A North Carolina appeals court has reaffirmed that records produced by government officials and stored with private contractors are the property of the people and subject to the North Carolina Public Records Act.
In Gray Media v. City of Charlotte, the North Carolina Court of Appeals unanimously held that the city violated the public records law when it failed to produce documents that city officials electronically produced and transmitted to a consulting firm hired to help improve relationships between city leaders.
The case, which revolved around electronic survey forms and survey data requested by WBTV, a Gray Media television affiliate in Charlotte, has broad implications for government agencies who wrongfully withhold records produced for third-party vendors hired with public money. The opinion also clarifies the bar for awarding attorneys’ fees in public records cases and cautions government agencies that they could be on the hook for fees if they fail to produce records before litigation begins.
In 2020, the City of Charlotte hired Ernst & Young (“EY”) to provide management consulting services to improve teamwork among then-city councilmembers. In the contract, EY agreed to keep city data confidential but retained rights in its “preexisting intellectual property,” including proprietary information such as EY’s methodologies and trade secrets. As part of its consulting, EY sent city councilmembers a hyperlink to complete a survey. The survey, responses and results were stored on EY’s private server.
David Hodges, a reporter for WBTV, filed a public records request for the contract with EY, the survey questions and city councilmembers’ responses. The city produced the contract, but declined to release the survey information on the grounds that it did not possess the survey, EY did.
For months, the parties argued over whether the survey and responses were public records. After the city produced EY’s final consulting report, excluding the survey and responses, Gray Media filed a lawsuit asking for 1) a declaration by the court that the survey and responses were public records subject to disclosure; and 2) an order requiring the city to comply with the Public Records Act. The city argued that records solely in the possession of EY are not subject to disclosure under the Public Records Act. During litigation, the city subpoenaed the survey and responses from EY and produced the records to WBTV. The city then argued that the case had become moot and should be dismissed. The trial court agreed, issuing summary judgment in favor of the city and denying Gray Media’s request for attorneys’ fees. Gray Media appealed.
Court of Appeals Decision a Big Win for Access
Gray Media v. City of Charlotte raised three main issues. First, whether the survey instrument and responses were public records; second, whether the case was moot after Gray Media obtained the records during litigation; and third, whether Gray Media (if it prevailed) should be entitled to an award of attorneys’ fees. In a monumental win for the public’s access to government information, the Court of Appeals found in favor of Gray Media on all three issues.
Digital Records Produced by Government Officials are Presumptively Public Records
The North Carolina Public Records Act defines public records broadly. All documents and electronic data-processing records, regardless of form, made or received by government in the transaction of public business qualify as public records unless a legal exemption applies. The City of Charlotte argued that the survey and responses were not public records partly because they were created using a hyperlink originated by EY and stored on EY’s private server. The city also argued that they lacked possession or control of the records and that the records were EY’s proprietary information.
The court roundly rejected the city’s argument that it had not created public records finding that, “Such a reading [of the public records act] would defeat the purpose of the statute, creating a clear path to hide huge swaths of governmental work from public scrutiny.” The court concluded that because the records were created by public officials in their governmental capacity, on taxpayer-funded time, they constituted records within the meaning of the statute regardless of how they were technically created.
The court also rejected the city’s argument that it lacked possession or control of the records. The court found that the city had the right and ability to demand its contract data from EY at any time under the contract, meaning it maintained possession and custody of the records sought by WBTV. The Public Records Act does not require an agency to exercise actual possession over the records if they have constructive possession of the records, meaning the records are within arm’s reach.
Furthermore, EY never asserted that the survey or responses were confidential trade secrets or intellectual property. The city could not point to any provision in North Carolina law that would render the survey and responses confidential under the Public Records Act.
The language in Gray Media v. City of Charlotte strongly suggests that public officials violate the law if they fail to produce public records generated through third-party, cloud-based computing services or portals and stored off-site with third-party contractors.
WBTV Got the Records. Isn’t This Moot?
Mootness is a legal doctrine that allows a court to dismiss a case when, during the course of litigation, a party obtains the relief sought or the original controversy between the parties is otherwise resolved. The city argued that Gray Media’s case should be dismissed because the news organization received the records during litigation.
The Court of Appeals rejected the city’s mootness argument on two grounds. First, it found that Gray Media was entitled to a determination on the public records status of the survey and responses. Deciding this case, rather than dismissing it, would establish WBTV’s ¾ and therefore the public’s ¾ right to obtain records produced and stored using cloud-based technologies during the performance of public contracts. Second, the court said the case was not moot because the city’s illegal denial of access was capable of repetition. Given the role that online data storage plays in government business, the court found that similar disputes are likely to arise in the future between the parties or other public agencies and records requestors.
The Court of Appeals seized an opportunity to provide guidance and clarity on the legal status of cloud-based public records in the hands of third-party contractors.
Show Me the Money: Attorneys Fees
A plaintiff’s primary goal in a public records lawsuit is to obtain information that has been wrongfully withheld by the government. Some states allow plaintiffs to recover reasonable attorneys’ fees when they are forced to file lawsuits to compel disclosure of public records. In North Carolina, courts have the discretion to award attorneys’ fees to a “substantially prevailing party.” That is unless the government agency relied in good faith on appeals court precedent, a published North Carolina Attorney General opinion, or a preexisting order from a court having jurisdiction over the agency.
The city argued that it should not have to pay attorneys’ fees because Gray Media failed to substantially prevail and that the city relied on precedent when it denied access to the survey data. Again, the Court of Appeals found in favor of Gray Media and ordered the trial court to grant reasonable attorneys’ fees. Importantly, the court said Gray Media qualified as a substantially prevailing party because its actions (demanding records, negotiating for their release, and filing a lawsuit to compel disclosure after the city denied their requests) “substantially precipitated the ultimate disclosure of the records.” The Court of Appeals underscored that it was the city’s conduct that forced the station to litigate to obtain the information it was entitled to by law:
Because the City only moved to obtain the documents, which it contractually owned, sixteen months after the original request, after litigation was commenced, and, indeed, after Gray Media sought summary judgment in its favor, this sequence of events compels a conclusion that Gray Media’s actions substantially precipitated the ultimate disclosure of the records (emphasis added).
The crucial point in the court’s discussion of attorneys’ fees is that a party need not obtain all ¾ or even a majority of ¾ the relief they seek to qualify as a substantially prevailing party under the Public Records Act. They don’t need to win a court order compelling the production of public records and they don’t need to litigate a case to a final verdict.
The court’s analysis in Gray Media provides much needed support for records seekers who are considering filing a lawsuit to force a public agency to comply with the North Carolina Public Records Act. It clarifies the status of records produced during business relationships with public contractors and delivers strong words of caution to public agencies that wrongfully withhold information that belongs in public hands. Read the full opinion here: