Springfield Terminal Railway Co. v. Agency of Transportation (2001-447);
174 Vt. 341; 816 A.2d 448
NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
Springfield Terminal Railway Company Supreme Court
On Appeal from
v. Washington Superior Court
Agency of Transportation, and Green October Term, 2002
Mountain Railroad Corp., Vermont
Railway, Inc., Northern Vermont
Railroad Company, Intervenors
Matthew I. Katz, J.
Christopher D. Roy of Downs Rachlin Martin PLLC, Burlington, for
William H. Sorrell, Attorney General, and Thomas R. Viall, Assistant
Attorney General, Montpelier, for Defendant-Appellee.
Mark D. Oettinger of Lisman, Webster, Kirkpatrick & Leckerling,
Burlington, for Intervenor-Appellee Northern Vermont Railroad Company.
Eric R. Benson, Burlington, for Intervenors-Appellees Green Mountain
Railroad Corporation and Vermont Railway, Inc.
PRESENT: Amestoy, C.J., Morse, Johnson and Skoglund, JJ.
SKOGLUND, J. Plaintiff Springfield Terminal Railway Company ("STR")
appeals from the superior court's grant of summary judgment in favor of
defendant Vermont Agency of Transportation ("VTrans"). STR argues that the
superior court improperly granted summary judgment by incorrectly
interpreting 1 V.S.A. § 317(c)(9) (FN1) to exempt from mandated public
disclosure under Vermont's Access to Public Records Act specific financial
information submitted to VTrans in response to requests for proposals to
provide rail freight service in the state. We find that § 317(c)(9) exempts
from public disclosure the financial information submitted to VTrans and,
therefore, affirm the superior court's grant of summary judgment.
In February 2000, VTrans issued a request for proposals, seeking a
rail freight operator to provide freight service over a railroad line
running from White River Junction to Wells River. The proposal request
specifically required that each bidding operator submit detailed
information regarding corporate finances, in addition to a general
technical proposal. In response to VTrans's request, intervenors Northern
Vermont Railroad Company, Green Mountain Railroad Corporation, and Vermont
Railway (collectively the "intervenors") submitted proposals containing the
required financial information. STR also submitted a proposal, but omitted
the required financial information, stating that it did not "believe that
the State of Vermont or the Agency of Transportation has the expertise
necessary to accurately assess the requested information, nor does [STR]
believe that its financial ability to operate this line should be open to
question." STR instead proposed to post a bond to ensure its ability to
meet its operating and maintenance obligations to the line.
STR's proposal was initially deemed non-responsive and rejected by
VTrans. STR appealed the rejection of its proposal to the Secretary of
Transportation, who reversed the initial decision and allowed STR's
proposal to be considered by VTrans's selection committee. The selection
committee ultimately chose a proposal submitted by intervenor Northern
Vermont Railroad Company
("NVR"). The Secretary of Transportation ratified the selection and the
parties then negotiated a long-term operating agreement.
Prior to the selection of NVR's proposal, STR submitted by letter
dated March 16, 2000, a request to inspect and/or copy public records
relating to the selection, solicitation, and recruitment of entities to
operate the rail line. On April 6, 2000, VTrans responded by producing
some of the requested documents, but withheld from disclosure other
documents, claiming them as exempt from Vermont's Access to Public Records
Act pursuant to 1 V.S.A. § 317. VTrans wrote:
Generally speaking, we consider copies of the proposals submitted
to the Agency by potential operators in response to the [request
for proposals] notice to be confidential under 1 V.S.A. §
317(b)(15) (exemption from records relating to negotiation of
contracts) until such time as the Secretary of Transportation has
confirmed the selection committee's recommendation in favor of a
particular operator. Furthermore, we consider financial
information submitted by potential operators to be confidential on
an ongoing basis under 1 V.S.A. § 317(b)(6) (exemption for
financial information submitted in connection with agency
business), 317(b)(7) (exemption for information relating to
finances of an individual or a private corporation), and §
317(b)(9) (exemption for proprietary information known only to
certain individuals within a commercial concern).
Most relevant to this appeal is VTrans's refusal to disclose specific
financial information submitted by the intervenors. This withheld
financial information included balance sheets, income statements, profit
and loss statements, statements of retained earnings, statements of cash
flows, and five or six year freight and passenger flow projections. At the
request of intervenor Green Mountain Railroad Corporation, VTrans also
withheld information including the names of current and potential shippers,
stockholder information, and employee information.
