On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-5408-09.
The opinion of the court was delivered by: Lihotz, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 14, 2011
Before Judges Cuff, Lihotz and Waugh.
The opinion of the court was delivered by LIHOTZ, J.A.D.
We are asked to examine the scope of certain exemptions from the disclosure requirements set forth in the Open Public Records Act (OPRA), N.J.S.A. 47:1A-1 to -13. Defendant, the New Jersey Sports and Exposition Authority, appeals from an order requiring it to release unredacted copies of promoter licensing agreements for use of the IZOD Center, a State owned entertainment facility. A reporter employed by plaintiff, the Newark Morning Ledger Co., which publishes The Star-Ledger, filed an OPRA request seeking release of contracts between defendant and event promoters for performances held in the IZOD Center from 2007 to the date of the request, March 19, 2009. Defendant released copies of ninety-eight contracts, however the financial terms in the contracts were redacted. Defendant declined to release the full contracts, claiming the information was exempt from disclosure as proprietary financial information and because its release would create a competitive disadvantage or reveal trade secrets. Defendant also argued plaintiff's request sought confidential information, which was exempt from disclosure under common law.
Challenging the Law Division's order mandating the release of the unredacted documents, defendant seeks our review, offering the same arguments presented before the trial court and including a challenge to restrictions the trial court imposed on pre-hearing discovery.
Amicus, the International Association of Venue Managers, a not-for-profit tax exempt corporation consisting of venue operators across the country, supports defendant's position arguing the association favors "the protection and non-disclosure of confidential business contracts and other agreements that are negotiated with promoters, artists, agents, professional teams and numerous other licensees or lessees of assembly venues."
Having considered the arguments raised by the parties in light of the applicable law, we affirm. We conclude disclosure of the terms of the licensing agreements is mandated by OPRA. The redacted terms relating to the use of a state facility do not fall within the scope of "trade secrets" or "proprietary commercial or financial information" as used in N.J.S.A. 47:1A-1.1. Further, disclosure of the details regarding the licensing fees and other remunerative arrangements would not afford an advantage to other venues competing for bookings because they are widely known among those involved in this branch of the entertainment industry, defeating defendant's claims of confidentiality.
Defendant was created by the State Legislature in 1971 to construct and operate "stadiums and other facilities for the holding of such spectator sports, expositions and other public events and uses," to "provide needed recreation, forums and expositions for the public" and "to accommodate trade shows and other expositions in order to promote industry[.]" N.J.S.A. 5:10-2. Defendant's certificate of incorporation established it within the Department of Community Affairs as "a public body corporate and politic, . . . an instrumentality of the State exercising public and essential governmental functions[.]" N.J.S.A. 5:10-4(a). On behalf of the State, defendant operates several facilities, including the Meadowlands Sports Complex (consisting of the IZOD Center, the Meadowlands Racetrack, and the MetLife Stadium), Monmouth Park Racetrack, the Atlantic City Convention Center and Visitors Center (which manages Boardwalk Hall), and the Wildwoods Convention Center.
On March 16, 2009, Ted Sherman, a reporter working for plaintiff, transmitted a written OPRA request to defendant seeking:
1. All contracts with any concert or event promoter for any event held from Jan[uary] 1, 2007 to present. This would include any multi-year contracts signed before this date for events scheduled after January 1, 2007.
2. Any letters or e-mails to and/or from the Sports and Exposition Authority and any concert or event promoter from Jan[uary] 1, 2007 to the present, referencing the Prudential Center.
3. Any letters or e-mails to and/or from the Sports and Exposition Authority and any elected official referencing the future of the [IZOD Center] from Jan[uary] 1, 2005 to present.
Shortly thereafter, defendant responded. As to the first request, defendant agreed to produce the information "not [otherwise] exempt" by May 3, 2009, and provide the documents for the remaining requests by April 6, 2009.
