IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Ginger Davis, :
Petitioner :
:
v. : No. 399 C.D. 2021
: Submitted: June 23, 2022
Pennsylvania State Employees :
Retirement System (SERS) :
(Office of Open Records), :
Respondent :
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE LORI A. DUMAS, Judge
OPINION
BY JUDGE DUMAS FILED: October 27, 2022
Ginger Davis (Requester) has petitioned this Court to review the Final
Determination, issued March 15, 2021, by the Office of Open Records (OOR), which
granted in part and denied in part her request for certain records maintained by the
Pennsylvania State Employees’ Retirement System (SERS) administrative board
(board) pursuant to the Right-to-Know-Law (RTKL).1 Upon review, we conclude
that SERS presented sufficient evidence to establish that these records are exempt
from disclosure under Section 5902(e)(2) of the State Employees’ Retirement Code
(Retirement Code or Code), 71 Pa.C.S. §§ 5902(e)(2). Thus, we affirm.
I. BACKGROUND
On September 17, 2020, Requester submitted a request to SERS for
records associated with a board decision to invest in certain funds offered by
Singerman Real Estate, LLC (Singerman).2 SERS denied the request, asserting that
1
Act of February 14, 2008, P.L. 6, 65 P.S. §§ 67.101-67.3104.
2
Specifically, the request sought the following documents: (1) Investor Presentation, (2)
Private Placement Memorandum (PPM), (3) Term Sheet, (4) Draft Limited Partnership Agreement
the records were exempt from disclosure under Section 5902(e)(2) of the Retirement
Code, 71 Pa.C.S. § 5902(e)(2),3 that the records contained confidential, proprietary
information and trade secrets under Section 708(b)(11) of the RTKL, 65 P.S. §
67.708(b)(11),4 and that certain records were exempt from disclosure because they
revealed internal, pre-decisional deliberations under Section 708(b)(10)(i)(A) of the
RTKL, 65 P.S. § 67.708(b)(10)(i)(A).5, 6
(LPA), (5) Real Estate Consultant’s Private Markets Investment Due Diligence Report (NEPC
Due Diligence Report), (6) Real Estate Consultant’s Recommendation Summary (NEPC
Recommendation Summary), and (7) Recommendation for Board Interview and Investment
Memoranda. OOR Final Determination, 3/5/21, at 5-6.
3
Section 5902(e)(2) provides:
Any record, material or data received, prepared, used or retained by the board or its
employees, investment professionals or agents relating to an investment shall not constitute
a public record subject to public access under the act of February 14, 2008 (P.L. 6, No. 3),
known as the Right-to-Know Law, if, in the reasonable judgment of the board, the access
would:
(i) in the case of an alternative investment or alternative investment vehicle, involve
the release of sensitive investment or financial information relating to the
alternative investment or alternative investment vehicle which the fund or trust was
able to obtain only upon agreeing to maintain its confidentiality;
(ii) cause substantial competitive harm to the person from whom sensitive
investment or financial information relating to the investment was received; or
(iii) have a substantial detrimental impact on the value of an investment to be
acquired, held or disposed of by the fund or trust or would cause a breach of the
standard of care or fiduciary duty set forth in this part.
71 Pa.C.S. § 5902(e)(2) (footnote omitted).
4
Section 708(b)(11) of the RTKL exempts from disclosure “[a] record that constitutes or
reveals a trade secret or confidential proprietary information.” 65 P.S. § 67.708(b)(11).
5
Section 708(b)(10)(i)(A) exempts from disclosure “[t]he internal, predecisional
deliberations of an agency, its members, employees or officials or predecisional deliberations
between agency members, employees or officials and members, employees or officials of another
agency, . . . contemplated or proposed policy or course of action or any research, memos or other
documents used in the predecisional deliberations.” 65 P.S. § 67.708(b)(10)(i)(A).
6
SERS did not pursue this third claim before OOR. Accordingly, OOR did not address this
claim in its Final Determination. OOR Final Determination at 2 n.2.
