City of Chi. v. Janssen Pharm., Inc.

• Decision Date: 31 March 2017
• Docket Number: No. 1-15-0870,1-15-0870
• Citation: 78 N.E.3d 446,2017 IL App (1st) 150870
• Parties: The CITY OF CHICAGO, Plaintiff-Appellee, v. JANSSEN PHARMACEUTICALS, INC., Defendant-Appellant.
• Court: United States Appellate Court of Illinois

2017 IL App (1st) 150870
78 N.E.3d 446

The CITY OF CHICAGO, Plaintiff-Appellee,
v.
JANSSEN PHARMACEUTICALS, INC., Defendant-Appellant.

No. 1-15-0870

Appellate Court of Illinois, First District, FIFTH DIVISION.

March 31, 2017

Carolyn J. Kubota and Charles C. Lifland, of O'Melveny & Meyers LLP, and Michael P. Doss and Scott D. Stein, of Sidley Austin LLP, both of Chicago, for appellant.

78 N.E.3d 448

Stephen R. Patton, Corporation Counsel, of Chicago (Benna Ruth Solomon, Myriam Zreczny Kasper, and Stephen G. Collins, Assistant Corporation Counsel, of counsel), for appellee.

OPINION

JUSTICE REYES delivered the judgment of the court, with opinion.

¶ 1 Defendant Janssen Pharmaceuticals, Inc. (Janssen) appeals the circuit court of Cook County's order denying a motion to enforce a protective order previously entered between Janssen and plaintiff, the City of Chicago (City). On appeal, Janssen maintains that the documents it provided to the City pursuant to the protective order were not subject to disclosure under the Freedom of Information Act (FOIA) (5 ILCS 140/1 et seq. (West 2014)). Specifically, Janssen argues that the documents are exempt from inspection and copying under two separate provisions of FOIA as (1) their disclosure is specifically prohibited by State law (5 ILCS 140/7(1)(a) (West 2014)) and (2) the documents are trade secrets or commercial or financial information furnished under a claim that they are confidential and such disclosure would cause competitive harm to Janssen's business (5 ILCS 104/7(1)(g) (West 2014)). At oral argument, the defendant argued only that their disclosure is prohibited by section 7(1)(a) (5 ILCS 140/7(1)(a) (West 2014)). For the reasons that follow, we affirm.

¶ 2 BACKGROUND

¶ 3 Prior to filing the lawsuit, the City served Janssen with a subpoena pursuant to section 1-22-050 of the False Claims chapter of the Chicago Municipal Code (Ordinance) (Chicago Municipal Code § 1-22-050) (added Dec. 15, 2004), as it was seeking documents that pertained to the City's civil investigation into false claims submitted as a result of certain of Janssen's practices in marketing opioids, i.e. a synthetic narcotic. Janssen, however, declined to produce the documents requested by the City. As a result, on September 23, 2013, the City filed the instant suit due to Janssen's failure to respond to the subpoena.

¶ 4 While the matter was pending in the circuit court, Janssen and the City negotiated a "Confidentiality Stipulation and Protective Order" (protective order), which was entered by the circuit court on November 12, 2013. The protective order provided in pertinent part that the information produced by Janssen, regardless of confidentiality designation, could only be used in accordance with the provisions of section 1-22-050(i) of the Ordinance, or as otherwise required by law or court order. The City acknowledged in the protective order that the information produced by Janssen may contain trade secrets or other confidential information and that Janssen "considers this information to be protected and exempt from disclosure under the Illinois Freedom of Information Act." The protective order further provided that the City would notify Janssen if a request was made by a third party to disclose the produced information so as to allow Janssen "the opportunity to take steps to prevent disclosure; provided, however, that nothing in this Protective Order shall be read to conflict with the City of Chicago's duty to comply" with the public disclosure laws, including FOIA.

¶ 5 On November 20, 2013, the City withdrew its petition to enforce the subpoena without prejudice and was granted leave to reinstate "before this Court in the event that further disputes or issues arise between the parties with respect to the subpoena." Janssen then produced 114,230 pages of documents to the City, many of

78 N.E.3d 449

which were marked "confidential" pursuant to the protective order.

¶ 6 On June 2, 2014, the City filed suit against Janssen, Janssen's parent, and various other pharmaceutical companies alleging violations of the Ordinance. As a result of filing this lawsuit, USA Today issued a FOIA request to the City seeking copies of documents in support of certain claims the City asserted against Janssen. Pursuant to the protective order, the City notified Janssen of the request and informed Janssen that it believed three documents were responsive to USA Today's request.

