The Lewin Group, Inc. v. Dep't of Health and Human Svs.

• Court: Superior Court of Maine
• Decided: March 13, 2014
• Docket: CUMbcd-ap-14-01
• Status: Unpublished

Opinion

EN T E RED AUG 2 9 2014

STATE OF MAINE BUSINESS AND CONSUMER COURT CUMBERLAND I ss Location: Portland j DocketNo.: BCD-AP-14·0) 1 I ;1-'} /Y? (V) - CtA ('r') - ~,/1 3 ;2 0 I £-I ) THE LEWIN GROUP, INC., ) ) Petitioner, ) ) v, ) ) DEPARTMENT OF HEALTH AND ) HUMAN SERVICES, ) ) Respondent, ) DECISION ON RULE SOC APPEAL ) ed ) ) UNIVERSITY OF SOUTHERN MAINE ) and UNIVERSITY OF NEW ) ENGLAND, ) ) Intervenors ) )

The Lewin Group, Inc. (Lewin) appeals the February 7, 2014, decision of the

Department of Health and Human Services (the Department) to release documents pursuant to

the Maine Freedom of Access Act (FOAA), I M.R.S. §§ 400-521 (2013). See 5 M.R.S. § 11001

(2013) (entitling an aggrieved pnrty to judicial review of final agency action); M.R. Civ. P. 80C

(providing procedure for flling an administrative appeal). (Administrative Recotd (hereinafter,

"A.R.") 347-50.) 1 The documents in question (hereinafter, the "proprietary documents") 2 were

submitted to the Department by Lewin as a bid proposal in response to request for proposal

1 Tile Department submiued the administrative record with a redacted version of Lewin's proposal based on Lewin's assertion of privilege over certain documents. (A.R. 44-lBO.) The Department also submJtted a sepamte, unredacled version of Lewin's proposal under seal to maintain the confidentiality of the documents .·in question pending the Court's dccisiou. Citations to the conficleutlal documents in the separate filing arc · indicated by "C.R." 2 These documents include Lewin's Budget Narrative, which was marked "LEWIN PROPIBTARY & CONFIDENTIAL" (C.R. 163-80), nnd three documents In the Budget Form that were not marked confidential, but which Lewin contends were in ract confidential (C.R. 152, 154-55). (RFP) number 20130960. Lewin maintains that the proprietary documents are privileged trade

secrets, not public records pursuant to 1 M.R.S. § 402(3)(B), and thus not subject to public

inspection. Upon review of the administrative record and the parties' arguments, the Court

affirms the decision of the Department to release the documents.

FACTUALANDPROCEDURALDACKGROUND

On October 21, 2013, the Department published RFP No. 201309604 for proposals to

provide evaluation services for the Maine State Innovation Model. 3 (A.R. 1.) Of particular

relevance to the present dispute, the RFP stated:

Following announcement of an award decision, all submissions in response to this RFP will be considered public records available for public inspection pursuant to the State of Maine Freedom of Access ActO. In the event a request is made to produce any proposal, the Department will notify the bidder that the Department will produce the proposal unless the bidder takes steps it deems necessary to prohibit production. The Department will not undertake to determine whether any proposal or part of any proposal is confidential or otherwise protected from disclosure.

(A.R. 5.) See also 5 M.R.S. § 1825-B(6) (2013) (11 Each bid, with the name of the bidder, must be

entered on a record. Each record, with the successful bid indicated, must be open to public

inspection after the Jetting of the contract.")

There were 4 entities that responded to the RFP, including Lewin and the University of

Southern Maine (USM). (80C Petition fl~ 4·5, 7.) Lewin submitted its response to the R.FP on

November 22, 2013. (A.R. 44.) Lewin marked the Budget Narrative in its proposal "LEWIN

PROPIETARY & CONFIDENTIAL", but did not designate or otherwise indicate that any

other document in the proposal was confidential. (C.R. 163-80.) On January 2, 2014, Lewin

was awarded the bid. (SOC Petition ~ 6.)

3 "The Maine State Innovation Model advances health care delivery system and payment reform initiatives thnt impact the State's public payer sector on cost reduction, quality improvement, and informed patient engagement- the Triple Aim go<~ Is." (A.R. 4.)

