U.S. West Communications, Inc. v. Office of Consumer Advocate

• Decision Date: 21 April 1993
• Docket Number: No. 92-403,92-403
• Citation: 498 N.W.2d 711
• Parties: US WEST COMMUNICATIONS, INC., A Colorado Corporation; US West, Inc., A Colorado Corporation; and US West Real Estate, Inc., A Colorado Corporation, Appellants, v. OFFICE OF CONSUMER ADVOCATE, Appellee, and Thomas N. Locke, Intervenor-Appellee.
• Court: Iowa Supreme Court

Page 711

498 N.W.2d 711

US WEST COMMUNICATIONS, INC., A Colorado Corporation; US West, Inc., A Colorado Corporation; and US West Real Estate, Inc., A Colorado Corporation, Appellants, v. OFFICE OF CONSUMER ADVOCATE, Appellee and Thomas N. Locke, Intervenor-Appellee.

No. 92-403.

Supreme Court of Iowa.

April 21, 1993.

George A. Carroll of US West Communications, Inc., Des Moines, for appellants.

James R. Maret, David R. Conn, and Alice J. Hyde, Des Moines, for appellee Office of Consumer Advocate.

Jacqueline Stetson Rypma and Jeanne K. Johnson, Des Moines, for intervenor-appellee Locke.

Considered by McGIVERIN, C.J., and SCHULTZ, CARTER, NEUMAN, and SNELL, JJ.

SCHULTZ, Justice.

The issue in this appeal is whether copies of lease and real estate transactions, which were provided to the Office of Consumer Advocate (OCA) by a utility company in a rate proceeding, are exempt from disclosure under our public records law, Iowa Code chapter 22. ¹ Thomas A. Locke, the intervenor, is a newswriter who demanded the release of the information. US West, Inc. (West) owns US West Communications, Inc. (USWC) and US West Real Estate, Inc. (REI). These three companies commenced this action to enjoin the OCA from disclosing the lease information. We hold the trial court correctly refused to grant the injunction and affirm.

In 1991, the Denver Business Journal published a series of articles, written by Locke and others, relating to West's sales of commercial real estate and leasebacks of commercial space to its subsidiaries. According to the articles, West and its subsidiaries are paying inflated lease rates to each other to help drive up the costs of its buildings that are for sale and prevent a loss at the expense of shareholders. The inflated lease rates are then passed along to increase ratepayers' costs.

In February 1992, during a pending rate proceeding, the OCA instituted an investigation to determine the reasonableness of USWC's rates and charges. The OCA filed data requests asking for the book values of six of West's buildings. OCA wanted to know who previously owned the buildings, who bought them, and how much rent per square foot USWC was paying its affiliate, REI. USWC provided the requested information under an agreement of confidentiality. This agreement provided that OCA would not release the information until West had an opportunity to litigate the question of whether the information met an exception to disclosure.

This action was tried in equity; therefore, our review is de novo. We review the facts and the law and decide the matter anew. Schnabel v. Display Sign Service, Inc., 219 N.W.2d 546, 549 (Iowa 1974). When statutes are construed, our review is at law.

Iowa Code chapter 22 generally grants the public the right for examination and dissemination of public records. The definition of public records is found in Iowa Code section 22.1 and includes "all records, documents stored or preserved in any medium, of or belonging to this state...." Iowa Code section 22.2 provides for public access to examine and copy public records. In seeking an injunction, West and its subsidiaries relied on two exceptions to disclosure provided in Iowa Code section 22.7:

3. Trade secrets which are recognized and protected as such by law.

. . . . .

6. Reports to government agencies which, if released, would give advantage to competitors and serve no public purpose ...

The purpose of chapter 22 is to remedy unnecessary secrecy in conducting the public's business. City of Dubuque v. Telegraph Herald, Inc., 297 N.W.2d 523, 527 (Iowa 1980). We have interpreted our public records law to impose a presumption in favor of disclosure and to give a narrow interpretation to statutory exemptions from disclosure. Board of Directors of Davenport Community School Dist. v. Quad City Times, 382 N.W.2d 80, 82 (Iowa 1986); City of Dubuque, 297 N.W.2d at 526-27. "Disclosure is favored over non-disclosure, and exemptions from disclosure are to be strictly construed and granted sparingly." Davenport Community School Dist., 382 N.W.2d at 82 I. Trade secrets. We must first determine whether leases, purchases or sales agreements found in the unregulated real estate division of West's files, divulged to OCA during a rate proceeding, may be properly characterized as "trade secrets" under section 22.7(3). Our review requires an examination of the legal principles employed and the facts de novo.

While section 22.7(3) exempts "trade secrets" from disclosure, chapter 22 does not define the term. However, all parties agree that the definition contained in the Uniform Trade Secrets Act, Iowa Code section 550.2(4) (Supp.1991), is controlling. Consequently, we need not consider the meanings of "trade secrets" derived from our case law in effect at the time chapter 22 was enacted. Section 550.2(4) provides:

"Trade secret" means information, including but not limited to a formula, pattern, compilation, program, device, method, technique, or process that is both of the following:

a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by a person able to obtain economic value from its disclosure or use.

b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Our first inquiry is whether the statutory term "information" includes the leases, sales and purchase material provided by West to OCA. If it does, we must determine whether such data meet both requirements in subparagraphs (a) and (b).

The intervenor claims the lease and sale agreements are not "information." The intervenor urges "information" is not a separate and distinct category which, by itself, defines "trade secret." If this were the case, the intervenor argues, then anything described as "information" could be considered a trade secret.

We do not accept the intervenor's contentions. Under the plain language of the statute, "trade secret" is defined as "information" and eight examples of this term are provided. Although these examples cover items normally associated with the production of goods, "trade secrets" are not limited to the listed examples. Business information may also fall within the definition of a trade secret, including such matters as maintenance of data on customer lists and needs, source of supplies, confidential costs, price data and figures. 2 Roger M. Millgrim, Millgrim on Trade Secrets, § 9.03(3)(f) (1991). One commentator explains:

Trade secrets can range from customer information, to financial information, to information about manufacturing processes to the composition of products. There is virtually no category of information that cannot, as long as the information is protected from disclosure to the public, constitute a trade secret.

Thomas J. Collin, Determining Whether Information Is a Trade Secret Under Ohio Law, 19 U.Tol.L.Rev. 543, 545 (1988). We believe that a broad range of business data and facts which, if kept...