Court Opinion

ID: 2876593
Source: CourtListenerOpinion
Date Created: 2015-09-06 06:48:02.694292+00
Date Added: 2024-06-11T12:46:09.008825
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                     NO. 03-06-00257-CV

       Greg Abbott, in his official capacity as Attorney General of Texas, Appellant

                                               v.

 GameTech International, Inc.; Anthony J. Sadberry, in his official capacity as Executive
  Director of the Texas Lottery Commission; and Texas Lottery Commission, Appellees

    FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT
    NO. D-1-GN-05-001668, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING

                           MEMORANDUM OPINION

              Greg Abbott, in his official capacity as Attorney General of Texas (“the Attorney

General”) appeals from a summary judgment granted in favor of GameTech International, Inc.,

Anthony Sadberry, in his official capacity as Executive Director of the Texas Lottery Commission,

and the Texas Lottery Commission (“the Commission”), in their suits seeking a declaration that

certain documents in the Commission’s possession are exempt from the disclosure requirements of

the Texas Public Information Act (“PIA”). See Tex. Gov’t Code Ann. §§ 552.001-.353 (West 2004

& Supp. 2008). We will reverse the district court’s summary judgment and render judgment

declaring that the documents are not exempt from disclosure.
                     FACTUAL AND PROCEDURAL BACKGROUND

               GameTech is a manufacturer of electronic bingo devices. In Texas, GameTech’s

equipment is used by charitable organizations licensed to raise funds by conducting bingo games.

GameTech’s business activities are regulated by the Commission under the Texas Bingo Enabling

Act. See Tex. Occ. Code Ann. §§ 2001.001-.657 (West 2004 & Supp. 2008). In 2002, Steve

Hieronymous, a former distributor of GameTech equipment, filed a complaint with the Commission,

alleging that GameTech engaged in price fixing and unlicensed distribution of bingo equipment in

violation of Texas law. Hieronymous filed subsequent complaints in 2003 and 2004 complaining

of GameTech’s activities in the bingo industry. In January 2005, the Commission initiated an

enforcement action against GameTech. Thereafter, GameTech and the Commission engaged in

discussions related to the enforcement action, including settlement negotiations.

               In February and March 2005, Hieronymous sent the Commission two public

information requests pursuant to the PIA. See Tex. Gov’t Code Ann. §§ 552.001-.353. The requests

sought copies of documents and communications exchanged between the Commission and

GameTech or GameTech’s attorney. See Tex. Gov’t Code Ann. § 552.021. The Commission

complied with both requests but in each case withheld from disclosure two documents (“the

settlement letters”), which the Commission described as follows:

       1.      A letter dated February 11, 2005 from the Commission’s staff attorney to
               GameTech’s attorney in which the Commission offered terms for settling the
               issues and controversies between the Commission and GameTech; and

                                                2
        2.      A letter dated March 3, 2005 from GameTech’s attorney to the Commission’s
                staff attorney in which GameTech proposed a counter-offer of settlement for
                the Commission’s consideration.1

The Commission withheld the settlement letters on the ground that they were excepted from

disclosure under sections 552.101 and 552.103 of the government code. See Tex. Gov’t Code Ann.

§§ 552.101 (“Information is excepted from the requirements of Section 552.021 if it is information

considered to be confidential by law, either constitutional, statutory, or by judicial decision.”);

552.103 (“Information is excepted from the requirements of 552.021 if it is information relating to

[pending or reasonably anticipated] litigation of a civil or criminal nature to which the state or a

political subdivision is or may be a party . . . .”).

                Pursuant to section 552.301 of the PIA, the Commission twice sought opinions from

the Attorney General regarding whether the settlement letters fell within either exception. See

Tex. Gov’t Code Ann. § 552.301 (governmental body receiving written request for information

it wishes to withhold must ask for decision from attorney general regarding whether information falls

within specified exception).2 In its first opinion, the Attorney General stated that, although the

settlement letters were information relating to reasonably anticipated litigation, they were not

covered by the litigation exception because they had been exchanged between GameTech and

the Commission. See OR2005-03642 (“Once information has been obtained by all parties to a

        1
           The settlement letters were not made part of the appellate record, but are described in an
affidavit in support of the Commission’s motion for summary judgment.
        2
         The Commission did not ask the Attorney General for a ruling on the section 552.101
exception in its first request for an opinion—at that time the Commission asserted only the litigation
exception as a basis for withholding the settlement letters. See Tex. Gov’t Code Ann. § 552.103.

                                                    3
litigation through discovery or otherwise, no section 552.103(a) interest exists with respect to

that information.”).

               Although GameTech did not participate in the open records ruling process before the

Attorney General, GameTech filed suit in district court against the Commission and the Attorney

General seeking a declaration that the settlement letters were excepted from disclosure under the

PIA. See Tex. Gov’t Code Ann. §§ 552.3215, .325. The Commission filed a cross-claim against the

Attorney General likewise seeking a declaration that the settlement letters were excepted

from disclosure under the section 552.103 litigation exception and the section 552.101

confidential-information exception.3

               The Commission moved for summary judgment asserting that, pursuant to PIA

sections 552.022(a) and 552.101, the settlement letters were considered confidential by law,

specifically by the confidentiality provisions contained in chapter 154 of the civil practice and

remedies code and chapter 2009 of the government code, both of which afford confidentiality to

communications made by participants to, and during the course of, an alternative dispute resolution

procedure. See Tex. Gov’t Code Ann. §§ 552.022(a), .101, 2009.054 (West 2008); Tex. Civ.