2
Requester appealed to OOR, challenging the denial and grounds stated
for nondisclosure. Appeal of Denial, 11/17/2020. OOR invited both parties to
supplement the record and directed SERS to notify any appropriate third parties of
their interest in the appeal. OOR Final Determination at 2. Thereafter, OOR granted
Singerman’s request to participate.7 Both SERS and Singerman supplemented the
record with affidavits supporting SERS’ denial. See SERS’ Position Statement,
1/29/21, Ex. 3 (Felix Affidavit); Singerman’s Position Statement, 1/29/21, Ex. A
(Singerman Affidavit) (collectively, Affidavits).
On March 15, 2021, OOR issued a Final Determination, granting in part
and denying in part Requester’s appeal. OOR determined that the Affidavits
established that the materials provided by Singerman were entrusted to SERS under
strict confidentiality agreements and that the disclosure of the records and
information contained therein would result in both competitive harm to Singerman
and SERS and a detrimental impact on the value of an investment for which the
board acts as a fiduciary. OOR Final Determination at 16-20.
Specifically, OOR concluded that SERS could withhold the Investor
Presentation, PPM, Term Sheet, and Draft LPA under the confidentiality exception
of the Retirement Code. OOR Final Determination at 16. OOR further concluded
that the NEPC Due Diligence Research Report and the NEPC Recommendation
Summary were exempt under the substantial competitive harm and substantial
detrimental impact exemptions under the Retirement Code. OOR Final
Determination, at 19-20. However, OOR also concluded that the Affidavits failed
to establish how a two-sentence portion of the Recommendation for Board Interview
and Investment Memoranda constituted a trade secret under Section 708(b)(11) of
7
See Section 1101(c) of the RTKL, 65 P.S. § 67.1101(c).
3
the RTKL. OOR Final Determination at 24. Thus, OOR directed SERS to produce
this document. Id. at 25.
Requester timely appealed.8
II. ISSUES
On appeal, Requester contends that OOR erred in concluding that the
records requested are exempt under the Retirement Code. According to Requester,
the evidence submitted by SERS and Singerman was insufficient to establish that
the documents were subject to a confidentiality agreement. See Pet’r’s Br. at 16-17
(specifically noting the lack of evidence addressing the duration of the
confidentiality agreement and whether it remained operative). Further, according to
Requester, there was insufficient or contradictory evidence to establish that
disclosure would cause substantial competitive harm to SERS or detrimental impact
to its investments. See id. at 17-20.
In response to these arguments, SERS maintains that the records
requested are exempt from disclosure under both Section 5902(e)(2) of the
Retirement Code and Section 708(b)(11) of the RTKL. See Resp’t’s Br. at 15.
According to SERS, the Affidavits submitted were sufficient to establish that these
documents contain confidential information, and that disclosure would cause
substantial competitive harm to both SERS and Singerman, as well as a substantial
detrimental impact to SERS’ investments. See Resp’t’s Br. at 15-45.9
8
This Court’s standard of review of an OOR Final Determination under the RTKL is de
novo, and our scope of review is plenary. Bowling v. Office of Open Records, 75 A.3d 453, 477
(Pa. 2013). “[W]e may substitute our own findings of fact for that of the agency or rely upon the
record created below.” Pa. State Police v. Muller, 124 A.3d 761, 763 n.2 (Pa. Cmwlth. 2015).
9
For its part, Singerman is largely in agreement with SERS’ position on appeal. See
generally Singerman’s Br. at 13-26.
4
III. DISCUSSION
Under the RTKL, information is only subject to disclosure if it is a
“public record.” Section 301(a) of the RTKL, 65 P.S. § 67.301(a). Pursuant to
Section 305, however, records in the possession of a Commonwealth agency shall
be presumed public unless (1) exempted under Section 708 of the RTKL; (2)
protected by a privilege; or (3) exempted under any other federal or state law or
regulation or judicial order. 65 P.S. § 67.305; Crouthamel v. Dep’t of Transp., 207
A.3d 432, 437 (Pa. Cmwlth. 2019).
