Can a Delaware city committee meet privately to interview vendors competing for a public contract?

Official title

08-IB10 RE: Freedom of Information Act Complaint Against City of Rehoboth Beach

Plain-English summary

Rehoboth Beach's Boardwalk Committee was searching for an engineering firm to design the first phase of a boardwalk reconstruction project. After publishing a request for qualifications, the committee met privately on three dates in late March and early April 2008 to rank and then interview the five firms that responded, without telling the public those sessions were happening or voting in public to close them. A resident complained.

On the substance, the AG sided with the city. The firms' qualifications packets, along with additional technical details some firms shared only in their interviews (like a mapping process one firm hadn't disclosed anywhere else), counted as confidential commercial information under FOIA's trade secrets exemption. Borrowing the federal test used for the nearly identical federal FOIA exemption, the AG reasoned that disclosing this kind of competitive bidding detail would likely either harm the firms' competitive positions or make it harder for the city to get candid submissions in future procurements, so the topic of these closed sessions was legitimately exempt from public view.

But qualifying for the exemption did not excuse the city from FOIA's separate procedural rules for entering executive session in the first place: giving the public advance notice that an executive session would happen, and voting in an open meeting to actually go into one. The Boardwalk Committee skipped both steps three times. The AG found that violation, but declined the resident's request to void the resulting contract with the winning firm, Kercher Engineering. The recommendation to hire Kercher and the vote to authorize the contract had both happened at properly noticed public meetings, and the contract was already signed and being performed, so the AG concluded a court would be unlikely to take the "very serious" step of unwinding it. Instead, the AG required Rehoboth Beach's commissioners to sign a one-year consent agreement giving the AG's office three days' advance notice before any future executive session, a compliance check rather than a fine or reversal.

Currency note

This opinion was issued in 2008. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did a citizen have to prove a government meeting was secretly held before Delaware's AG would investigate?

Not fully, according to this opinion. Once a complainant identified enough specifics for the public body to check, and the body admitted the meetings happened, the AG treated the complaint as substantiated rather than requiring independent proof from the citizen.

Could a Delaware public body meet privately to review and interview companies competing for a contract?

Yes, according to this opinion, when the discussion involved confidential commercial or financial information, such as competing firms' proposals and pricing, whose disclosure could harm their competitive position or discourage candid submissions in future procurements.

Did qualifying for an executive-session exemption excuse a public body from other FOIA notice requirements?

No, according to this opinion. Even where the topic of a closed session was legitimately exempt, the public body still had to give advance public notice of its intent to hold the session and vote at a public meeting to go into it.

Would a Delaware court void a contract simply because the underlying committee meetings violated the open-meetings law?

Not necessarily, according to this opinion. Where the contract itself was later the subject of properly noticed public votes and had already been signed and performed, the AG found a court unlikely to impose voiding as a remedy.

Background and statutory framework

FOIA defined a "meeting" as a gathering of a quorum to discuss or act on public business, 29 Del. C. § 10002(b), and required that "[e]very meeting of all public bodies shall be open to the public." Id. § 10004(a). Executive sessions closed to the public were permitted only on a majority vote at an open meeting, with the vote result made public and recorded in the minutes and the purpose stated on the agenda, id. § 10004(c), including for the purpose of discussing documents that were not public records under § 10002(g) where discussion would reveal their contents, id. § 10004(b)(6). One such exemption covered "[t]rade secrets and commercial or financial information … which is of a privileged or confidential nature." Id. § 10002(g)(2). Regular meetings also required seven days' public notice of "intent to hold an executive session closed to the public." Id. § 10004(e)(2).

On the threshold question of whether the resident had to independently prove the private meetings occurred, the AG applied the burden-shifting rule from Iowa's Gavin v. City of Cascade, requiring "substantive proof of a secret meeting rather than mere speculation," but treated the complaint as substantiated once the city admitted the meetings took place. On the merits, because Delaware's trade-secrets exemption was "identical" to the federal FOIA's confidential-commercial-information exemption, 5 U.S.C. § 552(b)(4), the AG applied the D.C. Circuit's National Parks & Conservation Ass'n v. Morton test, asking whether disclosure was likely to impair the public body's future ability to obtain similar information or cause substantial competitive harm to the firms involved, a test the AG noted had been approved by Congress in CNA Fin. Corp. v. Donovan and followed by the federal district court in Delaware in United Technologies Corp. v. Dep't of Health and Human Serv.. The Fifth Circuit's Shermco Indus., Inc. v. Sec'y of the Air Force supported treating competitive pricing information as confidential on similar reasoning. Having found the topic exempt, the AG still found the city's failure to notice its intent to hold executive session and to vote publicly before doing so violated FOIA, but declined to seek voiding of the resulting contract under 29 Del. C. § 10005(a), citing the Delaware Supreme Court's Wilmington Fed'n of Teachers v. Howell for the principle that courts are reluctant to impose that "very serious sanction" once a contract has been the subject of later, properly noticed votes and has already been performed.

