Trade Secret/Proprietary Information Exemptions Block Access to Hotel Tax Information

“Trade secrets” and “confidential proprietary information” are not only exempt from the RTKL, but wide open to judicial interpretation that will surely shape the law’s effectiveness as a true means to access information. 65 Pa. Stat. Ann. § 67.708. Take for example the courts’ broad interpretation of “personal identification information” which prevented the disclosure of agency-issued contact information belonging to state executive-level officials and employees, even though such information was publically available. Recently, the Commonwealth Court gave a similarly broad reading to “confidential proprietary information.” However, if one is familiar with precisely how the courts measure these exemptions, one can tailor-make a RTKL request to fit these precise definitions, affording a requester the best odds of discovering the desired information.

In February 2012, Lancaster Newspapers Inc. submitted a RTKL request to Lancaster County. The Newspaper sought tax records for all county hotels that paid the local excise tax, the names of each hotel, yearly totals of room rental tax collected and occupancy data on a year by year basis from 2007 to 2011. The County denied the request on the grounds that the records contained “confidential and proprietary information” and “personal financial information” pursuant to two exceptions found in Section 708 of the RTKL. On appeal, the Office of Open Records (OOR) ordered the release of the names of the hotels, along with the total excise and room rental taxes collected for each hotel, but not the occupancy data. On appeal, several local hotels were allowed to intervene in opposition (collectively “Hotels”). The trial court disagreed with the OOR and ordered only the release of the names of the hotels that paid the relevant taxes, finding the amounts of such taxes “confidential proprietary information.” The trial court concluded that by knowing the name of the hotel, one can easily determine the number of rooms because that information is public knowledge. And by knowing the tax paid by each hotel, one can compute revenue by dividing the total payments by the tax rate (.05) to calculate “RevPAR” (revenue per available room), which “might be used by competitors to divert business” according to the Hotels’ expert witness. The Newspaper appealed to the Commonwealth Court.

The Commonwealth Court agreed with the trial court that the tax information was “proprietary” and exempt from public disclosure under the RTKL. The RTKL defines confidential proprietary information as “privileged or confidential” information that if disclosed would cause “substantial harm to the competitive position” of the business that submitted it. 65 P.S. § 67.102. Relying solely on the Hotels’ expert witnesses, the Court first reasoned that the tax information sought by the Newspaper was “confidential” because “gross receipts of a hotel, number of occupied room nights, and receipts exempted” are kept strictly confidential by hoteliers. Second, the court reasoned that disclosing the tax information would “substantially harm” the Hotels’ competitive positions because it would allow competitors to extrapolate occupancy rates and profitability that, according to the Hotels ‘expert, was tantamount to giving competitors “a loaded gun.” The Court concluded that such tax information was exempt from the RTKL under these circumstances.

The bottom line: “proprietary” information that can harm one’s “Bottom Line” will likely be exempt under the RTKL. The same is true for “personal identifying” information as we have seen from past decisions. On the other hand, lists of consumers with outstanding public debts are generally available under the RTKL. The key for future drafters of RTKL requests will be how to navigate the case law in crafting their requests to discover the desired information, while not allowing the holder of that information to assert an exception under the RTKL. This will require affixing a keen eye on these emerging decisions interpreting the numerous exceptions contained in the RTKL.

Disclaimer:  This blog is maintained by the members of Nauman Smith’s Media and Right-to-Know Law practice group.  The members of this practice group represent both: 1) media entities, individuals and corporations seeking access to public records, and 2) local municipalities seeking to comply with the law.  THIS BLOG IS NOT MEANT TO BE USED AS LEGAL ADVICE.  The purpose of this blog is to provide educational material for individuals interested in Pennsylvania’s open records law, commonly referred to as the “Right-to-Know Law” or “RTKL”.  The opinions expressed by the individual members of the practice group are solely their own, and do not reflect the opinions of Nauman, Smith, Shissler & Hall, LLP, or the practice group as a whole.