Verizon New York Inc. v. New York State Pub. Serv. Comm’n

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: Egan Jr., J.P.
• Citation: 236 N.Y.S.3d 396,239 A.D.3d 1110
• Decision Date: 12 June 2025
• Parties: In the Matter of VERIZON NEW YORK INC. et al., Respondents, v. NEW YORK STATE PUBLIC SERVICE COMMISSION et al., Appellants.
• topic: Administrative Law,Consumer Law

236 N.Y.S.3d 396

239 A.D.3d 1110

In the Matter of VERIZON NEW YORK INC. et al., Respondents,

v.NEW YORK STATE PUBLIC SERVICE COMMISSION et al., Appellants.

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: April 29, 2025

Decided and Entered: June 12, 2025

John J. Sipos, Public Service Commission, Albany (Daniel Becker of counsel), for appellants.

McGuireWoods LLP, New York City (Jeffrey J. Chapman of counsel), for respondents.

Before: Egan Jr., J.P., Aarons, Reynolds Fitzgerald, Ceresia and Fisher, JJ.

MEMORANDUM AND ORDER

Egan Jr., J.P.

Appeal from a judgment of the Supreme Court (David Gandin, J.), entered January 30, 2024 in Albany County, which granted petitioners’ application, in a proceeding pursuant to CPLR article 78, to annul a determination of respondent Public Service Commission partially denying petitioners’ request for an exemption from disclosure under the Freedom of Information Law.

On July 9, 2023, an article appeared in The Wall Street Journal entitled “America is Wrapped in Miles of Toxic Lead Cables,” describing how petitioners and other telecommunication companies owned thousands of miles of lead-sheathed copper wires throughout the country that had been installed decades earlier as part of the telephone network and were a “hidden source of [lead] contamination” posing health risks to the public. The article prompted respondent Department of Public Service and other state entities to investigate the scope of the problem in New York and, on July 20, 2023, the Chair of respondent Public Service Commission (hereinafter PSC) and other officials jointly requested that petitioners provide “a full inventory of lead-containing aerial and buried cable, both on land and below water, owned by [petitioners],” regardless of whether the cable was still in use or not, as well as the location thereof to allow inspection.¹ Petitioners provided the information to the PSC in August 2023, filing redacted versions of a spreadsheet that extensively detailed, among other things, the locations and amounts of cable known to be sheathed in lead (Exhibit A), as well as “a representative example of a record for a manhole that does not include latitude and longitude data … [which] allows engineers to understand the characteristics of each cable, including its lead status” (Exhibit B). Petitioners also provided an unredacted version to the PSC with an explanation as to how the redacted material contained trade secrets, confidential commercial information and/or critical infrastructure information that was exempt from disclosure under the Freedom of Information Law (see Public Officers Law art 6 [hereinafter FOIL]; see also 16 NYCRR 6-1.3[b]).

Four days later, a Journal reporter submitted a FOIL request to the PSC seeking disclosure of the exhibits in unredacted form. Respondent Records Access Officer (hereinafter RAO) notified petitioners of the request, and they reiterated their view that the redacted material was exempt from disclosure pursuant to Public Officers Law § 87(2)(d), (f) and (i). The RAO determined that the portions of Exhibit A detailing the locations of the cable, as well as the entirety of Exhibit B, contained critical infrastructure information and were exempt from disclosure (see Public Officers Law § 87[2][i]). The RAO ordered disclosure of the remainder of Exhibit A that detailed, among other things, the amount of lead-sheathed cable identified by petitioners and whether that cable was suspended in the air, underground, underwater or within buildings. Upon petitioners’ administrative appeal, respondent Secretary of the PSC (hereinafter the Secretary) upheld the RAO’s determination.

Petitioners responded by commencing the present CPLR article 78 proceeding and successfully seeking a temporary stay of disclosure. Petitioners argued that disclosure of Exhibit A with the limited redactions authorized by the RAO would still reveal “trade secrets” and cause “substantial injury to [their] competitive position” (Public Officers Law § 87[2][d]). Following joinder of issue, Supreme Court concluded that disclosure of the redacted information would still fall under the substantial competitive injury exemption to FOIL and granted the petition. Respondents appeal.

