as giving
priority to the public purpose served by disclosure. Id. at 760–61.
Similar considerations are present here. According to the record,
IDED awarded approximately $24 million in tax credits to moviemakers
33
in fiscal year 2009, a year in which our state government suffered a
shortfall in revenues and endured layoffs and furloughs. The public
would appear to have an interest in knowing how this money was used.
As in the Northeast Council case, the requested records would provide
more information, albeit in summary form, regarding how public money
was spent. Id.; see also Craigmont Care Ctr. v. Dep’t of Soc. Servs., 325
N.W.2d 918, 920–21 (Iowa Ct. App. 1982) (rejecting a claimed exemption
under this section for cost reports filed by various health care facilities
after finding that the taxpaying public’s strong interest in knowing the
cost of care for Medicaid recipients outweighed the potential advantage
competitors could gain from access to these reports).
The Producers argue that Northeast Council is distinguishable
because they are not “spending government grant funds for a
government service, but rather are private business entities, producing
films and receiving tax credits upon completion as an inducement to
engage in their production activities in Iowa.” Yet this seems to us a
distinction without a difference. Either way, a private entity is receiving
taxpayer money in furtherance of a public purpose. In Northeast Council,
that was the critical consideration. 513 N.W.2d at 761. 14
The Producers further argue that there is a public “interest in the
State honoring its commitments to members of the public.” We have
previously observed that most courts consider a “pledge of confidentiality
[to be a] factor in the balancing process.” City of Dubuque v. Tel. Herald,
Inc., 297 N.W.2d 523, 528 (Iowa 1980) (finding no pledge of
14Although nominally the Film Program involves tax credits, in this case the tax
credits were transferable, and as a routine matter they were sold to third parties. Thus,
they went beyond a reduction or elimination of the Producers’ potential tax liability and
amounted to State subsidization of filmmaking costs.
34
confidentiality), superseded by statute on other grounds, Iowa Code
§ 22.7(18) (1985), as recognized in Greater Sioux City Press Club, 421
N.W.2d at 897. The State counters that public officials have no right to
modify the terms of the Open Records Act by making side agreements.
We need not resolve the debate because the record in this case
falls short of a promise of confidentiality. Anderson, the president of
Mississippi Films, did not claim in his affidavit he had ever been
promised his budget figures would be kept confidential. Nor did Ben-
Hamou. Konwiser did volunteer in his live testimony that he had “the
absolute assurance from the IDED office . . . that this information would
remain confidential.” Yet Konwiser provided no specifics, such as
person, time, place, or manner, and in any event he was not tied to the
Form Z Summaries that were the subject of this litigation.
More to the point, the application made clear that IDED would
review the request for confidential treatment and “provide written
confirmation to you of its approval or denial.” The application also
stated, “INFORMATION SUBMITTED WITH THIS APPLICATION MAY BE
TREATED AS CONFIDENTIAL IF . . . THE DEPARTMENT ISSUES
WRITTEN CONFIRMATION THAT THE INFORMATION . . . WILL BE
TREATED AS CONFIDENTIAL.” And it stated, “[I]nformation submitted
as part of this application information will be available for public
inspection, unless a request for confidentiality has been submitted by the
applicant in the required form and approved in writing by IDED.” None
of the Producers claim they received a written confirmation of
confidentiality. See Iowa Movers & Warehousemen’s Ass’n v. Briggs, 237
N.W.2d 759, 766–67 (Iowa 1976) (indicating that reliance on unofficial
statements of an agency by substantial businesspersons could not be
considered reasonable).
35
Also, as the State notes, the request for confidential treatment by
its terms covered only the application. It did not cover information that
might have to be provided later if the application were approved. Once
their applications were granted, each Producer signed a contract with
IDED that contained the following integration clause:
This Contract contains the entire understanding between the
Recipient and IDED relating to the Registered Project and
any representations that may have been made before or after
the signing of this Contract, which are not contained herein,
are nonbinding, void and of no effect.
IDED’s position that any confidentiality shield would not extend to
postapplication submissions is plausible. One could reasonably
conclude that a high degree of confidentiality protection would be
warranted during the application stage, but a lesser degree would be
appropriate once the application has been granted and the filmmaker is
receiving taxpayer monies. 15
At the same time, we agree with the State that there is a legitimate
public interest in disclosure. The district court found otherwise:
Although the film program has been a source of
controversy, including allegations of fraud and abuse, those
matters are not before the Court. This case does not involve
issues of whether the program was a good idea in the first
place, or whether the program was improperly administered,
or whether film producers were misleading or untruthful in
their dealings with the IDED. The program was approved by
15As we have noted, the transferable tax credit involved in this case is the
practical equivalent of a government subsidy.
