Financial Terms in Negotiated Contracts Are Not Exempt from Disclosure under FOIA

By September 7, 2017 News No Comments

The Illinois Appellate Court recently held that the Village of Rosemont could not redact certain financial terms from negotiated contracts before releasing the contracts pursuant to a Freedom of Information Act request, because such information was not considered “trade secrets” under Section 7(1)(g) of FOIA.  Better Government Association v. Village of Rosemont, 2017 IL App (1st) 161957.

At issue was a FOIA request from the Better Government Association to the Village of Rosemont for all contracts for events held in 2014 at the Allstate Arena and the Donald E. Stephens Convention Center, which are both owned and operated by the Village.  In response, the Village provided copies of the contracts but redacted information about “amounts paid as rent” to the Village and “rebates or financial inducements” paid by the Village.  The Village claimed that such information was exempt from disclosure under Sections 7(1)(a) and 7(1)(g) of the FOIA, as well as a Village ordinance prohibiting Village employees and officers from “knowingly disclos[ing] confidential financial or proprietary information relating to any Amusement Event held or to be held at” the Village’s entertainment venues.

Section 7(1)(a) of the FOIA exempts from disclosure “information specifically prohibited from disclosure by federal or State law or rules and regulations implementing federal or State law.”  The Village argued that the financial terms of its venue contracts were prohibited from disclosure by the Illinois Trade Secrets Act (765 ILCS 1065/1 et seq.).  However, the court found that this Act provides only that “[a]ctual or threatened misappropriation [of trade secrets] may be enjoined,” not that simple disclosures under FOIA are prohibited.  As a result, Section 7(1)(a) did not justify redacting the financial terms of the venue contracts.

Section 7(1)(g) of the FOIA exempts from disclosure certain “trade secrets and commercial or financial information obtained from a person or business.”  Here, the redacted information was not obtained from any third party; instead, the financial terms were negotiated between the Village and the third parties.  Moreover, the court opined that the public has a right to know about the sources and disposition of public funds.  Thus, Section 7(1)(g) of the FOIA also did not justify redacting the financial terms of the venue contracts.

Finally, the court found that the Village ordinance at issue was preempted by state law because the FOIA precludes local governments from creating additional restrictions on public access to information.

This case is an important reminder that the “trade secrets” exemption under the FOIA is narrow and will likely not cover information that is contained in the final form of a contract.

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