State Employees Ass'n Of North Carolina Inc v. North Carolina Dep't Of State Treasurer

• Decision Date: 17 June 2010
• Docket Number: No. 487A09.,487A09.
• Citation: 364 N.C. 205,695 S.E.2d 91
• Parties: STATE EMPLOYEES ASSOCIATION OF NORTH CAROLINA, INC.v.NORTH CAROLINA DEPARTMENT OF STATE TREASURER and Richard H. Moore, in his capacity as Treasurer of the State of North Carolina.
• Court: North Carolina Supreme Court

364 N.C. 205

695 S.E.2d 91

STATE EMPLOYEES ASSOCIATION OF NORTH CAROLINA, INC.v.NORTH CAROLINA DEPARTMENT OF STATE TREASURER and Richard H. Moore, in his capacity as Treasurer of the State of North Carolina.

No. 487A09.

Supreme Court of North Carolina.

June 17, 2010.

Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, --- N.C.App. ----, 685 S.E.2d 516 (2009), affirming an order dismissing plaintiff's complaint entered on 21 July 2008 by Judge James E. Hardin, Jr. in Superior Court, Wake County. Heard in the Supreme Court 23 March 2010.

Notes from the Official Reporter

Public Records-denial of requested records-Rule 12(b)(6) dismissal

The trial court erred by a dismissing a public records case under Rule 12(b)(6) where plaintiffs' claim was supported by the Public Records Act, states facts sufficient to allege denied access to requested public records, and discloses no facts that necessarily defeat the claim.

Blanchard, Miller, Lewis & Styers, P.A., by E. Hardy Lewis, for plaintiff-appellant.

Shanahan Law Group, PLLC, by Kieran J. Shanahan and Steven K. McCallister; and Joyce Rutledge, Legal Counsel, Retirement Systems Division, Department of State Treasurer, for defendant-appellees.

Bussian Law Firm, PLLC, by John A. Bussian, for North Carolina Press Association, and Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Mark J. Prak, for North Carolina Association of Broadcasters, amici curiae.

BRADY, Justice.

One of the earliest historians to comment on the “great experiment” that is America noted that our nation's political structure rests on the fundamental “principle of the sovereignty of the people.” 1 Alexis de Tocqueville Democracy in America 9, 40 (Henry Reeve trans., Arlington House 1966) (1835). In harmony with this principle, the North Carolina General Assembly recognized in the Public Records Act that “[t]he public records and public information compiled by the agencies of North Carolina government or its subdivisions are the property of the people.” N.C.G.S. § 132-1(b) (2009) (emphasis added). The issue in this case is whether the complaint filed by plaintiff State Employees Association of North Carolina, Inc. under the North Carolina Public Records Act id. §§ 132-1 to -10 (2009), is sufficient to overcome a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to North Carolina Rule of Civil Procedure 12(b)(6). We conclude that the complaint is sufficient and reverse the Court of Appeals.

FACTUAL BACKGROUND

Plaintiff's complaint and accompanying exhibits tend to show the following: Plaintiff is a nonprofit corporation incorporated under the laws of our state for the purpose of inter alia, promoting the best interests of current, retired, and future employees of the State of North Carolina. Defendants are the North Carolina Department of State Treasurer (defendant department), and, in his official capacity, Richard H. Moore (defendant Moore), who is the former Treasurer of the State of North Carolina and as such was the custodian of the public records of defendant department when the complaint was filed (collectively defendants).

Plaintiff's complaint was the culmination of its efforts over the course of nearly a year to obtain copies of documents involving the investment decisions and performance of the Retirement Systems Division of the Department of State Treasurer. Plaintiff's corporate officers decided to investigate issues illuminated by an article published in February 2007 in Forbes magazine entitled, “Pensions, Pols, Payola.” Neil Weinberg Pensions, Pols, Payola, Forbes, Mar. 12, 2007, at 42 available at http:// www. forbes. com/ forbes/ 2007/ 0312/ 042. html. The article takes a critical approach to what it calls “a cesspool of pay-to-play” scenarios in “most of the U.S. State and local governments.” Id. at 43. Particularly, the article reports on some of defendant Moore's activities and decisions:

As state treasurer Moore, a Democrat, is the sole fiduciary for the North Carolina Retirement System, with $73 billion in assets. He holds sway over which money managers are entrusted to invest funds from the state pension plan. At stake: millions of dollars in fees. He has parlayed this clout into one of the biggest fundraising machines in the state by eagerly accepting contributions from dozens of financial firms that benefit (or could benefit) from his largesse.