Citations

• 29 Del. C. § 10001 (FOIA's declaration of policy)
• 29 Del. C. § 10002(b) (defining "meeting" as a gathering of a quorum to discuss or act on public business)
• 29 Del. C. § 10004(a) (meetings of public bodies must be open to the public)
• 29 Del. C. § 10004(c) (executive session requires a majority vote at an open meeting, with the vote and purpose made public)
• 29 Del. C. § 10004(b)(6) (executive session permitted to discuss non-public documents where discussion would reveal their contents)
• 29 Del. C. § 10002(g)(2) (exemption for confidential trade secrets and commercial or financial information)
• 29 Del. C. § 10004(e)(2) (seven days' public notice required, including intent to hold an executive session)
• 29 Del. C. § 10005(a) (Court of Chancery may void action taken in violation of FOIA)
• 5 U.S.C. § 552(b)(4) (federal FOIA exemption for confidential commercial or financial information, textually identical to Delaware's exemption)
• Gavin v. City of Cascade, 500 N.W.2d 729, 732 (Iowa App. Ct. 1993) (Iowa state court; a FOIA complainant must show substantive proof of a secret meeting, not mere speculation, to shift the burden to the public body)
• Nat'l Parks & Conservation Ass'n v. Morton, 498 F.2d 765 (D.C. Cir. 1974) (federal court; commercial or financial information is confidential if disclosure would impair future information-gathering or cause substantial competitive harm)
• Shermco Indus., Inc. v. Sec'y of the Air Force, 613 F.2d 1314 (5th Cir. 1980) (federal court; basic pricing information can be confidential commercial information)
• Wilmington Fed'n of Teachers v. Howell, 374 A.2d 832, 835 (Del. 1977) (Delaware state court; courts are reluctant to impose the "very serious sanction" of voiding government action already relied upon)
• CNA Fin. Corp. v. Donovan, 830 F.2d 1132, 1152 n. 146 (D.C. Cir. 1987) (federal court; Congress approved the National Parks confidentiality test)
• United Technologies Corp. v. Dep't of Health and Human Serv., 574 F.Supp. 86 (D. Del. 1983) (federal court; the District of Delaware follows the National Parks test)

Source

• Landing page: https://attorneygeneral.delaware.gov/2008/07/16/08-ib10-re-freedom-of-information-act-complaint-against-city-of-rehoboth-beach/
• Original PDF: not linked from landing page

Original opinion text

Del. Op. Atty. Gen. 08-IB10 (Del.A.G.), 2008 WL 3485366

Office of the Attorney General

State of Delaware

Opinion No. 08 – IB10

July 16, 2008

RE: Freedom of Information Act Complaint Against City of Rehoboth Beach

*1 Mr. Dennis J. Barbour

153 Columbia Ave.

Rehoboth Beach, DE 19971

Dear Mr. Barbour:

On May 7, 2008, the Delaware Department of Justice (“DDOJ”) received your complaint alleging that the City of Rehoboth Beach (“City”) violated the Freedom of Information Act (“ FOIA ”), 29 Del. C . § 10001 et seq. , when the City’s Boardwalk Committee held meetings between March 27 and April 2, 2008 that were 1) not publicly noticed, 2) were not open to the public, and 3) for which no minutes were made available. 1 On May 8, 2008, we sent your complaint to the City, and, pursuant to this office’s grant of an extension of time in which to respond, we received its response on May 21, 2008. On May 28, 2008, you made a supplemental submission in reply to the City’s response. On May 29, 2008, the City provided us, at our request, with the five Statements of Qualifications submitted in response to the City’s Request for Qualifications (“RFQ”) regarding its search for an engineering firm to provide professional services related to reconstruction of the Rehoboth Beach Boardwalk. 2 On June 4, 2008, we received your reply to the material the City submitted on May 29, and we requested the City’s response by June 25, 2008. The City provided the RFQ with that response.

