FOI Advisory Council Opinion AO-01-11

VIRGINIA FREEDOM OF INFORMATION ADVISORY COUNCIL

COMMONWEALTH OF VIRGINIA

AO-01-11

May 6, 2011

V. Colleen Miller
Executive Director
Virginia Office for Protection and Advocacy
Richmond, Virginia

Paula Otto
Executive Director
Virginia Lottery
Richmond, Virginia

The staff of the Freedom of Information Advisory Council is authorized to issue advisory opinions. The ensuing staff advisory opinion is based solely upon the information presented in your electronic mail of March 18, 2011.

Dear Ms. Miller and Ms. Otto:

You have asked whether a settlement agreement is subject to disclosure under the Virginia Freedom of Information Act (FOIA). As background, you indicated that the Virginia Office for Protection and Advocacy (VOPA) represented plaintiffs in a case against the Virginia State Lottery Department (the Lottery) in the Richmond Circuit Court. The plaintiffs alleged that the Lottery failed to make its programs accessible to individuals with disabilities. You stated that after five years of litigation, the parties entered into a settlement agreement and a supplemental settlement agreement. Furthermore, you related that the settlement agreement contained a confidentiality clause and that the agreements were incorporated into a sealed order of the court.1 The confidentiality clause allowed for certain releases by mutual agreement, pursuant to which the parties have issued a joint press release and the Lottery has made most of the terms of the agreements available on its website.2 However, you also indicated that other details contained in the settlement agreements had not been made public. Finally, you stated that VOPA has received requests for the agreements under FOIA, but VOPA and the Lottery disagree regarding whether the records must be released. There is no question that the aspects of the settlement agreements that have already been made public are subject to release. The question is whether the remaining portions, which have not been made public by either VOPA or the Lottery, must be released in response to the FOIA request. The arguments presented will be addressed in detail below.

As an initial matter, we must establish the applicability of FOIA. The definition of public body set forth in • 2.2-3701 includes any...agency of the Commonwealth. Therefore, as state agencies, both VOPA and the Lottery are public bodies subject to the provisions of FOIA.3 Next, the definition of public record in the same section includes all writings and recordings...regardless of physical form or characteristics, prepared or owned by, or in the possession of a public body or its officers, employees or agents in the transaction of public business. The settlement agreements prepared, possessed, and owned by VOPA and the Lottery are public records under this definition. However, note further that subdivision A 5 of • 2.2-3703 states that the provisions of FOIA shall not apply to the records required by law to be maintained by the clerks of the courts of record. Under this provision, copies of the settlement agreements included with the court case file would not be subject to FOIA, because as records required by law to be maintained by the clerk of court, the case file itself is exempt from FOIA (but would be subject to disclosure as provided by • 17.1-208 and other laws affecting access to court records).4

You stated that VOPA's position is that the records should be released pursuant to FOIA, because there is no general exemption for settlement agreements,5 and because the confidentiality clause allows for release as required by law. Pursuant to subsection A of • 2.2-3704, FOIA generally requires that all public records be made available for inspection and copying except as otherwise specifically provided by law. Therefore, you are correct that as a general rule, FOIA would require the release of public records, including the settlement agreements in question, absent any applicable statutory exemption. You have correctly observed that there is no general exemption that expressly applies to settlement agreements. In the interest of thorough analysis of the matter, however, we must look at prior opinions that considered whether a settlement agreement must be disclosed under FOIA. In 1988, the Attorney General opined that the settlement agreement was not protected by the attorney-client privilege exemption, nor by the exemption for records compiled exclusively for use in a closed meeting.6 However, that opinion also concluded that the settlement agreement could be withheld from disclosure as memoranda, working papers and records compiled specifically for use in litigation, because it had been compiled specifically for use in litigation to resolve an existing dispute and to memorialize and evidence the terms of that resolution.7 That opinion therefore provides a precedent for exempting settlement agreements as memoranda compiled specifically for use in litigation. However, this issue came before the Supreme Court of Virginia in a case in 1990, but because the records in dispute were not filed before the Court, the Court refused to decide the issue in a vacuum.8 It appears that at trial, the exemption for records compiled specifically for use in litigation was asserted, but the trial court rejected that assertion and issued a writ of mandamus ordering the settlement agreement to be produced. On this issue, the Court allowed the judgment of the trial court to stand without approval due to the insufficiency of the appellate record.9 Considering these opinions together, it appears that the Attorney General opined that settlement agreements could be withheld as memoranda compiled specifically for use in litigation, a trial court disagreed and issued an order to the contrary, and the Supreme Court refused to decide the issue for lack of a proper appellate record. However, the Supreme Court did find that it had a sufficiently precise description of certain accounting records of payments made pursuant to the settlement agreement at issue, and that those accounting records were not exempt from disclosure, even if the settlement agreement itself was exempt.10