2 Although the initial request is not included in the administrative record, USM requested

a copy of Lewin's proposal some date prior to January 8, 2014, because on that date the RFP

Coordinator provided USM with a version of the proposal that redacted information marked by

Lewin as proprietary or confidential. (A.R. 181; see also A.R. 213.) Among the documents

released to USM on January 8, 2014, were three documents in the Budget Form that were not

marked confidential, but which Lewin contends were in fact confldentlal. 4 (A.R. 190; C.R. 152,

154-55.)

On January 10, 2014, USM submitted a FOAA request to the RFP Coordinator for

Lewin's full, non-redacted proposal. (A.R. 181.) By letter dated January 13, 2014, the

Department notified Lewin of the request and stated it intended to release the documents on

January 17, 2014, unless Lewin objected and took timely legal action to prevent production.

(A.R. 182.) Lewin stated is objections via letter on January 16, 2014, and January 17, 2014,

asserting that the proprietary documents were trade secrets because they contained "budget

detail for the Project by person by task; and indirect cost rate detail consistent with its federally

approved accounting practices for the allocation of costs." (A.R. 190; see A.R. 189-94.) Lewin

asserted that the proprietary documents have "independent economic value to Lewin by virtue

of its secrecy and if available to competitors of Lewin without an obligation to keep it

confidential, could be used to generate competitive harm from, either [from] competitive

procurements [or] seeking to hire Lewin personnel to joii1 the competitor.'' (A.R. 190.) Lewin

asserted that the information within the proprietary documents was not widely known or

distributed within Lewin itself and provided the Department with two confidentiality forms it

utilizes to protect the pricing information and its policy regarding protecting information and

confidential assets. (A.R. 193, 196, 198, 202-03.)

4 Lewin asserted thnt tile Budget Forms were not marked confidential because it was "unable to change the proscribed format of the Budget Forms." (A.R. 190.)

3 USM revised its FOAA request by letter dated January 17, 2014 (A.R. 199-200), and on

January 20, 2014, the FOIA Group, Inc. requested unredacted versions of all the proposals

submitted in response to RFP No. 20130960 (A.R. 204). USM responded to Lewin's assertion

that the proprietary documents were trade secrets on January 28, 2014. (A.R. 340-45.)

On February 7, 2014, the Department issued its decision to release Lewin's full proposal.

The Department's reasoning was twofold. First, each bidder was on notice pursuant to the RFP

that its submission would be considered a public document pursuant to FOAA, and prior to

submission, Lewin did not seck a protective order of the proprietary documents. (A.R. 349.)

Second, the Depattment concluded that the proprietary documents were not in fact trade secrets

because they contained primarily compensation data, which the law Court has indicated is not a

trade secret. (A.R. 349-50 (citing Town ofBurlington v. Hosp. Admin. Dlst. No. I, 2001 MB 59, 769

A.2d 857).) The decision stated that it constituted final agency action by the Department.

(A.R. 350.)

On February 13, 20 14, the Bureau of General Purchases withdrew the award to Lewin

and announced its intention to re-review and rescore the submissions. (80C Petition ~ 6 n.l;

Pet.'s Br. 1 n.I.)

Lewin filed an appeal of the Department's decision in Kennebec County Superior Court

on February 14, 2014. The matter was approved for tmnsfer to the Business and Consumer

Court on Febmary 28, 2014. The Court agreed to expedite briefing on and review of the

petition, and the parties waived oral argument.

DISCUSSION

I. TI-ffiESHOLD ISSUES

Before addressing the merits of the appeal, the Court must address three threshold issues:

mootness, waiver, and the standard of review.

4 A. Mootncss

Although not addressed specifically by the parties, the Court cannot ignore that Lewin is

no longer the winning bidder on the RFP, raising the specter of mootness to Lewin's appeal. A

case may become moot if ''the passage of time and the occurrence of events deprive the litigant

of an ongoing stake in the controversy, n even though ut11e case raised a justiciable controversy

at the time the complaint was ftled." Roop v. City ofBelfast, 2008 ME 103, ~ 3, 953 A.2d 374

(quotation marks omitted). Here, however, the State's bidding and contracting procedure

requires that all bids, regardless of whether a bid is the winning bid, must be open to public

inspection \tpon the letting of the contract. See 5 M.R.S. § l825-D(6). Thus, the Court

concludes that the case presents a justiciable controversy because even if Lewin is not awarded

the bid upon rescoring, its proposal will still be subject to public inspection. See id.