Prac. & Rem. Code Ann. § 154.073 (West 2005).4 GameTech moved for summary judgment on the

       3
          Because GameTech’s suit against the Attorney General and the Commission was then
pending, in its second opinion the Attorney General declined to address whether the settlement
letters were excepted from disclosure under section 552.101 of the PIA.
       4
           At the summary judgment hearing, the Commission withdrew its argument that the section
552.103 litigation exception applied to the settlement letters. Because, by that time, the
Commission’s enforcement action against GameTech had been resolved, the Commission believed
the litigation exception no longer applied. See Tex. Att’y Gen. Op. MW00575 (1982) (applicability
of section 552.103 ends once litigation has been concluded or is no longer reasonably anticipated).
Consequently, the litigation exception to disclosure under the Texas Public Information Act is not

                                                4
same ground, and also claimed that public policy and common law privacy rendered the settlement

letters confidential. The Attorney General filed a cross-motion for summary judgment asserting that

there was no applicable law that rendered the settlement letters confidential under either section

552.101 or 552.022(a) of the PIA.

               The district court granted both GameTech’s and the Commission’s motions for

summary judgment. The district court’s judgment states that the settlement letters “are settlement

negotiations excepted from mandatory disclosure under Tex. Gov’t Code § 552.101 pursuant to

Tex. Gov’t Code ch. 2009 and Tex. Civ. Prac. and Rem. Code ch. 154.” The court denied the

Attorney General’s motion for summary judgment. This appeal followed. By one issue, the

Attorney General contends that, because the settlement letters were not communications between

parties to an alternative dispute resolution procedure, the confidentiality provisions in chapter 154

of the civil practice and remedies code and chapter 2009 of the government code do not apply, and

the district court erred in finding an exception to the mandatory disclosure requirement of the PIA.

                                    STANDARD OF REVIEW

               We review the district court’s granting of summary judgment de novo. Valence

Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). A party moving for summary judgment

must demonstrate that there is no genuine issue of material fact and that he is entitled to judgment

as a matter of law. Tex. R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548

(Tex. 1985). The burden of proof is on the movant, and we take as true all evidence favorable to the

at issue in this appeal. See Tex. Gov’t Code Ann. § 552.103.

                                                 5
nonmovant, and indulge every reasonable inference and resolve all doubts in the nonmovant’s favor.

Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). When both sides move

for summary judgment and the trial court grants one motion and denies the other, the reviewing court

should review the summary judgment evidence presented by both sides, determine all questions

presented, and render the judgment the trial court should have rendered. Texas Worker’s Comp.

Comm’n v. Patient Advocates, 136 S.W.3d 643, 648 (Tex. 2004).

               This appeal involves statutory construction, which presents questions of law that we

review de novo. Bragg v. Edwards Aquifer Auth., 71 S.W.3d 729, 734 (Tex. 2002); Sanchez

v. Texas State Bd. of Med. Exam’rs, 229 S.W.3d 498, 512 (Tex. App.—Austin 2007, no pet.). In

construing a statute, our task is to determine and give effect to the legislature’s intent. Texas Dep’t

of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 176 (Tex. 2006);

National Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000); see also Tex. Gov’t Code

Ann. § 312.005 (West 2005). We ascertain that intent “first and foremost” from the statute’s

language as written. Sanchez, 229 S.W.3d at 512. We consider the statute as a whole, not as isolated

individual provisions, and we do not give one provision a meaning out of harmony or inconsistent

with other provisions, even though it might be susceptible to such a construction standing alone.

See Texas Dep’t of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 2002). In determining legislative

intent, we may also consider the consequences of a particular construction. See Tex. Gov’t Code

Ann. § 311.023 (West 2005); City of Austin v. Southwestern Bell Tel. Co., 92 S.W.3d 434,

442 (Tex. 2002).

                                                  6
                                          DISCUSSION

               Under the PIA, information that is “collected, assembled or maintained . . . in

connection with the transaction of official business” by a governmental body is “public information.”

Tex. Gov’t Code Ann. § 552.002(a). Public information may not be withheld from disclosure except

as expressly provided by the PIA. Id. § 552.006; Arlington Indep. Sch. Dist. v. Texas Attorney Gen.,

37 S.W.3d 152, 157 (Tex. App.—Austin 2001, no pet.). The PIA is to be liberally construed in

favor of granting requests for information. Tex. Gov’t Code Ann. § 552.001(b). Exceptions

to the disclosure requirement of the PIA are narrowly construed. Arlington Indep. Sch. Dist.,
37 S.W.3d at 157. The issue here is whether the settlement letters fall within an exception to

disclosure recognized by the PIA.