Note also that the statutory language of the exemption has been amended since these opinions were issued. Former • 2.2-342(B)(6) exempted memoranda, working papers and records compiled specifically for use in litigation or as a part of an active administrative investigation concerning a matter which is properly the subject of an executive or closed meeting under • 2.1-344 and material furnished in confidence with respect thereto. The current language of • 2.2-3705.1(3), adopted in 1999,11 exempts legal memoranda and other work product compiled specifically for use in litigation or for use in an active administrative investigation concerning a matter that is properly the subject of a closed meeting under • 2.2-3711. Research did not reveal any more recent precedent on this issue, or any opinion interpreting how the changes in language might affect the application of this exemption in regard to settlement agreements. Given the ambiguity of prior opinions, the absence of controlling precedent, and the subsequent changes to the language of the exemption, it is unclear whether settlement agreements generally may be withheld pursuant to the current exemption for legal memoranda compiled specifically for use in litigation. However, in this case you indicated that the settlement agreements came about after years of actual litigation, and did in fact settle that litigation. Therefore, in this case, under the facts presented, it would appear that the settlement agreements at issue were, in fact, legal memoranda ... compiled specifically for use in litigation, and therefore could be withheld pursuant to subdivision 3 of • 2.2-3705.1.

Next, you described the Lottery's position as being that the settlement agreements should be withheld from disclosure pursuant to Va. Code • 2.2-514, which addresses the compromise and settlement of disputes by the Attorney General. You stated that the requirements of that section were satisfied in the instant case, as the settlement agreement at issue was approved by the Office of the Governor, the Attorney General, and the Executive Director of the Lottery, as required by subsection A of • 2.2-514.12 Subsections B and C address confidentiality agreements as follows:

B. No settlement under subsection A shall be made subject to a confidentiality agreement that prohibits the Commonwealth, a state agency, officer or employee from disclosing the amount of such settlement except where such confidentiality agreement is imposed by a court of competent jurisdiction or otherwise is required by law.

C. No settlement under subsection A shall be made subject to a confidentiality agreement if such settlement requires that a matter or issue shall be the subject of (i) regulatory action pursuant to Article 2 (• 2.2-4006 et seq.) of Chapter 40 of this title, or (ii) legislation proposed to be introduced in the General Assembly.

Both of these subsections appear to be limitations on the Attorney General's ability to enter certain types of confidentiality agreements. Neither subsection provides an explicit exemption from disclosure under FOIA. It does not appear that subsection C is applicable to this matter based on the facts presented. Under subsection B, it appears that court approval is required in order to enter a confidentiality agreement that prohibits the disclosure of the amount of the settlement. You indicated that the settlement agreement at issue was filed with the court and sealed by court order.13 While subsection B as quoted above does not set forth any explicit exemption from FOIA, the fact that the settlement agreement at issue was sealed by court order is dispositive of this matter.

As previously stated, FOIA requires the disclosure of public records except as otherwise specifically provided by law. It is the opinion of this office that the settlement agreements at issue could be withheld as memoranda compiled specifically for use in litigation pursuant to subdivision 3 of • 2.2-3705.1. This exemption, like others in FOIA, grants discretion to the custodian to withhold records. In deciding whether to invoke a FOIA exemption, a custodian could also choose to release the records.14 However, while FOIA exemptions are discretionary, compliance with court orders is mandatory (subject to enforcement by the court itself). To the extent that the court has prohibited disclosure by placing the records at issue under seal, the court order is binding on the parties. Therefore the records are exempt from FOIA and must be withheld. When responding to a request for records, FOIA requires that the requester be provided a written response that cites the appropriate exemption any time records are withheld in whole or in part.15 In this instance, it would be proper to cite both subdivsion 3 of • 2.2-3705.1 and the court order that seals the records.

