Jefferson Davis, Jr. v. SC Educational Credit ( 2023 )

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Jefferson Davis, Jr., Appellant,
v.
South Carolina Educational Credit for Exceptional Needs
Children Fund, Respondent.
Appellate Case No. 2019-001231
Appeal from Richland County
DeAndrea G. Benjamin, Circuit Court Judge
Opinion No. 6014
Heard November 7, 2022 – Filed August 9, 2023
AFFIRMED
Jefferson Davis, Jr., pro se.
Geoffrey Kelly Chambers, of Green Cove Springs,
Florida, for Respondent.
GEATHERS, J.: In this Freedom of Information Act (FOIA) litigation, Appellant
Jefferson Davis, Jr. (Davis) appeals the circuit court's order granting summary
judgment to Respondent South Carolina Educational Credit for Exceptional Needs
Children Fund (the Fund). Davis contends the circuit court erred in (1) finding that
the Fund is not covered by state law defining a "public body"; (2) finding that the
Fund was not supported by public funds; (3) finding that reporting requirements for
the Department of Revenue could replace any FOIA obligations the Fund might
have; (4) finding that reporting requirements in a 2016–2017 budget proviso were
sufficient to replace any FOIA obligations the Fund might have; (5) finding that
reporting requirements in a 2017–2018 budget proviso were sufficient to replace any
FOIA obligations the Fund might have; (6) taking into account later legislation when
considering the intent behind the budget provisos governing the Fund; and (7)
misconstruing legislation that made the Fund permanent. We affirm.
FACTS/PROCEDURAL HISTORY
In 2017, Davis began filing FOIA requests with the Fund, which was created
by a proviso in the 2016–2017 General Appropriations Act. 1 The program provides
funding for children defined as "exceptional needs children" to attend private
schools; in return, those who donate to the Fund receive a state tax credit. The
proviso specifically stated that "[t]he [F]und may not receive an appropriation of
public funds." The proviso also stated that monies raised by the Fund "do not
constitute public funds," and provided that the state could not be obligated by the
Fund's contracts or other agreements. It allowed five directors to be appointed by
lawmakers and the governor, though it provided that those selections would be made
"based upon" recommendations from certain school organizations. The Department
of Revenue (the Department), "[i]n concert with the [F]und directors" was instructed
to "administer the fund, including, but not limited to, the keeping of records, the
management of accounts, and disbursement of the grants awarded pursuant to this
proviso." Additionally, the proviso required an accounting of the money on June
30, 2017. Approximately one year later, a virtually identical proviso was passed as
part of the 2017-2018 General Appropriations Act. The program was permanently
codified by the General Assembly in 2018.
Davis's first two FOIA requests to the Fund were sent on December 14, 2016.
He asked for "notifications of any and all meetings involving the ECENC Fund."
Davis also requested:
1. Copies of all invoices and payments made on behalf of
[the Fund].
2. Copies of all board meetings and/or actions for [the
Fund].
3. Copies of all brokerage statements for [the Fund].
1
Specifically, Proviso 109.15 established the program.
4. Copies of any employment or contractor agreement with
or for the services of [an individual not directly involved
in the current litigation].
He sent the requests by mail and emailed them to Tom Persons, who served on the
Fund's board. Additionally, on July 10, 2017, Davis sent a request for a copy of the
report that the Fund is required to submit to the Department.
On July 25, 2017, attorney Geoffrey K. Chambers responded on behalf of the
Fund to Davis's July 10 request. He wrote:
South Carolina Educational Credit for Exceptional Needs
Children Fund is a 501(c) charitable organization.
Pursuant to the South Carolina Freedom of Information
Act, S[.]C[.] Code Annotated 30-4-10 et seq., and the
South Carolina Solicitation of Public Funds Act, []33-56-
10 et seq., South Carolina Educational Credit for
Exceptional Needs Children Fund is not subject to FOIA.
I believe the documents you seek are public documents. I
do not have the documents to provide a courtesy copy. I
recommend you request these documents from the proper
public body records custodian.
Undeterred, on August 31, 2017, Davis requested documents related to the
Fund's "funding formula" for the previous and then-current fiscal year. On
September 12, 2017, Chambers responded again, reiterating that the Fund did not
believe it was subject to the FOIA and adding:
Due to pending litigation you have brought regarding
Freedom of Information Act requests sent to [the Fund], I
have instructed my client not to respond. In the future, I
recommend you direct FOIA requests to government
entities. As an opposing party in litigation, I ask that you
do not send any correspondence directly to parties who
have representation.
