Lyft, Inc. v. City of Seattle

• Decision Date: 31 May 2018
• Docket Number: NO. 94026-6,94026-6
• Court: Washington Supreme Court
• Parties: LYFT, INC. and Rasier, LLC, Respondents, v. CITY OF SEATTLE, Appellant, and Jeff Kirk, Defendant.

190 Wash.2d 769

418 P.3d 102

LYFT, INC. and Rasier, LLC, Respondents,

v. CITY OF SEATTLE, Appellant,andJeff Kirk, Defendant.

NO. 94026-6

Supreme Court of Washington.

Argued November 16, 2017

Filed May 31, 2018

Michael K. Ryan, Sara O'Connor-Kriss, Seattle City Attorney's Office, 701 5th Ave. Ste. 2050, Seattle, WA, 98104-7095, Matthew J. Segal, Kymberly Kathryn Evanson, Pacifica Law Group LLP, 1191 2nd Ave. Ste. 2000, Seattle, WA, 98101-3404 for Appellant.

Heidi Brooks Bradley, Ryan P. McBride, Lane Powell PC, Katie Denise Fairchild, Attorney at Law, 1420 5th Ave. Ste. 4200, Seattle, WA, 98101-2375, Judith A. Endejan, Attorney at Law, 2012 5th Ave. N, Seattle, WA, 98109-2613, Miriam Korngold, Garvey Schubert Barer, 1191 2nd Ave. Fl. 18, Seattle, WA, 98101-2939, Danny David, Aaron Streett, Baker Botts, 910 Louisiana Street, One Shell Plaza, Houston, TX, 77002 for Respondents.

Steven L. Gross, Attorney at Law, 250 Madison St., Port Townsend, WA, 98368-5738 Amicus Curiae on behalf of Washington State Association of Municipal Attorneys.

STEPHENS, J.

¶ 1 This case is before the court on direct review of a King County Superior Court order enjoining the release of records the trial court concluded were trade secrets under the Uniform Trade Secrets Act (UTSA), ch. 19.108 RCW. We must decide whether records containing trade secrets are categorically excluded from public disclosure under the Public Records Act (PRA), ch. 42.56 RCW. We hold that they are not. Applying the injunction standard set forth in RCW 42.56.540, such records may be enjoined from disclosure only if disclosure would clearly not be in the public interest, and would substantially and irreparably damage a person or a vital government interest.

¶ 2 The superior court erred by applying the general injunction standard of Civil Rule (CR) 65 articulated in Tyler Pipe Industries, Inc. v. Department of Revenue , 96 Wash.2d 785, 792, 638 P.2d 1213 (1982), and by not adequately considering the PRA's more stringent standard. We therefore reverse the decision below and remand for the trial court to apply the proper standard under RCW 42.56.540.

BACKGROUND FACTS AND PROCEDURAL HISTORY

¶ 3 Respondents Lyft Inc. and Rasier LLC¹ operate car-hailing or "transportation networking companies" (TNC) in several locations, including the city of Seattle (City). TNC mobile and Internet-based technology enables consumers to use their smartphones to retain drivers for trips. Drivers connected to the network can access real-time information to respond to consumer requests for rides and carpools. Rasier, in a dominant position with 14,000 drivers in Seattle, competes with Lyft for local market share.

¶ 4 After the City passed a 2014 ordinance that limited the number of TNC drivers active at any given time, respondents Lyft and Rasier (collectively L/R) organized a coalition to overturn the ordinance through a voter referendum. In response to mediation among the City, L/R, and taxi and for-hire stakeholders in the ground transportation industry, the referendum proposal was withdrawn. The parties agreed that L/R would submit quarterly standardized reports to the City that include the total number of rides, the percentage of rides completed in each zip code, pick-up and drop-off zip codes, the percentage of rides requested but unfulfilled, collision data, and the number of requested rides for accessible vehicles.²

¶ 5 In response to L/R concerns regarding data confidentiality, a mediation provision stated that " '[t]he city will work to achieve the highest possible level of confidentiality for information provided within the confines of state law. ' " Clerk's Papers (CP) at 2703-04 (emphasis added) (alteration in original) (quoting Ex. 101). The mediation terms, including acknowledgement that their ultimate adoption was subject to city council approval, were subsequently enacted as Seattle Municipal Code (SMC) 6.310.540. The for-hire vehicle regulatory ordinance provides that "[i]f a public records request is made of the City for documents that have been designated by the providing party as confidential or proprietary, the City shall provide third party notice to the providing party prior to disclosure." SMC 6.310.540(D). Likewise, under a confidentiality agreement between the City and Rasier subject to the requirements of the PRA, the City notifies Rasier upon receipt of a PRA request implicating disclosure of Rasier-designated confidential records.³

¶ 6 L/R's zip code reports to the City are extracted through queries from L/R's databases containing driver and passenger records collected using L/R's software programs. In consultation with L/R, the City established a secure, encrypted file transfer protocol (FTP) website for L/R submissions of required quarterly reports. Access to this FTP site is controlled using log-in credentials, both externally and within city government. The City limits access to L/R quarterly reports and derivative public records to persons with a need to know this information within its departments of transportation, and financial and administrative services.

