11 N.Y.3d 43 (2008)

An insurance regulation mandating that reports be “public record” does not automatically negate an insurer’s right to assert a Freedom of Information Law (FOIL) exemption if disclosure would cause substantial competitive injury, but the burden of proving such injury is a high one requiring specific, persuasive evidence.

Summary

Brooklyn Borough President Markowitz sought zip code-level auto insurance data from the NYS Insurance Department under FOIL, arguing it was a public record under insurance regulations aimed at preventing redlining. The Department refused, claiming the data was a trade secret and its release would cause substantial competitive harm to insurers. The Court of Appeals held that while the reports are subject to FOIL, the insurers failed to demonstrate specific competitive injury. The court emphasized the narrow interpretation of FOIL exemptions and the requirement of concrete evidence of harm, reversing the Appellate Division’s decision and ordering disclosure.

Facts

Marty Markowitz, Brooklyn Borough President, filed FOIL requests with the NYS Insurance Department for Regulation 90 reports. These reports contain zip code-level data on auto insurance policies, including issuances, renewals, cancellations, and non-renewals, broken down by carrier. Markowitz argued the reports were public records under 11 NYCRR 218.7(d). The Insurance Department provided county-level data but refused to release zip code-specific data, asserting FOIL exemptions for trade secrets and potential competitive harm.

Procedural History

After exhausting administrative remedies, Markowitz filed an Article 78 proceeding. Supreme Court granted the petition, ordering disclosure. The Appellate Division reversed, finding the Department’s decision to withhold the reports reasonable, based on evidence of potential competitive harm to insurers. The Court of Appeals granted leave to appeal.

Issue(s)

1. Whether 11 NYCRR 218.7(d)’s designation of Regulation 90 reports as “public record” prevents the Insurance Department from withholding the reports under a FOIL exemption.

2. Whether the Insurance Department and the intervening insurers met their burden of proving that disclosure of the Regulation 90 reports would cause substantial competitive injury under Public Officers Law § 87(2)(d).

Holding

1. No, because the “public record” designation does not negate the right of insurers to claim a FOIL exemption; the language means the reports are subject to public disclosure unless a FOIL exemption applies.

2. No, because the Department and insurers failed to present specific, persuasive evidence that disclosure would cause substantial competitive injury; the evidence presented was theoretical at best.

Court’s Reasoning

The court reasoned that the “public record” language of 11 NYCRR 218.7(d) does not automatically mandate disclosure, but rather subjects the reports to FOIL provisions, including potential exemptions. The court deferred to the Department’s interpretation of the regulation, finding it reasonable and consistent with FOIL principles. Referencing previous cases, the Court stated that “the FOIL exemptions must be read as having engrafted, as a matter of public policy, certain limitations on the disclosure of otherwise accessible records”. The court emphasized that FOIL exemptions are narrowly construed to promote public access to government records. To justify a FOIL exemption under Public Officers Law § 87(2)(d), the party seeking the exemption must provide specific, persuasive evidence of substantial competitive injury, not merely speculative harm. Here, the insurers’ argument that competitors could exploit their geographic weaknesses was deemed theoretical, as they failed to demonstrate how zip code data alone would necessarily cause competitive disadvantage. The court stated that the party seeking the exemption must “articulating a particularized and specific justification for denying access”. Judge Smith concurred in result only, arguing the regulation made the reports automatically public records, but that if FOIL applied, the insurers had shown a substantial competitive injury. He criticized the majority for dismissing the insurers’ detailed factual submissions. The Court found that the Department and insurers did not meet their burden of justifying the exemption of the reports, and reversed the Appellate Division’s decision, ordering the reports be made available.