The Producers rely on IDED’s admission in its November 20, 2009 letters that it
“agreed to maintain the information as confidential as you [i.e., the Producers]
requested.” The short answer to this argument is that IDED may have thought as of
November 20 that it made such a commitment, but the record shows it did not. In any
event, as we have already discussed, the commitment would not have extended to final
budget information submitted after the applications had been approved, the films had
been completed, and the tax credit certificates were being requested.
36
the legislature and administered by the executive branch of
government.
....
Release of the Form Z Summaries would serve no
public purpose. The public has access to allegations made
involving mismanagement, information on how the
legislature and IDED set up the program, and information on
how much public funding has gone into the program. Fraud
or other criminal allegations may lead to other types of
disclosures.
We respectfully believe this view of the matter is too narrow. One role of
the Open Records Act is to help voters decide whether government
programs, even when “approved by the legislature and administered by
the executive branch of government,” are “a good idea.” While the public
already has access to information on the total tax credits awarded for
particular projects, the Form Z Summaries allow the public to see the
expenditures, and thus calculate the public funds being used, for such
categories as “DIRECTOR & STAFF,” “TALENT & STAFF,” “TRAVEL &
LIVING,” “WARDROBE,” AND “MAKEUP & HAIRDRESSING.” The public
can then assess the appropriateness of these uses of taxpayer funds.
In applying section 22.7(6) “it is not our responsibility to balance
competing policy interests. This balancing is a legislative function and
our role is simply to determine the legislature’s intent about those policy
issues.” Ne. Council, 513 N.W.2d at 761. Under section 22.7(6) the
Producers had the burden of demonstrating that no public purpose
would be served by the release of the Form Z Summaries. We adhere to
our precedent stating that where “public funds are involved . . . the
public has a right to know how those funds have been spent . . . and how
efficiently the funds were spent.” Id. Thus, we find the Producers have
not carried their burden to establish a section 22.7(6) exemption.
37
E. Applying Section 22.8 to This Case. We now turn to whether
the Producers should have been granted relief under section 22.8. As
noted above, Iowa Code section 22.8 authorizes a district court to bar
disclosure of public records when examination is clearly not in the public
interest and “would substantially and irreparably injure any person or
persons.” Iowa Code § 22.8(1)(a)–(b). The party opposing disclosure
carries the burden of establishing both elements by clear and convincing
evidence. Id. § 22.8(3); see also Hall, 811 N.W.2d at 487. Also, we are
required to take into account the policy that “free and open examination
of public records is generally in the public interest even though such
examination may cause inconvenience or embarrassment to public
officials or others.” Iowa Code § 22.8(3).
In the past, we have accepted arguments that the public interest
under section 22.8 generally encompasses the public’s right to know how
public money is being spent. For example, in Northeast Council, we
found the same public interests that overcame a claim of exemption
under section 22.7(6) also supported denial of an injunction under
section 22.8. 513 N.W.2d at 761; see also Craigmont Care Ctr., 325
N.W.2d at 921 (“We believe that the considerations of public interest
discussed in division I are sufficiently strong to render the granting of an
injunction under Iowa Code § 68A.8 [now section 22.8] inappropriate.”).
More recently, in Hall, we reversed a district court’s grant of an
injunction under section 22.8. 811 N.W.2d at 487–88. In that case,
Broadlawns, a publicly funded hospital in Des Moines, came under
investigation for alleged deficiencies in its handling of controlled
substances. Id. During the course of its investigation the board
contacted Hall, the licensed pharmacist in charge of the pharmacy at
Broadlawns, in order to obtain records from the Broadlawns pharmacy.
38
Id. Hall cooperated with the board’s requests and independently decided
to conduct an internal audit of Broadlawns, which he also provided to
the board. Id. About a year later, the board filed charges against Hall
and Broadlawns alleging lack of competency and inadequate controls.
Id. Upon reviewing the statement of charges, which referenced the
internal audit conducted by Hall, the Des Moines Register sought to
obtain Hall’s audit under the Open Records Act. Id. Broadlawns refused
to release the audit claiming it was confidential, and in order to prevent
disclosure, Hall filed an action against Broadlawns seeking declaratory
and injunctive relief precluding release of the internal audit. Id. The
Register intervened. Id. The district court granted an injunction against
disclosure, and the Register appealed. Id.
On appeal, Hall and Broadlawns argued that under section 22.8,
release of the audit would clearly not be in the public interest because it
would have a “chilling effect” on candid communications within the
pharmacy and with the board. Id. at 488. Hall further argued that if the
audit was released to a news publisher, the board would be improperly
swayed in disciplinary proceedings against him. Id.