On May 17, 2000, STR again requested access to the intervenors'
proposals. On April 26, 2000, VTrans denied STR's request, again
maintaining the information as exempt from disclosure.
STR responded by filing for an injunction in superior court on July 8,
2000, seeking an order requiring VTrans to produce the withheld documents
pursuant to 1 V.S.A. §§ 315-320, Vermont's Access to Public Records
statutes. On July 24, 2000, a hearing was held to address several issues,
including previously filed motions to intervene. At this hearing, STR's
attorney admitted that STR sought disclosure of the financial information
submitted to VTrans because it desired the "business and other information"
of its competitors and that they were "being nosey."
In October 2000, VTrans and the intervenors filed motions for summary
judgment. STR responded by filing a cross-motion for summary judgment on
November 15, 2000. The superior court issued an order on January 31, 2001
dismissing STR's complaint and finding that the financial information
sought by STR was exempt from disclosure pursuant to 1 V.S.A. § 317(c)(9).
STR filed a motion for reconsideration on March 7, 2001, arguing that the
intervenors' voluntary submission of the financial information to VTrans
constituted a waiver of confidentiality. The superior court denied
reconsideration on August 24, 2001. This appeal followed.
Our review of summary judgment is de novo. This Court uses the same
standard as the trial court. We will affirm summary judgment "if there are
no genuine issues of material fact and the moving party is entitled to
judgment as a matter of law." Granger v. Town of Woodford, 167 Vt. 610,
611, 708 A.2d 1345, 1346 (1998) (mem.); V.R.C.P. 56(c).
The relevant issue in this appeal is whether the financial information
provided to VTrans by the intervenors and ultimately sought by STR is
exempt from public disclosure under Vermont's Access to Public Records Act.
See 1 V.S.A. §§ 315-320. We have an established method for analyzing
appeals arising under the Public Records Act. See Trombley v. Bellows
Falls Union High School, 160 Vt. 101, 106-07, 624 A.2d 857, 861 (1993)
(stressing that the Court's approach to the
Public Records Act is similar to that for open meeting law cases). The
Public Records Act represents and exhibits a strong policy favoring access
to public documents and records. Id. Exceptions to that general policy of
disclosure are listed in 1 V.S.A. § 317(c). We construe these exceptions
strictly against the custodians of records and resolve any doubts in favor
of disclosure. Id. (citing Caledonian-Record Publishing Co. v. Walton, 154
Vt. 15, 20, 573 A.2d 296, 299 (1990). The burden of showing that a record
falls within an exception is on the agency seeking to avoid disclosure.
Finberg v. Murnane, 159 Vt. 431, 434, 623 A.2d 979, 981 (1992). The agency
meets that burden by making a specific factual showing and not merely by
averring conclusory claims. Id. at 438, 623 A.2d at 983.
Unless an exception pursuant to § 317(c) applies, STR is entitled to
access the records that it seeks; the financial information submitted to
VTrans with the intervenors' proposals qualifies as a public record
potentially subject to disclosure. See 1 V.S.A. §§ 315, 317(b)
(establishing that "certain public records shall be made available" and
defining a public record as " all papers . . . or any other written or
recorded matters . . . produced or acquired in the course of agency
business"). To avoid disclosure of the submitted financial documents,
VTrans relied upon § 317(c)(9), which exempts from public inspection and
trade secrets, including, but not limited to, any formulae, plan,
pattern, process, tool, mechanism, compound, procedure, production
data, or compilation of information, which is not patented, which
is known only to certain individuals within a commercial concern,
and which gives its user or owner an opportunity to obtain
business advantage over competitors who do not know it or use it.
1 V.S.A. § 317(c)(9). The superior court concluded that the financial
information sought by STR qualified as a "compilation of information"
included within the § 317(c)(9) statutory exemption. On
appeal, STR argues that the statutory language of § 317(c)(9) exempting
"trade secrets" from public disclosure does not encompass the submitted
financial information to which STR seeks access under the Public Records
Act. To support its argument, STR suggests that the financial information
submitted to VTrans by the intervenors does not qualify as a trade secret
within the scope of § 317(c)(9) because: (1) the submitted financial
information is not proprietary in the nature of intellectual property; (2)
the Legislature did not expressly include "financial information or bid
documents" in the language of the statute; and (3) the financial
information was voluntarily disclosed by the intervenors to VTrans. We
To resolve this appeal, we must, for the first time, construe the
statutory language of § 317(c)(9). Our primary objective in construing a
statute is to effectuate the intent of the Legislature. Okemo Mtn., Inc.
v. Town of Ludlow, 171 Vt. 201, 210, 762 A.2d 1219, 1227 (2000). In order
to determine the Legislature's intent - the first step in our analysis - we
initially look to the language of the statute itself. Town of Hinesburg v.
