Did the Division of Corporations violate FOIA by not producing a rejected LLC filing and related application-screen data?

Official title

19-IB49 9/9/2019 FOIA Opinion Letter to Messrs. Raynor Johnson and John Seitz re: FOIA Complaint Concerning The Department of State

Plain-English summary

Hickory Hill Group LLC (HHG) was in a dispute about whether and when it had been formed as a Delaware LLC. The 2014 formation document was received and time-stamped on February 19, 2014 at 12:22 pm but rejected for a discrepancy and, per Division of Corporations standard practice, the image of the rejected filing was purged from DCIS (the Delaware Corporate Information System). HHG's Pennsylvania litigation hinged on whether HHG existed in 2014. HHG's counsel filed a FOIA request seeking five categories of records, including the rejected filing itself, file-number-linked records, name reservation records, correspondence to John Seitz or Scott Edgell, and bank-card charge records.

The Department of State responded over several months. For items that could be produced as photocopies or images, the Department directed HHG to its standard request-and-pay process. For items 4 and 5 (correspondence and credit-card charges), the Department needed legal review. By July 26, 2019 the Department explained the 2014 history and why a 2014 formation date could not be assigned. Counsel's affidavit from the Technical Support Administrator detailed the data state: the 2014 image was purged, file numbers and reservation data exist as application-screen data without standalone documents, no documents to regenerate the 2014 correspondence, and no separate fee record for the name reservation.

The AG found no FOIA violation. It first discussed 6 Del. C. § 18-1105(a)(5), which governs how the Division of Corporations produces records. The statute says the Secretary "upon request shall issue only photocopies or electronic image copies of public records in exchange for the fees described in this section, and in no case shall the Secretary of State be required to provide copies (or access to copies) of such public records (including without limitation bulk data, digital copies of instruments, documents and other papers, databases or other information) in an electronic medium or in any form other than photocopies or electronic image copies." The AG found that the sworn record established the absence of responsive documents for the five items. It also found the pending-litigation exemption applicable because HHG acknowledged the records' relevance to its Pennsylvania litigation. The AG expressly did not decide whether the Secretary of State statute could require screen data by another method.

Currency note

This opinion was issued in 2019. 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

What is 6 Del. C. § 18-1105(a)(5) doing in a FOIA opinion?

It is a Title 6 statute (Commerce and Trade) governing how the Division of Corporations produces business-entity records. It expressly overrides FOIA: "Notwithstanding Delaware's Freedom of Information Act (Chapter 100 of Title 29) or other provision of law granting access to public records, the Secretary of State upon request shall issue only photocopies or electronic image copies of public records." That carve-out limits both the format and the universe of records the Division must produce.

Why does Delaware purge rejected business filings?

The Department's Technical Support Administrator said the 2014 filing was rejected for a discrepancy and its image was purged under standard practice. The opinion did not adjudicate HHG's formation date.

Did the AG decide whether application-screen data had to be provided by another method?

The affidavit said application-screen data remained but no associated documents could be produced for several requested items. The AG expressly declined to decide whether § 18-1105(a)(5) required the Department to provide that data by another available method, because it also found the pending-litigation exemption applicable.

The opinion mentions § 10002(l)(17)(a)(7). What does that exempt?

Information technology infrastructure details, source code, system designs, vulnerability reports, and similar materials whose disclosure could compromise the security or integrity of state IT systems. The Department invoked this for DCIS-internal data. The AG did not need to fully reach this argument because the photocopy-statute and the litigation exemption were dispositive.

Why does pending litigation in Pennsylvania matter for a Delaware FOIA?

The AG found the pending-litigation exemption applicable after HHG acknowledged the records' relevance to its Pennsylvania litigation. The opinion did not separately analyze the litigation's venue.

Background and statutory framework

The opinion examined the Secretary of State records provision, 6 Del. C. § 18-1105(a)(5), alongside Delaware FOIA. It quoted the provision governing photocopies and electronic image copies for a fee.

The opinion quoted 6 Del. C. § 18-1105(a)(5), which prescribes photocopies or electronic image copies on request for a statutory fee notwithstanding FOIA. The opinion quotes its command that "[n]otwithstanding Delaware's Freedom of Information Act (Chapter 100 of Title 29) or other provision of law granting access to public records," the Secretary of State "upon request shall issue only photocopies or electronic image copies of public records," and "in no case shall the Secretary of State be required to provide copies (or access to copies) of such public records (including without limitation bulk data, digital copies of instruments, documents and other papers, databases or other information) in an electronic medium or in any form other than photocopies or electronic image copies." On that basis, the opinion said the Division was not obligated to provide bulk data or digital record copies outside the statute's prescribed formats. It left open whether application-screen data could be supplied by another method, if available.

