Smart Communications Holding, Inc. v. B. Wishnefsky ( 2020 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Smart Communications Holding, Inc., :
Petitioner :
:
v. : No. 80 C.D. 2019
: Submitted: May 15, 2020
Bruce Wishnefsky, :
Respondent :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
JUDGE COHN JUBELIRER FILED: July 6, 2020
Smart Communications Holding, Inc. (SmartCOM) petitions for review of a
Final Determination of the Pennsylvania Office of Open Records (OOR) dated
December 27, 2018, which granted an appeal filed by Bruce Wishnefsky
(Requester). Requester had filed a Right-to-Know Law1 (RTKL) request (Request)
with the Department of Corrections (Department), seeking part of the Department’s
contract with SmartCOM to provide electronic mail service to state correctional
institutions (SCIs). The Department produced a responsive record but redacted
portions thereof based on an assertion of confidential, proprietary information and/or
trade secrets. The OOR found SmartCOM did not meet its burden of showing the
1
Act of February 14, 2008, P.L. 6, 65 P.S. §§ 67.101-67.3104.
exemptions applied and ordered production of an unredacted copy of the record.
Upon review, we affirm, albeit on other grounds.2
I. BACKGROUND
On October 13, 2018, Requester, an inmate at SCI-Laurel Highlands,
submitted the Request to the Department seeking “the portion of the contract with
Smart[COM] . . . that shows the time that Smart[COM] . . . is permitted under the
contract to process and forward mail to SCI[-]Laurel Highlands, or if the standard is
the same at all SCIs, then that time period.” (Reproduced Record (R.R.) at 9a.) On
November 5, 2018, the Department responded to the Request, providing Requester
with access to a partially redacted document. Specifically, the Department provided
Requester with a copy of the Statement of Work (SOW), which the Department
stated contained the information Requester sought. According to the Department,
paragraphs 6 through 11 of the SOW were redacted to protect confidential,
proprietary information and/or trade secrets that are exempted from production
pursuant to Section 708(b)(11) of the RTKL, 65 P.S. § 67.708(b)(11).
A. Proceedings before the OOR
Requester, then proceeding pro se, filed an appeal with the OOR, challenging
the redactions. SmartCOM filed a request to participate before the OOR on the basis
that it was the owner of a record containing confidential, proprietary information or
trade secrets. (R.R. at 19a.) SmartCOM also submitted a position statement wherein
it stated that paragraph 5 of the SOW provided Requester with the information he
2
“[T]his Court may affirm on grounds different than those relied upon by the court or
agency below if such grounds for affirmance exist.” Motor Coils MFG/WABTEC v. Workers’
Comp. Appeal Bd. (Bish), 853 A.2d 1082, 1087 n.9 (Pa. Cmwlth. 2004). See also McKelvey v.
Office of Att’y Gen., 172 A.3d 122, 125 (Pa. Cmwlth. 2017) (affirming RTKL appeals officer on
alternate grounds).
2
sought in unredacted form.3 (Id. at 20a-21a.) According to SmartCOM, the redacted
paragraphs “do not relate to the time that SmartCOM is permitted to process mail
under its [a]greement with [the Department].” (Id. at 21a.) SmartCOM asserted the
paragraphs that were redacted contain confidential, proprietary information and
trade secrets. In support thereof, SmartCOM also submitted a declaration by James
Logan (Declaration), an owner and officer of SmartCOM. The Declaration provides,
in relevant part, as follows:
3. SmartCOM provides communications[-]related products and
services to correctional facilities.
4. On or about September 4, 2018, SmartCOM executed an Agreement
for Processing Inmate Postal Mail (the “Agreement”) with the
Commonwealth of Pennsylvania, acting through the . . . Department
....
5. Pursuant to the Agreement, SmartCOM agreed to convert incoming
postal mail sent to the facilities within the [Department] into an
electronic document to be delivered to [the Department].
....
7. Paragraphs 6 through 11 of the [SOW] do not describe or
demonstrate the time that SmartCOM is permitted under the Agreement
to process and forward mail to SCI[-]Laurel Highlands or other SCIs.
8. Paragraphs 6 through 11 of the [SOW] describe in detail
SmartCOM’s method and process of scanning mail and providing
electronic copies to [the Department]. More specifically, these
paragraphs describe how SmartCOM reviews and organizes
information, maintains electronic and hard-copy records, and provides
electronic records to [the Department] in a form that is convenient and
easy for [the Department] to manage. These paragraphs also describe
3
Paragraph 5 of the SOW provides: “SmartCOM shall retrieve and process incoming
Routine Mail and process said mail as outlined herein within twenty-four (24) hours upon receipt,
with the exception that for the first sixty (60) days of the Agreement[,] mail processing shall be
accomplished within five (5) days of receipt.” (R.R. at 10a.)
3
services that SmartCOM provides to [the Department] to enable [the
Department] to access and review scanned mail.
