PennLive v. Dept of Health (Apl of: SMPD Mfg.) ( 2021 )

[J-66A-2020, J-66B-2020 and J-66C-2020] [MO: Todd, J.]
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
WALLACE MCKELVEY AND PENNLIVE : No. 3 MAP 2020
AND THE PATRIOT-NEWS :
: Appeal from the Order of the
: Commonwealth Court at No. 186 CD
v. : 2018 dated June 4, 2019 Reversing
: in part and Affirming in part the
: decision of the Office of Open
PENNSYLVANIA DEPARTMENT OF : Records at No. AP 2017-1443 dated
HEALTH, AND MISSION PENNSYLVANIA, : January 11, 2018.
LLC, KW VENTURES HOLDING, LLC, :
CRESCO YELTRAH, LLC, SMPD : ARGUED: September 15, 2020
MANUFACTURING, LLC/SMPB RETAIL, :
LLC AND TERRAPIN INVESTMENT FUND, :
1, LLC (DIRECT INTEREST :
PARTICIPANTS) :
:
:
:
:
:
APPEAL OF: TERRAPIN INVESTMENT :
FUND 1, LLC :
WALLACE MCKELVEY AND PENNLIVE : No. 4 MAP 2020
AND THE PATRIOT-NEWS :
: Appeal from the Order of the
: Commonwealth Court at No. 187 CD
v. : 2018, dated June 4, 2019 Reversing
: in part and Affirming in part the
: decision of the Office of Open
PENNSYLVANIA DEPARTMENT OF : Records at No. AP 2017-1443 dated
HEALTH, AND MISSION PENNSYLVANIA, : January 11, 2018.
LLC, KW VENTURES HOLDING, LLC, :
CRESCO YELTRAH, LLC, SMPD : ARGUED: September 15, 2020
MANUFACTURING, LLC/SMPB RETAIL, :
LLC AND TERRAPIN INVESTMENT FUND, :
1, LLC (DIRECT INTEREST :
PARTICIPANTS) :
:
:
:
:
:
APPEAL OF: SMPD MANUFACTURING, :
LLC AND SMPB RETAIL, LLC :
WALLACE MCKELVEY AND PENNLIVE : No. 5 MAP 2020
AND THE PATRIOT-NEWS :
: Appeal from the Order of the
: Commonwealth Court at No. 189 CD
v. : 2018, dated June 4, 2019 Reversing
: in part and Affirming in part the
: decision of the Office of Open
PENNSYLVANIA DEPARTMENT OF : Records at No. AP 2017-1443 dated
HEALTH, AND MISSION PENNSYLVANIA, : January 11, 2018.
LLC, KW VENTURES HOLDING, LLC, :
CRESCO YELTRAH, LLC, SMPD : ARGUED: September 15, 2020
MANUFACTURING, LLC/SMPB RETAIL, :
LLC AND TERRAPIN INVESTMENT FUND, :
1, LLC (DIRECT INTEREST :
PARTICIPANTS) :
:
:
:
:
:
APPEAL OF: PENNSYLVANIA :
DEPARTMENT OF HEALTH :
CONCURRING OPINION
JUSTICE DOUGHERTY DECIDED: July 21, 2021
I agree substantially with the majority’s careful unravelling of the thorny and
intertwined issues before us in this case. Specifically, I fully join the majority’s analysis
with the sole exception of its discussion of financial information in Section (III)(D).
Although I concur with the majority’s resulting vacatur and remand of the issue with
instructions for the lower tribunals, as well as its encouragement of the use of in camera
review, see Majority Opinion at 44-46, I write separately to underscore a particular feature
of the Right-to-Know Law (RTKL), 65 P.S. §§67.101-67.3104, as this Court has
[J-66A-2020, J-66B-2020 and J-66C-2020] [MO: Todd, J.] - 2
interpreted it which, though overlooked by the parties and the lower tribunals,
nevertheless impacts proper review of Terrapin’s financial information in this case. I
believe it poses a plausible conflict between the majority’s analysis and our decision in
Dep’t of Pub. Welfare v. Eiseman, 125 A.3d 19 (Pa. 2015).
In the forefront of its analysis of this issue, the majority flatly rejects Terrapin’s
assertion the financial information contained in its application is not a “financial record” as
the term is defined under the RTKL. See Majority Opinion at 42. In doing so, the majority
views whether Terrapin’s financial information also constitutes a “financial record” under
the RTKL as immaterial because, pursuant to the Medical Marijuana Act, all permit
applications are by definition “public records” subject to the RTKL. See id.; 35 P.S.
§10231.302(b)(1). However, although RTKL-defined “financial records” are one category
of “public records” subject to disclosure, see 65 P.S. §67.102 (definition of “public record”
includes “a financial record”),1 the particular treatment of a financial record under the
RTKL is more nuanced than the general category of public records. Our distinctive
treatment of financial records has repercussions regarding the particular exemptions at
issue on remand.
As the majority describes, RTKL subsection 708(b) enumerates specific
exceptions which, if their criteria are met, exempt a presumed-public record from
disclosure; these provisions include the exemptions claimed by Terrapin to support
redaction of the financial information in their application, i.e., the facility security
exemption described in subsection 708(b)(3), and the confidential proprietary information
exemption described in subsection 708(b)(11). See Majority Opinion at 23-24; 65 P.S.
