City of Chicago Mayor's Office properly withheld investment bank pitchbooks under 7(1)(g)

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Dear Mr. P,odkul and Ms. Julka:

Office denied the request in its entirety pursuant to section 7( 1)( g) of FOIA ( 5 ILCS 140/ 7( 1)( g) West 2018). In his Request for Review Mr. Podkul contested the Mayor' s Office' s denial.

On February 6, 2019, the Public Access Bureau sent a copy of the Request for Review to the Mayor' s Office and asked it to provide copies of a representative sample of each type of record withheld, e.g., pitchbooks, presentations, or other types of marketing materials, along with a detailed explanation of the factual and legal basis for the applicability of the section 7( 1)( g) exemption to those records. On February 26, 2019, the Mayor' s Office_provided six of the eighteen responsive pitchbooks as a representative sample of the records it maintains and a written response detailing its rationale for denying the records under 7( 1)( g). On March 15, 2019, Mr. Podkul submitted a reply. On September 9, 2019, after repeated attempts to discuss this matter with the FOIA Officer for the Mayor' s Office and with lawyers in the City' s Law department, this office sent an e- mail to the Mayor' s Office asking it to provide the additional twelve pitchbooks for our confidential review. 2 On September 27, 2019, the Mayor' s Office provided eight pitchbooks, three of which were copies of pitchbooks previously provided on February 26, 2019; on September 30, 2019, the Mayor' s Office provided a cover page for an business, and only insofar as the claim directly applies to the records requested.

In order to be exempt from disclosure under section .7( 1)( g):

T] he document must contain ( 1) a trade secret, commercial, or financial information, ( 2) that was obtained from a person or business where the trade secrets or commercial or financial information are furnished under a claim that they are either ( a) proprietary, ( b) privileged, or ( c) confidential, and ( 3) that disclosure of the trade secrets or commercial or financial information would cause competitive harm to the person or business. Chicago v. Janssen Pharmaceuticals, Inc., 2017 IL App 1st) 150870, ¶ 27, 78 N.E. 3d 446, 455 ( 2017).

Trade Secret, Commercial, or Financial Information In his Request for Review, Mr. Podkul asserted that the withheld pitchbooks are not exempt because pitchbooks do not contain trade secrets. To fall within the scope of section 7( 1)( g), records must contain trade secrets, or commercial, or financial information. FOIA does not define these terms. Accordingly, the terms are defined by their ordinary and commonly understood meaning. Lake County Bd. ofReview v. Prop. Tax Appeal Bd. ofState ofIll., 119 Ill. 2d 419, 423 ( 1988). A " trade secret" is defined as "[ a] formula, process, device, or other business information that is kept confidential to maintain an advantage over competitors[.]"

review of a representative sample of the pitchbooks establishes that the pitchbooks show each firm' s unique approach to selling its services. As such, the pitchbooks pertain to commerce ' and fall within the scope of the first prong of section 7( 1)( g).

Furnished Under a Claim it is Proprietary, Privileged, or Confidential As part of its burden of establishing that records are exempt under section 7( 1)( g), a public body must demonstrate that the records were furnished under a claim that they are proprietary, privileged, or confidential. See I11. Att'y Gen. Pub. Acc. Op. No. 18- 004, issued March 6, 2018, at 5. .

In its response to this office, the Mayor' s Office explained that it discussed the withheld records with its Chief Financial Officer (CFO), Deputy Controller, Chief of Staff to the CFO, and the City' s Independent Registered Municipal Advisor who is in charge of maintaining allpitchbooks and materials received from investment banks. The Mayor' s Office explained that • t] he longstanding relationship between the City and financial institutions proposing their services is based on the understanding that these records are proprietary. In addition, they have been marked confidential by the investment banking firms that created them. i5 Accordingly, the Mayor's Office contended that the records were confidential, proprietary records of the financial institutions.