....
10. SmartCOM does not share the information described in paragraphs
6 through 11 of the [SOW] with anyone other than the senior officers
of SmartCOM: myself, Jonathan Logan, and Justin Scott. These
officers are each obligated by contract and by fiduciary duties to
maintain the secrecy of this information.
11. The information described in paragraphs 6 through 11 of the
[SOW] is not publicly available. The Agreement is SmartCOM’s first
agreement whereby SmartCOM provides postal mail conversion and
delivery services through the processes and mechanisms described in
paragraphs 6 through 11 of the [SOW]. When SmartCOM executed the
Agreement, it informed [the Department] that the Agreement included
trade secret and confidential, proprietary information and requested to
be notified of any public records request for the Agreement or any of
its exhibits. SmartCOM also requested that the information described
in paragraphs 6 through 11 of the [SOW] be redacted before being
posted on any public forum.
12. SmartCOM has spent significant time and money developing and
refining the processes and mechanisms described in paragraphs 6
through 11 of the [SOW].
13. The information described in paragraphs 6 through 11 of the
[SOW] derives independent economic value, both actual and potential,
from not being generally known to and not being readily ascertainable
by proper means by other persons. The processes and mechanisms
described in paragraphs 6 through 11 of the [SOW] allow SmartCOM
to efficiently perform the tasks required by the Agreement.
14. The disclosure of the information described in paragraphs 6
through 11 of the [SOW] would cause substantial harm to SmartCOM’s
competitive position in the market. With the information, processes
and mechanisms described in paragraphs 6 through 11 of the [SOW],
SmartCOM’s competitors could avoid spending the time and money
that SmartCOM spent to develop and refine the processes and
mechanisms. Further, SmartCOM’s competitors could use the
information to copy more than just SmartCOM’s general product and
4
services—the competitors could use the exact processes created and
used by SmartCOM.
(Logan Declaration, R.R. at 24a-26a.)4
Based upon the Declaration, SmartCOM asserted in its position statement that
it satisfied its burden of demonstrating the redacted information was confidential,
proprietary information and/or trade secrets. Specifically, it shows, according to
SmartCOM, that the redacted information was held in confidence by only three
senior officers, and that competitors would copy the methods and processes that
SmartCOM invested a significant amount of time and money in developing, which
the competitors could unfairly avoid. (R.R. at 22a-23a.) In a footnote, SmartCOM
noted that, although “[t]he argument was not raised in the appeal, [] even if the
Agreement qualifies as the type of financial record that may not be withheld from
disclosure on the basis of the trade secret exemption, the SOW retains the benefit of
the exemption,” citing this Court’s holding in Global Tel*Link Corp. v. Wright, 147
A.3d 978 (Pa. Cmwlth. 2016), in which the Court held that a document attached to
a contract does not automatically transform into a financial record subject to
disclosure under the RTKL. (R.R. at 21a.)
Based upon the parties’ submissions and the OOR’s in camera review of the
redacted paragraphs, which was performed at the request of Requester, the OOR
issued its Final Determination granting Requester’s appeal. The OOR did not
address whether the SOW should be disclosed as a financial record. Instead, the
OOR considered only whether the redacted paragraphs were subject to redaction
under one of the specified exemptions. The OOR explained that even if the redacted
paragraphs were not responsive to the Request, the RTKL does not permit redaction
4
Pages 2 and 3 of the Declaration are out of order in the Reproduced Record.
5
of a responsive record because some of the content is nonresponsive; rather, the
redactions must be made pursuant to a recognized exemption. (Final Determination
at 4 n.4.) The OOR also found the redacted paragraphs were neither confidential,
proprietary information nor trade secrets. While it found SmartCOM took
reasonable measures to maintain the confidence of the information, the Declaration
by Logan was “not sufficient to show that disclosure would cause competitive harm
or that the [SOW] possesses independent economic value.” (Id. at 8.) The OOR
noted that generic or conclusory statements are alone insufficient to satisfy an
agency’s burden of proving an asserted exemption. Here, the OOR found that the
Logan Declaration “largely parrots the language of the test [for confidential,
propriety information], only noting in addition that the processes in the redacted
paragraphs ‘allow SmartCOM to efficiently perform the tasks required by the
Agreement’ and that competitors could copy SmartCOM’s processes and thereby
save money developing their own.” (Id. at 9.) The OOR found this failed “to show
that there is competition in the relevant market or that there is an actual likelihood
of substantial competitive injury if the information is released.” (Id.) In addition,
the OOR found the Declaration did “not adequately describe the value of the
information to the business or any competitors, the amount of money or effort
expended in developing the information, or the difficulty any competitors would
have in duplicating it,” and, as a result, the test for trade secrets also was not met.
(Id.)
