Belo Management Services, Inc. v. Click! Network ( 2014 )

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGT``ON''
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2014 NOV 25 I: 20
DIVISION II
STAT
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BELO MANAGEMENT SERVICES, INC., a No. 45577- 3- 11
Delaware corporation; KIRO -TV, INC., a BY
Delaware corporation; TRIBUNE
BROADCASTING SEATTLE; LLC, a
Delaware limited liability company; and CBS
CORPORATION;
Respondents,
v.
CLICK! NETWORK, a Department of Tacoma PUBLISHED OPINION
Public Utilities Division of the CITY OF
TACOMA; and TACOMA NEWS, INC.;
Appellants.
MELNICK, J. — Tacoma News, Inc. appeals the trial court' s order enjoining the disclosure
of unredacted retransmission consent agreements ( RCAs) between Click!, a cable system owned
by the City of Tacoma ( the City), and five broadcasters. The court ruled that the pricing
information portions of the RCAs were trade secrets exempt from disclosure under the Public
Act1 (
Records PRA). Tacoma News argues that the RCAs do not contain trade secrets, the
court should have conducted in camera review of the unredacted RCAs, the broadcasters did not
prove the requirements for an injunction under the PRA, the injunction is overbroad, and it is
entitled to attorney fees and costs. The broadcasters argue that we should uphold the injunction
because the RCA pricing information qualifies as trade secrets or, alternatively, federal
regulations exempt the pricing information from PRA disclosure.
1
Ch. 42. 56 RCW.
45577 -3 - II
We hold that the RCA pricing information is not a trade secret and that the broadcasters
failed to meet their burden of proving that the non -cash compensation information in the
agreements qualifies as a trade secret. Additionally, the federal regulations cited by the
broadcasters do not qualify as an " other statute" under the PRA which exempts the pricing
information from disclosure. Moreover, the broadcasters failed to establish the requirements for
an injunction under the PRA. Accordingly, the trial court erred when it enjoined disclosure of
the unredacted records. Tacoma News is not entitled to attorney fees under the PRA because the
private broadcasters, rather than the City, opposed the disclosure. We reverse and vacate the
injunction.
FACTS
This case involves whether pricing information in contracts between the City -owned
cable system, Click!, and several broadcasters should be disclosed under the PRA. Cable
systems must obtain express consent from broadcasters and pay license fees to retransmit the
broadcasters' shows. Cable systems and broadcasters enter into RCAs that include license fees.
The fees are negotiated between the individual broadcasters and the cable systems. Both the
cable systems and the broadcasters consider the licensing fees confidential. The amount paid in
fees is not shared with third parties. These figures are only known, on a need to know basis, by a
few employees within each party' s organization. These employees are required to keep the
information confidential. Clerk' s Papers ( CP) at 36. T between Click! and the broadcasters,
however, specifically put the broadcasters on notice that the RCA' s terms are subject to potential
disclosure under chapter 42. 56 RCW.
Click! had difficulty negotiating the 2013 RCAs with one of the broadcasters, Fisher
Communications. As a result, Click! customers were unable to view the channels broadcast by
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Fisher. In response to this situation, Tacoma News filed a public records request with Click!
seeking copies of the current RCAs between Click! and " all broadcast entities." CP at 43. The
City determined that there were no applicable PRA exemptions and it notified the broadcasters
that it intended to release the RCAs to Tacoma News.2 The broadcasters sought an injunction
prohibiting the City and Click! from releasing the RCAs. The broadcasters claimed that the
RCAs contained pricing information that qualified as a trade secret.
The broadcasters and Click! submitted affidavits and declarations stating that they
considered the rebroadcast fee infoiination confidential. The broadcasters alleged that they
would be harmed by disclosure. They claimed that other cable systems would use the disclosed
fees Click! paid to negotiate lower fees for themselves. The broadcasters stated that rebroadcast
fees are a significant and growing portion of their revenue. The broadcasters claimed that they
would not have a similar opportunity to discover the fees other cable systems paid because most
cable systems are privately -owned and not subject to the PRA, which would put them at a
disadvantage in negotiating RCAs. Additionally, both the broadcasters and Click! stated that
disclosure would harm Click! and the public because it would discourage broadcasters from
contracting with Click! because Click! could not promise confidentiality, it would likely raise
Click!' s fees because the broadcasters would use the highest disclosed fee as a baseline, and the
preceding issues would result in fewer available channels and increased rates for Click!
customers.