The Mayor' s Office provided to this office for our confidential review copies of twelve pitchbooks, eight of which are labeled or otherwise denoted as confidential. The plain language of section 7( 1)( g) requires records withheld pursuant to it to be " furnished under a under_a claim that they are proprietary and confidential. Accordingly, this office concludes that the Mayor' s Office has demonstrated that the pitchbooks were furnished under a claim that they are proprietary or privileged.

Competitive Harm to a Person or Business To establish that records are exempt under section 7( 1)( g), a publicbody must also' demonstrate that disclosing the records would cause competitive harm. Janssen, Inc., 2017 IL App ( 1st) 150870, ¶ 29, 78 N.E.3d at 456. To cause competitive harm, a public body must show by specific factual or evidentiary material that: ( 1) the person or entity from which information was obtained actually faces competition; and ( 2) substantial harm to a competitive position would likely result from disclosureof the information in the agency' s records.'" Cooper v. Dep' t of the Lottery, 266 Ill. App. 3d 1007, 1013 ( 1st Dist. 1994) ( quoting Calhoun v. Lyng, 864 F.2d 34,: 36 ( 5th Cir. 1988)). In this matter, numerous companies were competing to underwrite bonds to fund the City' s pension plans and provided pitchbooks to the Mayor' s Office in an attempt to acquire that business. Accordingly, it is apparent that the financial institutions furnishing the pitchbooks actually faced competition.

In addition to demonstrating actual competition, a public body opposing disclosure must show that substantial harm to a competitive position would likely result from disclosure of the information. However a public body need not demonstrate actual competitive harm; instead, it needs to show a likelihood of substantial competitive injury. New Hampshire Right to Life, 778 F. 3d at 50- 51 ( where potential future competitor could take advantage of institutional knowledge contained in a manual and letter describing the manual, manual and letter were exempt commercial information); Ill. Att'y Gena Pub. Acc. Op. No. 19- 007, issued September 23, 2019, at 11 ( assertions regarding competitive harm that are largely conclusory fail to provide specific factual evidence demonstrating how substantial harm would occur).

competitors to structure financial proposals, both to the City and other governmental clients. l71 In Mr. Podkul' s reply he contends that the release of the records would be beneficial to the various firms, explaining:

I] nvestment banks typically include in their pitchbooks information on previously - announced deals and engagements for which they were hired. * * * By disclosing these pitchbooks to The Wall Street Journal, the top business and financial newspaper in the U. S., the city will help burnish these firms' business credentials and obtain them publicity that would, if anything, be helpful to their business interests -- not harmful, as the city claims. l81 Although pitchbooks include this type of self -promotion, it is unclear how a sales pitch by an investmentfirm, which might have been unsuccessful, would be advantageous to that firm' s reputation. Further, review of the pitchbooks reveal that disclosure of the pitchbooks would enable competing financial firms to copy the way a firm presents information, and would allow competitors to utilize unique marketing methods, ideas, design, and analysis. Therefore the Mayors Office has sustained its burden of establishing that release of the pitchbooks would cause substantial harm to a competitive position.

Mr. Podkul asserts that because the Illinois Governor' s Office of Management and Budget ( Illinois Budget Office) provided him with copies of certain pitchbooks, it establishes that the pitchbooks withheld by the Mayor' s Office are not exempt under section 7( 1)( g) of FOIA. However, under section 7( 1) of FOIA ( 5 ILCS 140/ 7( 1) ( West 2018)), a public body may elect to: redact or withhold exempt information; FOIA does not require it do so. See People v.

similar records.

Accordingly, based on the available information, this office concludes that the Mayor' s Office sustained its burden of demonstrating by clear and convincing evidence that the withheld pitchbooks are exempt from disclosure pursuant to section 7( 1)( g) of FOIA. The Public Access Counselor has determined that resolution of this matter does not require the issuance of a binding opinion. This file is closed. Please contact me at ( 312) 814- 5201 or at the Chicago address on the first page of this letter if you have questions.

Very truly yours,