The agency receiving a RTKL request bears the burden of proving that
the record is exempt by a preponderance of the evidence. Section 708(a)(1) of the
RTKL, 65 P.S. § 67.708(a)(1). A preponderance of the evidence is such evidence
as would lead a factfinder to find that the existence of a contested fact is more
probable than the nonexistence of the contested fact. Off. of the Dist. Att’y of Phila.
v. Bagwell, 155 A.3d 1119, 1130 (Pa. Cmwlth. 2017).
In appeals involving a Commonwealth agency, Section 1101(b)(1) of
the RTKL charges an OOR appeals officer with the obligation of determining, in the
first instance, whether an agency has met its burden of proof. 65 P.S. §
67.1101(b)(1). “Testimonial affidavits found to be relevant and credible may
provide sufficient evidence in support of a claimed exemption.” McGowan v. Pa.
Dep’t of Env’t Prot., 103 A.3d 374, 381 (Pa. Cmwlth. 2014); see also Hodges v. Pa.
Dep’t of Health, 29 A.3d 1190 (Pa. Cmwlth. 2011). However, conclusory affidavits
are not sufficient to justify an exemption. Off. of Governor v. Scolforo, 65 A.3d 1095,
1104 (Pa. Cmwlth. 2013). The evidence must be specific enough to permit this Court
to ascertain how disclosure of the entries would reflect that the records sought fall
5
within the proffered exemptions. Carey v. Pa. Dep't of Corr., 61 A.3d 367, 375-79
(Pa. Cmwlth. 2013).
The Retirement Code mandates that its administrative board shall
maintain “a record of all its proceedings which shall be open to access by the public.”
71 Pa.C.S. § 5902(e)(1). The records at issue here deal with private market real
estate investments, which are defined under the Retirement Code as “alternative
investments,” i.e., “an investment in a private equity fund, private debt fund, venture
fund, real estate fund, hedge fund or absolute return fund.” 71 Pa.C.S. § 5102. The
administrative board is empowered “in its prudent discretion” to make such
investments. 71 Pa.C.S. § 5931(h).
Under the Code, records pertaining to alternative investments do not
constitute public records subject to disclosure if, in the reasonable judgment of the
board: (1) the records are subject to a confidentiality agreement; (2) their public
access would cause substantial competitive harm; or (3) their public access would
have a substantial detrimental impact on the value of an investment. See 71 Pa.C.S.
§ 5902(e)(2)(i)-(iii). However, the Retirement Code limits these exemptions. For
example, the Code provides that investment information excluded as confidential
shall be deemed a public record subject to disclosure once the board is no longer
required to maintain confidentiality. 71 Pa.C.S. § 5903(e)(3)(i). Records subject to
the competitive harm exemption shall be subject to disclosure once access to the
documents would no longer cause substantial competitive harm or the entity which
made the investment is liquidated, whichever is later. 71 Pa.C.S. § 5903(e)(3)(ii).
Similarly, records subject to the detrimental impact exemption shall be subject to
disclosure when access to the documents would no longer have a substantial
detrimental impact or the entity which made the investment is liquidated. See 71
6
Pa.C.S. § 5902(e)(3)(iii). In each of these provisions, there is a temporal element
that limits the board’s ability to withhold records from the public.
A. The Investor Presentation, Term Sheet, PPM and Draft LPA are Exempt
from Disclosure under Section 5902(e)(2)(i) the Retirement Code
Requester contends that the Affidavits are insufficient to establish that
the requested records are exempt from disclosure for confidentiality under Section
5902(e)(2)(i) of the Retirement Code. We disagree.
According to the Felix Affidavit, the responsive documents are not
publicly available, and “SERS obtained the Investor Presentation, Term Sheet, PPM,
and Draft LPA on the condition of maintaining their confidentiality and that SERS
is contractually required to maintain the confidentiality of the requested records.”