2
At the initial hearing, the City stated, "[ F] rom a business standpoint [ C] lick! finds the release of ,
these contracts, specifically the pricing, to be highly objectionable. This is commercially
sensitive information; however, we are a public agency, and under the [ PRA], our evaluation is
that we are unlikely to successfully assert Uniform Trade Secret Act exemption or any other
exemption under the [ PRA]." Report of Proceedings ( RP) at 14. The City and Click! did not file
briefs in this appeal.
3
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The trial court ruled that the RCAs contained trade secrets and enjoined Click! from
releasing the RCAs and any related records. Tacoma News moved for reconsideration. It argued
that the court should review the unredacted RCAs in camera and, if it still found that the
agreements contained trade secrets, redact the exempt information and release the redacted
RCAs. The court granted the motion for reconsideration and set a hearing to establish the
process by which it would receive and review the unredacted RCAs. The court further ordered
the parties to submit briefing regarding the sealing of the unredacted RCAs. The court clarified
that the injunction was still in effect and that the City must submit RCA -related records to the
broadcasters for approval before releasing the records to any requesters.3
After a hearing, the trial court determined that in camera review was unnecessary in light
of the broadcasters' affidavits and declarations which described the redacted information. Based
on the affidavits and declarations, the court concluded that the redactions contained trade secrets
that were exempt from disclosure under the PRA. The court never reviewed unredacted copies.
Instead, the court ordered Click! to release the records with the redacted information.
Tacoma News appealed to our Supreme Court. That court denied direct review and
transferred the case to us.
ANALYSIS
I. STANDARD OF REVIEW
The PRA requires each agency to make public records available for public inspection
unless the record falls within the specific exemptions of the PRA or other statute. RCW
42. 56. 070( 1). The PRA should be "`` liberally construed to promote full access to public records,
3 After the broadcasters sought an injunction, unrelated third parties began requesting RCA
information from the City.
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and its exemptions are to be narrowly construed.' King County Dep' t of Adult & Juvenile Det.
v. Parmelee, 162 Wn. App. 337, 350, 254 P.3d 927 ( 2011) ( quoting Amren v. City of Kalama,
131 Wash. 2d 25, 31, 929 P.2d 389 ( 1997)). Persons who are named in the record or to whom the
record pertains may move the trial court to enjoin the release of the records. RCW 42. 56. 540;
Parmelee, 162 Wash. App. at 350. The court may enjoin production of requested records if it finds
that production would not be in the public' s interest and would substantially and irreparably
damage any person or vital government function. RCW 42. 56. 540.
We review injunctions issued under the PRA de novo.4 Parmelee, 162 Wash. App. at 351.
Where, as here, the record consists only of documentary evidence, we stand in the same position
as the trial court. Progressive Animal Welfare Soc' y v. Univ. of Wash., 125 Wash. 2d 243, 252, 884
P.2d 592 ( 1994).
II. TRADE SECRET EXEMPTION
The broadcasters do not argue that the RCAs are not public records subject to the PRA.
Rather, they argue that the records are exempt from disclosure. The trial court concluded that the
pricing information in the RCAs was exempt as a trade secret. Tacoma News disagrees. We
hold that the broadcasters failed to prove that the fees are a trade secret.
A public record is exempt from disclosure under the PRA if the record falls within an
other statute" that exempts or prohibits disclosure of specific information. RCW 42. 56. 070( 1).
4 The broadcasters argue that we should use the abuse of discretion standard to review the court' s
decision to grant an injunction. They cite Resident Action Council v. Seattle Housing Authority,
177 Wash. 2d 417, 428, 300 P.3d 376 ( 2013). But the trial court in that case did not grant an
injunction under RCW 42. 56. 540. Resident Action Council, 177 Wash. 2d at 445 -46. We review
actions under chapter 42. 56 RCW de novo. RCW 42. 56. 550( 3); Resident Action Council, 177
Wash. 2d at 432; Robbins, Geller, Rudman & Dowd, LLP v. State, 179 Wash. App. 711, 719, 328
P.3d 905 ( 2014); Parmelee, 162 Wash. App. at 351.