¶ 7 Besides using the L/R zip code reports for regulatory enforcement, the City considers the records to analyze overall TNC impact on transportation systems and infrastructure; enforcement staffing needs and allocation; vehicle-miles traveled and traffic congestion; service levels for all sections of the city; and service disparities such as redlining and discrimination based on impermissible factors, including race and religion. The for-hire vehicle ordinance requires that City staff prepare an annual report for the chair of the Taxi, For-hire, and Limousine Regulations Committee of the city council, summarizing TNC-reported public records. SMC 6.310.100(B). Although this city reporting requirement was not included in the mediation terms, neither Lyft nor Rasier objected to this language in the proposed ordinance. The City delayed circulation or release of the draft 2015 report to the committee and city council, after L/R objected and threatened litigation.

¶ 8 L/R insist that their quarterly zip code reports to the City consist of trade secrets protected under the UTSA. See Resp't Lyft's Answering Br. at 16; Resp't Rasier LLC's Answering Br. at 1. L/R can consider data compilations and extracts to assess demand for their services, new product launch targets, marketing and pricing strategies, and market competition. While each L/R driver possesses knowledge contained in the records corresponding to individual trips driven, L/R limit employee access to the quarterly zip code reports submitted to the City. L/R do not share their quarterly zip code reports with each other.

¶ 9 In January 2016, appellant Jeff Kirk, a resident of Texas, submitted a PRA request to the City seeking L/R reports for the final two quarters of 2015. Kirk obtains this information from Seattle taxi companies, and researchers examine this information to detect evidence of redlining in the provision of ground transportation to the detriment of persons or communities of color. Specifically, Kirk seeks release of records submitted by L/R to the City as required by SMC 6.310.540, including the percentage and number of rides picked up in each zip code, and the pick-up and drop-off zip codes of each ride.

¶ 10 In response to his PRA request, the City advised Kirk that the subject reports were labeled by L/R as confidential. The City provided notice of the request to L/R, which then sought an injunction under the PRA to prevent disclosure of the requested reports to Kirk. The King County Superior Court issued a temporary injunction granting partial relief as to zip code records but denying injunctive relief as to data indicating L/R's total number of rides, total number of rides requesting an accessible vehicle, and crime reports. Following an evidentiary hearing in which the court considered live and deposition testimony, the court granted L/R's request for a permanent injunction preventing disclosure of the records, concluding that the zip code reports are trade secrets under the UTSA and, therefore, exempt from disclosure under the PRA. Kirk and the City sought direct review of the injunction by this court, and we granted review.⁴

ANALYSIS

¶ 11 Under the PRA, public records⁵ may be withheld only " 'in accordance with a statute that exempts or prohibits disclosure in whole or in part of specific information or records.' " Progressive Animal Welfare Soc'y v. Univ. of Wash. , 125 Wash.2d 243, 251-52, 884 P.2d 592 (1994) ( PAWS ) (plurality opinion) (quoting former RCW 42.17.340(1) (1992), recodified as RCW 42.56.550(1) ). To determine whether the records at issue in this case may be withheld from disclosure, we consider the relevant provisions of both the PRA and the UTSA. While we conclude that L/R's zip code records likely meet the definition of "trade secrets" under the UTSA, L/R are not entitled to an injunction under the applicable PRA standard, RCW 42.56.540, unless they can establish on remand that disclosure is clearly not in the public interest and in fact poses substantial and irreparable harm.

A. The PRA and "Other Statute" Exemptions

¶ 12 The PRA "begins with a mandate of full disclosure of public records; that mandate is then limited only by the precise, specific, and limited exemptions which the Act provides." PAWS, 125 Wash.2d at 258, 884 P.2d 592. The PRA requires that "[e]ach agency, in accordance with published rules, shall make available for public inspection and copying all public records, unless the record falls within the specific exemptions of subsection (8) of this section, this chapter, or other statute which exempts or prohibits disclosure of specific information or records."⁶ RCW 42.56.070(1) (emphasis added). "The 'other statutes' exemption incorporates into the Act other statutes which exempt or prohibit disclosure of specific information or records. [Former] RCW 42.17.260(1) [ (1992), recodified as RCW 42.56.070(1...