Thank you for contacting this office. I hope that I have been of assistance.

Sincerely,

Maria J.K. Everett

Executive Director

1. The confidentiality clause of the settlement agreement you provided reads as follows:

8. The Parties will keep the terms of this Agreement confidential, except as required by law, as necessary to implement this Agreement or as agreed upon by VOPA and the Lottery.

9. VOPA and the Lottery may issue a join, mutually agreeable press release regarding the resolution of this case. No other publications or media interviews will be permitted unless mutually agreed upon.

. . .

16. Once the parties have agreed upon the standards required in Paragraphs 1, 2 and 3, they will jointly move to dismiss the case with prejudice and request that this Agreement be incorporated into a sealed Court order.

2. "Retailer Accessibility Program" available at http://valottery.com/retailer/default.asp (last visited April 27, 2011). Note that this office has not been provided with complete copies of the settlement agreements or the court order, and cannot offer any opinion regarding whether the agreed-to releases have been made in compliance with the terms of the settlement agreements and court order.

3. VOPA is an independent state agency pursuant to Va. Code • 51.5-39.2; the Lottery is an independent agency of the Commonwealth pursuant to • 58.1-4003.

4. See generally •• 17.1-123 and 17.1-124 (order books to be maintained by the clerks of courts of record) and Chapter 2 of Title 17.1 (•• 17.1-200 through 17.1-295)(clerks, clerks' offices, and records) regarding records required by law to be maintained by the clerks of the courts of record.

5. While it is true that there is no general exemption for settlement agreements, note that contracts settling public employee employment disputes may be withheld as personnel records, as specifically addressed in subsection A of • 2.2-3705.8.

6. 1987-1988 Op. Att'y Gen. Va. 35.

7. Id., citing former • 2.2-342(B)(6), now codified at • 2.2-3705.1(3).

8. Lemond v. McElroy, 239 Va. 515; 391 S.E.2d 309 (1990).

9. Id., 239 Va. at 520-521, 391 S.E. 2d at 312 ("First, we address the 'settlement agreement' issue. Presented with persuasive arguments on both sides of this important question, we refuse to decide the issue in a vacuum, without any idea of the precise nature of the document with which we are dealing....At the trial level, it was incumbent upon the litigants to make an appellate record...This was not done, and that failure has prevented appellate review of the question.")

10. Id., 239 Va. at 521, 391 S.E.2d at 312.

11. 1999 Acts of Assembly, c. 703.

12. Subsection A of • 2.2-514 reads as follows: Except as provided in this section or subsection B of • 23-38.33:1, the Attorney General may compromise and settle disputes, claims and controversies involving all interests of the Commonwealth including, but not limited to the Virginia Tort Claims Act (• 8.01-195.1 et seq.), and may discharge any such claims, but only after the proposed compromise, settlement or discharge, together with the reasons therefor, have been submitted in writing to the Governor and approved by him. Where any dispute, claim or controversy involves the interests of any department, institution, division, commission, board, authority or bureau of the Commonwealth, the Attorney General may compromise and settle or discharge the same provided the action is approved both by the Governor, as provided in this section, and by the head, or his designee, of the department, institution, division, board, authority or bureau that is interested. However, when any dispute, claim or controversy arises under the Virginia Tort Claims Act (• 8.01-195.1 et seq.) or otherwise involves the interests of any department, institution, division, commission, board, authority or bureau of the Commonwealth, and the settlement amount does not exceed $250,000, the Attorney General or an assistant Attorney General assigned to such department, institution, division, commission, board, authority or bureau, or such other designee of the Attorney General, may compromise and settle or discharge the same provided the action is approved by the head, or his designee, of the department, institution, division, board or bureau whose interests are in issue. When the dispute, claim or controversy involves a case in which the Commonwealth has a claim for sums due it as the result of hospital, medical or dental care furnished by or on behalf of the Commonwealth, the Attorney General or such assistant Attorney General may compromise and settle and discharge the same when the settlement amount does not exceed $250,000.

13. Note that the settlement agreement at issue in Lemond, supra, was not filed with any court.

14. Unless some other law prohibits release of the records.

15. Subdivisions B 1 and B 2 of • 2.2-3704.