Douglas Asphalt v. E.R. Snell Contractor

• Decision Date: 22 November 2006
• Docket Number: No. A06A1392.,A06A1392.
• Citation: 639 S.E.2d 372,282 Ga. App. 546
• Parties: DOUGLAS ASPHALT COMPANY v. E.R. SNELL CONTRACTOR, INC. et al.
• Court: Georgia Court of Appeals

282 Ga. App. 546

639 S.E.2d 372

DOUGLAS ASPHALT COMPANY v. E.R. SNELL CONTRACTOR, INC. et al.

No. A06A1392.

Court of Appeals of Georgia.

November 22, 2006.

Certiorari Denied February 5, 2007.

Frederick L. Wright, II, Vaughn, Wright & Boyer L.L.P., Atlanta, for appellant.

Troutman Sanders, Michael E. Johnson, Matthew R. Clark, Schreeder, Wheeler & Flint, David H. Flint, Coleman, Talley, Newbern, Kurrie, Preston & Holland, Wade H. Coleman, Smith, Currie & Hancock, Eric L. Nelson, Thompson, Slagle & Hannan, Alfred A. Malena, Jr., Thurbert E. Baker, Attorney General, Mary Jo Volkert, Assistant Attorney General, David M. Toolan, Sheldon K. Fram, Atlanta, for appellees.

BARNES, Judge.

E.R. Snell Contractor, Inc. and ten other contractors applied for an injunction against the Georgia Department of Transportation to prevent the agency from giving copies of certain documents to Douglas Asphalt Company in response to its Open Records Act request. The contractors contended that the documents, which the companies submitted to the DOT pursuant to their roadway paving contracts, contained trade secrets and thus were exempt from the Act. Douglas Asphalt was granted permission to intervene, and objected to the application. Following a bench trial, the trial court permanently enjoined the DOT from giving unredacted copies of the documents to Douglas Asphalt, specifying which information was to be redacted. For the reasons that follow, we affirm.

As the trial court found, the asphalt industry is highly competitive, with profit margins from one to five percent. Material costs make up the largest portion of overall costs, and thus the companies expend significant resources tweaking their asphalt formulas to reduce those costs, some through their own full-time state-certified laboratory technicians and others through outsourcing. The cost for material per ton can vary a great deal, depending on the mix design. Asphalt is composed of aggregate or crushed stone, liquid asphalt, and minor additives such as lime, which is an anti-stripping agent, and the liquid asphalt, which is a form of crude oil, is the most costly ingredient. Some companies use recycled asphalt product (RAP) as a component, which lowers the amount of liquid asphalt required and thus lowers the material costs. Other factors affecting cost are the source locations, and the porosity, size, and amount of the aggregate.

The Georgia DOT establishes the property specifications of the finished asphalt product, and contractors submit proposed design mix formulas to the DOT for approval before bidding on a job. Once those formulas are approved, they are kept on file and the contractor can refer to them when it bids on a project. All DOT projects are bid in a closed process, so that no one knows the amount anyone else is bidding, and the lowest bid is awarded the job. Once it is awarded a contract, the contractor submits a Job Mix Formula for DOT approval before beginning the job, based on the previously approved formula, and includes the percentages and sources of each material.

Once the formula is approved and the contractor begins work, it submits a form document called a 159 Worksheet every day. The 159 Worksheet reports the results of tests run on the asphalt in place or at the plant. It includes some of the information contained on the Job Mix Formula, plus the test data and the quantity of material laid that day. The number given for the "pay factor" reveals whether the contractor is performing according to the terms of its contract. A pay factor of one means the contractor was paid 100 percent of the agreed-upon cost per unit, based on whether or not the asphalt it placed fell within the required contract specifications. A pay factor of 0.9 means the contractor was paid 90 percent of agreed unit cost, because the asphalt did not fall within the required contract specifications, and if it falls too far outside the specifications, the DOT would make the contractor take it up and place it again.

A competitor could derive the mix design from the information on these two forms, and would gain a competitive advantage in future bidding. For example, the quantity of material laid tells a competitor the company's ability to produce and place asphalt. The source of goods affects cost, because the further the source from the job, the higher the freight costs will be. The liquid asphalt percentage is important information, because if a competitor knows that a company is using a mix design with 4.4 percent liquid asphalt, it needs to bid using a mix design with 4.3 percent liquid asphalt. If a competitor knows a company is using RAP, it knows that the material costs are lower than if it were using a design mix without RAP.

The DOT Office of Materials and Research Standard Operating Procedure regarding the control of these mix designs provides that

[ m]ix designs shall be made available only to the designer and to users authorized by the designer. Mix designs are considered to be proprietary information. They are not subject to public disclosure under the Georgia Open Records Act by virtue of OCGA § 50-18-72(b)(1), which protects the confidentiality of trade secrets obtained from a business entity that are confidential and required to be submitted to a government agency.

Further, a December 2004 interdepartmental memorandum from a state asphalt design engineer with the materials and research office reminded all DOT personnel that documents regarding mix designs produced by commercial laboratories were confidential and proprietary. Copying and dissemination of designs and design data, which were trade secrets not subject to public disclosure under the Open Records Act, should be strictly controlled and limited to designated personnel. The nondisclosure of mix design data has been the official DOT policy since at least 1998, when the DOT stopped creating its own mix designs that were available to all and began accepting mix designs created by private laboratories. The contractors testified that they spent a great deal of money to develop these mix designs and severely restricted access to the information to protect its confidentiality. An assistant state materials and research engineer testified that if a contractor has a competitor's Job Mix Formula form, it has much of the information in the mix design because it knows the combined gradation of the aggregate, the liquid asphalt percentage, and other information critical to the design. While it would not know the competitor's costs, it would know its own cost for the same mix, which would enable it to bid more competitively.

In this case, Douglas Asphalt filed an Open Records Act request with DOT, seeking copies of every Job Mix Formula form and 159 Worksheet form submitted by any road contractor to the agency from 1997 to 2003. The trial court concluded that some of information in these forms contained trade secrets as defined by OCGA § 10-1-761(4), and permanently enjoined the DOT from disclosing certain portions of the information on these documents.

Douglas Asphalt contends that the trial court erred in permanently enjoining the DOT from disclosing certain designated portions of public records. "The findings of fact in a nonjury trial are analogous to a jury verdict and will not be interfered with if there is any evidence to support them." (Citation omitted.) Lowry v. Hamilton, 268 Ga. 373, 374(2), 489 S.E.2d 827 (1997). We review the trial court's conclusions of law de novo. Hibbard v. P.G.A., Inc., 251 Ga.App. 68, 69(1), 553 S.E.2d 371 (2001).

The Open Records Act provides that "[a]ll public records of an agency . . . shall be open for a personal inspection by any citizen of this state at a reasonable time and place." OCGA § 50-18-70(b). The purpose of the Open Records Act is "to encourage public access to government information and to foster confidence in government through openness to the public," (citation omitted) McFrugal Rental, etc. v. Garr, 262 Ga. 369, 418 S.E.2d 60 (1992), and exemptions from disclosure should be narrowly construed. OCGA § 50-18-72(g); Hardaway Co. v. Rives, 262 Ga. 631, 634(2)(a), 422 S.E.2d 854 (1992). The act does not apply to "[a]ny trade secrets obtained from...