Dunkling, 167 Vt. 514, 525, 711 A.2d 1163, 1169 (1998). The Legislature is
presumed to have intended the plain, ordinary meaning of the adopted
statutory language. Id. If the statute is unambiguous and the words have
plain meaning, we accept that plain meaning as the intent of the
Legislature and our inquiry proceeds no further. Town of Killington v.
State, 172 Vt. 182, 188, 776 A.2d 395, 400 (2001).
The plain meaning of the statutory language in § 317(c)(9) is clear,
and accordingly, no further interpretation is required to determine the
intent of the Legislature. For the purposes of § 317(c)(9), the
Legislature chose to include within the rubric of exempted trade secrets
any "compilation of information which is not patented, which is known only
to certain individuals within a commercial concern, and which gives its
user or owner an opportunity to obtain business advantage
over competitors who do not know it or use it." 1 V.S.A. § 317(c)(9). It
is apparent from this language that the Legislature did not intend to
limit, as STR contends, this statutory definition of trade secrets to
proprietary information in the nature of intellectual property. Instead,
the Legislature chose to broaden the scope of exempted documents by
expressly defining trade secrets as "including, but not limited to"
specific compilations of information. Id. (emphasis added). While we must
strictly construe exceptions to the Public Records Act, the statutory
language of § 317(c)(9) including "compilations of information" within the
rubric of trade secrets compels this interpretation of the statute. (FN2)
See Trombley v. Bellows Falls Union High School, 160 Vt. 101, 106-07, 624 A.2d 857, 862 (1993). Therefore, the inclusive language of the statute is
dispositive and we will not interpret the language defining "trade secrets"
in a more limited sense. See In re Handy, 171 Vt. 336, 341, 764 A.2d 1226,
1233 (2000) (refusing to read statutory language in a more limited sense
than its plain meaning).
From this unambiguous language, we must presume that § 317(c)(9)
reflects a legislative desire to protect from public access some
non-technical, competitively useful business information. See Town of
Hinesburg, 167 Vt. at 525, 711 A.2d at 1169 (holding that we can presume
legislative intent from the plain meaning of statutory language).
Therefore, STR's contention that the term "trade secrets" is limited to
proprietary information in the nature of intellectual property fails as it
ignores the plain statutory language and legislative intent of § 317(c)(9).
Accordingly, STR's claim that the Legislature would have specifically
stated "financial information or bid documents" had it
desired to exempt that information from disclosure also fails. We hold
instead that internal, corporate financial information can be exempt from
disclosure under the Public Records Act if that financial information
qualifies as a "compilation of information" as defined in § 317(c)(9).
Recognizing that § 317(c)(9) can exempt financial information from
public disclosure, the relevant question is whether the financial
information sought by STR qualifies for protection as a "compilation of
information." To qualify under this statutory language, the information
must not be patented, must be known only to those individuals within a
commercial concern, and must give the user or owner an opportunity to
obtain a business advantage over competitors who do not know or use that
information. 1 V.S.A. § 317(c)(9). VTrans must demonstrate that the
financial information sought by STR fits within the § 317(c)(9) exemption.
1 V.S.A. § 319(a); Trombley, 160 Vt. at 110, 624 A.2d at 863. To satisfy
its burden, VTrans prepared an itemized confidentiality log for the
superior court. The confidentiality log described the data contained in
the records submitted by the intervenors and sought by STR, including
balance sheets, cash flow statements, revenue histories, assets and
liabilities, retained earnings, names of shippers, stockholder information,
letters of reference from shippers, staff and supervision information,
potential shippers, target commodities, and plans for the proposed freight
service. VTrans also characterized the intervenors as closely-held
corporations, which STR did not dispute. The superior court concluded that
this data is generally private corporate information that gives its
possessor a commercial advantage over others, thus making the financial
information exempt from disclosure under § 317(c)(9). We agree with the
The financial information detailed in VTrans's confidentiality log
provides the intervenors with an opportunity to obtain a business advantage
over their competitors who do not have
knowledge of or access to that information. See 1 V.S.A. § 317(c)(9).
This sensitive, internal economic data of closely-held corporations might
be used to affect decisions regarding individual operational capabilities,
as well as to determine the content of proposals and bids for the services
of the intervenors, such as the rail freight service proposed to VTrans.
