Opinion
Opinion By: Jack Conway, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
This matter having been presented to the Attorney General in an open records appeal, and the Attorney General being sufficiently advised, we find that the Kentucky Association of Counties did not violate the Open Records Act in partially denying John Rogers' January 4, 2011, request for "(1) copies of all agreements or contracts between [KACo] and Peel and Holland and (2) all copies of any agreements or contracts between [KACo] and any legal counsel." 1 KACo properly relied on KRS 65.312(1)(b) and (c), incorporated into the Open Records Act by KRS 61.878(1)(l), 2 in redacting federal employer identification number and "client lists" from the records disclosed to Mr. Rogers.
In its January 12, 2012, response, KACo indicated that the federal ID and insured entity's names were redacted from two of the six records disclosed. 3 KACo's attorney, Richard J. Ornstein, invoked KRS 65.312(1)(b) and KRS 65.312(1)(c) in support of these redactions, explaining that disclosure of this information "would provide an unfair competitive advantage to private sector competitors providing insurance coverage and is information that is generally recognized as confidential or proprietary, and which, if openly disclosed, would permit an unfair commercial advantage to competitors. "
In supplemental correspondence, Mr. Ornstein analogized a business's federal employer identification number to an individual's social security number, citing Zink v. Commonwealth of Kentucky, Department of Workers' Claims, 902 S.W.2d 825, 829 (Ky. App. 1994), for the proposition that a social security number represents "no less than the keys to an information kingdom as it relates to any given individual," or in this case, a business entity, affording "[a]ccess to a wealth of data" that could compromise the individual's, or in this case the business entity's, interests. He noted that the Attorney General gave tacit approval to redaction of federal employer identification numbers in 10-ORD-184.
With reference to KACo's redaction of "affiliated organizations' client lists" Mr. Ornstein asserted that disclosure "would allow KACo's competitors to have a 'one stop shop' to determine for which clients KACo writes insurance," enabling them to "target" its clients, thereby undermining its competitive position "in an increasingly difficult insurance market." It was his position that "[c]lient lists are considered proprietary and confidential by private sector insurance companies." The same, he argued, is true for KACo and its affiliated organizations since its clients are not exclusively public agencies and include "entities providing governmental type services."
In the only open records decision issued by this office since the 2010 enactment of KRS 65.310 to 65.314, the Attorney General addressed the application of KRS 65.312(1)(b) and (c) to records reflecting attorneys fees paid by the Kentucky League of Cities in defending a particular case. 10-ORD-190. At pages 2 and 3 of 10-ORD-190, we observed:
KRS 65.312 extends the application of the Open Records and Open Meetings Act to the governing body of a public entity and affiliated organizations as defined at KRS 65.310(1) and (2), but provides additional exceptions to public inspection other than those provided in the Acts. KLC invokes two of these, KRS 65.812(1)(b) and (c), to deny [the requester] access to records reflecting attorneys fees in [the named case]. These exceptions authorize nondisclosure of a record that:
These provisions are similar, but not identical, to KRS 61.878(1)(c)1. which authorizes public agencies to withhold "records confidentially disclosed to an agency or required by an agency to be disclosed to it, generally recognized as confidential or proprietary, which if openly disclosed would permit an unfair commercial advantage to competitors of the entity that disclosed the records."
We rejected KLC's reliance on KRS 65.312(1)(c) "because [the requested attorney billing records were] not 'generated by the public entity [KLC] or an affiliated organization [Kentucky League of Cities Insurance Service'] but [were] instead generated by the attorneys hired to represent KLC's members and submitted to KLC." Id.
Additionally, we rejected KLC's reliance on KRS 65.312(1)(b). We reasoned:
Information in the billing records is, by KLC's own admission, only "part of the overall loss costs used to calculate insurance rates." Attorneys fees are "raw data" that is factored, along with other undisclosed data, into "overall loss costs" as a component of KLC's insurance rates. KLC offers no insight into what the other factors are or how its insurance rates are calculated. Accordingly, the record on appeal contains insufficient proof that disclosure of information relating to attorneys fees would, standing alone, provide an unfair advantage to private sector competitors providing insurance coverage.
10-ORD-190, p. 3. Recognizing that KLC "occupies a unique position as a public entity, subject to the Open Records Act, that is engaged in a competitive business," we concluded that the entity postulated " potential harm and possible competitive advantage" rather than presenting proof of actual harm. Id. "Given the speculative nature of this response, and the absence of supporting proof," we held that the records sought did not contain "the type of information that the General Assembly sought to exempt from disclosure when it carefully crafted and enacted [KRS 65.310 to 65.314 ]." Id. at 4. To construe KRS 65.312(1)(b) and (c) more liberally, we concluded, would subvert "[t]he legislature's apparent goal . . . to expose KLC, and similarly situated entities, to the light of public scrutiny" by interpreting the exceptions in such a way that they "swallow the rule of openness and accountability." Id.
The records to which KACo partially denied Mr. Rogers access are captioned "Workers Compensation Agent Commissions 2011-2012" and "KACo All Lines Fund Agent Commissions 2011-2012." Each contains three subheadings: Agent, Entity, and Commission Rate. KACo originally disclosed the identity of the agent, and has now disclosed the commission rate, but asserts the right to withhold the identities of the insured entities, or clients, under authority of KRS 65.312(1)(b) and (c). As noted, these exceptions to the general rule that "all records of [KACo] and its affiliated organizations shall be deemed open records" 4 are aimed at promoting transparency without "jeopardiz[ing] the competitiveness of the public entity or an affiliated organization . . . ." KRS 65.312(2)(b) . It is intuitive to deem client information both confidential and proprietary. Disclosure of that portion of a record that, in essence, constitutes a "client list" would give substantially more than a trivial unfair advantage to industry competitors. 5 Whereas the Kentucky League of Cities could postulate only speculative competitive harm from disclosure of records containing attorneys fees paid in a particular case in 10-ORD-190, KACo advances a convincing argument that disclosure of the "client list" would result in its competitors soliciting away its clients thereby permitting those competitors an unfair commercial advantage. We affirm KACo's partial denial of Mr. Rogers' request as it relates to records that constitute the functional equivalent of its client lists.
So, too, we affirm KACo's refusal to disclose the federal employer identification number. Although these numbers have been analogized to a social security number, they are no longer considered sensitive information. Indeed, the numbers are available in business publications and on the internet. See, e.g., "Getting a Tax Identification Number," a publication of the U.S. Small Business Administration, http://www.sba.gov/content/getting-tax-identification-number. 6 Nevertheless, no open records related public purpose would be advanced by disclosure of the record. The number is no less proprietary "simply because that information is available someplace. We deal . . . not in total nondisclosure, but with [KACo's] . . . interest in selective disclosure. " Zink v. Commonwealth, 902 S.W.2d 825, 828 (Ky. App. 1994). Until such a public purpose is articulated, we continue to ascribe to the view that the public's interest in disclosure of the federal tax identification number must yield to the business' proprietary interest. Accord, 94-ORD-64.
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.
Distributed to:
John RogersRichard J. Ornstein
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