B. Waivet•

The parties' briefs do tmtch upon the issue of notice or waiver, specifically whether

Lewin waived its objections to disclosure pursuant to FOAA by: I) submitting its bid in

response to the RFP; 2) not seeking a protective order prior to submitting its bid (see A.R. 349);

and 3) not designating three documents confidential within its bid (C.R. 152, 154·55).

As noted, the RFP clearly states that "all submissions in response to this RFP wlll be

considered public records available for public inspection pursuant to the State of Maine

Freedom of Access Act(]." (A.R. 5.) The RFP goes on to provide, however, that "[i]n the event

a request is made to produce any proposal, the Department will notify the bidder that the

Department will prod\Jce the proposal unless the bidder takes steps it deems necessary to

prohibit production." (A.R. 5.)

The Court does not agree that submitting documents pursuant to the RFP constitutes a

waiver of any confidentiality or the right to challenge subsequently the release of those

5 documents. Lewin designated certain documents as confidential, and while it would have been

prudent for Lewin to indicate in some manner all the documents it contended were proprietary,

the designation is not absolutely necessary. Cf. Anastos v. Town ofBrunswick, 2011 ME 41, ~ 6, IS

A. 3d 1279 ("Although it might be prudent to identify a document as confidential when first

submitting it to a government agency, [a party)'s failure to do so does not remove it from the

protection of the statute.") Designating some documents, but not all documents, is not a waive•·

of the privilege. SeeM. R. Evid. 51 0.

C. Stand11rd ofreview

Finally, the parties dispute the standard of review the Court should be applying in this

matter. Lewin admits that this is 1\11 administrative appeal, but argues that the Court should

engage in a de novo review of the issues. Lewin equates the Department's decision to release

the documents with an agency's decision to refuse to produce a document pursuant to I M.R.S.

§ 408·A(4), which denial triggers de novo review by the Superior Court, see 1 M.R.S. § 409(1).

The Department argues that de novo review Is not appropriate because the present appeal is not

a FOAA action. The Department asserts that a FOAA action is limited to compelling a holder

of public records to disclose documentsi FOAA does not provide a cause of action for a party to

enjoin an agency or official from disclosing Information. Rather, the Department argues that

the correct standard of review for this "rcverse-FOAA" challenge is found in the Administrative

Procedures Act (APA), S M.R.S. §§ 11001-08 (2013).

The Court agrees that the correct standard of review is from the APA, and not FOAA.

FOAA provides a cause of action for a "person aggrieved by a refusal or denial to inspect or copy a

record or the failure to allow the inspection or copying of a record" to appeal "the refusal, denMI

or failure ... to any Superior Court within the State as a trial de novo." I M.R.S. § 409( 1)

(emphasis added). Facially, section 409 does not speak to an appeal of the decision of an

6 agency or official to grant a request to inspect or copy documents. See id. In contrast, Maine's

APA permits "any person who is aggrieved by fmal agency action {to seek] judicial review

thereofin the Superior Court." 5 M.R.S. § 11001(1).

The Co\ut's conclusion is consistent with federal law, 5 and with the Law Court's

decision in Medical Mutual I11surance Co. of Maine v. Bureau of Insurance, 2005 ME 12, 866 A.2d

117, which the Court finds to be particularly instructive in this case. In Medical Mutual, the Law

Court specifically stated that it was reviewing the decision of the Bureau oflnsurance to release

documents in the context of an administrative appeal. Id. ~ 5.

Lewin nevertheless contends that two Law Court cases mandate pure de novo review of

FOAA decisions: Citizens Communications Co. v. Attomey General, 2007 ME 114, 931 A.2d 503,

and Moffett v. City of Portland, 400 A.2d 340 (Me. 1979). Moffett is plainly distinguishable,

however, in that it did not involve the release of documents by a state agency, but by the City of

Portland, and thus did not implicate the APA. 400 A.2d at 343. Citizens Communications,

although potentially involving an APA issue, is not controlling because the parties never raised

the issue to the Superior Comt or the Law Coutt. 6 The direction for this Comt is better found

within Medical Mutunl, which addresses the confluence of the Al) A and FOAA.