Indeed, on July 31, Davis had filed a pro se complaint for FOIA enforcement
in Greenville County, seeking declaratory and injunctive relief. In an order filed
November 7, 2017, the circuit court in Greenville County transferred venue to
Richland County in a Form 4 order. 2
The Fund filed its answer in Richland County on November 20, 2017,
essentially denying the substantive portions of Davis's complaint. Davis filed a
motion for summary judgment on January 24, 2018. The motion included
allegations that that the Fund was created by the legislature; that its board was
appointed "by elected government officials"; that the Department helped set up and
is authorized to help administer the Fund; that the Department helped the Fund in
raising donations through email and social media; that contributions to the Fund
could be routed through the state's internet presence; and that the Fund "is publicly
listed as a 'State Board and Commission'" on the Secretary of State's website.
In his written summary judgment motion, Davis noted precedent from our
supreme court suggesting that some private nonprofits could be subject to the FOIA.
He also cited an opinion from the South Carolina Attorney General's Office stating
that "a court would likely find the grant [and tax credits] 3 authorized by the ECENC
proviso likewise constitute 'public funds.'" (quoting Op. S.C. Atty. Gen., January 18,
2018).
In addition, Davis filed an affidavit and multiple exhibits. In the affidavit,
Davis complained that he had not received responses to his FOIA requests, 4 had not
been notified about board meetings that he believed had occurred since his initial
FOIA request, and had reached a state employee's voicemail when he called a
number provided for certain donations to the Fund that Davis had found on the
internet.
Among the attachments to Davis's affidavit were: (1) the articles of
incorporation for the Fund, signed by Rick Reames III 5 as the agent, with the address
listed as 300A Outlet Pointe Boulevard in Columbia; (2) the Fund's registration with
2
Initial hearings under FOIA are generally supposed to be scheduled "within ten
days of the service on all parties." S.C. Code Ann. § 30-4-100 (Supp. 2022).
According to the Fund, one reason this FOIA litigation persisted so long in the circuit
court is that Davis incorrectly filed his suit as "complex litigation."
3
The bracketed words appear in the opinion from the Attorney General's Office, but
are omitted by ellipsis in Davis's motion.
4
According to a memorandum in support of the motion to dismiss filed by the Fund
on June 14, 2018, Davis "has received copies of [the Fund's] reports." These
statements are not mutually exclusive.
5
Reames was director of the South Carolina Department of Revenue at the time.
the Public Charities Division of the Secretary of State's office, listing Reames as the
"contact person" for the Fund, listing his title as "President," and giving the address
of P.O. Box 125 in the 29214 ZIP code in Columbia, as well as listing Reames as
the registered agent and providing the same street address as listed on the articles of
incorporation; 6 (3) a receipt reflecting a $50.00 payment from the Fund on July 8,
2016; 7 (4) an image of a web page directing potential Fund donors with certain
financial instruments to "have your account manager contact" a phone number that
Davis said led to the state employee's voicemail; 8 (5) internet communications
highlighting the Fund on the Department's website, Facebook page, and Twitter
feed; (6) a web page for contributions to the fund at
https://ssl.sc.gov/checkout/exceptionalsc/; and (7) results from an internet search of
the Secretary of State's Boards and Commissions website showing the members of
the Fund's board, and listing the Fund as a board, commission, or committee.
Davis also attached an email chain between Reames and an individual at the
South Carolina Chamber of Commerce. Davis characterized the email as support
for his allegation that state officials helped raise money for the Fund. 9 The emails
indicated that Reames and the individual at the chamber had previously discussed
the Fund, and that Reames was hoping the individual could send an "introduction"
to members "that might have local decision making and have SC tax liabilities they
want to abate." The individual then requested a draft of a potential email from
Reames. Reames responded:
Exceptional SC is the new face of South Carolina's
Educational Credit for Exceptional Needs Children. It is
an organization established under Internal Revenue Code
Section 501(c)(3) that is dedicated to supporting
exceptional needs students and families in South Carolina
by providing scholarships to attend private schools that
meet their needs.
6
Additionally, Reames signed spaces for the Chief Financial Officer/Treasurer of
the charity and Chief Executive Officer/President of the charity.
7
The filing fee for a registration with the Public Charities Division is $50.00.
8
The number was to be called "for delivery instructions." The same page instructed
those who wanted to mail their checks to send them to the Fund at a post office box
in Columbia.
9
At times, because of markings on the emails, they are difficult to make out in the
record.
Donors making financial contributions to Exceptional SC
not only help these exceptional needs children but also
receive significant tax benefits, including a state income
tax credit. The total statewide credit is limited to $10M on
a first come, first serve basis - and it is already filling up
fast. Potential donors should act fast so they don't lose this
opportunity. Click on www.exceptionalsc.org for more
information.
In the email, Reames indicated that the individual at the chamber should "[e]dit as
[they] need to." Reames's signature block in the emails identified him as director of
the Department and included a P.O. Box address provided on some of the Fund's
paperwork. At least one of the emails Reames sent originated from a dor.sc.gov
account. 10
The circuit court 11 held a hearing on April 17, 2018. Counsel for the Fund did
not appear, so the court took Davis's arguments under advisement. The circuit court
held another hearing on May 15, 2018. There, the Fund argued that it was a
"regulated charity" rather than a public body. It contended that the appointments to
its board, while made by elected officials, were essentially ratifications of nominees
from the named school organizations. The Fund also argued that the Secretary of
State's decision to include the Fund on its list of state boards was incorrect and that
the South Carolina Legislative Manual did not list the Fund as a state board.
