Abell Found. v. Balt. Dev. Corp.

262 Md. App. 657

320 A.3d 495

THE ABELL FOUNDATION

v.BALTIMORE DEVELOPMENT CORPORATION, et al.

No. 1890, Sept. Term, 2022

Appellate Court of Maryland.

August 2, 2024

Circuit Court for Baltimore City, Case No. 24-C-18-001552, Lawrence P. Fletcher-Hill, Judge.

Argued by Marc A. Marinaccio, Hogan Lovells US LLP, Baltimore, MD, on brief, for Appellant.

Argued by Jared S. Dvornicky, Gallagher Evelius & Jones LLP, Baltimore, MD, and Michael Redmond, Director, Appellate Practice Group, Baltimore City Department of Law, Baltimore, MD (David Kinkopf and Emily Levy, Gallagher Evelius & Jones LLP, Baltimore, MD; Ebony M. Thompson, Acting Solicitor, Matthew O. Bradford, Chief of Staff, and Gwen B. Tromley, Chief Solicitor, Litigation Practice Group, Baltimore City Department of Law, Baltimore, MD), on brief, for Appellee.

Argued before: Arthur, Albright, Alexander Wright, Jr. (Senior Judge, Specially Assigned), JJ.

Arthur, J.

This case involves a request for information under the Maryland Public Information Act (the "MPIA"), Maryland Code (2014, 2019 Repl. Vol.), §§ 4-101 to -601 of the General Provisions Article ("GP").

[1] The MPIA states that the public is generally entitled to "access to information about the affairs of government and the official acts of public officials and employees." GP § 4-103(a). In some instances, however, the MPIA requires the custodian of a public record to deny access to a record. For example, a custodian must deny access when the record contains "confidential commercial information" or "confidential financial information." GP § 4-335. A custodian must also deny access when any part of a public record is "privileged or confidential," GP § 4-301, such as when the record is subject to the attorney-client privilege. See Glass v. Anne Arundel County, 453 Md. 201, 209, 160 A.3d 658 (2017); Caffrey v. Dep’t of Liquor Control for Montgomery County, 370 Md. 272, 298 n.15, 805 A.2d 268 (2002). In addition, a custodian may deny access to "any part of an interagency or intra-agency letter or memorandum that would not be available by law to a private party in litigation with the unit," GP § 4-344, such as when the document is subject to the deliberative-process privilege. See Glass v. Anne Arundel County, 453 Md. at 210, 160 A.3d 658.¹

[2] The primary issue in this case is the disputed meaning of "confidential" commercial or financial information, a term that is not defined in the MPIA. GP § 4-335. Because the MPIA "was to some extent modeled" on the Freedom of Information Act, 5 U.S.C. § 552 ("FOIA"), Maryland courts generally give "significant weight" to the federal courts’ interpretation of similar provisions in FOIA. See, e.g., Amster v. Baker, 453 Md. 68, 79, 160 A.3d 580 (2017); accord Faulk v. State's Attorney for Harford County, 299 Md. 493, 506, 474 A.2d 880 (1984); MacPhail v. Comptroller, 178 Md. App. 115, 119, 941 A.2d 493 (2008); see also Stromberg Metal Works, Inc. v. University of Maryland, 382 Md. 151, 164, 854 A.2d 1220 (2004).

Much like the MPIA, FOIA contains an exemption that prohibits the disclosure of "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4) ("FOIA Exemption 4"). Like the Maryland statute, FOIA does not define the term "confidential."

When this case began in 2018, the federal circuit courts of appeal had devised a two-tiered approach to determining whether commercial or financial information was "confidential" for purposes of FOIA’s Exemption 4. Under that approach, the question depended on whether a party had voluntarily provided the information to the government or whether the party had been required to produce the information to the government. If a party had voluntarily provided commercial or financial information to the government, the information was considered "confidential" "if it is of a kind that would customarily not be released to the public by the person from whom it was obtained." Critical Mass Energy Project v. Nuclear Regulatory Comm’n, 975 F.2d 871, 879 (D.C. Cir. 1992) (en banc). By contrast, if a party had been required to provide the information to the government, the information was considered "confidential" if its disclosure was likely to "cause substantial harm to the competitive position of the person from whom the information was obtained." See National Parks and Conservation Ass’n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974).