As an initial matter, the City disputes that you have made a prima facie case that meetings occurred that were closed to the public. We have previously determined that in order to avoid placing on the public body the burden of proving a negative, the complainant “‘must show substantive proof of a secret meeting rather than mere speculation in order to shift the burden of going forward.”’ Att’y Gen. Op . 05-IB10, at 4 (Apr. 11, 2005), 2005 WL 1209240 (quoting Gavin v. City of Cascade , 500 N.W.2d 729, 732 (Iowa App. Ct. 1993) ). Although your complaint did not substantiate your allegations of secret meetings, you did identify enough information to enable the City to determine that the Boardwalk Committee did meet between March 27, 2008 and April 2, 2008 without public notice. Because the City, properly, admitted the truth of your allegations, we will consider your complaint as if you had substantiated your allegations.

Statement of the Facts

According to the City, at public meetings in February, 2008, the Boardwalk Committee proposed, and the City Commissioners approved, obtaining the services of a professional engineering firm to produce plans and specifications for Phase I of the Boardwalk reconstruction project. In late February and early March, 2008, the City published an RFQ, which included the “Selection Procedure” -“[t]he City will select the firm they feel is most qualified to complete this project based on the written submissions and interviews.” The Boardwalk Committee met without public notice in closed sessions on March 27, 31 and April 2, 2008 to rank and then interview individually the engineering firms that responded to the RFQ. At the interviews, some of the engineering firms made PowerPoint presentations or distributed written material to supplement their Statements of Qualifications.

*2 On April 11, 2008, the Boardwalk Committee held a public meeting at which, according to the agenda, it provided an “update” on the RFQ submissions and voted to recommend to the City Commissioners that they be permitted to contract with one of the submitters, Kercher Engineering, Inc. (“Kercher”). The City Commissioners voted at a public meeting on April 21, 2008 to authorize the Boardwalk Committee to enter into a contract with Kercher. It is undisputed that the Boardwalk Committee neither provided public notice of its intent to hold executive sessions for the purpose of interviewing the submitters and discussing the Statements of Qualifications, nor voted at a public meeting to go into executive session on March 27, 30 and April 2, 2008.

Relevant Statutes

29 Del. C . § 10002 (b) defines “[m]eeting” as a “gathering of a quorum of the members of any public body for the purpose of discussing or taking action on public business.” “Every meeting of all public bodies shall be open to the public[.]” 29 Del. C . § 10004(a) . As to executive sessions, which are closed to the public, 29 Del. C . § 10004(c) provides they may take place on the approval of a majority of the members at a meeting that is open to the public, “and the results of the vote shall be made public and shall be recorded in the minutes. The purpose of such executive sessions shall be set forth in the agenda and shall be limited to the purposes listed in subsection (b) of this section.” Subsection (b)(6) provides that an executive session may be held for the purpose of discussing documents that are not public records pursuant to 29 Del. C . § 10002 , where the discussion may reveal the contents of such documents. 29 Del. C . § 10002(g)(2) provides that “[t]rade secrets and commercial or financial information … which is of a privileged or confidential nature” are not public records.

29 Del. C . § 10004(e)(2) requires public bodies to provide the public seven days’ notice of the time, place and agenda (if one has been determined) for their regularly scheduled meetings “and of their intent to hold an executive session closed to the public[.]”

Discussion

FOIA exempts from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 29 Del. C . § 10002(g)(2) . The City contends the private meetings of the Boardwalk Committee were executive sessions pursuant to 29 Del. C . § 10004(c) and (b)(6) and § 10002(g)(2) because the purpose of the meetings was to discuss confidential commercial or financial information. The City provided to us for confidential review the Statements of Qualifications submitted by five engineering firms in response to the RFQ. First, from our review of these documents, we find that the Statements of Qualifications are commercial information obtained from a person. The question is whether they are “confidential.” Because 29 Del. C . § 10002(g)(2) and the comparable provision of federal law, 5 U.S.C. § 552(b)(4) , are identical, we can look to federal case law for guidance in interpreting Delaware’s statute.