Additionally, the Fund argued virtually all of its activities were covered by the
FOIA-related provisions of legislation making the Fund permanent that the governor
was considering. The court denied Davis's motion for summary judgment, saying
that it "believe[d] that a genuine issue of material fact exist[ed] . . . ."
On June 14, 2018, the Fund filed a motion to dismiss and a motion for a
protective order. In a memorandum supporting the motion to dismiss, the Fund
10
It is likely both did. An affidavit sworn May 11, 2018 by Thomas Persons, the
chairman of the Fund's board, states that currently "[t]here is no assistance from any
government entity in contacting potential donors and soliciting donations." Persons
refers to the Fund as a "highly regulated" organization. Additionally, he states that
the Department "monitors incoming funds much like a turnstile would monitor
passengers entering a train station."
11
At least four different circuit court judges were involved in this litigation in
Richland County. For ease of understanding, we will not refer to each of the judges
by name.
argued that our supreme court's holding in DomainsNewMedia.com v. Hilton Head
Island-Bluffton Chamber of Commerce, 423 S.C. 295, 814 S.E.2d 513 (2018) was
controlling. 12
The Fund's motion also mentioned a development outside the courtroom:
legislation signed by the governor the previous month (the Act) permanently
codifying the Fund and providing:
In concert with the public charity directors, the department
shall administer the public charity including, but not
limited to, the keeping of records, the management of
accounts, and disbursement of the grants awarded
pursuant to this section. The public charity may expend
up to two percent of the fund for administration and related
costs. The department and the public charity may not
expend public funds to administer the program.
Information contained in or produced from a tax return,
document, or magnetically or electronically stored data
utilized by the Department of Revenue or the public
charity in the exercise of its duties as provided in this
section must remain confidential and is exempt from
disclosure pursuant to the Freedom of Information Act.
Personally identifiable information, as described in the
Family Educational Rights and Privacy Act and individual
health records, or the medical or wellness needs of
children applying for or receiving grants must remain
confidential and is not subject to disclosure pursuant to
the Freedom of Information Act. 13
(Emphasis added in the memo). The Fund argued that this provision was "explicit
instruction from the legislature that FOIA does not apply to the normal operations
of [the Fund]." The Fund also contended that, under the FOIA, meetings related to
12
We discuss this case in greater detail in our analysis.
13
The legislation also made some other changes. For example, the Act did not
include the requirement that elected officials consult with school organizations for
their appointments to the board.
scholarship decisions "are . . . closed to the public" under section 30-4-70(a)(1) of
the South Carolina Code (2007). 14
The circuit court held its third hearing on the matter on August 9, 2018. The
court denied the Fund's motion to dismiss. It also ordered the Fund to comply with
Davis's discovery requests to the extent possible.
On August 17, 2018, the Fund filed a motion for summary judgment, a
memorandum on the motion for summary judgment, and a motion for judgment on
the pleadings with an accompanying memorandum. In these filings, the Fund largely
reiterated its arguments from the motion to dismiss. 15
Davis filed an emergency motion for contempt and sanctions on August 22,
2018. In it, he argued that the Fund had failed to produce certain discovery. At a
hearing on September 4, 2018, the circuit court held a status conference. Scheduling
and discovery issues were discussed. This was followed by a motion to compel
discovery and for sanctions on September 10, 2018. Additionally, Davis filed a
renewal of his motion for summary judgment on September 10, 2018.
The circuit court held another hearing on October 3, 2018. On December 21,
2018, in a Form 4 order, the circuit court granted the Fund's motions for judgment
on the pleadings and summary judgment. In its later written order, the circuit court
noted the DomainsNewMedia.com decision. The circuit court found the Fund was
similarly situated to the chamber of commerce in our supreme court's decision:
Educational Credit for Exceptional Needs Children Fund
registers with the Secretary of State as a public charity
under Section 509 and reports to the Secretary of State as
14
See S.C. Code Ann. § 30-4-70(a) (2007) ("A public body may hold a meeting
closed to the public for . . . [d]iscussion of employment, appointment, compensation,
promotion, demotion, discipline, or release of an employee, a student, or a person
regulated by a public body or the appointment of a person to a public body . . . .")
15
The Fund filed a revised memorandum in support of its motion for judgment on
the pleadings on September 29, 2018, again elaborating on its arguments. In addition
to its previous theories, the Fund contended that it could not be a public body because
state law does not allow it to "receive, have or spend public funds." Further, it noted
that state law described the Fund as an independent entity, and "provide[d] that the
Department of Revenue and [the Fund] may not expend public funds to administer"
the Fund. It also argued that the legislative intent of provisions setting up the fund
supported its motions.
contemplated for entities not subject to FOIA. The
funding is not state funding, but rather private donations.