¶ 7 Ultimately, on October 22, 2014, Janssen filed a motion to enforce the protective order in the circuit court alleging that the City was required to deny third-party requests brought under FOIA pursuant to the protective order. Janssen further argued that the documents sought were exempt from disclosure under section 7 of FOIA (5 ILCS 140/7 (West 2014) ). Pertinent to this appeal, Janssen specifically asserted two reasons the documents were exempt. First, that section 7(1)(a) prevented disclosure of the documents where the information sought was specifically prohibited from disclosure by State law (5 ILCS 140/7(1)(a) (West 2014)). According to Janssen, subsections (i) and (k) of the Ordinance (Chicago Municipal Code § 1-22-050(i), (k) (added Dec. 15, 2004)) qualified as such a "State law" as it manifested the required legislative intent to prohibit public disclosure of subpoenaed documents. Second, Janssen maintained the documents were exempt under section 7(1)(g) of FOIA (5 ILCS 140/7(1)(g) (West 2014)) as the production of its confidential documents would make it more difficult for a public body to induce individuals to submit similar information in the future, i.e. such production would have a "chilling effect." In addition to finding the documents sought by USA Today were exempt from disclosure pursuant to FOIA, Janssen also requested the circuit court enter a declaratory judgment prohibiting the City from disclosing all of Janssen's nonpublic documents to third parties under FOIA.

¶ 8 After the matter was fully briefed and argued, on February 26, 2015, the circuit court issued a written memorandum denying Janssen's motion. Pertinent to this appeal, the circuit court found that Janssen's documents were not exempt from FOIA under section 7(1)(a) because the Ordinance "in no way" implements State law. The circuit court further found that even if the Ordinance fell within the purview of section 7(1)(a) of FOIA, sections 1-22-050(i) and 1-22-050(k) of the Ordinance did not prohibit disclosure. Specifically, section 1-22-050(i) expressly allowed disclosure if the City determines, in its judgment, that it is necessary for the effective enforcement of laws. In addition, section 1-22-050(k) does not generally prohibit disclosure, "rather, the exemption from disclosure is limited by its express terms to the [Illinois Administrative Procedure Act (5 ILCS 100/1-1 et seq. (West 2014)) ]." As to section 7(1)(g) of FOIA, the circuit court found the only party that could assert a "chilling effect" under section 7(1)(g) of FOIA was the public body in possession of the documents.

¶ 9 On March 23, 2015, Janssen filed its notice of appeal. Thereafter, Janssen moved to stay enforcement of the circuit court's order pending this appeal, and the circuit court denied the request. Janssen moved for similar relief in this court, which we also denied. The City then disclosed the relevant documents to USA Today on May 1, 2015.

¶ 10 ANALYSIS

¶ 11 On appeal, Janssen argues that the circuit court erred when it determined the

78 N.E.3d 450

remaining documents (which were not tendered to USA Today) were not exempt from disclosure under sections 7(1)(a) and 7(1)(g) of FOIA. 5 ILCS 140/7(1)(a), (g) (West 2014).¹ Section 7(1)(a) generally provides that information is exempt from disclosure where it is "specifically prohibited from disclosure by federal or State law." 5 ILCS 140/7(1)(a) (West 2014). Under section 7(1)(g), information is exempt from disclosure where it consists of a "trade secrets or commercial or financial information" that is "furnished under a claim that they are proprietary, privileged or confidential" and that such disclosure "would cause competitive harm to the person or business" in regards to the specific records requested. 5 ILCS 104/7(1)(g) (West 2014). As a result, Janssen requests that this court reverse the order of the circuit court and find that, as a matter of law, all nonpublic documents it produced to the City pursuant to the protective order are exempt from disclosure under FOIA.

¶ 12 In response, the City argues that Janssen's documents do not fall under the exceptions to disclosure under FOIA because (1) the ordinance is not "State law" as required under section 7(1)(a), and (2) the policy concerns of section 7(1)(g) are not applicable here where the disclosure of Janssen's documents will have no effect on the City's ability to acquire similar information from others.²

¶ 13 Whether the records are exempt from disclosure under FOIA (5 ILCS 140/7 (West 2014) ), as Janssen claims, is a matter of statutory construction, and our review proceeds de novo . Lucas v. Prisoner Review Board , 2013 IL App (2d) 110698, ¶ 15, 376 Ill.Dec. 482, 999 N.E.2d 365 ; Stern v. Wheaton-Warrenville Community Unit School District 200 , 233 Ill.2d 396, 404, 331 Ill.Dec. 12, 910 N.E.2d 85 (2009). For the reasons that follow, we find that Janssen's remaining documents are not exempt from disclosure under either section 7(1)(a) or section 7(1)(g) of FOIA.

¶ 14 We begin our analysis by explaining the purpose of FOIA, which is "to open governmental records to the light of public scrutiny." Bowie v. Evanston Community Consolidated School District No. 65 , 128 Ill.2d 373, 378, 131 Ill.Dec. 182, 538 N.E.2d 557 (1989) ; see 5 ILCS 140/1 (West 2014). Thus, we are directed by our legislature to view FOIA from the standpoint that, "All records in the custody or possession of a public body are presumed to be open to inspection or copying." 5 ILCS 104/1.2 (West 2014). The term "public...