P'ship v. Paxton

Decision Date26 June 2015
Docket NumberNo. 13–0745,13–0745
Citation468 S.W.3d 51,58 Tex. Sup. Ct. J. 1362
PartiesGreater Houston Partnership, Petitioner, v. Ken Paxton, Texas Attorney General; and Jim Jenkins, Respondents.
CourtTexas Supreme Court

OPINION TEXT STARTS HERE

On Petition for Review from the Court of Appeals for the Third District of Texas. Honorable Scott H. Jenkins, Judge.

Bill Aleshire, Aleshire Law PC, Jennifer S. Riggs, Riggs Aleshire & Ray, Austin, TX, Lynne Liberato, Polly B. Fohn, Haynes and Boone LLP, Houston, TX, for Petitioner.

Charles Roy, Daniel T. Hodge, First Asst. Attorney General, David A. Talbot Jr., Consumer Protection, David C. Mattax, James Edward Davis, Kimberly L. Fuchs, Matthew H. Frederick, Assistant Solicitor General, Warren Kenneth Paxton Jr., Office of the Attorney General, Rosalind L. Hunt, Office of Attorney General, Administrative Law Divison, Austin, TX, Eric Lyf Yollick, Yollick Law Firm, P.C., The Woodlands, TX, for Respondents.

JUSTICE GUZMAN delivered the opinion of the Court, in which CHIEF JUSTICE HECHT, JUSTICE GREEN, JUSTICE LEHRMANN, JUSTICE DEVINE, and JUSTICE BROWN joined.

The question presented here is whether a private entity operating like a chamber of commerce is a “governmental body” subject to public disclosure of its private business affairs under the Texas Public Information Act. In seeking to promote the public's legitimate interest in transparent government, the Act imposes considerable disclosure obligations on “governmental bod[ies].” Importantly, the statutory definition of “governmental body” extends only to “the part, section, or portion of an organization, corporation, commission, committee, institution, or agency that spends or that is supported in whole or in part by public funds.” SeeTex. Gov't Code § 552.003(1)(A)(xii) (emphasis added). This operates to prevent nominally private entities whose work might otherwise qualify them as de facto public agencies from circumventing the Act's disclosure requirements. This case requires us to decide whether the term “supported” encompasses private entities contracting at arm's length with the government to provide general and specific services or whether the term properly includes only those entities that could not perform similar services without public funds and, are thus, sustained—in whole or part—by such funds.

When a private entity enters into a contract and receives government funds in exchange for its services, the entity's right to conduct its affairs confidentially may be in tension with the public's right to know how government funds are spent. Transparency, openness, and accountability in the government are all of fundamental importance. However, these important policy objectives cannot extinguish the privacy rights properly belonging to private business entities in Texas. By liberally authorizing public access to government records while simultaneously shielding private business from unwarranted interference, the Legislature carefully balanced these conflicting interests. Mindful of the delicate equilibrium between these equally compelling concerns, we conclude that the term “supported,” which helps define the breadth of the Act, unambiguously includes only those entities at least partially sustained by public funding. Because the statutory language is unambiguous, we need not consider the accuracy or vitality of the test articulated in Kneeland v. National Collegiate Athletic Ass'n, 850 F.2d 224 (5th Cir. 1988), which the Attorney General's Open Records Division has traditionally applied to private entities in cases involving open-record requests.

Here, Greater Houston Partnership, a nonprofit corporation providing economic-development services to the City and other clients pursuant to quid pro quo contracts, contests whether it is a “governmental body” in whole or in part. Applying Kneeland, the Attorney General and lower courts held that it is. We hold, however, that Greater Houston Partnership is not a “governmental body” under the Texas Public Information Act because it is not wholly or partially sustained by public funds; we therefore reverse the court of appeals' judgment and render judgment for Greater Houston Partnership.

I. Factual and Procedural Background

Greater Houston Partnership (GHP) is a private, nonprofit corporation that promotes regional economic growth and an attractive business climate for a ten-county area centered around Houston, Texas. GHP's stated purpose is to enhance economic prosperity, facilitate business relocation and expansion, encourage international outreach initiatives, and provide strategic planning to advocate for “the improvement of commercial, industrial, agricultural, civic, and cultural affairs” in the Houston region. In furtherance of this objective, GHP provides consulting, event planning, and marketing services (including advertising and market research) to its roughly 2,100 member companies on a contractual basis. GHP also hosts numerous networking and professional development events, including several weekly GHP Council meetings on topics relevant to the regional economy. GHP operates on an annual budget of approximately $11.7 million, and these funds emanate primarily from membership revenue. In short, GHP functions much like thousands of chambers of commerce across the nation that promote municipal and regional economies.