Exceptional SC receives no support from state funding.
The State has provided an avenue for Exceptional SC to
exist, and for that reason this program is highly regulated
and reporting intensive, like the Chamber of Commerce.
Additionally, the circuit court interpreted the adoption of the Act as "explicit
instruction from the legislature that FOIA does not apply to the normal operations
of [the Fund]." The circuit court added: "Likewise, according to the South Carolina
Freedom of Information Act, public meetings in which applications for scholarships
are reviewed and scholarships are awarded are exempt from FOIA disclosure and
can be closed meetings."
On July 8, 2019, the circuit court denied Davis's motion for reconsideration
with a Form 4 order. This appeal followed.
ISSUES ON APPEAL
I. Did the circuit court err in finding that the Fund is not a "public body" for the
purposes of FOIA even though it was created by the General Assembly, is
governed by a board appointed by state officials, and can be administered by
the Department?
II. Did the circuit err in granting summary judgment based in part on a finding
that no public funds were expended by the Department, despite the evidence
provided by Davis?
III. Did the circuit court err in finding that reporting requirements on the part of
the Department could serve as a replacement for the Fund's alleged FOIA
obligations?
IV. Did the circuit court err in holding that the reporting requirements in the 2016
budget proviso were sufficient to satisfy the standards of
DomainsNewMedia.com?
V. Did the circuit court err in holding that the reporting requirements in the 2017
budget proviso were sufficient to satisfy the standards of
DomainsNewMedia.com?
VI. Did the circuit court err in basing its interpretation of the legislative intent of
the earlier budget provisos partially on the later legislation approved by the
General Assembly and the governor?
VII. Did the circuit court err in construing the Act as a broad FOIA exemption
rather than a "belt and suspender" provision regarding already exempt
information?
STANDARD OF REVIEW
"Declaratory judgments are neither legal nor equitable. The standard of
review for a declaratory judgment action is, therefore, determined by the nature of
the underlying issue." Bundy v. Shirley, 412 S.C. 292, 301, 772 S.E.2d 163, 168
(2015) (citations omitted). "The interpretation of a statute is a question of law."
DomainsNewMedia.com, LLC v. Hilton Head Island-Bluffton Chamber of
Commerce, 423 S.C. 295, 300, 814 S.E.2d 513, 516 (2018) (quoting Sparks v.
Palmetto Hardwood, Inc., 406 S.C. 124, 128, 750 S.E.2d 61, 63 (2013). "Th[e
appellate c]ourt may interpret statutes, and therefore resolve the case, 'without any
deference to the court below.'" Id. (quoting Brock v. Town of Mt. Pleasant, 415 S.C.
625, 628, 785 S.E.2d 198, 200 (2016)). "When the circuit court grants summary
judgment on a question of law, we review the ruling de novo." Stoneledge Lake
Keowee Owners' Ass'n, Inc., v. Builders FirstSource–Se. Grp., 413 S.C. 630, 634–
35, 776 S.E.2d 434, 437 (2015). To the extent that Davis's request for injunctive
relief proves relevant, we note that "[a]ctions for injunctive relief are equitable in
nature. In equitable actions, the appellate court may review the record and make
findings of fact in accordance with its own view of a preponderance of the evidence."
Wiedemann v. Town of Hilton Head Island, 344 S.C. 233, 236, 542 S.E.2d 752, 753
(Ct. App. 2001) (citations removed).
LAW/ANALYSIS
I. PUBLIC BODIES AND THE FOIA
The South Carolina Freedom of Information Act has a far-reaching definition
of what constitutes a public body subject to its terms. According to the FOIA, a
"public body" is defined as
any department of the State, a majority of directors or their
representatives of departments within the executive
branch of state government as outlined in Section 1-30-10,
any state board, commission, agency, and authority, any
public or governmental body or political subdivision of the
State, including counties, municipalities, townships,
school districts, and special purpose districts, or any
organization, corporation, or agency supported in whole
or in part by public funds or expending public funds,
including committees, subcommittees, advisory
committees, and the like of any such body by whatever
name known, and includes any quasi-governmental body
of the State and its political subdivisions, including,
without limitation, bodies such as the South Carolina
Public Service Authority and the South Carolina State
Ports Authority. . . .
S.C. Code Ann. § 30-4-20(a) (2007) (emphasis added). The broad sweep of that
definition has left room for judicial interpretation.
Perhaps the most far-reaching construction of the term "public body" comes
from our supreme court's decision in Weston v. Carolina Research & Dev. Found.,
303 S.C. 398, 401 S.E.2d 161 (1991). In that case, the court considered the status of
a foundation linked to the University of South Carolina that had received transfers
of funding and real estate on behalf of university projects and research. Id. at 401–
03, 401 S.E.2d at 163–64. The court rejected arguments that the foundation's status
as a "private corporation" insulated it from the state's FOIA. Id. at 403, 401 S.E.2d
at 164.