1 Section 102 of the RTKL defines “public record” as “[a] record, including a financial
record, of a Commonwealth or local agency that: (1) is not exempt under section 708; (2)
is not exempt from being disclosed under any other Federal or State law or regulation or
judicial order or decree; or (3) is not protected by a privilege.” 65 P.S. §67.102 (internal
footnote omitted).
[J-66A-2020, J-66B-2020 and J-66C-2020] [MO: Todd, J.] - 3
§67.708(b)(3), (11). However, the exemptions listed in subsection 708(b) only apply
“[e]xcept as provided in subsections (c) and (d),” and subsection (c) curtails the extent to
which the exemptions apply to financial records. 65 P.S. §67.708(b), (c). In relevant part,
subsection (c) provides, “[t]he exceptions set forth in subsection (b) shall not apply to
financial records, except that an agency may redact that portion of a financial record
protected under subsection (b)(1), (2), (3), (4), (5), (6), (16) or (17).” Id. (emphasis
added). In Eiseman, we observed the confidential proprietary information exemption —
subsection 708(b)(11) — was not one of the enumerated exceptions to subsection 708(c),
which therefore “render[ed] the [Right-to-Know] Law’s own internal trade-
secrets/confidential-proprietary-information exception inapplicable” even where
competent evidence demonstrated the criteria under subsection 708(b) was otherwise
met. Eiseman, 125 A.3d at 32; see id. at 32 n.12 (“confidential proprietary information
within financial records is subject to public disclosure under the [RTKL]”). Thus, a
“financial record” is a public record not exempt from disclosure, but may be redacted only
if information it contains meets the criteria of those exemptions enumerated in subsection
708(c). See id.
Notably, and relevant to this case, pursuant to RTKL subsection 708(c), a financial
record may be redacted if its disclosure creates a reasonable likelihood of endangering
facility safety as provided in subsection 708(b)(3), but not if it constitutes confidential
proprietary information as provided in subsection 708(b)(11). Thus, in my view, whether
Terrapin’s financial information is a “financial record,” as the RTKL defines the term, may
not be material to a determination of whether the information is presumed public, but it
does matter to a determination of whether the claimed exemptions apply, and should not
be discounted in our analysis. If the information is a financial record, as the majority
appears to conclude by its rejection of Terrapin’s argument to the contrary, no amount of
[J-66A-2020, J-66B-2020 and J-66C-2020] [MO: Todd, J.] - 4
competent evidence can support the redaction of confidential proprietary information.
Instead, Terrapin’s financial information may be redacted only in a manner consistent with
the facility security exception in subsection 708(b)(3). See Eiseman, 125 A.3d at 32; 65
P.S. §67.708(c).
To that end, the RTKL defines a “financial record” as “[a]ny of the following:”
(1) Any account, voucher or contract dealing with:
(i) the receipt or disbursement of funds by an agency; or
(ii) an agency’s acquisition, use or disposal of services, supplies,
materials, equipment or property.
(2) The salary or other payments or expenses paid to an officer or
employee of an agency, including the name and title of the officer or
employee.
(3) A financial audit report. The term does not include work papers
underlying an audit.
65 P.S. §67.102 (emphasis added). In Eiseman, we explained the term “financial record”
was not limited to an agency’s records of its own transactions, but also included records
“dealing with” the agency’s monetary disbursements via its contractors performing
delegated governmental functions. See Eiseman, 125 A.3d at 29 (“‘financial records’
encompass records ‘dealing with’ disbursements of public money and services
acquisitions by agencies”); id. at 32 (records submitted to government agency for
approval “which embody a delegation (albeit a downstream delegation) of a governmental
function” are records “‘dealing with’ the agency’s monetary disbursements and services
acquisitions”). Here, Terrapin is a third-party permit applicant, not a contractor or
subcontractor performing any delegated government function. In addition, as the majority
relates, medical marijuana permit applicants are required by the terms of the Medical
Marijuana Act to include in their applications, inter alia, the identity of and other
information regarding their financial backers, a description of their business activities,
[J-66A-2020, J-66B-2020 and J-66C-2020] [MO: Todd, J.] - 5
activities in other jurisdictions, ability to obtain sufficient land and facilities for operation,
and ability to maintain effective security. See Majority Opinion at 20-21 n.14 (setting forth
medical marijuana permit application requirements pursuant to 35 P.S. §10231.602). At
least facially, none of these requirements appear to deal with disbursements of public
money, and Terrapin asserts no such agency transactions are contained in its financial
information. See Terrapin’s Brief at 17-20, 27-28 n.23-24, 32.
Accordingly, in my view, Terrapin’s claim the financial information contained in its
permit application is not a “financial record” as defined by the RTKL has some merit. Yet,
as the majority concludes, and I agree, absent integral fact-finding by the lower tribunals,
we are constrained to remand the issue of whether the information could properly be
redacted under RTKL subsection 708(b)(3) or (11). However, for the foregoing reasons,
I view a determination of whether the financial information constitutes a “financial record”
as an integral preliminary step to implementing the majority’s directive “to review the
information at issue — in camera if prudent — and to consider fully the reasons proffered
by Terrapin to support its claimed exemptions from disclosure.” Majority Opinion at 46.
[J-66A-2020, J-66B-2020 and J-66C-2020] [MO: Todd, J.] - 6