State Records Committee Appeal Decision 2023-63

BEFORE THE STATE RECORDS COMMITTEE OF THE STATE OF UTAH

HUGHES GENERAL CONTRACTORS (Joe McAllister), Petitioner, v.

WASATCH SCHOOL DISTRICT, Respondent, and
WESTLAND CONSTRUCTION, Intervenor, Interested Party.

DECISION AND ORDER

Case No. 23-63

By this appeal, Hughes General Contractors (“Petitioner”), requests records allegedly held by Wasatch School District (“Respondent”). Westland Construction intervenes as an interested party.

FACTS

Recently, Respondent conducted a procurement for the construction of its new high school that is slated to be built in Heber City, Utah. Three general contractors submitted bids for the project: Westland Construction (“Westland”), Bud Mahas, and Petitioner. Westland was the low bidder by a substantial margin. Upon being awarded the contract, the law requires all bidders submit their subcontractor lists and schedule of values (collectively, “Subcontractor Documents”) to Respondent within twenty-four hours of the award.

When Westland submitted its Subcontractor Documents, it stamped each page of the package with a red “Proprietary” stamp that read:

PROPRIETARY
Any and all information contained herein is PROPRIETARY to Westland Construction, Inc. This includes any and all subcontractor financial bids/budgetary numbers and business information. Release of any of [sic] information contained here in [sic], will be cause for legal action.

When Petitioner submitted its Subcontractor Documents to Respondent, it also made a request for the other contractors’ Subcontractor Documents pursuant to the Government Records Access and Management Act (“GRAMA”). Wasatch School District didn’t answer the public records (GRAMA) request within the 10-day time limit prescribed by law. See Utah Code § 63G-2-204(4)(b). Consequently, it was treated as a denial under Utah Code § 63G-2-204(9). Petitioner appealed to Respondent’s Chief Administrative Officer (“CAO”) who responded to the appeal saying that the documents are protected records because they contain trade secrets, as set forth in § 63G-2-305(1).

Petitioner has now appealed to the State Records Committee (“Committee”), challenging the CAO’s decision. On December 21, 2023, the Committee held a hearing during which the parties were allowed to participate. At the hearing, the Committee considered the written materials, oral testimony, and oral arguments of the parties. After having carefully considered all evidence presented to the Committee, the Committee issues the following Decision and Order.

ISSUES FOR REVIEW

The Committee is asked to determine whether the records are properly withheld pursuant to Subsection 63G-2-305(1).

STATEMENT OF REASONS FOR DECISION

GRAMA prescribes that “a person has the right to inspect a public record free of charge, and the right to take a copy of a public record during normal working hours, . . .” Utah Code § 63G-2-201(1)(a). When the governmental entity receives a document, it normally becomes a public record under GRAMA and is subject to disclosure. Utah Code § 63G-2-103(25)(a)(i); See also Romboy v. University of Utah, et al., Decision and Order no. 2023-55, Utah State Records Committee (entered Oct. 30, 2023) (“When those contracts are shared with a public institution, they become a government record under statute.”). However, a record that is classified as protected is not a public record that is subject to disclosure. Utah Code § 63G-2-201(3)(a). And, as it relates to governmental procurements, procurement records become public records after the contract or grant has been awarded and signed by all parties, unless the party submitting the records to the governmental entity asserts a claim of confidentiality over the records because they can be protected under Subsections 63G-2-305(1) or 305(2).

There is no dispute among the parties that Westland submitted Subcontractor Documents to Respondent. There is, however, dispute as to whether those materials are properly classified and withheld. Petitioner argues that because the bid was awarded, Westland’s Subcontractor Documents are public record pursuant to Utah Code § 63G-2-305(6). However, while Respondent and Westland both agree that procurement records normally become public records upon the award and signing, they argue the Subcontractor Documents are still restricted under Westland’s confidentiality claim that invokes Subsection 305(1). Petitioner rebuts this by pointing to various regulations and laws that specifically address the status of subcontractor lists and sets of values as applied to certain state agencies and their construction procurements. We need not address the applicability of state agency regulations in this case because we find the records are not protected due to Westland’s failure to assert a proper confidentiality claim over them.

Subsection 63G-2-305(1) classifies as protected “trade secrets as defined in Section 13-24-2 if the person submitting the trade secret has provided the governmental entity with the information specified in Section 63G-2-309.” Thus, for Respondent’s and Westland’s defense to survive, they must show two things: (1) that the information specified in Section 309 was submitted to Respondent; and (2) that the Subcontractor Documents meet the definition of “trade secrets” as defined by state law.

At the hearing, the Committee reviewed the Subcontractor Documents in camera. For the reasons stated below, we need not address whether the records satisfy the legal definition of “trade secret.” Rather, the Section 309 compliance requirement disposes of this appeal.

As previously mentioned, in order for a trade secret to be protected from a GRAMA request, the person submitting the document to the governmental entity must also comply with Section 309. There, the law prescribes:

(1)(a)(i) Any person who provides to a governmental entity a record that the person believes should be protected under Subsection 63G-2-305(1) or (2) or both Subsections 63G-2-305(1) and (2) shall provide with the record:
(A) a written claim of business confidentiality; and
(B) a concise statement of reasons supporting the claim of business confidentiality. Utah Code § 63G-2-309(1)(a)(i) (emphasis added.)