The Foundation's argument that the FOIA only applies to
governmental and quasi-governmental bodies would
rewrite the statutory definition of "public body" by
deleting the phrase, "or any organization, corporation, or
agency supported in whole or in part by public funds or
expending public funds." According to the Foundation's
position, a corporation that cannot be labeled
governmental or quasi-governmental would be exempt
from the FOIA, regardless of whether it received support
from public funds or expended public funds. Such a
construction would obliterate both the intent and the clear
meaning of the statutory definition.
. . . . [T]he unambiguous language of the FOIA mandates
that the receipt of support in whole or in part from public
funds brings a corporation within the definition of a public
body. The common law concept of "public" versus
"private" corporations is inconsistent with the FOIA's
definition of "public body" and thus cannot be
superimposed on the FOIA.
Id. At the same time, the Weston court laid out a limiting principle that has become
increasingly important to FOIA jurisprudence in the years since.
[T]his decision does not mean that the FOIA would apply
to business enterprises that receive payment from public
bodies in return for supplying specific goods or services
on an arms[-]length basis. In that situation, there is an
exchange of money for identifiable goods or services and
access to the public body's records would show how the
money was spent. However, when a block of public funds
is diverted en masse from a public body to a related
organization, or when the related organization undertakes
the management of the expenditure of public funds, the
only way that the public can determine with specificity
how those funds were spent is through access to the
records and affairs of the organization receiving and
spending the funds.
Id. at 404, 401 S.E.2d at 165.
Our supreme court returned to that caveat several years later in Disabato v.
S.C. Ass'n of School Adm'rs, 404 S.C. 433, 746 S.E.2d 329 (2013). There, the court
did not directly address whether the term "public body" was broad enough to include
the South Carolina Association of School Administrators. Id. at 443, 746 S.E.2d at
334. However, in discussing whether the obligation of some organizations to
comply with the FOIA constituted a violation of those organizations' First
Amendment rights, the Disabato court placed a renewed emphasis on the degree of
state involvement with the organization at issue.
[T]he application of the FOIA beyond traditional
governmental entities is limited to statutorily defined
public bodies, which are only those entities supported by
public funds. . . . We previously recognized in Weston that
the FOIA is ineffectual if it does not extend to such bodies,
explaining that when an entity receives public funds en
masse or manages the expenditure of public funds, "the
only way that the public can determine with specificity
how those funds were spent is through access to the
records and affairs of the organization receiving and
spending the funds." If public bodies were not subject to
the FOIA, governmental bodies could subvert the FOIA
by funneling State funds to nonprofit corporations so that
those corporations could act, outside the public's view, as
proxies for the State. . . .
. . . . The dissent would read the FOIA as applying to a
private organization that receives even a negligible
amount of public funding for a discrete purpose. We made
clear in Weston that the FOIA only applies to private
entities who receive government funds en masse. The
FOIA would not apply to a private entity that receives
public funds for a specific purpose. For example, the
FOIA would not apply to a private organization that
receives public funds to operate a childcare center or
healthcare clinic. However, the FOIA does apply to any
private organization that is generally supported by public
funds.
Id. at 433, 454–56, 746 S.E.2d at 340–41 (citations omitted) (quoting Weston, 303
S.C. at 404, 401 S.E.2d at 165). 16
16
This interpretation of the reach of the FOIA was one of the dividing lines between
the majority opinion and the dissent.
The clear language of the statute, we said
in Weston, mandates that an organization receiving public
funds in even one transaction is a "public body" for
purposes of FOIA requirements, and construing the statute
to reach only governmental or quasi-governmental
organizations would "obliterate both the intent and the
clear meaning of the statutory definition." Thus, the
statute may reach an otherwise private organization that
receives even a negligible amount of public funding for a
discrete purpose.
Our supreme court returned again to this issue in DomainsNewMedia.com.
There, the court dealt with accommodations tax revenues used to fund marketing
ventures by a local chamber of commerce. See DomainsNewMedia.com, 423 S.C.
at 298, 814 S.E.2d at 514–15. The court found that a literal interpretation of the
FOIA could lead to the conclusion that the transfer of tax proceeds to the chamber
of commerce was enough to open the chamber's records. Id. at 304, 814 S.E.2d at
518. At the same time, though, the court focused on the fact that portions of the
pieces of legislation setting up the system "provide a specific and comprehensive
approach for the receipt, expenditure, and oversight of these funds." Id. The court
held:
Moreover, even in the absence of a specific statute, this
[c]ourt has recognized that the applicability of FOIA to a
non-governmental entity is more involved than
classification as a public body due to the receipt of public
funds.
. . . . [In Weston, the supreme court] rejected the suggestion
that the mere receipt or expenditure of public funds
automatically and categorically transformed an otherwise
private entity into a public body triggering the full panoply
of FOIA requirements. We made clear that the mere
receipt or expenditure of public funds did not mean "that
the FOIA would apply to business enterprises that receive
payment from public bodies in return for supplying
specific goods or services on an arms[-]length basis." . . .