On April 28, 2009, defendant released ninety-eight contracts it had executed with concert and event promoters leasing the IZOD Center for events. The modified documents blacken all financial terms, such as: licensing fees; obligations for payment of expenses; allocations of revenue generated from parking, ticket, concession, suite revenue and merchandise; ticket prices and other fees; terms regarding complimentary tickets and accommodations; and the name of the promoter executing the contract.
Explaining the basis for redacting the information, defendant stated:
The information that has been redacted is information that would either a) give an advantage to competitors or bidders, if disclosed; or, b) disclose trade secrets and proprietary commercial or financial information. You have inquired, specifically, about artist dressing room specifications . . . . If [defendant] is required to publicly disclose this information, it could result in an artist's refusal to perform at this venue, which certainly puts [defendant] and the arena at a competitive disadvantage to other private venues that can protect and respect the personal requests of the artists. It is our belief that disclosure of this information would have a chilling effect on the artists' willingness to perform at this arena in the future.
In an effort to avoid litigation, plaintiff requested defendant reassess its position and release unredacted records, asserting there was "no legal authority to withhold the requested contractual information from public disclosure under OPRA as proprietary or trade secret information." Further, plaintiff maintained there existed "no factual or legal basis for [the] assertion that release of basic financial information about the terms of [defendant]'s contracts would give an advantage to competitors or bidders." At defendant's request, plaintiff agreed to "refrain from filing suit" while both sides attempted to resolve the dispute. These efforts were unsuccessful and plaintiff filed its verified complaint accompanied by an order seeking defendant to show cause why it "should not be compelled to produce" the entirety of the records requested.
In response, defendant interposed several defenses, including the assertion plaintiff's claims were barred by Rule 4:69-6(b)(3), and its requests were exempt by OPRA. To buttress the latter position, defendant filed largely identical certifications from several concert and event promoters, opposing the release of the redacted contract information, stating:
3. Throughout my negotiations and subsequent contractual agreements with the [defendant], I always believed and intended that the terms of each agreement and especially each performance and its requirements remain confidential. I never expected that the information within the agreements . . . [would] be released publicly.
4. I understand now that certain media outlets have requested as part of New Jersey's [OPRA] the contracts, addendums, and agreements made with [defendant] containing all of what I considered confidential information. I strongly oppose such a release.
5. If a release were made, I would be very reluctant in considering in the future whether to negotiate and sign any agreement with [defendant] because of the concern that such agreement would be subsequently made public. Both I and the performers that I represent, never intended this information to be made public.
6. The release of this information would greatly impact my impression of [defendant]. I would seriously consider alternative venues that would not release this type of information to the public.
7. To the best of my knowledge, contracts and agreements that I negotiate with other private venues are not made public and I have always insisted that the financial terms and conditions of any agreement on behalf of performers or artists I represent remain confidential.
Defendant also filed a certification from an Executive Vice President of Ticketmaster, which stated:
[O]ther venues in the [t]ri-[s]tate region that compete with [defendant] to attract concerts and other live entertainment events to their facilities would gain access to this previously confidential information and use this information to their competitive advantage in negotiating against [defendant] with artists' representatives and others. I further believe, based on my experience, that artists and event providers would be more inclined to stage their events at venues other than [defendant's] out of concern that their contractual arrangements with [defendant] would be made public.
Finally, Mark Stefanacci, defendant's Chief Operating Officer and General Counsel, opposed plaintiff's request, certifying that the Meadowlands Complex, which houses the IZOD Center, "continue[d] to outperform its competitive peers in the entertainment industry by setting attendance records and winning industry awards." Stefanacci asserted defendant "and its venues operate in a well known and fiercely competitive region and environment, and because of its public function it must remain competitive in order to provide tangible benefits to the citizens of the State." He explained the redacted information "would reveal the bargain and terms [defendant] offers to different promoters to bring entertainment to citizens of the State[,]" the release of which, he believed, would enable "private entertainment venues [to] use the confidential financial information to gain an advantage over the IZOD Center by luring away promoters and entertainers with more lucrative agreements and terms." Stefanacci concluded defendant's efforts to book the IZOD Center would be "undercut[,]" resulting in a "chilling effect on the artists' and promoters' willingness to contract with [defendant]" for the venue, and eliminate its bargaining power when negotiating agreements, leading to a loss of revenue and ultimately causing the arena to shut down.
