Opinion
Opinion By: Jack Conway, Attorney General; Michelle D. Harrison, Assistant Attorney General
Open Records Decision
At issue in this appeal is whether the Regional Water Resource Agency violated the Kentucky Open Records Act in denying Messenger-Inquirer reporter James Mayse's request for "a copy of the settlement between Regional Water Resource Agency and Ed Shelton" that "was reached in late May." Consistent with Lexington-Fayette Urban County Government v. Lexington Herald-Leader Company, Ky., 941 S.W.2d 469 (1997), and prior decisions of this office, including 08-ORD-068, the Attorney General finds that neither a bare assertion relative to KRS 61.878(1)(a) nor the confidentiality provision of the requested settlement agreement justify the denial of Mr. Mayse's request. A "settlement of litigation between private citizens and a governmental entity is a matter of legitimate public concern which the public is entitled to scrutinize [and a] confidentiality clause in such an agreement is not entitled to protection." Id. at 473.
Having received no response to his request, which Mr. Mayse directed to Thomas N. Kerrick and Dean Benhke via e-mail on July 22, 2009, Mr. Mayse initiated this appeal by letter dated July 30, 2009, initially noting that attorneys "representing RWRA's insurance carrier had until Monday, July 27 to formally respond" to his request in writing. Mr. Mayse further explained that the settlement agreement in dispute "closes a lawsuit Shelton filed against RWRA after a sewer collapse damaged Shelton's business." Relying upon Lexington-Fayette Urban County Government, Mr. Mayse argued that "in 1997, the state Supreme Court ruled that public agencies could not withhold agreements entered into by public agencies in settlement of lawsuits. "
Upon receiving notification of Mr. Mayse's appeal from this office, Mr. Kerrick responded on behalf of the RWRA, advising that on "the eve of trial, Edwin Shelton, [RWRA] and its liability insurance carrier, Kentucky League of Cities entered into a confidential settlement agreement. As is common, the settlement document sets forth a confidentiality provision which is for the mutual protection of the parties." As Mr. Kerrick correctly observed, Mr. Mayse's e-mail did not comply with KRS 61.872(2); 1 however, the RWRA "sent a response from its Executive Director, David Hawes, dated July 28, 2009," and Mr. Kerrick "sent a formal response to Mr. Mayse's email dated July 31, 2009," 2 both of which Mr. Kerrick attached to his response.
In support of his position that said agreement is protected, Mr. Kerrick argued:
Since the settlement document requires confidentiality, we respectfully object to the disclosure of settlement terms entered in this matter on the basis that KRS 61.878(1)(a) permits an exception for public records that contain information of a personal nature where disclosure thereof would constitute an unwarranted invasion of privacy. Kentucky courts have established that an open records request requires a balancing of the private interest versus the right to open dissemination of information for the public good. The policy of disclosure is not designed to satisfy the public's curiosity. Cape Publications v. City of Louisville, 147 S.W.3d 731 (Ky. App. 2003).
Lexington-Fayette Urban County Government [, supra,] relied upon by [the Messenger-Inquirer] can be distinguished from the facts of the Shelton v. Regional Water Resource settlement. In Herald-Leader, only two of the three settlement documents referred to confidentiality and in those documents, the provisions were merely for the benefit of the government agency. In contrast, the confidential [it]y provision in this case is for the benefit of both parties. See letter from Shelton's counsel attached hereto which objects to disclosure of the settlement information on the basis of his client's concern for personal privacy. 3
Secondly, there is no concern as to the expenditure of public funds here as there was in Herald-Leader. Please be advised that the settlement in the above referenced matter is being paid entirely out of insurance proceeds and no public funds are being consumed for this settlement. As such, the funding of the settlement is another factor weighing in favor of protecting the private interests of all parties to the litigation.
Based upon the following, this office must respectfully disagree with RWRA's interpretation of the governing law as well as its characterization of the funding involved. Although the RWRA is correct regarding the balancing test which must be applied relative to KRS 61.878(1)(a), the analysis does not end there, and the RWRA failed to identify, with any degree of specificity, the nature of the privacy interests implicated on the facts presented; a bare assertion that the settlement agreement is exempt under KRS 61.878(1)(a) "'is simply insufficient to overcome the public's right of access to information of this type.'" 08-ORD-068, p. 2, quoting Lexington-Fayette Urban County Government at 472. Likewise, a confidentiality provision "'cannot in and of itself create an inherent right to privacy superior and exempt from the statutory mandate for disclosure' " found in the Act. 08-ORD-068, pp. 2-3, quoting Lexington-Fayette Urban County Government at 472, 473. Each of the issues raised in the instant appeal has been conclusively resolved in favor of disclosure in prior decisions premised on the reasoning of Lexington-Fayette Urban County Government.