. Significantly, in that case, there was not a statute or
proviso governing the procedure and oversight for the
expenditure of the specific funds at issue or mandating the
public reporting and accountability as exists with respect
to [the funds at issue in DomainsNewMedia.com].
Disabato, 404 S.C. at 460, 746 S.E.2d at 343 (quoting Weston, 303 S.C. at 403, 401
S.E.2d at 164) (Pleicones, J., concurring in part and dissenting in part) (footnote
omitted). Justice Pleicones added later that the law "applies solely by virtue of the
fact that the organization has received public funds, regardless of any relationship
between the organization's publicly and privately funded activities." Id. at 464, 746
S.E.2d at 345.
Here, as noted, there is a specific statute (or proviso) that
directs the local governments to select a DMO 17 to manage
the expenditure of certain tourism funds and requires the
governments to maintain oversight and responsibility of
the funds by approving the proposed budget and receiving
an accounting from the DMO. Thus, this is not the
situation found in Weston wherein the funds were intended
to be given to a public body and, instead, were diverted to
a private organization to be spent without oversight.
Through [the relevant legislation] there are accountability
measures in place[,] and the public has access to
information regarding how the funds are spent. Therefore,
the concern in Weston regarding the lack of a legislatively
sanctioned process mandating oversight, reporting, and
accountability is not present in the expenditure of these
funds.
Id. at 304–06, 814 S.E.2d at 518–19 (citations omitted) (quoting Weston, 303 S.C.
at 404, 401 S.E.2d at 165). Justice Few dissented, arguing that the Weston court
"applied that plain language [of the FOIA] to transactions that are factually
indistinguishable from the Chamber's receipt and expenditure of accommodations
sales tax revenues in this case[] and held the FOIA applies." Id. at 311, 814 S.E.2d
at 521 (Few, J., dissenting). Additionally, Justice Few argued that the limiting
principle in Weston "was never intended to create any additional requirement—or a
"more involved" analysis—to determine the applicability of the FOIA." Id. at 311,
814 S.E.2d at 522.
The DomainsNewMedia.com decision was handed down May 23, 2018—
before the circuit court decided this case, but days after the governor approved the
legislation making the Fund permanent.
II. STATUS OF THE FUND (Davis's Issues I–V)
Davis's first five issues—the core of the case—can all be reasonably reduced
to one overarching question: Is the Fund a public body for the purposes of the FOIA?
The issues of the meaning of the term "public body"; whether tax revenues support
the Fund; and the correct interpretation of our supreme court's ruling in
DomainsNewMedia.com are all focused on this threshold question. We also do not
17
"DMO" stands for the designated marketing organization.
DomainsNewMedia.com, 423 S.C. at 298, 814 S.E.2d at 515.
and should not go beyond answering that question in our consideration of the Fund's
operations. Because of the unique structure of the Fund, this is a close call.
However, we find that the Fund is not a public body for the purposes of the state's
FOIA.
The parties have devoted a great deal of energy to arguing over the meaning
of Weston, Disabato, and DomainsNewMedia.com. All three decisions are, of
course, relevant. However, we must consider that DomainsNewMedia.com is the
most recent of the three cases decided by our supreme court, and we can hardly
contravene the most recent precedent. See S.C. CONST. art. V, § 9 ("The decisions
of the Supreme Court shall bind the Court of Appeals as precedents."); State v.
Cheeks, 400 S.C. 329, 342, 733 S.E.2d 611, 618 (Ct. App. 2012) ("[T]his court lacks
the authority to rule against prior published precedent from our supreme court, but
is bound by the decisions of the supreme court."), aff'd as modified, 408 S.C. 198,
758 S.E.2d 715 (2014).
Our inquiry cannot proceed as though there are not significant factual
distinctions between the chamber of commerce in DomainsNewMedia.com and the
Fund. There clearly are. For example, there is no indication in
DomainsNewMedia.com that state government had a cooperative role in
administering the chamber of commerce's marketing program. The chamber of
commerce in that case was not set up by the General Assembly and had been around
for decades when the marketing program was set up. See 423 S.C. at 298, 814 S.E.2d
at 515. To our knowledge, local chambers do not have access to the state's online
credit card system, do not have state employees answering the phone, and usually
cannot count on promotion from state agencies on social media. Finally, a chamber
of commerce carries out other activities beyond distributing public dollars. Here,
the Fund's major purpose is deciding who receives scholarships indirectly supported
by the state. After all, our supreme court said in its conclusion in
DomainsNewMedia.com that "the General Assembly enacted the more narrow and
targeted [accommodations tax] statute . . . to provide what it determined were the
necessary accountability safeguards with regard to the expenditure of these specific
funds while simultaneously protecting the private nature of the organizations
selected to perform this marketing function." Id. at 307, 814 S.E.2d at 519 (emphasis
added).