5
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Acts (
The Uniform Trade Secret UTSA) qualifies as an " other statute" exempting disclosure.
Progressive Animal Welfare Soc 'y, 125 Wash. 2d at 262. This statute allows courts to take action .
to protect trade secrets. Progressive Animal Welfare Soc' y, 125 Wash. 2d at 262 ( citing RCW
19. 108. 020( 3), . 050).
The UTSA defines a trade secret as
information, including a formula, pattern, compilation, program, device, method,
technique, or process that:
a) 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
b) Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
RCW 19. 108. 010( 4). The information must be " novel," meaning that it must not be readily
ascertainable from another source. Spokane Research & Def. Fund v. City of Spokane, 96 Wn.
App. 568, 578, 983 P.2d 676 ( 1999).
The broadcasters have the burden of proving a trade secret. Spokane Research & Def.
Fund, 96 Wn. App. at 577. Their declarations and affidavits must provide specific, concrete
examples illustrating that the pricing information meets the requirements for a trade secret.
McCallum v. Allstate Prop. & Cas. Ins. Co., 149 Wash. App. 412, 426, 204 P.3d 944 ( 2009).
A. RCA Pricing Information
Tacoma News contends that the RCA pricing information not trade secrets because they
are not the type of information protected as a trade secret and they are not subject to reasonable
efforts to maintain secrecy. Tacoma News further contends, and the .broadcasters' conclusory
statements are insufficient to establish, that the pricing information is novel. We agree.
5
Ch. 19. 108 RCW.
45577 -3 -II
We recently dealt with a similar situation in Robbins, Geller, Rudman & Dowd, LLP v.
State, 179 Wn. App. 711, 328 P.3d 905 ( 2014). There, a law firm attempted to enjoin the
Attorney General' s Office from disclosing the firm' s fee proposal and insurance information
under the PRA. Robbins, 179 Wn. App. at 717 -18. The firm argued that the information
constituted a trade secret that was exempt from PRA disclosure. Robbins, 179 Wash. App. at 723-
24. It stated that its approach to fee setting was unique, specific to each client and case, and
required significant time and effort to formulate. Robbins, 179 Wn. App. at 723. And it
contended that the release of this information would give its competitors an unfair advantage by
allowing them to outbid the firm for future work. Robbins, 179 Wash. App. at 723 -24.
We disagreed. Robbins, 179 Wn. App. at 724. We determined that the firm failed to
show that its fee schedule and insurance information differed significantly from its competitors'.
Robbins, 179 Wn. App. at 724. Additionally, the firm had previously publicly released similar
fee information. Robbins, 179 Wn. App. at 724. Thus, the firm' s assertions of uniqueness and
competitive disadvantage were conclusory and the information was not a trade secret. Robbins,
179 Wash. App. at 724.
Similarly, here, the broadcasters' allegations of harm are too conclusory and speculative.
They make the same argument as the firm in Robbins: Release of this information would give
competitors an unfair advantage. This reason alone is insufficient to prove that the information
is a trade secret. The broadcasters have not proven that their prices have independent economic
value to their competitors or other cable systems. As the broadcasters concede, every negotiation
is different. Markets and cable systems vary. Prices fluctuate over time. Thus, it does not
follow that the other cable systems could viably argue that they are entitled to the same price as a
cable system in a different market during a different time period. Moreover, it is not clear from
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45577 -3 - II
the record that Click!' s fees would set a ceiling on fees because the record does not state that
Click! 's fees are consistently lower than the fees paid by other cable systems. And, the court did
not see the unredacted records to make an independent assessment.
Additionally, the broadcasters failed to show that their RCA fees are unique. Like the
firm in Robbins, the broadcasters merely presented conclusory and speculative statements
arguing that their approaches are unique and specific to each negotiation. There is no support for
this statement because the broadcasters stated that their fees are unique, but they admit that they
have not seen the other broadcasters' RCAs. And the unredacted RCAs are not in the record.
The City, the only party to view all of the unredacted RCAs, determined that no PRA exemption
applied to bar disclosure of the RCAs. The broadcasters' assertions are conclusory and
speculative and we hold that the RCA prices are not trade secrets.