Regarding section 22.8, we concluded Hall had failed to
demonstrate release of the audit would clearly not be in the public
interest. Id. at 487–88. In reaching this conclusion, we observed that
“[t]he public interest in information related to the theft of drugs from a
pharmacy at a hospital funded by taxpayers is compelling.” Id. at 487.
We also noted that the information sought “merely present[ed] factual
information in a table format related to drug inventories” and did “not
contain communications reflecting deliberative processes, [did] not make
policy recommendations of any kind, and [did] not implicate privacy
interests of third parties.” Id. at 488. As to Hall’s argument that release
39
of the documents to the media would result in the board being
improperly swayed in the disciplinary proceeding, we decided that this
claim was “too speculative and too insubstantial.” Id.
This case involves some of the same elements as Hall. Like the
Broadlawns pharmacy, the Iowa Film Program has become the subject of
public controversy and accusations of criminal conduct. Millions of
dollars are involved. Because release of the Form Z Summaries would
serve a legitimate public purpose, we conclude the Producers were not
entitled to an injunction under section 22.8. 16
We also believe the Producers failed to demonstrate substantial
and irreparable injury to a person or persons. See Iowa Code
§ 22.8(1)(b). The Producers asserted three types of harm. First, they
alleged a Producer’s ability to market a film at a profit could be affected if
an outsider knew the Producer’s overall costs. Second, they expressed
concern that directors, actors, and others would have less ability to
negotiate higher compensation in the future if third parties could
determine how much they had worked for by drawing inferences from a
Form Z Summary. Third, they alleged disclosure of the summaries
would result in a breach of trust and that trust, once lost, would not be
recovered.
We have already discussed the first two alleged harms in regard to
section 22.7(3). Regarding the first type of harm, a critical link is
16The Producers argue that Iowa Code section 15.118, a confidentiality law that
specifically governs IDED, “demonstrates the public commitment to providing a
mechanism for maintaining the confidentiality of business information in the
administration of tax credits in order to encourage businesses to come to the State of
Iowa and increase Iowa’s economic development.” However, the Producers do not argue
that section 15.118 literally applies to the Form Z Summaries. We do not believe the
mere existence of a confidentiality law governing other materials is sufficient to alter the
conclusion we have reached regarding the public interest in this case. Cf. Burton, 566
N.W.2d at 189 (holding that “chapter 22 does not trump or supersede specific statutes
. . . on confidentiality of records”).
40
missing from the Producers’ chain of reasoning. As we have noted, since
the total tax credits awarded for any given film project are disclosed
publicly, and the Producers claimed they were entitled to fifty percent
credits, an interested person already can ascertain approximately what
the film cost. This record falls well short of establishing that a Producer
would be irreparably harmed if a two-page summary of its expenditures
on a film were disclosed. To the extent the Producers are concerned
about the disclosure of cost data benefiting a competitor, these are the
same concerns that did not carry the day in Northeast Council and
Craigmont Care Center. See Ne. Council, 513 N.W.2d at 760–62;
Craigmont Care Ctr., 325 N.W.2d at 920–21.
As to the second alleged harm, the Producers have raised a
hypothetical concern that from a category like “Director and Staff,” it
might be possible for an outside party to figure out how much the
director was actually paid on a film. The argument continues that this
would make it harder for that person to seek higher compensation on a
different project. As we have already discussed, this argument was
presented entirely at an abstract level. No example was given of how the
calculation could actually be made using one of the Form Z Summaries
at issue, even though the district court permitted confidential
submissions. Nor did any director, actor, or other individual whose
compensation would allegedly be subject to disclosure actually file an
affidavit expressing this concern. A number of filmmakers expressed
willingness to have their Form Z Summaries released.
The final alleged injury cited by the Producers really involves
alleged harm to the State. As the district court put it, “How can the State
of Iowa expect to attract new businesses if the businesses cannot rely on
the State’s word to keep confidential information which, if released, could
41
harm the businesses?” We respectfully disagree with the district court.
To begin with, its conclusion is based on factual premises we do not
share. As discussed above, IDED did not promise to keep the Form Z
Summaries confidential, and the Producers have not shown release of
those summaries would hurt them financially. Furthermore, we do not
see section 22.8 as a device for protecting the government from itself.
The irreparable harm must be to some person or entity other than the
defendant that is resisting the injunction. See Iowa Code § 22.8(1)(b).
IV. Disposition.
Because of our disposition of this appeal, we need not reach the
State’s arguments concerning the award of attorneys’ fees to the
Producers. For the reasons set forth above, we reverse the district
court’s judgment in favor of the Producers and remand this case for
further proceedings consistent herewith.
DISTRICT COURT JUDGMENT REVERSED AND CASE
REMANDED.
All justices concur except Zager, J., who takes no part.