Strange Bedfellows: Nondisclosure Agreements and the Public Records Act

A recent decision from the Oregon Court of Appeals, Pfizer Inc. v. Oregon Department of Justice, confronted how a nondisclosure agreement entered into by a government entity and a private party affected the government’s ability to respond to a public records request governed by Oregon’s Public Records Act (ORS 192.410 et. seq.). Background – The Public Records Act

The Oregon Public Records Act (“Act”) was enacted in 1973 and has been amended numerous times during the last 40 years.  Under the Act, the records of public entities such as cities must be made available for inspection and copying to any person, regardless of the person’s identity, motive, or need.  There are, however, numerous exemptions that permit a public agency to withhold a document from inspection and copying.  In most circumstances, a public agency may disclose a record even if an exemption would otherwise permit the agency to withhold the record from inspection and copying.  But, there are some situations in which the law mandates that a record of a public agency remain confidential.

The basic principle behind the Public Records Act is that records should be disclosed whenever possible.  To that end, courts narrowly construe exemptions under the Act.  In other words, courts generally view the Act in favor of disclosure, unless the law expressly prohibits disclosure.

The Decision

In 2003 the Oregon Department of Justice led a multistate investigation to determine whether Pfizer Inc. and one if its subsidiaries, Pharmacia Corporation, were marketing some of their products in violation of various consumer protection laws.  One aspect of the investigation related to whether the companies were marketing certain products for “off label uses” – uses of drugs that had not been approved by the Food and Drug Administration.

To determine whether illegal marketing practices had occurred, during its investigation, the Department of Justice requested several exhibits from the companies.  To facilitate the acquisition of the exhibits, the Department of Justice entered into a detailed confidentiality agreement with the companies that limited the disclosure of several the requested exhibits.  Among numerous other provisions, the disclosure agreement provided that the obligations to keep the exhibits confidential are “subject to the provisions of each State’s respective data practices act, public record act, freedom of information act or similar state law regarding the maintenance and disclosure of documents and information supplied to such State’s Attorney General.”

After the parties had reached a settlement agreement, an attorney from California and two reporters filed a public records request with the Department of Justice to receive copies of the exhibits governed by the confidentiality agreement.  The first question confronted by the court was whether the confidentiality agreement obligated the Department of Justice to withhold the exhibits to the extent that they are exempt from disclosure under the Act.

The Court of Appeals concluded that the confidentiality agreement did in fact obligate the Department of Justice to withhold exhibits produced by the companies to the extent that the exhibits were exempt from disclosure under the Act.  The court reasoned that the contractual obligations agreed to by the Department of Justice required the government to keep the exhibits confidential.  However, the court also reasoned that the reference to the public records act quoted above modified and limited this obligation so that it applied only if the exhibits were covered by an exemption under the Act.  In other words, the Department of Justice contractually waived its ability to disclose the exhibits if an exemption applied.

After reaching its conclusion on this preliminary question, the court proceeded to analyze each of the exhibits to determine whether an exemption applied.  After a detailed analysis, the court concluded that several exhibits were exempt from disclosure as trade secrets under the Act.  The court also concluded that several other exhibits were not exempt from disclosure as trade secrets, documents submitted in confidence or documents covered by the attorney work product doctrine mostly due to the fact that those documents were already publicly available by other means.

The Impact

Confidentiality agreements have always been tricky legal documents to navigate for cities.  The Pfizer decision demonstrates that if cities determine to enter into such agreements that they should be sure to include language in the agreements that the confidentiality obligations are subject to the Public Records Act.  Furthermore, both cities and the private parties with whom such agreements are being entered into should understand that the ability to keep a document confidential is dependent upon whether an exemption exists under the Act.