Our analysis begins with the legislative declaration of policy codified at KRS 61.871, pursuant to which:
The General Assembly finds and declares that the basic policy of KRS 61.870 to 61.884 is that free and open examination of public records is in the public interest and the exceptions provided for by KRS 61.878 or otherwise provided by law shall be strictly construed, even though such examination may cause inconvenience or embarrassment to public officials or others.
This office and the courts have long recognized that settlement of litigation by a governmental entity, which may involve the expenditure of public funds, is a matter of legitimate public concern which the public is entitled to scrutinize. Lexington-Fayette Urban County Government v. Lexington Herald-Leader Company, supra; 00-ORD-5.
In Lexington-Fayette Urban County Government, supra, the Kentucky Supreme Court recognized that such a settlement agreement was unquestionably a public record. At issue in that case was whether the LFUCG had violated the Open Records Act in denying a request for unredacted copies of three final settlement agreements pursuant to which the LFUCG agreed to pay litigants in connection with lawsuits filed against the agency. In denying access, the LFUCG partially relied on confidentiality clauses in two of the three agreements whereby the settlement recipients and their attorneys agreed not to disclose any terms of the agreements. As the Court observed:
There could be no viable contention that an agreement which represents the final settlement of a civil lawsuit whereby a governmental entity pays public funds to compensate for an injury it inflicted is not a public record. KRS 61.872(1) provides in part that "all public records shall be open for inspection by any person" and we think of no construction of this language which would permit exclusion of an agreement of the type at issue here. In fact, even before enactment of the Open Records statute, we held in Courier-Journal & Louisville Times Co. v. McDonald, Ky., 524 S.W.2d 633 (1974), that "the payment of city funds ? is a matter with which the public has a substantial concern, against which little weight can be accorded to any desire of the plaintiff in that suit to keep secret the amount of money he received." Id. at 635. Thus, the government is without any basis upon which to claim a right of privacy, and unless the documents are excluded from disclosure by one or more of the specific provisions of the Act, they must be produced. KRS 61.871.
Typically, the provision relied upon by persons wishing to prevent disclosure is KRS 61.878(1)(a) which excludes "public records containing information of a personal nature where the public disclosure thereof would constitute a clearly unwarranted invasion of personal privacy. "
Id. at 471.
Having summarized the relevant case law regarding application of KRS 61.878(1)(a), the Court noted that "[o]f primary concern is the nature of the information which is the subject of the requested disclosure; whether it is the type of information about which the public would have little or no legitimate interest but which would be likely to cause serious personal embarrassment or humiliation." Id. at 472. After weighing the competing interests, the Court determined that "the privacy claim here is simply insufficient to overcome the public's right of access to information of this type." Id. In so doing, the Court adopted the reasoning of the Court of Appeals regarding the requested agreements:
In balancing the sacrosanct right of an individual to privacy against legitimate public concerns and the right of the public to inquire into the workings of government, we find that a settlement of litigation between private citizens and a governmental entity is a matter of legitimate public concern which the public is entitled to scrutinize. A confidentiality clause in such an agreement is not entitled to protection-in contrast with agreements containing the kind of matters protected by the privileges [implicated in the prior opinions regarding application of KRS 61.878(1)(a) which are not implicated in this context].
Id. at 473. As in Lexington-Fayette Urban County Government, "the record in this case gives no indication that significant privacy rights of the settling plaintiffs are implicated here [beyond a letter from their attorney that merely reiterates the self-evident desire of his clients to maintain the confidentiality of the agreement]." Id. However, the Court again left the "door ajar for those who seek to prevent disclosure. " Beckham at 578; 98-ORD-24; 08-ORD-023.