The "pending or potential litigation" exemption applied here because HHG itself acknowledged in its petition that the records were relevant to its Pennsylvania litigation over its formation date. The opinion found that admission sufficient to apply § 10002(l)(9), and therefore did not decide whether § 18-1105(a)(5) otherwise required another method of producing the application-screen data.

Citations

• 29 Del. C. §§ 10001-10007 (Delaware Freedom of Information Act)
• 29 Del. C. § 10002(l)(9) (pending or potential litigation)
• 29 Del. C. § 10002(l)(17)(a)(7) (IT infrastructure security exemption)
• 6 Del. C. § 18-1105(a)(5) (Secretary of State photocopy fee statute)
• 29 Del. C. § 2318 (cross-referenced fee statute)

Source

• Landing page: https://attorneygeneral.delaware.gov/2019/09/09/19-ib49-9-9-2019-foia-opinion-letter-to-messrs-raynor-johnson-and-john-seitz-re-foia-complaint-concerning-the-department-of-state/
• Original PDF: https://attorneygeneral.delaware.gov/wp-content/uploads/sites/50/2019/10/Attorney-General-Opinion-No.-19-IB49.pdf

Original opinion text

PRINT VERSION: Attorney General Opinion No. 19-IB49

OFFICE OF THE ATTORNEY GENERAL OF THE STATE OF DELAWARE

Attorney General Opinion No. 19-IB49

September 9, 2019

VIA EMAIL

Mr. Raynor Johnson

Mr. John Seitz

Hickory Hill Group LLC

[email protected]

RE: FOIA Petition Regarding the Department of State

Dear Messrs. Johnson and Seitz:

We write in response to your correspondence on behalf of Hickory Hill Group, LLC ("HHG") alleging that the Delaware Department of State violated the Delaware Freedom of Information Act, 29 Del. C. §§ 10001-10007 ("FOIA"). We treat your correspondence as a Petition for a determination pursuant to 29 Del. C. § 10005(e) regarding whether a violation of FOIA has occurred or is about to occur. As discussed below, we determine that the Department has not committed a FOIA violation as alleged.

BACKGROUND

HHG is involved in a dispute that relates to its date of formation as a business entity. In addition to the FOIA request at issue here, HHG contacted the attorney for the Division of Corporation for assistance with this matter. On June 21, 2019, HHG's counsel emailed a FOIA request to the Department seeking "all records concerning and related to a new LLC Formation Document received and time stamped on February 19th, 2014 at 12:22 pm by the Division of Corporations for Hickory Hill Group LLC." The request also specified five categories of documents sought by this request: 1) the documents "actually" received or filed; 2) records relating to file number 9023378; 3) records relating to reservation number 5484344; 4) correspondence to John Seitz or Scott Edgell, including faxes, emails, and phone records; and 5) charges and/or refunds to credit/debit bank cards for filing and name reservation.

On June 24, 2019, the Department responded to HHG's request, explaining that in order to obtain copies of items 1 through 3 that HHG requested, HHG needed to submit the request via one of the designated methods and provide payment. The Department offered HHG a link to its website, provided a phone number to call to make the request, offered to LiveChat over its website, and provided an email where HHG could submit the request. The Department explained how the requisite fee may be processed through check, money order, debit card, or credit card. For items 4 and 5, the matter was referred to another staff member for response and HHG was informed that additional time was needed for legal review. By a letter dated July 26, 2019, the Department explained what happened with regard to the 2014 filing and why the Division of Corporations cannot assign a 2014 formation date. HHG followed up on August 15, 2019 about the FOIA request, and the Department submitted a final responsive email, stating that the July 26, 2019 letter addressed items 4 and 5 in the FOIA request and served as a response to the inquiry made to the Division's attorney. With regard to item 3, this email also clarified the process for reserving a business name and explained that a fee is not typically charged for a name reservation for regular, as opposed to expedited, filings and that the reservation automatically expires after 120 days. Following this email, HHG filed this Petition.

The Petition alleges that the Department improperly responded to the request because no records had been produced and that the Department did not respond to items 4 and 5 at all, and it "appears that no attempt was ever made to produce any records outside of the five specifically identified records in the request such as telephone logs, memos, emails, reports and the like." In addition, the Petition alleges that HHG filed a request outside the FOIA process as indicated and still received no records in response. The Petition asserts that there is no dispute that the records exist, because documents were referenced in the Department's July 26, 2019 letter and the extension notice cited the "legal review of the records requested." The Petition states that it appears that the Department "has acted arbitrarily and capriciously by improperly denying the disclosure of public documents that it has generated, accepted, time stamped, and scanned into their system as they acknowledge that they did in fact do, as well as the refusal to provide records, copies and call logs of communications they alleged they made relative to the matter."