5 The United States Supreme Court has concluded that in the federnl context, a party seeking to prohibit disclosure of documents by an agency must do so pursunnt to the federnl APA, and not the Freedom of Informntion Act (FOIA). See Chrysler Cq1p. v. Bronw, 441 U.S. 281 pnssfm (1979). Brow11 involved similar clrcumstnnces to those presented here: a party seeking to prohibit disclosure by an agency of trade secrets pursuant to a FOIA request. Id. at 287-88. The S\lpreme Court concluded that whether an agency's disclosure of documents pursunnt to FOIA violated the prohibition on revealing trade secrets was within the scope of review of the APA as to whether the agency's action was "not in accordnuce with the law." ld. at 318 (quoting 5 U.S.C. § 706(2)(A)). 6 The Law Court's decision docs not address the APA and anftlyzes the issue of the Attorney General's decision to release documents pursuant to FOAA de novo. C/1/ze/IS Commc'ns, 2004 ME 114, ~~ 7-9, 931 A.2d 503. At the Superior Court level, the parties treated the consolidated action as pursuant to FOAA and did not raise the APA issue. See Complaint, C/1/zms Commt'IIS Co. v. Allomey Gmeral, KENSC-CY·07·68 (Me. Super. Ct., Ken. Cty., Feb. 28, 2007) (seeking a declaratory judgment and a pennnnent injunction preventing release or the documents by the Attorney General)i Compl11int, Societe Coins, S.A. v. Allomey Gmeml, KENSC-CV.07-73 (Me. Super. Cr., Ken. Cty., Mar. 5, 2007) (nppcnling tbe Atlorney Geuernl's rei\Jsnl to disclose documents in a timely rashlon pursuant to section 409 of FOAA). These two actions were

7 In sum, the Court concludes that the APA provides the framework for this appeal and

the Court's review must be pursuant to 5 M.R.S. § 11007 and Rule SOC, with the statutory

mandates ofFOAA at the forefront. SeeMed. Mut. Ins. Co. ofMe., 2005 ME 12, ~~5-7, 866 A.2d

117.

II, STANDARD OF REVIEW

In an appeal of fmal agency action brought pursuant to the APA and M.R. Civ. P. SOC,

this court reviews 11 the agency's decision for errors of taw, abuse of discretion, or findings not

supported by substantial evidence in the record." Beauchene v. Dep't of Health & Human Servs.,

2009 ME 24, ~ 11, 965 A.2d 866; accord 5 M.R.S. § 11007(4). "The court shall not substitute its

judgment for that of the agency on questions of fact." 5 M.R.S. § 11007(3). "Stan•tory

construction is a question of law," nnd the Department's construction of FOAA is reviewed de

novo. Med. Mm. Ins. Co. ofMe., 2005 ME 12, tj~S, 866 A.2d 117.

The purpose of FOAA is to open public proceedings and require that public actions and

records be available to the public. Town ofBurl/ugto11 v. Hosp. Adm/11. Dist. No. 1, 2001 ME 59,

~ 13, 769 A.2d 857. uFOAA must be 'liberally construed and applied to promote its underlying

purposes and policies as contained in the declaration of legislative intent."' Med. Mut. Ins. Co. of

Me., 2005 ME 12, 1)5, 866 A.2d 117 (quoting 1 M.R.S.A. § 401 (1989)). Exceptions to FOAA

are strictly construed. See Springfield Terminal Ry. Co. v. Dep't ofTransp., 2000 ME 126, ~ 8, 754

A.2d 353. "The party seeking the denial of a request to inspect and copy a record pursuant to

section 408(1) has the burden to demonstrate the basis for the denial." Med. Mtlt. Ins. Co. of Me.,

2005 ME 12, ~ 6, 866 A.2d 117.

Accordingly, Lewin has the burden of showing that the proprietary documents are not

public records as defined by section 402. The parties do not dispute the essential framework for

consolidated on Marcb 8, 2007. Order, Cltlze11s Commc'ns Co. v. Atromey General, KENSC-CV-07·68 (Me. Super. Ct., Ken. Cty., Mnr. 8, 2007).

8 the analysis, or that the proprietary documents would be public records subject to disclosure

absent an exception. The exception asserted by Lewin is the privilege exception for trade

secrets.

III. ANALYSIS

Lewin argues that the "privilege" exception applies because its proprietary documents

are trade secrets, which are not subject to discovery pursuant to M.R. Evid. 507. See I M.R.S.

§ 402(3)(B) (providing "[r)ecords that would be within the scope of a privilege against discovery

or use as evidence recogni1.ed by the courts of this State In civil or criminal trials If the records or

inspection thereof were sought in the course of a court proceeding" are not public records).

"[W]hether particular records fall within the privileged records exception" is determined "by

considering whether by reason of a privilege they would be inadmissible as evidence in a court

proceeding in the State of Maine." Mojj'ett, 400 A.2d at 346.

