Dragonslayer v. Wash. State Gambling Com'n

Decision Date26 June 2007
Docket NumberNo. 34411-4-II.,34411-4-II.
Citation139 Wn. App. 433,161 P.3d 428
CourtWashington Court of Appeals
PartiesDRAGONSLAYER, INC., dba The New Phoenix Casino; and MT & M Gaming, Inc., dba The Last Frontier Casino, Appellants, v. WASHINGTON STATE GAMBLING COMMISSION, Respondent.

Jennifer Kampsula, Kell Alterman & Runstein LLP, Portland, OR, for Appellants.

H. Bruce Marvin, WA State Attorney General's Office, Olympia, WA, for Respondent.

Frank L. Miller, Miller Malone & Tellefson, David Allen Malone, Miller Malone & Tellefson, Tacoma, WA, for Amicus Curiae on behalf of Recreational Gaming Association.

PUBLISHED OPINION

PENOYAR, J.

¶ 1 Dragonslayer, Inc. and MT & M Gaming, Inc., two house-banked card rooms, appeal from the trial court's denial of their motion for an injunction to block public disclosure of their audited financial statements. Washington's Public Disclosure Act (PDA) provides that governmental agencies shall make "public records" available for public inspection. ch. 42.56 RCW. Dragonslayer, MT & M, and amicus curie, the Recreational Gaming Association, argue that the financial statements do not meet the "public documents" definition and that, even if they are "public documents," they are exempt from disclosure under RCW 42.56.270(10). Also, they assert that the financial statements are exempt from the PDA because they contain "trade secrets." We remand to the trial court to determine if the financial statements are related to the Washington State Gambling Commission's (the Commission) performance of its governmental functions and thus are "public records." We also remand for a determination of whether the financial statements are or contain "trade secrets" and are thus partially or completely exempt from disclosure. We reverse and remand.

FACTS

¶ 2 The Commission licenses, regulates and monitors gambling activities in Washington and enforces Washington's gambling laws and regulations. It is responsible for keeping the "criminal element" out of gambling and for promoting social welfare by limiting the nature and scope of gambling activities through strict regulation and control. RCW 9.46.010. George Teeny owns two "house banked card rooms," Dragonslayer, Inc. and MT & M Gaming, Inc. Clerk's Papers (CP) at 83. They are located in LaCenter, Washington and are subject to licensure, regulation, and monitoring by the Commission.

¶ 3 Dragonslayer and MT & M are required under WAC 230-40-823 to file annual audited financial statements with the Commission that contain information about their private business operations. An independent certified public accountant firm prepared the financial statements and Dragonslayer and MT & M submitted them to the Commission.

¶ 4 Edward Fleisher was involved in business negotiations with Dragonslayer and MT & M and he filed a public records request, asking the Commission to disclose "[c]opies of the most recent audited financial statements filed by the four house[-]banked card rooms in LaCenter, Washington." CP at 6. The Commission notified Dragonslayer and MT & M and indicated that if they did not object, the Commission would release the financial statements to Fleisher. Dragonslayer and MT & M did oppose the disclosure and filed for an injunction to stop the Commission from releasing the statements to Fleisher. They first obtained a temporary restraining order and then filed for a permanent injunction.

¶ 5 The trial court held oral arguments on the motion and conducted an in camera review of the financial statements. Dragonslayer and MT & M argued that the financial reports were not public records because they contained private, confidential information regarding the card rooms' business operations, and did not contain any information regarding governmental functions. Dragonslayer and MT & M also asserted that their financial statements contained financial information related to maintaining their gambling license with the Commission and that the statements were therefore exempt under RCW 42.56.270(10) (Formerly RCW 17.310(1)(tt)).

¶ 6 The Commission asserted that the financial statements were public records because they related to a governmental function and that the financial statements were not exempt because they were not a part of the card rooms' licensing process. The Commission asserted that the PDA's definition of "public records" must be broadly construed, and that the financial statements were public records because state law required Dragonslayer and MT & M to prepare the financial statements.

¶ 7 The trial court agreed with the Commission and did not issue an injunction. The court found that the financial statements were public records because they related to the Commission's regulatory functions, which is a public, governmental agency. It found that the statements did not contain financial information related to Dragonslayer and MT & M's gambling license and were therefore not exempt. The court considered the parties' oral argument, pleadings, and affidavits in reaching its decision; it did not hear any testimony and did not conduct an evidentiary hearing. Dragonslayer and MT & M now appeal.

