Facts and Procedural History:

The Minnesota Racing Commission (MRC) asked for an advisory opinion regarding data it maintains pursuant to Minnesota Statutes, Chapter 13, the Minnesota Government Data Practices Act. 

MRC provided a summary of the facts, as follows:

By way of background, the two Minnesota licensed racetracks are required to provide the MRC with a number of disclosures as part of their license applications, including annual audited financial statements. These financial statements must reflect "the applicant's current assets, including investments in affiliated entities, loans and advances receivable and fixed assets and current liabilities, including loans and advances payable, long term debt and equity." See Minn. R. 7870.0070, item A and Minn. R. 7870.0240, item A. In order to provide closer oversight throughout the year, the MRC has requested that the racetracks also provide us with quarterly unaudited financial statements, which they have done. 

We understand the data may be considered application data under Minn. Stat. [section] 13.41. The question is whether these financial statements - both the annual audited financial statements and the quarterly unaudited financial statements - may also meet the definition of "trade secret information" under Minn. Stat. [section] 13.37, subd. 1 (b) such that they may be classified as nonpublic data under Minn. Stat. [section] 13.37, subd. 2 in the case of a racetrack that is a privately held entity.

Issue:

Discussion:

Government data are public unless otherwise classified. (See Minnesota Statutes, section 13.03, subdivision 1.)

Government data that meet the definition of “trade secret” are classified as private data on individuals or nonpublic data not on individuals. (See Minnesota Statutes, section 13.37, subdivision 2.)

Section 13.37, subdivision 1(b), provides the definition of trade secret:

Trade secret information means government data, including a formula, pattern, compilation, program, device, method, technique or process (1) that was supplied by the affected individual or organization, (2) that is the subject of efforts by the individual or organization that are reasonable under the circumstances to maintain its secrecy, and (3) that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

The Commissioner has issued a number of advisory opinions on the application of the trade secret provision. (See Advisory Opinions 96-035, 03-009, 03-017, 06-005, and 14-018.) He has consistently opined that the provision should be interpreted narrowly. Additionally, in Advisory Opinion 14-018, he wrote:

[W]hile the outside person supplying the data to the government entity bears the burden of establishing that the data meet all of the conditions set forth in section 13.37, subdivision 1(b), the entity is ultimately responsible for determining whether the data warrant classification as trade secrets.

In its letter to the Commissioner, the MRC wrote that it asked the affected licensee racetrack to provide a rationale for its assertion that the data qualify for trade secret classification. The MRC stated:

In applying this definition [of trade secret in section 13.37], we are satisfied that these data are a compilation supplied by the affected organizations, i.e. the racetracks. In the case of the privately held racetrack, we agree that the information has been the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The issue is whether the financial statements derive independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from their disclosure or use.

The financial statements in question are not data unique to racetracks. Similar to the financial statement of other types of businesses, they contain high-level information on revenues, expenses, assets, liabilities and equity. It is not evident to the MRC as to how this information derives independent economic value from not being known or ascertainable by a competitor or anyone else who may derive economic value from it.

Therefore, we asked the affected entity to provide rationale on how their financial statements meet this third prong of the definition. The essence of their argument is that the information would give its "major competitor," the other racetrack, "a competitive advantage by allowing it to refine [its] own business practices to compete more effectively with [us] and potentially poach [our] customers." They also state the information is "current, detailed, highly secret, and proprietary." We find this response to be vague and insufficient to establish the third prong of the definition. It is also a bit disingenuous because, in previous submissions to the MRC, the affected entity has not identified the other racetrack as being a major competitor. (Attachment 5) In fact, the Minnesota legislature specifically placed geographic and other restrictions on the affected entity so as to minimize competition with the other racetrack. See Minn. Stat. § 240.06, subp. 5-5a. 

Financial statements are included in a long list of detailed disclosures required of racetrack license applicants. See Minn. Stat. 9 [sections] 240.06 and 240.07 and Minn. R. 7870. The law also requires a public hearing to be held before a license can be issued. Minn. Stat. [sections] 240.06, subd. 2 and 240.07, subd. 2. We thus believe the legislature intended for licensing data in this highly-regulated business, including financial disclosures, to be open to public scrutiny. [Footnote omitted.]

Here, the MRC did not find the licensee’s arguments to be persuasive and the Commissioner concurs with the MRC. If counsel for the privately held racetrack, Running Aces, disagrees with the conclusion reached in this opinion, she has the option of bringing an action in court to prevent the MRC from releasing the data.

The Commissioner has a final comment. The MRC noted that it may consider some of the data at issue to be application data under Minnesota Statutes, section 13.41. Section 13.41 classifies certain data about applicants for licenses and data about licensees as private, confidential, and public. Those not public classifications – private and confidential – apply solely to data on individuals. Therefore, any data maintained by the MRC about racetrack applicants or licensees that are not data on individuals, cannot be classified pursuant to section 13.41. (See Advisory Opinions 03-004 and 04-006.)

Opinion:

Based on the facts and information provided, the Commissioner’s opinion on the issue is as follows:

Certain financial data submitted by a licensee to the Minnesota Racing Commission do not meet the definition of trade secret data in Minnesota Statutes, section 13.37, and are therefore presumptively public.

Signed:

Matthew Massman
Commissioner

November 30, 2018