The OOR further found that its in camera review did not substantiate
SmartCOM’s claims, stating:
As [] Logan attests, paragraphs 6 to 11 of the [SOW] describe the
efforts that SmartCOM and the Department must undertake to fulfill
the contract requirements, as well as the requirements the Department
6
has for electronic systems. Paragraph 6 consists of specific instructions
for how the Department should provide SmartCOM with housing data;
Paragraph 7 describes the digital mail files to be provided to the
Department; Paragraph 8 governs SmartCOM’s retention of the
original mail documents; Paragraph 9 describes file aggregation;
Paragraph 10 describes the requirements for an electronic application;
and Paragraph 11 provides for the distribution of certain hardware to
the Department. While these paragraphs contain details regarding the
Department’s feature requirements for electronic systems and
specifications for how SmartCOM will provide the Department with
certain information, they contain nothing in the way of propriety
technical data or techniques for processing mail. Further, given the
level of personalization required by the Department, it is not apparent
that there is any broader competitive market for this information.
Therefore, because SmartCOM’s attestation does not demonstrate the
economic value or competitive harm arising from the redacted
paragraphs, and because the OOR could not independently discern any,
SmartCOM has not demonstrated that the contract may be redacted
under Section 708(b)(11) of the RTKL.
(Id. at 9-10.)
Accordingly, the OOR granted Requester’s appeal and ordered the
Department to produce an unredacted copy of the SOW within 30 days. (Id. at 10.)
B. Proceedings before this Court
SmartCOM now petitions for review of the Final Determination. Subsequent
to filing its Petition for Review, SmartCOM also filed an Application for Relief in
the Nature of a Motion to Supplement the Record, wherein it sought to invoke this
Court’s de novo review by providing an affidavit of Logan (Affidavit). The
Affidavit, SmartCOM claimed, addresses all of the OOR’s concerns and supplies
additional details relative to SmartCOM’s position. When no response or objection
was received from Requester, the Court granted SmartCOM’s application and
accepted the Affidavit. (See April 23, 2019 Order.)
7
In the Affidavit, Logan explained the history of SmartCOM and its
development of the MailGuard™ system in 2016 as a means of eliminating postal
mail in the corrections setting, thereby improving efficiency and security. (Affidavit
¶¶ 4-13, R.R. at 41a-42a.) According to Logan, MailGuard is used in correctional
facilities across the country and a number of other companies have sought to enter
the business and compete with SmartCOM for contracts. (Id. ¶¶ 16-20, R.R. at 43a.)
The Affidavit further detailed the Agreement between SmartCOM and the
Department, to which the SOW was attached as an exhibit. As to the redacted
paragraphs, the Affidavit provides, in pertinent part, as follows:
40. The [p]rotected [p]aragraphs include details about SmartCOM’s
propriety and secret method and process of scanning mail and providing
electronic copies to corrections institutions.
41. Generally speaking, and for purposes of understanding and context,
the [p]rotected [p]aragraphs describe how SmartCOM reviews and
organizes information, maintains electronic and hard-copy records, and
provides electronic records to [the Department] in a form that is
convenient and easy for [the Department] to manage.
42. The [p]rotected [p]aragraphs also describe services that SmartCOM
provides to enable institution access and review of scanned material.
43. The [p]rotected [p]aragraphs provide as follows:
a. Protected [p]aragraph 7 provides for SmartCOM to scan
routine mail and prepare electronic files based on a specified
protocol.
b. Protected [p]aragraph 8 provides specified retention time
periods for SmartCOM to retain routing mail.
c. Protected [p]aragraph 9 provides for how SmartCOM will
aggregate, sort, and organize scanned routine mail.
8
d. Protected [p]aragraph 10 provides for SmartCOM to host a
web application for [the Department] to access and use with
certain specified capabilities and features.
e. Protected [p]aragraph 11 provides for “Mail Carts,” including
the number and types of carts, electronic connections between
the carts and systems, storage of information obtained on the
carts, web applications for viewing and downloading of
information obtained on the carts, tracking and auditing of cart
information, and cart maintenance and repair.
44. It is not possible to provide further details beyond the above
without disclosing SmartCOM’s confidential and secret intellectual
property.
(Id. ¶¶ 40-44, R.R. at 46a-47a.)
The Affidavit described the steps SmartCOM takes to ensure the redacted
information is kept confidential, including allowing access to only three senior
officers and counsel, all of which have contractual and fiduciary duties of
confidentiality, electronic and security protocols, and computer password,
cybersecurity measures, and physical file security measures. (Id. ¶¶ 45-50, R.R. at
47a.) According to Logan, SmartCOM informed the Department of the confidential
nature of the information and requested it be notified of any RTKL requests seeking
access to the Agreement and its parts and “specifically requested that the
[Department] redact the [p]rotected [p]aragraphs before disclosing the Agreement
publicly.” (Id. ¶¶ 59-60, R.R. at 48a.)