"The 'right of persons who might be affected by the release of governmental information to be heard on their privacy claim, '" which the Court recognized in Beckham and Lexington-Fayette Urban County Government, "is triggered when a public agency expresses its intention to disclose that information, and the affected parties commence litigation prior to disclosure. Lexington-Fayette Urban County Government at 472. It cannot be employed by a public agency to avoid its duties under KRS 61.880(1)." 98-ORD-24, p. 5. Rather, it is "incumbent on the public agency to responsibly discharge its duties under the Open Records Act. " Id. If disclosure of the agreement would raise legitimate concerns for the Sheltons' personal privacy because the agreement contains information "which would be likely to cause serious personal embarrassment or humiliation," they certainly have standing to challenge the disclosure in court; however, the RWRA violated the Act in denying Mr. Mayse's request for the settlement agreement on the basis of KRS 61.878(1)(a) in the absence of any indication that said agreement contains information of such a highly sensitive nature as to overcome the presumption of openness.
Prior decisions of this office validate our holding. For example, in 08-ORD-068, the reasoning of which is equally controlling on the facts presented, the Attorney General rejected the agency's reliance on KRS 61.878(1)(a) in the absence "of more particularized proof relative to the privacy interest involved" and concluded that "the agency's denial of access to the settlement agreement, and records related thereto, notwithstanding a confidentiality agreement, constituted a violation of the Open Records Act. " Id., pp. 6-7. See 00-ORD-5. A copy of 08-ORD-068 is attached hereto and incorporated by reference. Contrary to Mr. Kerrick's remaining contention, it cannot be persuasively argued that no public funds are expended in the settlement of a lawsuit between private citizens and a governmental entity by an insurance carrier "when it is public funds that are expended in paying the insurance premium through which the agency relationship is formed that obligates the carrier to defend the lawsuit. " 00-ORD-207 (copy attached) , p. 5, citing OAG 91-20, OAG 92-17. Inasmuch as the instant appeal presents no reason to depart from Lexington-Fayette Urban County Government or prior decisions of this office, the same result necessarily follows. Acknowledging the significant policy considerations weighing in favor of settlements, the Kentucky Supreme Court and this office have recognized "that a public agency may not circumvent the statutory requirements by agreeing to keep the terms of a settlement agreement confidential. " Lexington-Fayette Urban County Government at 472 (citation omitted).
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3) , the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.
Footnotes
Footnotes
1 Because Mr. Mayse failed to submit a written request in accordance with KRS 61.872(2), the RWRA nevertheless responded within one day of the permissible time frame of three business days, and the law regarding application of KRS 61.880(1) is well-established, this office will not belabor the issue of procedural compliance.
2 In his letter of July 28, 2009, Mr. Hawes merely advised that "RWRA has not received a copy of the settlement referenced above." Likewise, Mr. Kerrick subsequently advised that "it will be necessary for anyone involved with this matter to obtain approval from Daviess Circuit Court before disclosure of any terms can be made." Both responses are deficient as lack of actual possession, standing alone, is not dispositive, as 00-ORD-207 confirms, nor does it appear, based upon the limited evidence of record, that a court order sealing the agreement was issued. See 07-ORD-110 (copy attached) (holding that public agency failed to satisfy its burden of proof relative to KRS 61.878(1)(a) but question of whether the documents requested were protected had to be raised in judicial system because the agreement had been placed under seal by circuit court).
3 Although no such letter was attached to Mr. Kerrick's response, Max S. Hartz, counsel for Edwin Shelton, Greta Shelton, and Weir's Drug & Jewelry, Inc., subsequently expressed his clients' objection by letter dated August 4, 2009, but received in this office August 10, 2009. Mr. Hartz noted that his clients "did not have any contractual or employment relationship with RWRA and are private individuals seeking redress against a public entity." Quoting the language of KRS 61.878(1)(a), without further elaboration, Mr. Hartz asked that Mr. Mayse's appeal be denied; however, nothing in this letter distinguishes the instant case from Lexington-Fayette Urban County Government and its progeny.
In accordance with Beckham v. Jefferson County Board of Education, Ky., 873 S.W.2d 575, 579 (1994), the Kentucky Supreme Court held that parties affected by disclosure of documents, "having commenced litigation prior to release of the information sought, were entitled to be heard on their exclusion claims and entitled to appellate review of the merits in the Court of Appeals." See Lexington-Fayette Urban County Government, supra. In other words, the Sheltons have standing to commence litigation prior to disclosure, but their right to be heard on their privacy claim does not relieve the public agency of its duties under the Open Records Act or satisfy its burden of proof. 08-ORD-023 (copy attached) , p. 6, citing 98-ORD-24.
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