Opinion
Opinion By: Albert B. Chandler III, Attorney General; James M. Ringo, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Air Pollution Control District of Jefferson County's (APCD) denial of Malcolm C. Winsper's February 28, 2002 open records request, on behalf of the Kentucky Motorcycle Association, for records involved in the ongoing arbitration proceeding between APCD and Gordon-Darby, Inc., violated the Open Records Act. We conclude that the denial did not constitute a violation of the Act.
On February 28, 2002, Mr. Winsper submitted the following request to APCD:
It has recently been made public that the APCD is in arbitration with its contractor, Gordon-Darby, for the Vehicle Emissions Testing (VET) program. In a number of instances, motorcycles have been mentioned in this public discourse.
Our organization formally requests, through the Open Records Law, Chapter 61, all materials involved in the litigation/arbitration between APCD and Gordon-Darby.
By letter dated March 1, 2002, Gaylord B. Ballard, Attorney for APCD, denied Mr. Winsper's request, advising:
First, there is no litigation between the parties. With regard to arbitration, District Regulation 1.08 Administrative Procedures addresses the issue. Section 6 Confidentiality and Open Records Policy states that records of such proceeding are public records not subject to inspection. The specific subsections under 6.3 Exceptions are 6.3.7 Preliminary drafts, notes or correspondence with individuals, other than correspondence which is intended to give notice of final action of a public agency; and 6.3.8 Preliminary recommendations and preliminary memoranda in which opinions are expressed or policies formulated or recommended.
The key words are "preliminary" and "final action". It is obvious that all correspondence and submittals are preliminary. Opinions are expressed by both parties with or without rebuttal. Arbitration sessions are private and confidential. Confidential information disclosed to an arbiter shall not be divulged.
Arbitration proceedings are by their very nature private. Two of the purposes of arbitration are to speed up the settlement process and to avoid the openness of court proceedings. Therefore, your request for arbitration materials is denied.
You stated that a reason for your request is that motorcycles have been mentioned in public disclosure. KRS 224.20-760 prohibits inspection of motorcycles. To my knowledge, there has been no attempt to repeal this prohibition.
In his letter of appeal, Mr. Winsper argued that the District's response failed to meet the requirements of KRS 61.880(1), in that the agency failed to cite the statutory authority of the Open Records Act authorizing nondisclosure. He further argued, in relevant part:
The procedures cited at 6.3.7 and 6.3.8 fail to provide protection of these documents should the Attorney General find the cited procedures substantially similar to exemptions at KRS 61.878. Attorney work product or litigation strategy aside, documents containing facts and data produced during the operation of the District are individual pieces of final agency action and discoverable in litigation. The documents need be inspected individually to determine if any qualify for protection under the Act exemptions. If you allow government agencies to arbitrarily label documents as "preliminary" documents, few documents would ever qualify for release.
After receipt of Notification of the appeal and a copy of Mr. Winsper's letter of appeal, Mr. Ballard provided this office with a response to the issues raised in the appeal. Elaborating on the APCD's initial response, Mr. Ballard advised, in relevant part:
Please note that Regulation 1.08 Sections 6.3.7 and 6.3.8 are identical to KRS 61.878 Section (1)(i) and (j). Their applicability is addressed in the District letter of March 1, 2002, to Mr. Winsper.
There are at least three references in Mr. Winsper['s] appeal to litigation. Black's dictionary Litigation as "A law suit. Legal action, including all proceedings therein. Contest in a court of law for the purpose of enforcing a right or seeking a remedy." On the other hand, Black's defines "Arbitration. A process of dispute resolution in which a neutral third party (arbitrator) renders a decision after a hearing at which both parties have an opportunity to be heard."
In 253 S.W.2d 629 Ky 1953 at 630, the court held that the law favors and encourages the settlement of controversies by arbitration. In their contract dated June 9, 1992, between the District and Gordon-Darby, in Section 23. Arbitration. the parties agreed that "The determination by the arbitrator shall be binding on the parties."
Arbitration hearings are private and the regulations applicable to litigation have nothing to do with arbitration proceedings. A copy of my District opinion supporting this position is enclosed.
Mr. Winsper has cited Kentucky Lottery Corp. This case deals primarily with open records handling during litigation. The District has never referred to litigation or contemplated litigation between the parties in its denial of an inspection of arbitration materials requested by the applicant.