In terms of harm that SmartCOM would suffer from disclosure, the Affidavit
provided as follows:
63. SmartCOM’s ability to compete in the corrections mail elimination
marketplace largely depends on its ability to protect its unique blend of
the MailGuard system (a special and unique mix of technology,
products, and service offerings) and its associated pricing structure.
9
64. If SmartCOM’s proprietary information depicted in the [p]rotected
[p]aragraphs was disclosed, it would undermine SmartCOM’s
competitive position.
65. Indeed, public disclosure will allow one, some, or all of
SmartCOM’s competitors to adjust their own mail solutions and price
offerings to undercut and undermine SmartCOM’s market position in
the country-wide corrections technology marketplace.
66. Specifically, competitors could steal SmartCOM’s proprietary
blend of technology, offerings, and pricing by simply copying it,
slightly adjusting it, or otherwise refining their own products, services,
and pricing to try to match or outbid SmartCOM in future contracting
scenarios based on insights unfairly gained from SmartCOM.
67. A competitor could make minor adjustments to any of the items
SmartCOM promised to [the Department] in the [p]rotected
[p]aragraphs, or it could match SmartCOM’s offering but slightly
undercut SmartCOM’s pricing.
68. Such minor adjustments could make all the difference between
SmartCOM or a competitor obtaining a future contract or contracts.
69. Competitors could unfairly take advantage of SmartCOM’s
experience and significant investments in developing its proprietary
information without having to make such investments or develop such
experience on their own.
70. Competitors also could use the information gained to attempt to
falsely or otherwise improperly or unfairly disparage SmartCOM
and/or MailGuard.
71. Improper access by competitors to SmartCOM’s proprietary
information will also give competitors insights on SmartCOM’s global
strategies that it deploys for all contracting scenarios for incoming mail
elimination.
72. Competitors could learn from this SmartCOM information and then
use that information to undercut SmartCOM in future bidding
scenarios.
73. This will unfairly tilt the competitive playing field in favor of
SmartCOM’s competitors and against SmartCOM, as SmartCOM does
10
not have its competitors’ equivalent of the information in the
[p]rotected [p]aragraphs.
74. Disclosure of the [p]rotected [p]aragraphs thus would cause
substantial harm to SmartCOM’s competitive position in the
marketplace.
75. Indeed, since SmartCOM is exclusively in the business of
corrections technology solutions, and MailGuard is a major part of
SmartCOM’s business, disclosure of the [p]rotected [p]aragraphs could
be devastating to SmartCOM’s competitive position.
(Id. ¶¶ 63-75, R.R. at 49a-50a.)
In addition, the Affidavit states the redacted information “has independent
economic value because, if disclosed, it would furnish competitors with solid
parameters by which they could refine their own strategies as part of their efforts to
win businesses away from SmartCOM or otherwise cause SmartCOM to lose out in
the marketplace.” (Id. ¶ 79, R.R. at 51a.) This would be achieved, the Affidavit
states, by competitors copying SmartCOM’s intellectual property and adjusting their
own products without having to invest any time, money, or energy. (Id. ¶¶ 76-78,
R.R. at 50a-51a.) Logan reiterated in the Affidavit what he said in the Declaration:
that SmartCOM invested significant time, capital, and effort to develop its product
and refine it over time. (Id. ¶¶ 81-83, R.R. at 51a.) Finally, the Affidavit states that
the specifics of the MailGuard system are not known by competitors and, therefore,
cannot be duplicated. (Id. ¶¶ 84-85, R.R. at 52a.)
Following the filing of SmartCOM’s brief in support of its petition for review,
Requester filed two applications. The first application seeks to supplement the
record (Application to Supplement) with two documents: (1) a copy of the
Agreement between the Department and SmartCOM; and (2) a copy of Terms and
Conditions, which were an exhibit to the Agreement, similar to the SOW. According
11
to the Application to Supplement, Requester obtained the documents in a separate
RTKL request filed with the Department subsequent to the OOR’s Final
Determination. (Application to Supplement ¶ 8.) The second application requests
that this Court conduct an in camera review of the redacted paragraphs, as the OOR
did (Application for In Camera Review). SmartCOM opposes both Applications.
With regard to the Application to Supplement, SmartCOM argues the documents
have not been authenticated, it would be prejudiced by their consideration because
SmartCOM had already filed its brief, and it disagrees the documents constitute the
contract. With regard to the Application for In Camera Review, SmartCOM
contends the Court generally does not conduct in camera reviews unless there is an
assertion of attorney-client privilege or predecisional deliberations, neither of which
is at issue here, it would suffer prejudice, and the agency, not a third party, provides
the records.
On August 5, 2019, the Court issued an order directing consideration of the
Requester’s applications with the merits. As briefing is now complete, SmartCOM’s
Petition for Review and Requester’s Application to Supplement and Application for
In Camera Review are ripe for consideration.