The broadcasters provide no authority compelling us to hold that contract prices are trade
secrets. Both sides cite to federal cases discussing the Freedom of Information Act (FOIA),6 but
this case does not involve federal agencies and Washington courts have recognized that FOIA
differs in many ways" from the PRA. Cowles Publ' g Co. v. Wash: State Patrol, 109 Wash. 2d
712, 731, 748 P.2d 597 ( 1988); Robbins, 17.9 Wn. App. at 730 -31.
B. Non -cash compensation
The trial court also allowed the broadcasters to redact non -cash compensation
information from the disclosed RCAs. We hold that this is error because the broadcasters failed
to meet their burden of establishing that these provisions are a trade secret.
As stated above, the broadcasters have the burden of proving that information is a trade
secret. Spokane Research & Def. Fund, 96 Wn. App. at 578. Although the trial court has
6
5 U.S. C. § 552.
8
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discretion to review documents in camera in some instances, ' the only way that a court can
accurately determine what portions, if any, of the file are exempt from disclosure is by an in
camera review. "' Limstrom v. Landenburg, 136 Wash. 2d 595, 615, 963 P.2d 869 ( 1998) ( quoting
Newman v. King County, 133 Wash. 2d 565, 583, 947 P.2d 712 ( 1997) ( Alexander, J., dissenting));
see also Overlake Fund v. City of Bellevue, 60 Wn. App. 787, 797, 810 P.2d 507 ( 1991) ( stating
that in camera review may be necessary " when the court cannot evaluate the asserted exemption
without more information than th at contained in the ... affidavits. ").
Here, one of the broadcasters, Fisher, redacted portions of its RCA that related to " non-
cash compensation." CP at 447. It is unclear from the affidavits what non -cash compensation
entails. The broadcasters resisted in camera review of the unredacted RCAs, despite the trial
court' s assurances that the records could be sealed. Without more information than what is
contained in the affidavits, we are unable to say that the broadcasters met their burden of proving
that the non -cash compensation information is a trade secret.
III. FEDERAL REGULATION EXEMPTION
The broadcasters alternatively argue that federal regulations qualify as an " other statute"
which exempt disclosure under RCW 42. 56. 070( 1). Resp' t Belo' s Br. at 23. The broadcasters
cite 47 U.S. C. § 325( b), which involves consent to retransmission of broadcasting station signals,
and 47 C. F.R. § 0. 459( a)( 1), which allows parties submitting materials to the Federal
Communications Commission ( FCC) to request that the information " not be made routinely
available for public inspection."
In Ameriquest Mortgage Co. v. Washington State Office ofAttorney General, 170 Wash. 2d
418, 440, 241 P.3d 1245 ( 2010), our Supreme Court determined that the federal Gramm- Leach-
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7
Act ( GLBA) the Federal Trade Commission ( FTC) enforcing it qualified as an
rule8
Bliley and
other statute" exempting records from disclosure under the PRA. In that case, the GLBA and
the FTC rule provided privacy protections to customers of financial institutions. Ameriquest,
170 Wash. 2d at 424 -25. These federal regulations fit within the PRA exemption because they
precluded disclosure of specific information or records, namely, customers' nonpublic personal
information. Ameriquest, 170 Wash. 2d at 425, 440.
Contrary to the broadcasters' assertions, the federal regulations the broadcasters cited do
not specifically state that RCAs are confidential and protected from disclosure. The regulations
do not preclude disclosure of any specific information or records. Rather, they allow a party to
request that information submitted to the FCC " not be made routinely available for public
inspection." 47 C. F. R. § 0. 459( a)( 1). The PRA " other statute" exemption only applies if the
other statute " exempts or prohibits disclosure of specific information or records." RCW
42. 56. 070( 1). Thus, the federal regulations the broadcasters cited do not qualify as an " other
statute."
Even if the broadcasters had proven that RCA prices are trade secrets or that the federal
regulations are an " other statute," the broadcasters still failed to prove the requirements for an
injunction under RCW 42. 56. 540.
