White & Case recently secured a significant appellate victory in a Freedom of Information Law ("FOIL") case involving insurance company clients that sets a favorable precedent for companies filing proprietary information with New York State and municipal agencies.

In Markowitz v. Serio decided on April 5, the Appellate Division, First Department overturned a lower court decision and agreed with White & Case's argument that certain proprietary information which the insurance companies must file with the New York Insurance Department as to policy cancellations, non-renewals and declinations should not be publicly released, because granting public access to that information would give the companies' competitors an unfair market advantage.

Precedent May Impact Companies Across Industries and State Lines

The win reaffirms the application of a FOIL exemption that protects companies that volunteer to, or must, file proprietary information with New York public agencies by enabling the companies to block disclosure if they can show that would likely cause substantial competitive harm to them. This decision will have a great impact on companies across industries in New York State (NYS) and possibly persuade courts in other states to rule the same way.

Background

Insurance companies doing business in NYS are required to disclose proprietary information to the New York Insurance Department — information that the insurers otherwise keep strictly confidential. The carriers do not wish their competitors to know in exactly which areas they are gaining or losing policyholders.

In 2004, concerned with the availability and affordability of auto insurance in Brooklyn, Borough President Marty Markowitz sued the Department, under the State's Freedom of Information Law seeking access to the insurers' confidential data on auto policy counts by zip code and cancellations, non-renewals and declinations by zip code. The Department's regulation under which companies must file the data stated that the records would be public.

In December, 2004 White & Case intervened on behalf of several insurance companies in a suit brought by the Borough President against the Insurance Department.

In January, 2006 the New York Supreme Court ruled that the Department had no right to exempt the requested data from disclosure under FOIL.

In its ruling this month, the Appellate Division unanimously reversed that decision, citing an exemption in FOIL that allows government agencies to refuse disclosure if it will cause substantial competitive harm to the company filing the information.

The importance of this recent decision is that even if the specific law under which a company makes a filing requires the information to be publicly released, the Appellate Division ruled that the data could still be withheld if it falls within the general exemption from disclosure in the FOIL statute for "trade secret"-type material which, if disclosed to a competitor, would result in substantial competitive harm to the company that made the filing.

Additional Information:

  • For a complete report on the decision, click here
  • For more details, please contact Richard G. Liskov, Of Counsel in White & Case's New York office