Here, the parties agree that M.R. Evid. 507 protects tl'ade secrets from disclosme in

discovery. The parties dispute, however, whether the proprietary documents are in fact trade

secrets. "[T]he definition of a trade secret is a matter of law, while the determinatlon in a given

case whether specific information is a trade secret is a factual question." Bernier v, Merrill Air

Eng'rs, 2001 ME 17, ,127, 770 A.2d 97 (quotation marks omitted) (alteration in original).

Because M.R. Evid. 507 does not defme trade secret, the Law Court has looked to the

Uniform Trade Secrets Act, 10 M.R.S. §§ 1541-48 (2013), as a useful guidepost for determining

what constitutes a trnde secret. Hosp. Admin. Dist. No. I, 2001 ME 59, ,121, 769 A.2d 857. A

trade secret is "information" that "[d]crives independent economic value, actual or potential,

from not being generally known to and not being readily ascertainable by proper means by other

persons who can obtain economic value from its disclosure or use" and "[i]s the subject of

efforts that are reasonable under the circumstances to maintain its secrecy." 10 M.R.S.

9 § 1542(4); accord Spottiswoode v. Levine, 1999 ME 79, ~ 27 nn.6-7, 730 A.2d 166 (expounding

relevant factors by which a court may determine whether the alleged trade secret derives value

from notbeing generally known and the efforts made at maintaining secrecy).

The Department analyzed the claim of trade secret by Lewin according to the foregoing

framework and concluded that the proprietary documents were not trade secrets. As noted, the

determination of whether information constit\Ites a trade secret is a factual question. See Hemler,

2001 ME 17, ~ 27, 770 A.2d 97. The Department had in the record before it: 1) all of the

information submitted in the bidding process from Lewin, which obviously included the

information that it claims to constitute trade secrets; 2) two confidentiality forms that Lewin

uses to protect pricing information; and 3) Lewin's policy regarding protecting information and

confidential assets. Lewin submitted this Information as Exhibit A (excerpt from "Employee

Acknowledgement Form" for new hires) and Exhibit B (''Form of Confidential Disclosure I

Proprietary Financial Documentation Proposal Submission" ttsed when Lewin is a

subcontractor to a prime who must disclose pricing Information) to a Jetter dated January 17,

2014, and as an attachment to an e-mail dated attached January 18, 2014 (~'Protecting

Information Assets & Confidential Information"). (A.R. 193, 196, 198, 202·03.) The January

17, 2014, letter indicates that Lewin submitted this additional evidence in support of its

argument that it had taken steps to protect this klnd of information internally. (A.R. 193.)

Lewin also had the opporttmity to present the Department with argument as to why the

proprietary documents were trade secrets. (A.R. 189-94.)

Simply stated, Lewin failed to show the information fell "within the defmition of a trade

secret; that is, it fniled to demonstrate to the [Department] that the [proprietary documents] had

independent economic value from not being generally known and "failed to show that it is in

fact S\lbject to secrecy." Med. Mut. !Its. Co. of Me., 2005 ME 12, ~ 14, 866 A.2d 117. The

10 Department concluded based on the evidence it had before it that "it is doubtful that the release

of the documents at issue would truly put the company at a significant economic disadvantage."

(A.R. 350.) The Court cannot second-guess this factual finding by the Department, which is

supported by competent evidence on the record. See Concemed Citizens to Save Roxbury v. Bd. of

Envtl. Prot., 2011 ME 39, ,124, 15 A.3d 1263.

Based on the foregoing, the decision of the Department of Health and Human Services

to release Lewin's proprietary documents is AFFIRMED. Pursuant to M.R. Civ. P. 79(a), the

Clerk shall incorporate tltis order into the docket by reference.

Date: ~~-J...~- Justtce M. Michaela Mt(__rpti - - - - - - · Business and Consumer C rt

b3/rt Entered on the Docket: .j Copies sent via Maii_EicctronicallyL 11 The Lewin Group v. Mary Mahew, Commissioner, Department of Health and Human Services BCD-AP-14-01

The Lewin Group Petitioners I Plaintiffs

Counsel: Martha Gaythwaite, Esq. Marie Mueller, Esq. One Portland Square Portland, ME 04112

Mary Mahew, Commissioner, Department of Health and Human Services Respondents I Defendants

Counsel: Barry Mills, Esq. Hale & Hamlin PO Box 729 Ellsworth, ME 04605