IV. INJUNCTION
If a PRA exemption applies, a court can enjoin the release of a public record if disclosure
would clearly not be in the public interest and would substantially and irreparably damage any
7
15 U.S. C. §§ 6801 - 6809.
8
16 C. F.R. § 313.
10
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person, or ... vital governmental functions. "' 9 Morgan v. City ofFederal Way, 166 Wash. 2d 747,
756 -57, 213 P.3d 596 ( 2009) ( quoting RCW 42. 56. 540). The broadcasters cannot show either
requirement in this instance.
A. Public Interest
Tacoma News asserts that the broadcasters failed to demonstrate that disclosure would
clearly not be in the public' s interest. We agree.
Tacoma News persuasively argues that the public has a right to know how Click!, a city -
owned enterprise, is spending public funds. The PRA broadly mandates in favor of disclosure:
The people of this state do not yield their sovereignty to the agencies that serve.
them. The people, in delegating authority, do not give their public servants the
right to decide what is good for the people to know and what is not good for them
to know. The people insist on remaining informed so that they may maintain
control over the instruments that they have created. This chapter shall be liberally
construed and its exemptions narrowly construed to promote this public policy
and to assure that the public interest will be fully protected.
RCW 42. 56. 030.
The broadcasters' contrary arguments confuse the public with Click! and its customers.
The affidavit from Click!' s general manager alleges public harm in the form of increased cable
rates to its subscribers, but not all people who subscribe to cable. Disclosure in this instance is in
the public' s interest because the information involves expenditure of public funds.
B. Irreparable Damage
Tacoma News next argues that the broadcasters are not a " person" under RCW
42. 56. 540. They also argue that the broadcasters will not be irreparably damaged by disclosure
9 Tacoma News argues that the trial court may have applied a different injunction .standard than
the one set out in RCW 42. 56. 540. But the court' s oral ruling shows that it considered whether a
PRA exemption applied, the public' s interest in disclosing the records, and damage to Click! and
the broadcasters. The record does not show that the court used a different standard.
11
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of the RCA prices. We hold that the broadcasters qualify as " persons" but that they failed to
show that they would suffer irreparable harm.
Our legislature has construed " person" to include " any public or private corporation or
limited liability company." RCW 1. 16. 080( 1). " Person" within the UTSA includes a
corporation or other commercial entity. RCW 19. 108. 010( 3). Washington courts have
determined that the UTSA provides an exemption for disclosure under the PRA. Progressive
Animal Welfare Soc' y, 125 Wash. 2d at 262. For this exemption to have meaning, it follows that
person" within the context of the PRA must also include commercial entities such as the
broadcasters.
But the broadcasters have not shown that they would suffer substantial and irreparable
damage. They stated that disclosure of the RCA prices would place them at a disadvantage in
negotiating RCAs with other cable systems. They claim the other cable systems would use the
disclosed license fees as a maximum, which would cost the broadcasters revenue. As discussed
above, these assertions are speculative. The broadcasters failed to show that they should be
10
granted an injunction under the PRA. We hold that this injunction should be vacated. The
broadcasters have not shown that the disclosure is not in the public' s interest and that it would
substantially and irreparably damage any person. We reverse the court and vacate the injunction.
VI. ATTORNEY FEES
Tacoma News contends that it is entitled to attorney fees and costs. RCW 42. 56. 550( 4)
states,
Any person who prevails against an agency in any action in the courts seeking the
right to inspect or copy any public record or the right to receive a response to a
1°
Because we vacate the injunction, we need not address Tacoma News argument that the
injunction was overbroad. We do note, however, that RCW 42. 56. 540 enjoins the release of any
specific public record and the court must make the determination.
12
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public record request within a reasonable amount of time shall be awarded all
costs, including reasonable attorney fees, incurred in connection with such legal
action.
This provision is inapplicable when a third party brings an action to prevent disclosure of
records the agency has agreed to release but is prevented from releasing because of a court order.
Confederated Tribes of Chehalis Reservation v. Johnson, 135 Wash. 2d 734, 757, 958 P.2d 260
1998). Here, the City determined that no exemptions applied and stated that it intended to
release the records. Thus, the broadcasters sought an injunction to prevent the City from
Tacoma News has the broadcasters, the City. We
releasing the records. prevailed against not
deny the request for attorney fees.
We reverse and vacate the injunction.
We concur:
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