See Felix Aff., ¶ 36. Mr. Felix clearly stated that SERS is bound by an agreement
and that the requested records remain subject to confidentiality. See id., ¶ 61 (“SERS
accepted delivery of [Singerman’s] Investor Presentation and is bound by the stated
conditions of maintaining confidentiality that such acceptance requires, including
not publishing, distributing or otherwise making it accessible to the public or anyone
without a legitimate business reason to observe the record.”); see also id., ¶¶ 74, 109,
128. Mr. Singerman’s Affidavit corroborates that SERS was provided the
documents by way of an active agreement. Singerman Aff., ¶ 6. (“SERS was only
allowed to view [Singerman’s] Investor Presentation and Marketing Materials upon
its agreement to maintain their confidentiality, because the materials contain
sensitive investment and financial information relating to [Singerman’s] investment
vehicles.”). This is because the Investor Presentations and Marketing Materials
7
“include not only data on past performance, but also forward-looking projections
and future strategies that SRE intends to execute.” Singerman Aff., ¶ 15.
Based on this language, it is clear that SERS remains subject to a
confidentiality agreement. We find these statements sufficient for OOR to conclude
that the Investor Presentation, Term Sheet, PPM and Draft LPA are exempt from
disclosure under Section 5902(e)(2)(1) the Retirement Code.
Relying on Scolforo, Requester contends that SERS failed to provide
evidence of the current validity and duration of the confidentiality agreement. In
that case, the Office of the Governor (Office) redacted certain information from the
Governor’s calendar, asserting that this information was protected by the pre-
decisional deliberation exception. Scolforo, 65 A.3d at 1098. In support of this
assertion, the Office submitted an affidavit, which stated that the redactions “were
reflective of internal deliberations that preceded decisions related to” various
enumerated subjects. Id. at 1104. This Court concluded that the affidavit was legally
insufficient to satisfy the elements of the pre-decisional deliberation exemption
because it contained no specifics; rather, the affidavit merely “track[ed] the language
of the exception it presupposes, rather than prove[] with sufficient detail, that the
redacted [c]alendar entries are reflective of internal deliberations and, therefore,
exempt from disclosure.” Id.
In contrast, the Affidavits in this matter contain the specific facts,
including that the documents contain sensitive, forward-looking information and
that SERS remains bound by agreement to protect this information. See, e.g., Felix
Aff., ¶ 36, see also Singerman Aff., ¶¶ 6, 15. These facts are sufficient to enable
OOR to conclude that the Investor Presentation, Term Sheet, PPM, and Draft LPA
were given to SERS by way of a confidentiality agreement and remain subject to the
8
confidentiality agreement. Therefore, the Affidavits are sufficient to establish that
the Investor Presentation, Term Sheet, PPM and Draft LPA are exempt from
disclosure under Section 5902(e)(2)(i) of the Retirement Code.
B. The NEPC Due Diligence Report and NEPC Recommendation Summary
are Exempt from Disclosure under Section 5902(e)(2)(ii) the Retirement
Code
Requester contends also that the Felix Affidavit presented contradictory
evidence as to whether disclosure would cause “substantial harm” to SERS or its
investments. See id. We disagree.
In his Affidavit, Mr. Felix attested that the NEPC Due Diligence Report
and NEPC Recommendation Summary are not publicly shared and are subject to
limited access. See Felix Aff., ¶¶ 91, 94, 100. Further, according to Mr. Felix,
disclosure of the NEPC Due Diligence Report and NEPC Recommendation
Summary would be harmful to SERS because it would put recommendations into
the hands of competitors. Id., ¶ 95 (“Disclosing the NEPC Due Diligence Report
could cause the following harm to SERS: putting the [board] at a negotiating
disadvantage, allowing competitors to reap the benefits of the report without the cost,
diminishing the negotiating power the [board] has with [Singerman] in any
subsequent negotiations, as [Singerman] would be informed of the [b]oard’s
knowledge of its strengths and weaknesses; [and] chilling future business
opportunities between SERS and [Singerman].”) see also id., ¶ 101. Additionally,
Mr. Felix attested that disclosure of the NEPC Due Diligence Report and NEPC
Recommendation Summary would harm SERS’ reputation. Id., ¶ 97 (“Granting
access to the NEPC Due Diligence Report would be harmful to SERS because it
9
would irreparably damage SERS’ reputation as a private markets investor with an
ongoing ability to maintain the confidentiality of private markets investments[’] non-
public documents”). See also id., ¶ 102. Lastly, Mr. Felix noted that disclosure of
the NEPC Due Diligence Report would directly harm Singerman by “publicizing
any information in the report deemed to be negative, its performance history and
identified vulnerabilities.” See id., ¶ 96.