The Department's counsel submitted a response on August 26, 2019 ("Response"). The Response first alleges that FOIA is inapplicable due to 6 Del. C. § 18-1105(a)(5), which authorizes the Department to issue photocopies or electronic images of business entity instruments for a fee, notwithstanding Delaware's FOIA statute. Further, the Department states that the requested documents cannot be provided because they do not exist and enclosed an affidavit from its Technical Support Administrator, who explained that some documents were purged, unable to be regenerated due to age, or do not exist in a "document" format. The Administrator explains that the descriptions in the Department's correspondence were produced by reviewing the information in the Delaware Corporate Information System ("DCIS"), and not based on a review of documents. In the July 26 th correspondence, the Department explains that HHG's entity filing was received on February 19, 2014 and scanned into the system. However, due to a discrepancy, the document was rejected and the submitter was notified. Because the filing was rejected, the image was purged from the system per the Department's standard practice.

The Department also argues that producing this information is inappropriate, because DCIS data is protected by 29 Del. C. § 10002(l)(17)(a)(7) as "information technology (IT) infrastructure details, source code, logical and physical design of IT systems and interfaces, detailed hardware and software inventories, network architecture and schematics, vulnerability reports, and any other information that, if disclosed, could jeopardize the security or integrity of an information and technology system owned, operated, or maintained by the State or any public body subject to the requirements of this chapter." Finally, the Department alleges that the FOIA request was properly denied under 29 Del. C. § 10002(l)(9), as the requesting entity "has litigation in Pennsylvania, which includes the very issue of its non-existence in 2014." For these reasons, the Department alleges its denial was proper.

DISCUSSION

FOIA provides citizens access to "public records," but specifically excludes those records that are statutorily exempt from disclosure. FOIA also does not require a public body to provide records which do not exist. The Department has provided an affidavit of its Technical Support Administrator. Although certain data is available on the DCIS application screens, the Administrator describes that no associated "documents" responsive to the request can be produced from DCIS. The Administrator's affidavit explains the available information for each numbered item of HHG's request: 1) the image of the 2014 filing was purged from the system and the only information remaining is data on application screens regarding the submission; 2) the designated file number is linked to a submitter account with some data about the submitter but has no associated documents; 3) the reservation data is on an application screen but no associated document can be provided; 4) the correspondence to the identified individuals is noted in the data in the "old system application screens" but there is no way to regenerate a copy of the letter sent in 2014; and 5) there was no information regarding a charge for the name reservation, only a credit for a filing fee shown on the application screen; the Division previously explained that it did not charge the reservation fee for regular filings.

Delaware law provides the following with regard to the Department's records:

The Secretary of State may issue photocopies or electronic image copies of instruments on file, as well as instruments, documents and other papers not on file, and for all such photocopies or electronic image copies which are not certified by the Secretary of State, a fee of $10 shall be paid for the first page and $2.00 for each additional page. Notwithstanding Delaware's Freedom of Information Act (Chapter 100 of Title 29) or other provision of law granting access to public records, the Secretary of State upon request shall issue only photocopies or electronic image copies of public records in exchange for the fees described in this section, and in no case shall the Secretary of State be required to provide copies (or access to copies) of such public records (including without limitation bulk data, digital copies of instruments, documents and other papers, databases or other information) in an electronic medium or in any form other than photocopies or electronic image copies of such public records in exchange, as applicable, for the fees described in this section or § 2318 of Title 29 for each such record associated with a file number.

Thus, despite the requirements of FOIA, the Department of State, Division of Corporations is not obligated to produce any bulk data or digital copies of records, only those records produced by photocopying or electronic image copying, and the Department has confirmed in sworn testimony under penalty of perjury that the only existing information responsive to the five items is data on its application screens.

The Department also alleges that any responsive records would be exempt pursuant to 29 Del. C. § 10002(l)(9) as records pertaining to pending or potential litigation. The Petition indicates that HHG is involved in litigation regarding HHG's real property and acknowledges the relevancy of these records to the litigation, explaining that the Department's failure to acknowledge HHG's alleged formation date "has caused a major problem" regarding that litigation. As we conclude this exemption is also applicable, this Office need not decide whether 6 Del. C. § 18-1105(a)(5) obligates the Department to produce the data from the application screens by any other method, if available.

CONCLUSION

Based on the foregoing, it is our determination that the Department has not violated FOIA as alleged.

Very truly yours,

/s/ Alexander S. Mackler

Alexander S. Mackler

Chief Deputy Attorney General

cc:

Lawrence W. Lewis and Laura L. Gerard, Deputy Attorneys General

Dorey Cole, Deputy Attorney General