Westland argues that its PROPRIETARY red stamp on each page satisfies Section’s 309 requirements. We disagree. Even if we were to construe the stamped language to be a written claim of business confidentiality, nothing in the stamp provides a concise statement of reasons supporting the claim that the records are proprietary. The language states only that “any and all subcontractor financial bids/budgetary numbers and business information” are proprietary to Westland Construction. This language is conclusory—it offers no reasoning for the proprietary claim as Subsection 309(1)(B) requires. Although Westland may have intended for the Subcontractor Documents to be confidential, we cannot overlook the fact that the stamped language doesn’t comply with the statute’s two required elements. Our previous rulings on confidentiality claims have been consistent on this point.

In Barnes v. Governor’s Office of Economic Opportunity, Decision and Order no. 2023-31, Utah State Records Committee (entered Aug. 1, 2023), Northrop submitted a separate written claim of business confidentiality to the Governor’s Office of Economic Opportunity in which it claimed that both Subsections 305(1) and 305(2) shielded the records from disclosure. The claim also included the reasons as to why the records needed shielding. We ruled that Northrop Grumman’s claim of confidentiality over records was properly submitted under Section 309 and we upheld the restriction of access because the practice of submitting a separate written claim of confidentiality that contains the reasoning behind the need for protection is exactly what GRAMA contemplates.

Recently, in Romboy v. University of Utah, et al., Decision and Order no. 2023-55, Utah State Records Committee (entered Oct. 30, 2023), the universities argued that a confidentiality claim should protect NIL contracts from disclosure in the event the records were not otherwise protected. We disagreed, explaining that,

[t]he Utah legislature was aware that turning commercial contracts and documents over to a governmental entity would curtail a person’s privacy expectations. For this reason, lawmakers enacted Section 63G-2-309, which allows any person to assert a claim of confidentiality over the record they provide the governmental entity if the record contains information protected under certain provisions of Section 63G-20305, and the person adheres to Section 309’s requirements. Id. at 13 (emphasis added).

In examining the materials submitted to the Committee, we found that confidentiality claims were not submitted to the universities with the NIL contracts. We concluded that “[w]ithout a proper confidentiality claim submitted at the time of the record, we find no provision in GRAMA that shields entire contracts from public disclosure.” Id. at 14.

We see no reason to deviate from our previous rulings in this case. There is no evidence that Westland submitted a separate written claim of business confidentiality at the time it delivered the Subcontractor Documents to Respondent. Nor do we have any evidence that Westland submitted a concise statement of reasons supporting the claim of business confidentiality. We don’t accept the argument that a rubber stamp constitutes the “written statement” that Section 309(1)(a)(i)(A) mandates. GRAMA contemplates a separate written confidentiality statement be submitted so that it may be retained by the governmental entity “with the records.” Utah Code § 63G-2-309(1)(a)(i). But as we stated above, even if we were to find that simply stamping the records could satisfy the “written statement” requirement, the stamp itself offers no reasoning as to why the Subcontractor Documents warrant protection. Consequently, we find that merely stamping the documents with a conclusory statement indicating that they are proprietary is not enough to satisfy Section 309’s requirements.

Because of this, we need not address whether the records were in fact trade secrets; nor do we need to address the various laws and regulations concerning subcontractor lists and sets of values post-procurement award. The requested records are public under Subsection 305(6) and must be disclosed.

ORDER

THEREFORE, in accordance with this Decision, Petitioner’s appeal is hereby GRANTED. Respondent shall disclose the requested Subcontractor Documents.

It is so ordered.

RIGHT TO APPEAL

A party to a proceeding before the Committee may seek judicial review in District Court of a Committee's Order by filing a petition for review of the Committee Order as provided in Utah Code § 63G-2-404. Utah Code § 63G-2-403(14). A petition for judicial review of a Committee Order "shall be filed no later than 30 days" after the date of the Committee Order. Utah Code § 63G-2-404(1)(a). The petition for judicial review must be a complaint which is governed by the Utah Rules of Civil Procedure and include the Committee as a necessary party and contain the required information listed in Subsection -404(2). Utah Code § 63G-2-404(1) & (2). The court shall make its decision de novo but shall allow introduction of evidence presented to the Committee, determine all questions of fact and law without a jury, and decide the issue at the earliest practical opportunity. Utah Code § 63G-2-404(6). In order to protect parties’ rights on appeal, a party may wish to seek advice from an attorney.

PENALTY NOTICE

Pursuant to Utah Code § 63G-2-403(15)(c), if the Committee orders the governmental entity to produce a record and no appeal is filed, the government entity herein shall comply with the order of the Committee and shall: (1) Produce the record; and (2) File a notice of compliance with the Committee. If the governmental entity ordered to produce a record fails to file a notice of compliance or a notice of intent to appeal, the Committee may do either or both of the following: (1) Impose a civil penalty of up to $500 for each day of continuing noncompliance; or (2) Send written notice of the entity's noncompliance to the Governor. Utah Code § 63G-2-403(15)(d)(i)(B). In imposing a civil penalty, the Committee shall consider the gravity and circumstances of the violation, including whether the failure to comply was due to neglect or was willful or intentional. Utah Code § 63G-2-403(15)(d)(ii).

Entered this 3rd day of January 2024

BY THE STATE RECORDS COMMITTEE

________________________________
Ken Williams
Chair, State Records Committee