II. PARTIES’ ARGUMENTS
On appeal,5 SmartCOM argues its MailGuard system is protected as
confidential, proprietary information and/or trade secrets. SmartCOM asserts it met
its burden of showing that the information is kept in confidence and would cause
substantial competitive harm if released, thus qualifying it as confidential,
proprietary information. It notes that the OOR found that SmartCOM took steps in
5
Our standard of review is de novo and our scope of review is plenary. Bowling v. Office
of Open Records, 75 A.3d 453, 477 (Pa. 2013).
12
maintaining the confidentiality of the redacted information, as only three senior
officers and counsel had access to it. Thus, according to SmartCOM, the only issue
is the harm that would result from disclosure. SmartCOM asserts it has shown it
would suffer competitive harm in this highly competitive market because it invested
significant time, money, and effort to develop the MailGuard system, and disclosure
of the redacted information would allow competitors to do the same without any
such investment. SmartCOM argues this Court has held the exemption in Section
708(b)(11) protects similar information in other cases. In support of this argument,
SmartCOM cites to Crouthamel v. Department of Transportation, 207 A.3d 432 (Pa.
Cmwlth. 2019), in which this Court found the exemption applicable to prices, supply
quantities, and asphalt mix; Smith on behalf of Smith Butz, LLC v. Pennsylvania
Department of Environmental Protection, 161 A.3d 1049 (Pa. Cmwlth. 2017), in
which the Court applied the exemption to protect information of a natural gas drilling
diagnostic company; Thirty, Inc. v. Smart (Pa. Cmwlth., No. 805 C.D. 2013, filed
April 14, 2014), in which the Court held hotel pricing information was protected by
the exemption; and Giurintano v. Department of General Services, 20 A.3d 613 (Pa.
Cmwlth. 2011), in which the Court concluded names of interpreters providing
translation services were protected by the exemption. In addition, SmartCOM
argues the redacted information constitutes trade secrets, which are also exempt from
disclosure. SmartCOM asserts it has shown that the information is not known to
outsiders and is only known to three officers within SmartCOM, is closely held in
confidence, is valuable to competitors, was developed after significant investment
of time, money, and sweat equity, and cannot be duplicated. Accordingly,
SmartCOM asks the Court to reverse the OOR’s Final Determination and order that
the Department need not take further action.
13
Requester responds that because the SOW deals with an agency’s acquisition
of services, it is considered a financial record under the RTKL and, as a result, even
if the information is otherwise confidential, proprietary information or a trade secret,
it is still subject to disclosure, citing Section 708(c) of the RTKL and the Supreme
Court’s holding in Department of Public Welfare v. Eiseman, 125 A.3d 19 (Pa.
2015). Requester distinguishes this Court’s decision in Global Tel*Link on the basis
that Global Tel*Link involved records to show the financial stability of a bidder,
whereas here, the issue is the provision of goods or services directly. Requester also
argues that the Department’s response to the Request supports the conclusion the
SOW is part of the contract between the Department and SmartCOM. Requester
notes he requested “the portion of the contract with Smart[COM]” that provides for
the amount of time SmartCOM has to process mail, and in response the Department
provided the redacted SOW, which shows the Department considered it a contract
for services, which constitutes a financial record under the RTKL. (Requester’s
Brief (Br.) at 16 (quoting R.R. at 9a) (emphasis added).) Requester also points out
that SmartCOM itself acknowledges the redacted paragraphs describe services that
SmartCOM provides to the Department. Because the SOW is a financial record and
neither confidential, proprietary information nor trade secrets are an enumerated
exception to financial records, Requester argues the SOW should be disclosed in its
entirety.
Even if the SOW is not considered a financial record subject to disclosure,
Requester argues, SmartCOM has not met its burden of showing the redacted
information constitutes confidential, proprietary information. Requester contends
the redacted information was not “received” by the Department, meaning
SmartCOM developed it and provided it to the Department, as the RTKL requires,
14
but was developed in conjunction with the Department to serve the Department’s
specific needs. Therefore, since the SOW tailors SmartCOM’s services to the
Department’s needs, Requester disputes SmartCOM’s assertions that its ability to
compete in the market depends on maintaining the confidence of the information.
Moreover, Requester contends the Declaration and Affidavit are general and
conclusory, and such statements are, under the law, insufficient. In addition,
Requester argues SmartCOM has not met the test for trade secrets. According to
Requester, there is no evidence that the redacted information is the type of
information generally protected as a trade secret, such as a formula or compilation
of data. Requester also notes that since the information was just recently developed,
“it is unsurprising that this information is not widely[] known either within the
company or outside the company.” (Requester’s Br. at 27.) Furthermore, Requester
argues the record is devoid of any evidence of SmartCOM’s corporate structure or
internal functioning, which is necessary to assess “whether this level of secrecy or
lack of knowledge within the workforce is typical[] or indicative of information
amounting to a trade secret.” (Id.) According to Requester, “[i]t seems
unremarkable that only senior officers in a company would be privy to the
contractual negotiations and contractual documents entered into by that company.”