In an effort to further support its position that the industry generally considers promoter and artist financial terms of licensing agreements proprietary and confidential, defendant served subpoenas mirroring plaintiff's request seeking similar contracts on other arena facilities. Newark's Prudential Center had released two contracts,*fn1 but all other venues objected claiming the "documents were highly confidential and proprietary[,]" because disclosure would place the venue at acompetitive disadvantage in the marketplace. Defendant also highlighted the fact that plaintiff's efforts to obtain information from these venues were similarly resisted.
Over defendant's objection, the court permitted limited discovery prior to the return date of the order to show cause. The court allowed "the deposition of a[t] least some of the promoters who submitted . . . certifications in order to delve into the basis for the conclusory statements in the certifications that public release of the information would cause a 'competitive disadvantage.'"
Brian Gale, the Director of Booking and Marketing for Anschutz Entertainment Group (AEG), an on-site manager of the event calendar for the Prudential Center, was deposed. Gale explained the standard contract used by the Prudential Center does not contain a confidentiality clause because there is an expectation that the financial terms of the contract were confidential. He believed only promoters or someone seeking to rent the Prudential Center would have access to the fee information. Although the "base licensing fee" for use of the Prudential Center was known by promoters to be $75,000, he was unaware whether the IZOD Center had a similar standard fee. Without relating specific details, Gale explained there were other negotiated rates and terms in the contract with the artists or family-oriented events that were negotiated in addition to the base licensing fee.
Defendant also sought to depose Gordon Lavalette, the Executive Vice President of Finance and Administration of Devils Arena Entertainment, LLC (DAE), an owner of the Prudential Center. Prior to Lavalette's deposition, plaintiff moved to restrict the scope of inquiry. The court agreed in part, limiting defendant's questions to four areas:
(1) the decision to partially comply with the subpoena served on or about October 19, 2009; (2) why certain contracts were specifically produced; (3) whether there are other existing contracts; and (4) whether previous requests for entertainment contracts have been made by [plaintiff.]
Defendant was specifically precluded from asking Lavalette questions surrounding his understanding of plaintiff's motives for requesting the event contracts.
Lavalette stated he did not consider the information in the two released contracts confidential and would have no concern if a competitor obtained the information regarding the base licensing fee or the event merchandising revenue split negotiated by the Prudential Center. However, he acknowledged there were more than two events held at the Prudential Center during the period covered by the subpoena, even though DAE only released two contracts in response to plaintiff's subpoena.
Brian Eric Kert, the Executive Vice President of Business and Legal Affairs for Live Nation Global Touring (Live Nation), explained Live Nation and AEG were the two largest concert promoters in the United States. Kert's division arranged worldwide tours for various performing artists. Kert noted that the kinds of terms that could be negotiated at various venues were generally known among the big concert promoters. However, the terms of each contract were never made public unless there was a lawsuit.
In discussing the factors considered when Live Nation contemplated whether to contract with a public venue for one of its artists, Kert stated the possibility of disclosure of the contractual terms is not "a positive factor attached to a venue[,]" yet it may still remain "advantageous" to book a public venue after considering "the location, the size of the venue . . . timing, [and] availability, all these factors go into" a decision to use a venue, which are "all probably going to trump confidentiality." Kert characterized the possible disclosure of the terms of a contract as "low down on your priority list[,] low down on your radar." This partly resulted from the fact that disclosure rarely occurred. Kert cautioned if disclosure happened routinely at a venue, the consideration would "be higher up on the radar."
Kert also discussed a Venue Rider he drafted and attached to agreements.*fn2 The Rider included certain financial terms specific to the venue and the artist. This Rider included a confidentially provision and Kert claimed he ...