Nor can we ignore how closely the structure of the Fund resembles a concern
our supreme court raised in Disabato. See 404 S.C. at 455, 746 S.E.2d at 340 ("If
public bodies were not subject to the FOIA, governmental bodies could subvert the
FOIA by funneling State funds to nonprofit corporations so that those corporations
could act, outside the public's view, as proxies for the State. . . ." (emphasis added)).
It is hard to see how the Fund is not a nonprofit corporation acting as a proxy for the
state; that seems to be its entire reason for existing. At least one of our sister courts
in another state has found that its state's requirement that a public body be one that
is "receiving or expending and supported in whole or in part by public funds" could
be fulfilled under similar—though not precisely analogous—circumstances. See
Associated Press v. Sebelius, 78 P.3d 486, 491–92 (Kan. Ct. App. 2003) (holding
that a volunteer "team" set up by the governor-elect was not a public body for other
reasons, but first finding the public funding requirement satisfied when "there were
12 state employees assigned to" the team, and "state employees continued to receive
their salary while assisting [the team]").
Nonetheless, we hold that, under DomainsNewMedia.com, the Fund is not a
public body for the purposes of the FOIA. The support that the Fund receives in the
form of likely fleeting assistance from state officials and use of the state fundraising
platform is de minimis rather than the diversion of "a block of public funds . . . en
masse" or "the management of the expenditure of public funds." Weston, 303 S.C.
at 404, 401 S.E.2d at 165. See also Disabato, 404 S.C. at 454–55, 746 S.E.2d at 340
("[T]he application of the FOIA beyond traditional governmental entities is limited
to statutorily defined public bodies, which are only those entities supported by public
funds."); id. at 456, 736 S.E.2d at 341 ("[T]he FOIA does not apply to a recipient of
public funds as a condition of the receipt of the funds. Rather, the general support
of an entity through public funds brings it within the class of entities to which the
FOIA applies."). Furthermore, the legislation creating the Fund includes a reporting
and accountability mechanism not unlike the measures considered relevant by the
DomainsNewMedia.com court. 18 See 423 S.C. at 304, 814 S.E.2d 518 (noting
statutes that "provide a specific and comprehensive approach for the receipt,
expenditure, and oversight of these funds," and stating those "play the lead role in
our disposition of this case"). See also Wilder v. S.C. State Highway Dep't, 228 S.C.
448, 454, 90 S.E.2d 635, 638 (1955) ("It is well settled that where there is a statute
dealing with a subject in general terms and another statute dealing with a part of the
same subject in a more minute and definite way, the special statute will be considered
as an exception to, or qualification of, the general statute and given effect."). Finally,
the Fund is at least technically independent of the state. See Disabato, 404 S.C. at
18
See S.C. Code Ann. § 12-6-3790(B)(5) (Supp. 2022) (requiring annual reports on
the Fund's operations, including "the number and total amount of grants issued to
eligible schools in each year" and "a copy of a compilation, review, or audit of the
fund's financial statements, conducted by a certified public accounting firm").
454–55, 746 S.E.2d at 340 (limiting the reach of FOIA "beyond traditional
governmental entities").
Even if we were to hold that the Fund is a public body under the FOIA, that
would not require the Fund to release many or perhaps most of its documents. The
Legislature has been clear on that:
Information contained in or produced from a tax return,
document, or magnetically or electronically stored data
utilized by the Department of Revenue or the public
charity in the exercise of its duties as provided in this
section must remain confidential and is exempt from
disclosure pursuant to the Freedom of Information Act.
Personally identifiable information, as described in the
Family Educational Rights and Privacy Act and individual
health records, or the medical or wellness needs of
children applying for or receiving grants must remain
confidential and is not subject to disclosure pursuant to the
Freedom of Information Act.
S.C. Code Ann. § 12-6-3790(B)(4) (Supp. 2022). We must interpret this statute as
it comes to us, and the plain meaning prevails.
That does not mean that the status of the Fund would be an academic point.
Rather, there is at least one aspect of Davis's challenge that would be unaffected by
this: whether the Fund's meetings must be at least partially open to the public.
We categorically disagree with the circuit court's conclusion that the meetings
of a public body "can be closed meetings" if aspects of the discussion at those
meetings—even all aspects—are exempt from the FOIA. That is not what FOIA
says. See S.C. Code Ann. § 30-4-60 (2007) ("Every meeting of all public bodies
shall be open to the public unless closed pursuant to Section 30-4-70 of this chapter."
(emphasis added)). Instead, the General Assembly has provided that certain issues
may be discussed in closed session. See § 30-4-70(a) (listing reasons that may justify
executive sessions). And the FOIA lays out a procedure for going into executive
session that requires a public vote to do so and prohibits a vote in executive session
to take action. See S.C. Code Ann. § 30-4-70(b) (2007) ("No action may be taken
in executive session except to (a) adjourn or (b) return to public session. The
members of a public body may not commit the public body to a course of action by
a polling of members in executive session.").