(Id.) Similarly, Requester argues SmartCOM only provided general allegations
about the money and time it expended, and there is no evidence of the ease or
difficulty in duplicating the information. As SmartCOM failed to satisfy its burden
of proving the redacted information is confidential, proprietary information and/or
trade secrets, Requester asks the Court to affirm the Final Determination of the OOR
and direct the Department to provide an unredacted copy of the SOW.
15
In its reply brief, SmartCOM asserts that the fact the SOW was appended to
the Agreement does not transform the SOW into a financial record and cites Global
Tel*Link for support of that proposition. SmartCOM argues the Agreement sets out
the parties’ mutual promises, “[o]r, in RTKL ‘financial record’ terms,” the
“‘Agreement’ . . . is the ‘contract’ dealing with ‘disbursement of funds by an
agency,’” whereas the SOW describes how SmartCOM will furnish the scanned mail
to the Department. (SmartCOM’s Reply Br. at 2 (quoting Section 102 of the RTKL,
65 P.S. § 67.1026).) SmartCOM reiterates that it has satisfied its burden of proving
the asserted exemption. It notes Requester has not submitted any evidence to rebut
SmartCOM’s evidence and asserts Requester is “attempt[ing] to elevate
Smart[COM]’s burden of proof.” (Id. at 6.) It contends it has no obligation to
provide corroborating documents to support its claims, as the courts have recognized
that affidavits alone will suffice for a party to meet its burden. SmartCOM also
denies its Declaration and/or Affidavit are general or conclusory, asserting its
evidence is similar to evidence accepted by the Court in other cases. SmartCOM
asserts many of Requester’s arguments “rely on the OOR’s unfounded guesswork,”
explaining that “[t]he OOR speculated that the [p]rotected [p]aragraphs contain
‘nothing in the way of proprietary technical data or techniques for processing mail’”
and “imagined that a ‘level of personalization [was] required by the Department,’”
which is unsupported by any evidence. (Id. at 8 (quoting Final Determination at
10).) According to SmartCOM, Requester “ignores” that the OOR found
SmartCOM took reasonable steps to maintain the redacted information in
confidence. (SmartCOM’s Reply Br. at 8.) SmartCOM also argues there is no
6
SmartCOM cited Section 101 of the RTKL, 65 P.S. § 67.101, but that provision relates
to the short title of the statute. Section 102 contains the definition of financial record that
SmartCOM quotes.
16
evidence it collaborated with the Department to develop the information in the SOW;
even if the information is newly developed, it does not mean it is not protected
intellectual property; and there is no explanation how disclosure of SmartCOM’s
intellectual property will promote government accountability, one of the purposes
behind the RTKL.
III. DISCUSSION
“[T]he objective of the [RTKL] . . . is to empower citizens by affording them
access to information concerning the activities of their government.” SWB Yankees
LLC v. Wintermantel, 45 A.3d 1029, 1042 (Pa. 2012.) Thus, with this purpose in
mind, we must “liberally construe the RTKL to effectuate its purpose of promoting
‘access to official government information in order to prohibit secrets, scrutinize
actions of public officials, and make public officials accountable for their actions.’”
Levy v. Senate of Pennsylvania, 65 A.3d 361, 381 (Pa. 2013) (quoting Allegheny Cty.
Dep’t of Admin. Servs. v. A Second Chance, Inc., 13 A.3d 1025, 1034 (Pa. Cmwlth.
2011)).
Pursuant to Section 305(a) of the RTKL, “[a] record in the possession of a
Commonwealth agency or local agency shall be presumed to be a public record.” 65
P.S. § 67.305(a). However, the RTKL exempts certain information from disclosure.
Among a number of enumerated exceptions are confidential proprietary information
and trade secrets. 65 P.S. § 67.708(b)(11). The term “[c]onfidential proprietary
information” is defined as:
Commercial or financial information received by an agency:
(1) which is privileged or confidential; and
17
(2) the disclosure of which would cause substantial harm to the
competitive position of the person that submitted the
information.
65 P.S. § 67.102.
The term “[t]rade secret” is defined as:
Information, including a formula, drawing, pattern, compilation,
including a customer list, program, device, method, technique or
process that:
(1) derives independent economic value, actual or potential,
from not being generally known to and not being readily
ascertainable by proper means by other persons who can
obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
Id. We generally examine six factors to determine whether information constitutes
a trade secret:
(1) the extent to which the information is known outside of the business;
(2) the extent to which the information is known by employees and
others in the business; (3) the extent of measures taken to guard the
secrecy of the information; (4) the value of the information to [an
individual’s] business and to competitors; (5) the amount of effort or
money expended in developing the information; and (6) the ease or
difficulty with which the information could be properly acquired or
duplicated by others.