We are asked to determine whether APCD violated the Open Records Act in denying Mr. Winsper's request for "all materials" involved in the arbitration proceedings between APCD and Gordon-Darby. For the reasons that follow, we conclude that the denial was in substantial compliance with the requirements of the Act.
Addressing the procedural issue first, the APCD's initial response was procedurally deficient in failing to cite the specific exceptions of the Open Records Act upon which it relied that authorized withholding the requested records. KRS 61.880(1) sets forth the procedural guidelines for agency response to an open records request. That statute provides, in part:
. . . An agency response denying, in whole or in part, inspection of any record shall include a statement of the specific exception authorizing the withholding of the record and a brief explanation of how the exception applies to the record withheld . . . .
This procedural deficiency is mitigated by the fact that the agency's supplemental response did set forth the exceptions upon which it relied, KRS 61.878(1)(i) and (j), and the fact that the language of the APCD's Regulation 1.08 - Sections 6.3.7 and 6.3.8, cited in its initial response as a bases for withholding disclosure of the records, is identical to KRS 61.878(1)(i) and (j).
Turning to the substantive issue, we find that the APCD properly relied upon KRS 61.878(1)(i) and (j) in denying Mr. Winsper's request for "all material" related to the arbitration proceedings.
Arbitration has been defined as "an arrangement for taking and abiding by the judgment of selected persons in some disputed matter, instead of carrying it to established tribunals of justice, and is intended to avoid the formalities, the delay, the expense and vexation of ordinary litigation." BLACK'S LAW DICTIONARY 96 (5th Edition 1983) (citations omitted).
As noted in the agency's responses and Mr. Winsper's request, APCD and Gordon-Darby, Inc. are engaged in arbitration proceedings. APCD's supplemental response states that in Section 23 of their contract, dated June 9, 1992, the parties agreed that the determination by the arbitrator would be binding on the parties.
In support of APCD's position that arbitration proceedings are private and that records of the arbitration proceedings are not subject to inspection under the Open Records Act, Mr. Ballard enclosed with his supplemental response a copy of his February 28, 2002 Memorandum to Art Williams, Director, APCD, Re: Opinion re Arbitration Proceedings. In his Memorandum, Mr. Ballard advised, in part:
You have asked my opinion as to whether any correspondence or submittals in connection with the arbitration matter being scheduled now are public records open to inspection.
It is my opinion that the arbitration proceedings are public records that are not subject to inspection under the Open Records Act.
KRS 61.878(1) provides, in part, that the following records are excluded from the application of KRS 61.870 to 61.884 and shall be subject to inspection only upon [an order] of a court of competent jurisdiction . . . [i] Preliminary drafts, notes, correspondence with private individuals. Other than correspondence which is intended to give notice of final action of a public agency.
The key words are "preliminary" and "final action." It is obvious that all correspondence, submittals, and any correspondence are preliminary. Opinions are expressed by both parties with or without rebuttal. Nothing is final until the arbitrator submits a binding determination.
In the American Arbitration Association (AAA) Commercial Dispute Resolution Procedures it states under Commercial Mediation Rules that: M-11 Privacy[.] Mediation sessions are private. The parties and their representatives may attend mediation sessions. Other persons may attend only with the permission of the parties and with the consent of the mediator. M-12 Confidentiality. Confidential information disclosed to a mediator by the parties or by witnesses in the course of the mediation shall not be divulged by the mediator. All records, reports, or other documents received by a mediator while serving in that capacity shall be confidential. The mediator shall not be compelled to divulge such records or to testify in regard to the mediation in any adversary proceeding or judicial forum.
The parties shall maintain the confidentiality of the mediation and shall not rely on or introduce as evidence in any arbitral, judicial, or other proceeding:
While I could not find anything in the separate rules for arbitration, I did call the AAA office in Cincinnati and was assured that M-11 and M-12 did apply to arbitration proceedings. The applicability is in the rules book but not on the web site.
Not only is the Open Records Act involved in this situation but the Open Meetings Act is involved also. If the C-J is allowed to inspect the arbitration proceedings, it would follow that the C-J, and anyone else, would be allowed to attend the arbitration meeting.
Although I would not wish to quote a confidential source, I was assured that arbitration hearings are private. Two of the purposes of arbitration are to speed up the settlement process and to avoid the openness of court proceedings. To allow the C-J to inspect the arbitration documents and to attend the hearing would severely damage the process.
