Article by
Francine L. Semaya 
,
William K. Broudy 
and
Laurance D. Shapiro
On January 13, 2009, the New York Supreme Court, the trial level court in New York, denied a challenge to the New York Insurance Department's (the "Department") determination that certain transactional information filed with the Department by a bond insurer as a trade secret was exempt from public disclosure under the Freedom of Information Law ("FOIL").1 The Court decided in Aurelius Capital Management LP v. Dinallo, 108462/08 (January 13, 2009) that the Department's decision to exempt such information on the basis that disclosure of the information filed by MBIA, the bond insurer, would lead to substantial competitive injury to MBIA was reasonable and entitled to judicial deference.
In this case, MBIA filed with the Department information on numerous structured finance transactions it insured, including spreadsheets containing highly detailed information relating to parties involved in each transaction and the details of such transactions. This information was submitted by MBIA with a request that the information be treated as confidential and be exempt from disclosure under FOIL as trade secrets which, if disclosed, would cause substantial injury to the competitive position of the subject enterprise.2
Aurelius Capital Management ("Aurelius") brought a proceeding challenging the Department's decision3 to deny broad FOIL requests submitted by Aurelius "to assess MBIA's financial strength and its ability to meet its obligations."4 While much of the information sought by Aurelius was disclosed, the Department determined that certain information was exempt from disclosure pursuant to N.Y. Public Officers Law § 87(2)(d) because, inter alia: the information at issue was substantially more detailed than that released by MBIA's competitors; the spreadsheets did not lend themselves to selective disclosure, and disclosure would have required the creation of a new record; and that disclosure would lead to competitive harm to MBIA and would likely harm the insurer's relationship with third parties to whom confidentiality had been promised.
In denying Aurelius's petition to challenge the Department's decision to exempt certain requested information from disclosure, the Court found that MBIA and the Department had adequately established MBIA's claim of competitive injury. In addition, the Court found that MBIA and the Department had established that neither MBIA nor its competitors had publicly disclosed most of this information, nor was such information otherwise available elsewhere. Further, the Court affirmed that the Department had no duty to create a record that did not already exist to disclose the information sought by Aurelius in its FOIL request, as the spreadsheets could not easily be redacted or limited.
Although the Court opined that "each case presents a unique set of facts and the ultimate determination of competitive injury is fact specific," the Court found that the Department's conclusion that the private financial data at issue was likely to cause MBIA substantial competitive injury if disclosed was entitled to judicial deference, and therefore the Court denied Aurelius' petition in all respects.
Footnotes
1. N.Y. Public Officers Law §§ 84 et seq.
2. See, N.Y. Public Officers Law § 87(2)(d).
3. This action was brought under Article 78 of the New York Civil Practice Laws and Rules.
4. Matter of Aurelius Capital Management LP v. Dinallo at 2, available at: http://iapps.courts.state.ny.us/webcivil/FCASDocumentSearch
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