Consistent with its business model, GHP contracted to provide consulting, event planning, and marketing services to the City of Houston, pursuant to an “Agreement for Professional Services.” GHP and the City signed similar agreements annually for several years, including 2007 and 2008, the time periods at issue here. The contracts included a “Scope of Services” exhibit that delineated, under general headers, the specific services that GHP would provide to the City. Under these contracts, GHP received quarterly payments in arrears contingent upon the City's approval of performance reports detailing the particular services GHP provided in that quarter. If GHP failed to deliver the contracted-for services to the City's satisfaction, the contracts authorized the City to pay GHP for the portion of services satisfactorily rendered. Notably, however, the two contracts differed in one significant respect: the 2008 contract expressly provided that [n]othing in this Agreement shall be construed to imply that [GHP] is subject to the Texas Public Information Act.”

The instant suit arose from a May 2008 request Houston-area resident Jim Jenkins submitted to GHP in which he sought “a copy of the check register for [GHP] for all checks issued for the year 2007.” Jenkins grounded his request in the Texas Public Information Act (TPIA), claiming that [p]ublic records show that [GHP] is an organization that spends or that is supported in whole or in part by public funds,” and GHP is, therefore, “subject to the Public Information Act in the same manner as a governmental body.” SeeTex. Gov't Code § 552.003(1)(A)(xii) (defining “governmental body” for purposes of the TPIA).

GHP objected to Jenkin's request and did not disclose the information. GHP acknowledged it received public funds from the City but disagreed it qualified as a “governmental body” under the TPIA because the public funds were compensation for vendor services provided pursuant to an arm's-length contract with the City. The City's annual payments under the contract amounted to less than 8% of GHP's total annual revenue; member contributions, on the other hand, totaled more than 90% of its revenue. GHP further noted that of the roughly 2,100 companies that comprise its membership, only four could be described as governmental bodies. Refusing to disclose the requested information, GHP referred the matter to the Texas Attorney General as required under the TPIA. See id. §§ 552.301(a), .307.

In an informal letter ruling, the Attorney General's Open Records Division agreed with Jenkins, and concluded that GHP was a “governmental body” subject to the TPIA's disclosure requirements specifically with respect to the 2007 contract with the City.1Tex. Att'y Gen. OR2008–16062; see alsoTex. Gov't Code § 552.306. In reaching this conclusion, the Attorney General determined that GHP's operations were “supported” by the City because: (1) GHP provided vague and indefinite services to the City aimed at advancing the City's overall economic development; (2) GHP and the City shared a common purpose and objective centered around the City's economy; and (3) GHP provided services traditionally supplied by the government. Tex. Att'y Gen. OR2008–16062.

In response to the Attorney General's informal ruling, GHP filed a declaratory-judgment action against the Attorney General seeking a declaration that: (1) the Attorney General lacked jurisdiction over the dispute and (2) even if jurisdiction was proper, GHP was not a “governmental body” under the TPIA. See Tex. Gov't Code §§ 552.3215(e), .321, .325(a). Shortly after GHP filed suit, Jenkins filed an additional request seeking a copy of GHP's 2008 “disbursement registers and/or check registers,” including the number, date, payee name, amount, and purpose. Noting that GHP had already filed suit regarding the 2007 check-register request, the Attorney General closed the second request without a finding and directed the trial court to resolve the dispute. Jenkins intervened in the lawsuit shortly thereafter. See id. § 552.325 (authorizing a requestor to intervene in the suit).

After a bench trial, the trial court found GHP was a “governmental body” supported by public funds and ordered disclosure of the 2007 and 2008 check registers.2 The trial court determined that:

• GHP received public funds to provide economic development and promotion services for or on behalf of the City;

• GHP and the City shared the common purpose of economic development and promotion; and

• An agency-type relationship was created between GHP and the City of Houston.

The court of appeals...

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