Disclosure of this financial information would give STR a detailed account
of that sensitive data and vitiate the competitive advantage held by the
intervenors. See Enterprise Leasing Co. v. Ehmke, 3 P.3d 1064, 1070 (Ariz.
Ct. App. 1999) (recognizing that internal financial information provides
economic value for its possessor and would allow a competitor to gain an
advantage if that information were made available). STR's admission that
it sought the financial information for the purpose of gaining a commercial
advantage over the intervenors emphasizes the economic value of this
internal financial data. While motive is irrelevant to the right of access
under the Public Records Act, Finberg, 159 Vt. at 437, 623 A.2d at 983
(1992), STR's motive for seeking the information is instructive in
determining that the financial information to which it sought access is the
kind entitled to protection pursuant to the statutory exception.
Moreover, adopting STR's interpretation of § 317(c)(9) has
unreasonable consequences. This Court will always avoid a statutory
construction which leads to absurd or irrational results. Heisse v. State,
143 Vt. 87, 90, 460 A.2d 444, 446 (1983). The financial information sought
by STR in this case was submitted to VTrans in response to a request for
proposals. VTrans required that those submitting proposals provide certain
sensitive financial information to allow for effective evaluation of those
proposals. Interpreting § 317(c)(9) in a manner that does not protect from
disclosure submitted financial information that qualifies as a compilation
of information would significantly hamper VTrans's ability to conduct a
comprehensive bid process. "It is a matter of
common sense that the disclosure of information the Government has secured
from voluntary sources on a confidential basis will both jeopardize its
continuing ability to secure such data on a cooperative basis and injure
the provider's interest in preventing its unauthorized release." Critical
Mass Energy Project v. Nuclear Regulatory Comm'n, 975 F.2d 871, 879 (D.C.
Cir. 1992) (construing the Freedom of Information Act). If we construed §
317(c)(9) as urged by STR, contractors and service providers may decline to
cooperate with the state, thus impairing the state's ability to make
intelligent, well-informed decisions. See id. at 877.
STR also argues that the intervenors waived any trade secret
protection of the financial documents under § 317(c)(9) by voluntarily
submitting them to VTrans. STR contends that it failed to submit its own
sensitive financial information to VTrans because its reading of the Public
Records Act gave them "little comfort that its internal, financial
information would remain confidential once submitted" to VTrans. STR's
stated concern highlights the irrational results of construing § 317(c)(9)
in the manner it suggests. Since we will not interpret a statute in a
manner that leads to irrational results, we will not interpret § 317(c)(9)
in a manner that causes potential contractors and service providers to
withhold information essential to the state in its selection process of
competitive bids. Financial information that is voluntarily submitted to
VTrans in response to a request for proposals can be exempt from public
disclosure if it qualifies as a trade secret as defined in § 317(c)(9).
Therefore, voluntary submission of financial information qualifying for
protection under § 317(c)(9) does not waive that protection.
Finally, STR argues that no other exceptions to the Public Records Act
set forth in 1 V.S.A. § 317 exempt the submitted financial information
from public access. Since the records are exempt from disclosure under §
317(c)(9) and the superior court did not address other potential
we decline to address that argument. For these reasons, we find that there
are no genuine issues of material fact and that VTrans is entitled to
judgment as a matter of law.
FOR THE COURT:
FN1. All parties to this appeal and the superior court incorrectly refer to
§ 317(b)(9). 1 V.S.A. § 317 was amended in 1996 to include subsection (c),
which clarified that the enumerated exceptions to the Vermont Access to
Public Records Act were exempt from public inspection and copying. See 1
V.S.A. § 317 (1995 & Supp. 2002); see also 1995, No. 159 (Adj. Sess.), § 2
("(c) The following public records are exempt from public inspection and
copying"). Pursuant to this amendment § 317(b)(9) became § 317(c)(9).
However, the operative language of § 317, subsection (9) was not amended.
Therefore, this citation error does not affect our analysis.
FN2. Adhering to our mandate to strictly construe exceptions to Vermont's
Access to Public Records Act, we decline appellees' urging to construe §
317(c)(9) in-pari-materia with the Vermont Trade Secrets Act, 9 V.S.A. §§
4601-4609. See Finberg v. Murnane, 159 Vt. 431, 436, 623 A.2d 979, 983
(1992) (refusing to construe the Public Records Act exception
in-pari-materia to avoid undermining the strong policy in favor of