W. Chester Univ. of Pa. v. Schackner, 124 A.3d 382, 392 n.15 (Pa. Cmwlth. 2015).
“Consistent with the RTKL’s goal of promoting government transparency and
its remedial nature, the exceptions to disclosure of public records must be narrowly
construed.” Pa. Dep’t of Educ. v. Bagwell, 114 A.3d 1113, 1122 (Pa. Cmwlth.
2015). The party asserting the exemption bears the burden of proving the record is
18
exempt by a preponderance of the evidence. 65 P.S. § 67.708(a). “The
preponderance of the evidence standard, which is ‘the lowest evidentiary standard,
is tantamount to a more likely than not inquiry.’” Smith Butz, 161 A.3d at 1059 n.10.
It is well settled that “[a]n agency may meet its burden through an unsworn
attestation or a sworn affidavit.” Schackner, 124 A.3d at 393. However, the affidavit
or attestation “must be specific enough to permit this Court to ascertain how
disclosure . . . would reflect that the records sought fall within the proffered
exemptions.” Id. “[C]onclusory affidavits, standing alone, will not satisfy the
burden of proof.” Office of the Dist. Att’y of Phila. v. Bagwell, 155 A.3d 1119, 1130
(Pa. Cmwlth. 2017). Moreover, “an affidavit which merely tracks the language of
the exception it presupposes is insufficient to demonstrate that the responsive
records are exempt from disclosure.” Pa. State Police v. Muller, 124 A.3d 761, 765
(Pa. Cmwlth. 2015).
Before determining whether the redacted paragraphs at issue here are
confidential, proprietary information and/or trade secrets, we must first determine
whether the SOW in which the redacted paragraphs appear is a financial record, as
Requester contends. If the SOW is a financial record, the exception in Section
708(b)(11) of the RTKL does not apply, as redactions to financial records may only
be made pursuant to certain enumerated exceptions, and Section 708(b)(11) is not
one of those exceptions.7 65 P.S. § 67.708(c).
The RTKL defines “[f]inancial record” as:
(1) Any account, voucher or contract dealing with:
(i) the receipt or disbursement of funds by an agency; or
7
Section 708(c) provides, in relevant part, “[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). . . .” 65 P.S. § 67.708(c).
19
(ii) an agency’s acquisition, use or disposal of services, supplies,
materials, equipment or property[; or]
(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[; or]
(3) A financial audit report. The term does not include work papers
underlying an audit.
65 P.S. § 67.102. It is under this first part of this definition that Requester claims
the SOW falls. According to Requester, the SOW is a contract that deals with the
Department’s acquisition or use of services. SmartCOM acknowledges the SOW
was appended to the Agreement it had with the Department, but contends that,
pursuant to Global Tel*Link, that alone does not transform the SOW into a contract.
In Global Tel*Link, the record at issue was information about the financial
well-being of a bidder that was attached to the contract to demonstrate the bidder
had the financial strength to perform the contract. 147 A.3d at 981. We held that
this financial information did “not automatically become a contract merely because
[the Department] attache[d] it to the subsequently executed contract.” Id. Instead,
we examined the record itself to determine its status. There, we examined the
financial information and determined it “did not involve the disbursement of funds
or the acquisition of services. Rather, the [f]inancial [i]nformation was submitted to
show [the bidder]’s economic capability to perform should it receive the . . .
contracts.” Id. Thus, we agree with SmartCOM that the mere fact the SOW was
appended to the Agreement does not automatically transform it into a financial
record. Id. However, this is not Requester’s argument. Requester argues the SOW
is subject to disclosure under subsection (1)(ii) of the financial record definition as
a “contract dealing with . . . an agency’s acquisition, use or disposal of services,
20
supplies, materials, equipment or property.” 65 P.S. § 67.102(1)(ii). Requester’s
argument in this regard is twofold. First, Requester argues that the Request sought
“the portion of the contract with Smart[COM]” that provides for the amount of time
SmartCOM has to process mail, (R.R. at 9a), to which the Department responded by
providing a redacted copy of the SOW. Therefore, the Department acknowledged
the SOW is part of the contract by producing it. Second, Requester argues that an
examination of the SOW’s content reveals it is part of a contract for the acquisition
of services.