In any event, we need not address that issue directly, because under our
precedents, the Fund is not a public body for the purposes of the FOIA. That
outcome is dictated by the majority opinion in DomainsNewMedia.com because (1)
the legislative enactment discussed in that opinion is similar enough in nature to the
legislative enactment concerning the Fund in the present case in that both have
independent reporting and accountability requirements, which was a key factor in
the majority's analysis in DomainsNewMedia.com; and (2) the legislative enactment
concerning the Fund expressly states that the funds are not public funds. The
occasional and relatively minor activities undertaken by the Department's employees
do not represent the en masse diversion of state resources required by
DomainsNewMedia.com to hold otherwise.
Davis contends that this line of analysis is wrong. He notes that "the South
Carolina Attorney General's Office has . . . specifically conclud[ed] that there exists
no 'de minimis' exception to [FOIA's] applicability for public funding which is
indirect or insignificant." We respect the Attorney General's Office and its work,
but we need not determine whether it has endorsed a de minimis exception, because
our supreme court has. See DomainsNewMedia.com, 423 S.C. at 305, 814 S.E.2d at
518 (holding that the Weston court "rejected the suggestion that the mere receipt or
expenditure of public funds automatically and categorically transformed an
otherwise private entity into a public body triggering the full panoply of FOIA
requirements").
Additionally, Davis argues that the scholarship dollars at issue here are public
money. We disagree. Davis's sole authority for this contention is an opinion of the
Attorney General's Office characterizing the funds as public. However, one of the
cases cited in that opinion stands for the opposite proposition; the quoted
parenthetical from that case, Elliott v. McNair, refers to a portion of the court's ruling
laying out the view that our supreme court was rejecting. See 250 S.C. 75, 90, 156
S.E.2d 421, 429 (1967) (quoting a Florida Supreme Court case as a "leading"
example of "decisions contrary to the view hereinbefore expressed"). Considering
the status of industrial revenue bonds used to help a manufacturing project and paid
off by a manufacturer, our supreme court distinguished those funds from public
funds. See id. ("It is our view, however, that the money which will be received by
the [c]ounty [b]oard in this case is impressed with a trust that it be used for the
purpose for which it was obtained, the construction of a project, for which reason
the money does not become public money whose expenditure would otherwise be
confined to the general public good."). Likewise, the private funds contributed to
the Fund are used for specified purposes—the scholarships—and would not become
public funds even if they were directly held by the Department or an indisputably
public body. The other authorities cited by the Attorney General's opinion are an
appeals court decision from Arizona, a South Carolina statutory provision
concerning funds of the Department of Commerce, and a quote from American
Jurisprudence that appears to be outdated. 19
We emphasize that this court has not been called upon to evaluate any other
policy or legal aspect of the Fund's establishment or structure. While we offer no
opinion on those questions, they would in some cases present more difficult
considerations. We are instead answering the far narrower issue presented to us:
Whether, under the current circumstances, the Fund is a public body for the purposes
of the FOIA. Given our precedents, it is not.
III. EFFECT OF THE ACT
A related question is Davis's contention that the circuit court erred in using
the Act to interpret the General Assembly's original intent in the proviso. We do not
need to address this issue, because Davis abandoned it on appeal.
Davis cites no legal authority for his argument that the circuit court could not
consider a subsequent act of the General Assembly as clarifying the intent of the
budget provisos. The only citations of any kind are to the record and to the act itself.
IV. 'BELT AND SUSPENDER' ARGUMENT
Davis argues that the Act is "nothing more than a restatement of FOIA
exemptions," and thus should be read as a "belt and suspender" provision. Davis
abandoned this argument on appeal, but it has no merit in any event.
Again, Davis cites no authority to support his argument that the General
Assembly intended nothing more than a reiteration of current law. Even so, without
some cursory evidence, interpreting the statute this way would run contrary to our
canons of statutory construction. See Centex Int'l, Inc. v. S.C. Dep't of Revenue, 406
S.C. 132, 139, 750 S.E.2d 65, 69 (2013) ("The cardinal rule
of statutory interpretation is to ascertain and effectuate the intention of the
legislature." (quoting Sloan v. Hardee, 371 S.C. 495, 498, 640 S.E.2d 457, 459
19
We also believe it is possible that Davis abandoned this argument in his reply
brief, where he states: "Respondent also wants to rely upon its belief that the
scholarship funds distributed are not public funds. That finding is not necessary as
it is irrelevant." (emphasis added).
(2007)); id. at 145, 750 S.E.2d at 72 (noting that "the legislature is presumed to be
aware of prior legislation and does not perform futile acts").
CONCLUSION
For the foregoing reasons, the circuit court's order is AFFIRMED.
MCDONALD, J., and LOCKEMY, A.J., concur.