[1–3] We affirm. “While there is a presumption of access accorded to documents held by a public agency that are used by it in the execution of its administrative responsibilities, that presumption is subject to certain narrowly defined exceptions” (Matter of City of Schenectady v. O’Keeffe, 50 A.D.3d 1384, 1386, 856 N.Y.S.2d 281 [3d Dept. 2008], lv denied 11 N.Y.3d 702, 864 N.Y.S.2d 389, 894 N.E.2d 653 [2008] [citations omitted]; see Matter of New York Civ. Lib. Union v. City of Rochester, — N.Y.3d —, —, — N.Y.S.3d —, — N.E.3d —, 2025 N.Y. Slip Op. 01010, *1 [2025]). The relevant exceptions here are in Public Officers Law § 87(2)(d), which exempts from disclosure records that contain “trade secrets or are submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise” (see Matter of Markowitz v. Serio, 11 N.Y.3d 43, 50, 862 N.Y.S.2d 833, 893 N.E.2d 110 [2008]; Matter of Verizon N.Y., Inc. v. New York State Pub. Serv. Commn., 137 A.D.3d 66, 68, 23 N.Y.S.3d 446 [3d Dept. 2016]). The language “create[s] two separate FOIL exemptions in the same statutory provision, one that exempts all records proven to be bona fide trade secrets, and another that requires a showing of substantial competitive injury in order to exempt from FOIL discovery all other types of confidential commercial information imparted to an agency” (Matter of Verizon N.Y., Inc. v. New York State Pub. Serv. Commn., 137 A.D.3d at 69-70, 23 N.Y.S.3d 446). It is incumbent upon petitioners, as the parties resisting disclosure, to “prove entitlement to one of the exceptions” (Matter of Capital Newspapers Div. of Hearst Corp. v. Burns, 109 A.D.2d 92, 94, 490 N.Y.S.2d 651 [3d Dept. 1985], affd 67 N.Y.2d 562, 505 N.Y.S.2d 576, 496 N.E.2d 665 [1986]; see Public Officers Law § 89[5][e]; Matter of Prall v. New York City Dept, of Corr., 129 AD.3d 734, 735, 10 N.Y.S.3d 332 [2d Dept. 2015]).

[4, 5] Petitioners attempted to show that both exemptions in Public Officers Law § 87(2)(d) applied, and Supreme Court determined that they succeeded with regard to the substantial competitive injury exemption. That exemption requires “[t]he party seeking to take advantage of [it to] demonstrate the existence of actual competition and the likelihood of substantial competitive injury” from disclosure (Matter of Glens Falls Newspapers v. Counties of Warren & Washington Dev. Agency, 257 A.D.2d 948, 949, 684 N.Y.S.2d 321 [3d Dept. 1999]; see Matter of Encore Coll. Bookstores v. Auxiliary Serv. Corp, of State Univ, of N.Y. at Farmingdale, 87 N.Y.2d 410, 421, 639 N.Y.S.2d 990, 663 N.E.2d 302 [1995]). There is no dispute here that petitioners face actual competition in the telecommunications industry. The issue accordingly distills to whether petitioners demonstrated the existence of substantial competitive injury from disclosure of confidential information, which depends upon an assessment of “ ‘the commercial value of the requested information to competitors and the cost of acquiring it through other means’ ” (Matter of Encore Coll. Bookstores v. Auxiliary Serv. Corp, of State Univ, of N.Y. at Farmingdale, 87 N.Y.2d at 420, 639 N.Y.S.2d 990, 663 N.E.2d 302, quoting Worthington Compressors, Inc. v. Costle, 662 F.2d 45, 51 [D.C. Cir.1981]; see Seife v. United States Food & Drug Admin., 43 F.4th 231, 241-242 [2d Cir.2022]; Matter of Sunset Energy Fleet v. New York State Dept, of Envtl. Conservation, 285 A.D.2d 865, 867, 728 N.Y.S.2d 279 [3d Dept. 2001]; see also 16 NYCRR 6-1.3[b][2]).²

Petitioners provided the PSC with a sworn declaration from the director of program and project management in their network engineering organization who detailed why the exemption applied. In particular, the director described how generating the inventory of lead-sheathed cables had required the work of multiple people...