ANALYSIS
I. STANDARD OF REVIEW AND BURDEN OF PROOF UNDER THE PDA

¶ 8 If an agency intends to disclose records to a requester under the PDA, an interested third party may object and seek judicial intervention to prevent disclosure. Spokane Police Guild v. Liquor Control Bd., 112 Wash.2d 30, 34-35, 769 P.2d 283 (1989). In this situation, the objector may proceed to prevent disclosure under RCW 42.56.5401 (Formerly RCW 42.17.330). Importantly, this section only applies to "[t]he examination of any specific public record." RCW 42.56.540 (emphasis added). In a proceeding brought under this injunction statute, the party seeking to prevent disclosure, here Dragonslayer and MT & M, has the burden to prove that the public record should not be disclosed. Spokane Police Guild, 112 Wash.2d at 35, 769 P.2d 283. However, this burden of proof only applies when a party seeks to disclose a public record. Therefore, the initial inquiry is whether the financial statements meet the definition of "public record." RCW 42.56.540.

¶ 9 Here, the trial court placed the burden of proof on Dragonslayer and MT & M to establish that an injunction was necessary to prevent disclosure. Under RCW 42.56.540, this was proper as long as the financial statements were in fact public records. Once the threshold inquiry of whether a document is a "public record" is met, then the burden to prove that an exemption applies is properly placed on the party seeking to prevent disclosure. RCW 42.56.540.

¶ 10 Our review of actions under the PDA and the injunction statute is de novo. RCW 42.56.550; Spokane Police Guild, 112 Wash.2d at 35, 769 P.2d 283. Where the record consists only of affidavits, memoranda of law, other documentary evidence, and where the trial court has not seen or heard testimony requiring it to assess the witnesses' credibility or competency, we are not bound by the trial court's factual findings and stand in the same position as the trial court. Spokane Police Guild, 112 Wash.2d at 35-36, 769 P.2d 283; Progressive Animal Welfare Soc'y (PAWS) v. Univ. of Wash., 125 Wash.2d 243, 252-53, 884 P.2d 592 (1994).

II. THE POLICY OF THE PDA AND DEFINITION OF "PUBLIC RECORDS"

¶ 11 The Recreational Gaming Association filed an amicus curiae brief in response to Dragonslayer and MT & M's appeal to this court and asserted that audited financial statements do not meet the PDA's threshold inquiry because they are not public records. The Commission responded that Dragonslayer and MT & M's audited financial statements are public records because they contain information that the Commission reviews, uses, and retains for its enforcement purposes and because they contain information that the Commission uses to educate the public about its operations. Also, the Commission urged us to dismiss the Gaming Association's argument because Dragonslayer and MT & M do not raise this issue and it was raised only by amicus.

¶ 12 Dragonslayer and MT & M argued that the financial statements did not meet the public records definition at trial court. This issue was therefore not first raised by amicus. Appellate courts will not usually decide an issue raised only by amicus, but may choose to do so. See Noble Manor Co. v. Pierce County, 133 Wash.2d 269, 272 n. 1, 943 P.2d 1378 (1997). We choose to address the PDA's definition of public records because this issue may arise again and it is in the interests of judicial economy for us to address it here.

¶ 13 The PDA's definition of public records requires us to interpret the statutory language. The fundamental objective of statutory construction is to ascertain and carry out the Legislature's intent. Rozner v. Bellevue, 116 Wash.2d 342, 347, 804 P.2d 24 (1991). We have accepted various tools of statutory construction, including legislative history and administrative interpretation. Rozner, 116 Wash.2d at 347, 804 P.2d 24. We will also resort to a dictionary meaning to assist in interpretation. Dawson v. Daly, 120 Wash.2d 782, 791, 845 P.2d 995 (1993).

¶ 14 The PDA is a strongly worded mandate for broad disclosure of public records. Hearst Corp. v. Hoppe, 90 Wash.2d 123, 127, 580 P.2d 246 (1978). The act was designed to provide open access to governmental activities. Amren v. City of Kalama, 131 Wash.2d 25, 31, 929 P.2d 389 (1997). It requires agencies to disclose any public record upon request, subject to very specific exceptions. RCW 42.56.070(1).

¶ 15 The PDA was passed by popular initiative, Laws of 1973, ch. 1, § 1 (Initiative 276, approved Nov. 7, 1972). The stated purpose of the act is to preserve the tenets of representative government: the sovereignty of the people and the accountability to the people of public officials and institutions:

The people of this state do not yield their sovereignty to the agencies that serve them. The people, in delegating...

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