In Amster v. Baker, 453 Md. at 81, 160 A.3d 580, the Court adopted the so-called "Critical Mass test" for information that a party had voluntarily provided to a local government official. Thus, the Court held that "commercial information is ‘confidential’—and therefore exempt from MPIA disclosure—if it ‘would customarily not be released to the public by the person from whom it was obtained.’ " Id. (quoting Critical Mass Energy Project v. Nuclear Regulatory Comm’n, 975 F.2d at 879). Although Amster mentioned the so-called National Parks test,² which requires proof of the likelihood of substantial competitive harm before the government may withhold information that a party has been required to provide to it, the Amster Court had no occasion to adopt the National Parks test, because in that case the party had voluntarily provided the information at issue. Id. at 71, 160 A.3d 580. No opinion in Maryland has ever adopted the National Parks test.

While this case was pending in the Circuit Court for Baltimore City, the Supreme Court of the United States interpreted FOIA’s Exemption 4 for the first time. Food Marketing Inst. v. Argus Leader Media, 588 U.S. 427, 139 S.Ct. 2356, 204 L.Ed.2d 742 (2019). In that case, the Court emphatically rejected the National Parks test and its requirement that the government show proof of the likelihood of substantial competitive harm before it withholds otherwise confidential commercial or financial information that it has compelled a party to provide. Id. at 435-40, 139 S.Ct. 2356. The Court held that, "[a]t least where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of Exemption 4." Id. at 440, 139 S.Ct. 2356.

The case before us involves an MPIA request both for commercial or financial information that a party had been required to provide to Baltimore City and for commercial or financial information that the party had voluntarily provided to Baltimore City. Consequently, in this case, the circuit court was required to decide what standard should apply to the information that the party had been required to provide. The court predicted that the Maryland appellate courts would follow the United States Supreme Court’s decision in Argus Leader.

Applying the standard announced in Argus Leader, the court concluded that the MPIA required Baltimore City not to disclose certain documents, because they contained "confidential" commercial or financial information. In a footnote, the court added that, even under the National Parks test that Argus Leader had rejected, the documents contained "confidential" commercial or financial information and, thus, the MPIA required the City not to disclose them. The court also concluded that the City properly withheld certain additional documents, because they were protected by the deliberative- process privilege and the attorney-client privilege.

This appeal ensued. We affirm.

I. Background

A. The PILOT Agreement

In 2009, in connection with the construction of the Legg Mason Tower and an associated parking garage in Baltimore’s Harbor East neighborhood, the City of Baltimore entered into a payment-in-lieu-of-taxes agreement (the "PILOT Agreement") with Harbor East Parcel D-Commercial, LLC (the "Developer").³ The PILOT Agreement provided that for specified periods of time—15 years for the tower and 25 years for the garage—the properties would be largely exempt from the City’s real property taxes. During this time, the City taxes would be calculated based on the pre-development value of the land on which the structures were situated, plus five percent of the tax assessment for the post-development value of the structures. The agreement had no effect on State real property taxes.

The PILOT Agreement required the Developer to submit financial information to the City, including the project’s financing terms and annual audited financial statements. It also required the Developer to preserve its financial records for up to three years after each calendar year so that the City could inspect the records if it chose to do so. The City and the Developer later affirmed that the Developer submitted its financial records on the condition that the City would keep the records confidential.

In the PILOT Agreement, the City and the Developer established a profit-sharing arrangement. Under that arrangement, once the Developer had recouped an annual 15 percent return on the equity invested in the development, the City and the Developer would share in the net cash flow from the parking garage and the office building. In that event, the City would receive 25 percent of the net cash flow, and the Developer would receive the rest. The profit-sharing agreement would automatically expire after the PILOT term for each structure had ended; however, the City and the Developer could agree to terminate the profit-sharing arrangement at an earlier date.

In 2016, the Developer asked to buy out the City’s rights under the profit-sharing provision. After reviewing internal-rate-of-return analyses ("IRR analyses") provided by the Developer, and after constructing its own model analysis to forecast the likely future returns, the Baltimore Development Corporation ("BDC"), a non-profit organization that serves as the economic development advisor to the City, concluded that the profit-sharing threshold would not be reached within the term of the PILOT Agreement....