Id. at 43.

As a result of the article, plaintiff's executive director wrote a letter to defendant Moore dated 1 March 2007 requesting copies of the following public records:

1. All documents from the Office of State Treasurer and the law firm retained regarding the dispute with Forbes over the magazine's request for information and the documents provided to Forbes.

2. A complete accounting of how the law firm was paid and the total cost to taxpayers.

3. All investment reports that your office has been required during your tenure to file with the legislature under GS 147-69.3(h)-(i), any other investment reports that have been required to be publicly filed under state law and identification of such reports that have not been filed.

4. A list of all current investment managers, their performance by year (or total time if shorter than a year) and the total fee amounts being paid by your office.

In response, defendant Moore provided plaintiff with copies of approximately seven hundred pages of public documents in March 2007. Plaintiff examined these documents over a number of months and concluded that they did not fully satisfy the request. As such, plaintiff's executive director sent a second letter to defendant Moore dated 16 October 2007. Plaintiff renewed its request as stated in the March 2007 letter and sought additional documents, as follows:

1. All private equity, hedge fund or real estate investments made or maintained by the Treasurer's Office on behalf of the state's pension funds since January 1, 2001. Please provide records that show the following information for each year that the investment was maintained by the Treasurer's Office:

a. Name of the fund or partnership

b. Name of the principals, fund managers and general partners

c. Date of the initial commitment, initial investment and any follow-[up] communications

d. Amount of capital committed and the actual amount of funds paid e. Cash paid out

f. Remaining or estimated value

g. Internal rate of return

h. Investment multiple or return on capital

2. Records that show the fees paid to each external investment manager for the state's pension funds, including brokers, private equity managers, hedge fund managers and real estate investment managers since January 6, 2001. Please provide records that show the fees paid on an annual or monthly basis.

3. Records that show the fees paid to each broker, bank or other financial institution that manages or holds the investments, cash and/or deposits in the Cash Management Program from January 6, 2001, to the present. Please provide records that show the fees paid on an annual or monthly basis.

4. Records that show all stocks held each year by the state retirement system (including externally managed funds) administered by the State Treasurer from January 6, 2001, to the present.

5. Records that show the identity of each person who has served on the State Treasurer's investment committee since January 6, 2001. Please provide records that show the dates of service for each advisor, including any SEC investment advisor, registration forms or form ADV's provided to or retrieved by the State Treasurer's Office.

Having received no response to its October 2007 letter, plaintiff sent a third letter to defendant Moore on 6 December 2007, asking that the requested documents be made available by 31 December 2007; otherwise, plaintiff would “consider taking appropriate legal action.” On 21 December 2007, the director of communications for defendant department sent a letter to plaintiff stating that the “more than” seven hundred pages of documents “previously provided” was “believe[d]” to “fully answer[ ]” plaintiff's “original request,” and if not, plaintiff was asked to provide “a list of the specific information that was not included with the original documents.” On 7 January 2008, a second letter from defendant department's communications director reiterated that plaintiff should “indicate specifically” what was believed to be “ missing.”

Plaintiff then sent a fourth letter to defendant Moore dated 15 January 2008 and included a list of documents believed to be “omitted from those initially disclosed.” Plaintiff referred to the requests made in its previous letters of 1 March and 16 October 2007 and described the items believed to still be missing. The letter indicated that plaintiff would file a lawsuit if defendants did not “produce the requested public records by 5:00 p.m. on Friday, January 18, 2008.”

The director of communications for defendant department then sent two letters to plaintiff, both dated 18 January 2008. One letter addressed the items plaintiff believed to be missing from its initial request of 1 March 2007. One hundred sixty-two pages of copied documents were included with the letter which, according to defendants, “complete[d]” plaintiff's 1 March 2007 request. The second letter from defendant department dated 18 January 2008 addressed plaintiff's 16 October 2007 request. This letter stated that defendant department was working to provide the information, explained that plaintiff had received some of the requested documents already, and included copies of twenty-eight additional pages of copied material.

Plaintiff's executive director responded in a letter dated 24 January 2008 that he believed certain information was still missing, and he provided examples of specific documents that he believed existed but had not yet been disclosed. He asked for copies of the documents not yet provided and requested information explaining why defenda...