Here, the Felix Affidavit is clear that the disclosure of the NEPC Due
Diligence Report and NEPC Recommendation Summary will result in competitive
harm to both SERS and Singerman. The Affidavit is not conclusory but rather
“specific enough to permit this Court to ascertain how disclosure of the entries would
reflect that the records sought fall within the proffered exemptions.” See Carey, 61
A.3d at 375-79; Scolforo, 65 A.3d at 1104.
Requester suggests that SERS has tied “substantial harm” to its claim
of confidentiality. Thus, Requester asserts, because it is impossible on this record to
ascertain whether SERS remains subject to a confidentiality agreement, it is further
impossible to evaluate SERS’ claim that a breach of confidentiality would cause
substantial competitive harm to SERS or Singerman. This argument is without merit.
Firstly, we note that Requester conflates the two exemptions of the Retirement Code
and reiterate that it is evident from the Affidavits that some of the requested records
are exempt due to confidentiality. Secondly, even if some of the records were not
conditioned upon a confidentiality agreement, the Felix Affidavit states that the
NEPC Due Diligence Report and NEPC Recommendation Summary are non-public
documents that contain sensitive information, which if released would advantage
Singerman’s and SERS’ competitors. See Felix Aff., ¶¶ 91, 94, 96, 100. From this
we can infer that disclosure of these documents would cause substantial competitive
10
harm. Accordingly, the Felix Affidavit is sufficient to establish that the NEPC Due
Diligence Report and NEPC Recommendation summary are exempt from disclosure
under Section 5902(e)(2)(ii) of the Retirement Code.10, 11
IV. CONCLUSION
Based on the foregoing, OOR did not err in determining that the
requested documents were exempt from disclosure under the Retirement Code.
Accordingly, we affirm.
LORI A. DUMAS, Judge
Judge Wallace did not participate in the decision in this case.
10
Upon concluding that the documents are exempt under Section 5902(e)(2)(i) and Section
5902(e)(2)(ii) of the Retirement Code, this Court need not discuss whether the documents are also
exempt under Section 5902(e)(2)(iii).
11
Because we find that the requested documents are exempt under the Retirement Code,
we need not discuss in detail whether the documents are also exempt under Section 708(b)(11) of
the RTKL. Nevertheless, the documents would be exempt under that provision as well. The Felix
Affidavit is sufficient to establish that the Due Diligence Report and NEPC Recommendation
Summary constitute trade secrets. See generally Crouthamel v. Dep’t of Transp., 207 A.3d 432,
438-39 (Pa. Cmwlth. 2019). The Investor Presentation, Term Sheet, PPM and Draft LPA contain
confidential proprietary information that, if revealed, would result in substantial harm to
Singerman and SERS. See generally Smith ex rel. Smith Butz, LLC v. Pa. Dep’t of Env’t Prot., 161
A.3d 1049, 1064 (Pa. Cmwlth. 2017).
11
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Ginger Davis, :
Petitioner :
:
v. : No. 399 C.D. 2021
:
Pennsylvania State Employees :
Retirement System (SERS) :
(Office of Open Records), :
Respondent :
ORDER
AND NOW, this 27th day of October, 2022, the Final Determination of
the Office of Open Records dated March 15, 2021, is AFFIRMED.
LORI A. DUMAS, Judge