*3 Commercial and financial records are confidential if “disclosure … is likely … (1) to impair the [public body’s] ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.” Nat’l Parks & Conservation Ass’n v. Morton , 498 F.2d 765 (D.C. Cir. 1974) . 3 Applying this test to the Statements of Qualification submitted in response to the Boardwalk Committee’s RFQ, we find that public discussion of these documents likely would either hamper the City’s future ability to obtain this type of information or cause substantial harm to the submitters’ competitive positions. The Statements of Qualifications contained such information as plans to analyze alternative materials, work schedules, engineering drawings, and schedules of rates—information that would likely be invaluable to a competitor who came later in the review of proposals. See Shermco Indus., Inc. v. Sec’y of the Air Force , 613 F.2d 1314 (5th Cir. 1980) (basic pricing information was confidential). Moreover, in the interviews, the engineering firms presented additional information that would have advantaged a competitor were the interviews open to the public; for example, one firm discussed a technical mapping process that was neither proposed nor discussed by any other firm. As the City explained, public meetings where competitive bids or proposals are presented or discussed would likely result in “unfair gamesmanship,” preventing the public body from obtaining “the free and honest exchange of information critical to the integrity of the competitive process.” Disclosure “would jeopardize the [public body’s] ability to discern clearly which bidder could do the best job for the lowest price … [while] [n]ondisclosure … encourages competing bidders to enter bids which accurately reflect their capabilities and their costs; … Absent … confidentiality, bidders might be reluctant to disclose such information to the procuring government agency.” Id . at 1317. This was not a process, as you have asserted, where sealed bids could not be supplemented once opened. The bidding process included interviews where bidders provided the Boardwalk Committee with valuable additional documentation concerning the proposals. Therefore, we find that the Boardwalk Committee’s closed executive sessions were properly for the purpose of discussing confidential commercial documents.

However, the Boardwalk Committee did violate FOIA when it held executive sessions without notice to the public and when it failed to hold a public vote to go into executive session. You have asked the DDOJ to invalidate the Kercher contract if we find that the contract resulted from illegal meetings, but the DDOJ has no legal authority to issue such an order. While the Court of Chancery has the power pursuant to 29 Del. C . § 10005 (a) to void any action taken in violation of FOIA , the DDOJ declines to pursue such an order in this case because, as the Kercher contract was the subject of two properly noticed public meetings—one of the Boardwalk Committee on April 11, 2008 and one of the City Commissioners on April 21, 2008—and the contract has been entered into and is being performed, it is unlikely that a court will impose the “very serious sanction” of voiding the actions of the Boardwalk Committee. Wilmington Fed’n of Teachers v. Howell , 374 A.2d 832, 835 (Del. 1977) . Discussion of the submissions was appropriately done in executive session, and the votes to recommend and to authorize the Kercher contract occurred at the open meetings of April 11 and 21, 2008. Given those facts, it is unnecessary to require that the process be repeated to remedy the violations.

*4 However, we cannot ignore that the Boardwalk Committee violated FOIA on three separate occasions. The public has a right to know when executive sessions are taking place, the purpose of the executive sessions and the outcome of the vote to go into executive session. In order to ensure that these violations are not repeated, we will require that the Commissioners of the City of Rehoboth Beach enter into a consent agreement with the Attorney General, to require that the City provide notice of any and all Executive Sessions to the DDOJ at least three days prior to public notice of the Executive Session for a period of one year.

Conclusion

For the reasons stated herein, it is determined that purpose of the executive sessions of March 27 and 31 and April 2, 2008 was the discussion of confidential commercial records, which can properly be done outside of public view. However, the Boardwalk Committee of the City of Rehoboth Beach violated FOIA in holding those executive sessions 1) without giving the public seven days notice of its intent to hold executive sessions and 2) without voting at a public meeting to go into executive session. The attorney for the City will be contacted regarding the specific terms of the consent agreement.

Very truly yours,

Judy Oken Hodas

Deputy Attorney General

Approved

Lawrence W. Lewis

State Solicitor

Footnotes

1
The City has represented that minutes are being prepared. Therefore, we will not address the issue of failure to keep minutes.

2
The City maintains that these five documents are confidential. We agree, for the reasons discussed below.

3
The National Parks test was approved by Congress, CAN Fin. Corp. v. Donovan , 830 F.2d 1132, 1152 n. 146 (D.C. Cir. 1987) , and is followed by the United States District Court for the District of Delaware. United Technologies Corp. v. Dep’t of Health and Human Serv. , 574 F.Supp. 86 (D. Del. 1983) .

Del. Op. Atty. Gen. 08-IB10 (Del.A.G.), 2008 WL 3485366