We agree with the APCD's argument and analysis. An arbitration proceeding is generally private and materials presented and opinions expressed before the arbitrator are confidential. 1 We conclude that these proceedings and materials presented are exempt from disclosure under KRS 61.878(1)(i) and (j), until the arbitrator has made a final determination. These provisions authorize the nondisclosure of:
Preliminary drafts, notes, correspondence with private individuals other than correspondence which is intended to give notice of final action of a public agency.
Preliminary recommendations, and preliminary memoranda in which opinions are expressed or policies formulated or recommended.
By use of mediation, minitrials, and other methods of ADR, the parties may for legitimate, good-faith reasons want their discussions to be private, immune both from later admission and from discovery by other potential plaintiff's lawyers, and maybe even from competitors. Since agreement may be impossible if a mediator cannot overcome the parties' wariness about confiding in each other, effective mediation demands that the parties be privileged not to testify about communications they have made to each other in the course of mediation. In other words, the very success of alternative dispute resolution mechanisms may depend upon expectations of confidentiality . . . . (Footnotes omitted.)
The arbitration proceedings are similar in nature to the proposals and counterproposals that take place between a public agency and a private contractor during the negotiation process of a disputed public contract in which no final resolution of the dispute has been reached. In 99-ORD-13, this office held that the Transportation Cabinet did not violate the Open Records Act in partially denying a request for various records relating to defective concrete used by a contractor in a reconstruction project of a portion of Interstate 75 in Kenton County, Kentucky. In that decision, we stated at pgs. 3-5:
We find that the Transportation Cabinet properly relied on KRS 61.878(1)(j) in partially denying [the requester's] request. The disputed documents in this appeal consist of a proposal submitted by the Cabinet to [the contractor] relating to the problems with the concrete pavement on I-75, and [the contractor's] counterproposal. Our review of these documents does not confirm the existence of a "plan" submitted by the company. The proposal and counterproposal are still on the negotiating table, and no final resolution of the dispute has been reached.
In an early opinion, this office observed:
OAG 79-347, p. 3; OAG 79-326 (holding that proposals and counterproposals submitted in negotiating process may be withheld pursuant to KRS 61.878(1)(i) and (j)); OAG 87-21 (holding that records involved with an ongoing competitive negotiation process are preliminary pending final resolution of the matter); OAG 91-21 (holding that letter of intent issued by city and county relative to incentive package is subject to negotiation until such time as final agreement is reached among the parties and may be withheld pursuant to KRS 61.878(1)(i) and (j)); 97-ORD-62 (holding that records generated in the course of negotiations and disclosing the substance of those negotiations may be withheld pursuant to KRS 61.878(1)(i) and (j) since "premature disclosure of records reflecting the negotiations . . . could seriously compromise the project [and] nondisclosure of those records prior to the finalization of the agreement promotes the purposes for which KRS 61.878(1)(i) [and] (j) . . . were enacted . . ."). On the basis of these authorities, we find no error in the Transportation Cabinet's denial of [the requester's] request for [the contractor's] counterproposal.
By the same legal reasoning, we conclude that the APCD properly denied access to the arbitration materials, which the APCD indicated included "correspondence and submittals, " in which "[o]pinions are expressed by both parties with or without rebuttal," that were submitted to the arbitrator in private and confidential non-final arbitration proceedings. Under these facts, the APCD did not violate the Open Records Act. Once the arbitrator has made a binding final determination, the document representing the final determination and any records adopted by the arbitrator as a part of his determination would be open for public inspection, unless otherwise exempt under an applicable exception set forth in KRS 61.878(1).
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.
Footnotes
Footnotes
1 In 4 Am.Jur.2d Alternate Dispute Resolution § 67, in discussing confidentiality concerns in dispute resolution, it is stated:
Checklist of reasons for confidentiality. The following is a checklist of reasons why parties may insist on confidentiality in settlement of ADR proceedings:
. To protect against harm in subsequent litigation.
. To protect against the dissemination of proprietary or competitive information, especially in trade secret and patent disputes, restrictive covenant litigation, and customer-supplier disagreements.
. A wish by both sides to avoid the creation or judicial precedent (as in intrainsurance disputes) or to avoid publicity (as in employer-employee disputes, will contests, and family disagreements.