SmartCOM focuses on subsection (1)(i) of the definition, dealing with the
receipt and disbursement of funds, which is also the subsection discussed by the
majority of the case law examining the definition of financial records. For example,
our Supreme Court explained “records bearing a sufficiently close connection to
such ‘fiscally related’ categories,” such as accounts, vouchers, and contracts, are
financial records “so long as they also ‘deal with the receipt or disbursement of funds
by an agency.’” City of Harrisburg v. Prince, 219 A.3d 602, 612 (Pa. 2019) (quoting
LaValle v. Office of Gen. Counsel, 769 A.2d 449, 456 (Pa. 2001), and N. Hills News
Record v. Town of McCandless, 722 A.2d 1037, 1039 (Pa. 1999)). However, the
Supreme Court also recognized that the term also encompassed accounts, vouchers,
and contracts themselves. Id. It further stated, as prior cases have, that the
definition of financial record is “broad.” Id.Therefore, while there is no discussion of the receipt or disbursement of funds
in the SOW, our inquiry does not stop there. We must also examine whether the
record is an “account, voucher, or contract dealing with . . . an agency’s acquisition,
use or disposal of services, supplies, materials, equipment or property,” which is a
second prong of the definition. 65 P.S. § 67.102(1)(ii). We agree with Requester
21
that the SOW is a financial record. Although SmartCOM denies the SOW is part of
the Agreement with the Department, the Department clearly thought otherwise
because it produced a copy of the SOW, in response to the Request seeking “the
portion of the contract with Smart[COM]” that provides for the amount of time
SmartCOM has to process mail. (R.R. at 9a (emphasis added).)
In addition, a review of the SOW, a redacted copy of which appears in the
record, supports this conclusion. The SOW begins by stating that the Department
“requires an offsite solution for the receipt and processing of inmate postal mail”
and “SmartCOM in providing the solution shall meet the following requirements.”
(R.R. at 10a (emphasis added).) The SOW then lists a number of requirements that
SmartCOM must satisfy, including providing equipment and support services, how
to handle certain mail, its operational processing will mirror the United Postal
Service’s schedule, its obligation to maintain a mailbox, and the timeframe in which
SmartCOM has to process mail, which is the information Requester sought in the
Request. (Id. at 10a.) Although several paragraphs are redacted, from the
unredacted portions of those paragraphs, the SOW also provides information on how
the Department is to provide SmartCOM with certain information and outlines
retention policies and scanning procedures. (Id.) In addition, it states SmartCOM
will provide training on its web application, and it sets out the security standards
with which SmartCOM shall comply. (Id. at 11a-12a.) Finally, it sets forth
procedures upon termination or completion of the Agreement. (Id. at 12a.) These
appear to be additional terms of the contract between the Department and
SmartCOM.
Given the Department’s implicit acknowledgement that the SOW was a
“portion of the contract with Smart[COM]” that provides for the amount of time
22
SmartCOM has to process mail, (R.R. at 9a), and the broad definition of “financial
record” as recognized by the Supreme Court in Prince, we conclude the SOW is a
part of a “contract dealing with . . . [the Department]’s acquisition, use or disposal
of services, supplies, materials, equipment or property,” 65 P.S. § 67.102(1)(ii),
namely SmartCOM’s MailGuard system. These provisions set forth the services
SmartCOM is to provide to the Department to fulfill its Agreement. Thus, it is a
financial record subject to disclosure.
IV. CONCLUSION
Having concluded that the SOW is a financial record under the RTKL, it is
not necessary to consider SmartCOM’s argument that the exception in Section
708(b)(11) related to confidential, proprietary information or trade secrets applies
because that exception is not one of the enumerated exceptions that may be redacted
from financial records. 65 P.S. § 67.708(c). As the court stated in Eiseman, “[w]ith
regard to such financial records, it is essentially undisputed that Section 708(c)
renders the [RTKL]’s own internal trade-secrets/confidential-proprietary-
information exception inapplicable.” 125 A.3d at 32. Furthermore, unlike in
Eiseman, there is no assertion by SmartCOM that the redacted information is also
protected by Pennsylvania’s Uniform Trade Secrets Act.8
8
12 Pa.C.S. §§ 5301-5308.
23
In addition, because it is unnecessary to examine the Agreement or the Terms
and Conditions, Requester’s Application to Supplement is denied. Finally,
Requester’s Application for In Camera Review is dismissed as moot.9
_____________________________________
RENÉE COHN JUBELIRER, Judge
9
Although a review of the unredacted SOW is unnecessary given our disposition, we note
that all records reviewed by the agency, even in camera, are considered part of the certified record,
although they may be sealed and filed separately. SmartCOM, which objects to our in camera
review of the unredacted SOW, appears to misapprehend our prior decisions declining to review
records in camera. In those instances, we were asked to review records that had not been reviewed
by the OOR and were not part of the certified record. Here, in contrast, the OOR already conducted
an in camera review of the records.
24
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Smart Communications Holding, Inc., :
Petitioner :
:
v. : No. 80 C.D. 2019
:
Bruce Wishnefsky, :
Respondent :
ORDER
NOW, July 6, 2020, the Final Determination of the Office of Open Records,
dated December 27, 2018, is AFFIRMED. The Application to Supplement the
Record filed by Respondent Bruce Wishnefsky (Requester) is DENIED.
Requester’s Application for In Camera Review is DISMISSED AS MOOT.
_____________________________________
RENÉE COHN JUBELIRER, Judge