               The Commission and GameTech contend that the settlement letters are excepted from

disclosure by sections 552.022 and 552.101 of the PIA. Section 552.022 provides that certain listed

categories of information are public information not excepted from disclosure under the Act

“unless they are expressly confidential under other law.” Tex. Gov’t Code Ann. § 522.022(a).

Section 552.101 provides that information is excepted from the disclosure requirement if it is

“considered to be confidential by law, either constitutional, statutory, or by judicial decision.”

Id. § 552.101. The Attorney General argues that there is no “other law” that renders the settlement

letters confidential, and therefore the PIA requires that they be disclosed.

                                                  7
Confidential Under Other Law: Statutes

               The Commission and GameTech assert that the “other law that makes the settlement

letters expressly confidential are chapter 2009 of the government code and chapter 154 of the civil

practice and remedies code.” Chapter 2009 of the government code, the Governmental Dispute

Resolution Act, extends confidentiality to any communication “made between an impartial third

party and the parties to the dispute or between the parties to the dispute during the course of an

alternative dispute resolution procedure.” Tex. Gov’t Code Ann. § 2009.054(b)(1). Chapter 154 of

the civil practice and remedies code, which contains the procedures for alternative dispute resolution,

provides in pertinent part:

       [A] communication relating to the subject matter of any civil or criminal dispute
       made by a participant in an alternative dispute resolution procedure, whether before
       or after the institution of formal judicial proceedings, is confidential, is not subject
       to disclosure, and may not be used as evidence against the participant in any judicial
       or administrative proceeding.

Tex. Civ. Prac. & Rem. Code Ann. § 154.073(a). In order for the settlement letters to be confidential

under these statutes, they must be communications made during the course of, and by a participant

in, an “alternative dispute resolution procedure.”

               The Governmental Alternative Dispute Resolution Act defines an “alternative dispute

resolution procedure” to include a procedure, or combination of procedures, described by chapter

154 of the civil practice and remedies code. Tex. Gov’t Code Ann. § 2009.003(1). The following

alternative dispute resolution procedures are described in chapter 154: mediation, mini-trial,

moderated settlement conference, summary jury trial, and arbitration. Tex. Civ. Prac. & Rem. Code

                                                  8
Ann. §§ 154.023-.027. Each of these procedures contemplates the participation of an impartial third

party to facilitate the resolution of the dispute. The alternative dispute resolution procedures

described in chapter 154 do not include informal settlement negotiations between the parties

conducted without an impartial third-party facilitator.

               The Governmental Alternative Dispute Resolution Act permits a governmental body

to “develop and use” alternative dispute resolution procedures to supplement the procedures

available for dispute resolution so long as they are consistent with chapter 154 of the civil practice

and remedies code. See Tex. Gov’t Code Ann. §§ 2009.051(a), .052. For example, the Commission

has adopted rules for mediation of claims brought by contractors under chapter 2260 of the

government code. See 16 Tex. Admin. Code §§ 403.214-.218 (2006) (Tex. Lottery Comm’n). The

Commission’s rules provide that mediation of such disputes is “confidential in accordance with

Government Code, § 2009.054.” See id. §§ 403.215, .217. However, neither the Commission nor

GameTech demonstrates, or even argues, that the Commission has adopted rules making settlement

discussions between parties to an existing or potential enforcement action an alternative dispute

resolution procedure afforded the confidentiality protections of government code chapter 2009.

               GameTech further contends that the definition of alternative dispute resolution

procedures in chapter 154 includes “conciliation,” and therefore informal settlement negotiations

must constitute an alternative dispute resolution procedure described in that chapter and covered by

the confidentiality provisions of the Governmental Dispute Resolution Act. We disagree. The word

“conciliation” appears in section 152.001 of the government code, which defines alternative dispute

resolution systems that may be established by counties; it is not one of the alternative dispute

                                                  9
resolution procedures described in civil practice and remedies code chapter 154. See Tex. Civ. Prac.

& Rem. Code Ann. § 152.001. Moreover, the provision states that “an ‘alternative dispute resolution

system’ means an informal forum in which mediation, conciliation or arbitration is used to resolve

disputes.” Id. (emphasis added). The word “forum” connotes something more than two parties

to a dispute privately discussing settlement and exchanging settlement offers. See Black’s

Law Dictionary 680 (8th ed. 2004) (defining “forum” as: “A court or other judicial body; a place

of jurisdiction.”).

                In the present case, the Commission and GameTech engaged in private settlement

discussions—they were not participants in any of the alternative dispute resolution procedures

described in chapter 154 of the civil practice and remedies code, nor were they engaged in an

alternative dispute resolution procedure developed by the Commission under chapter 2009 of the

government code. See Tex. Civ. Prac & Rem. Code Ann. §§ 154.023-.027; Tex. Gov’t Code Ann.

§ 2009.051. Even if the exchange of the settlement letters at issue in this case, consisting of an offer

and counter-offer, could be generally classified as an “alternative dispute resolution procedure,” it

is not one covered by the confidentiality provisions contained in either chapter 154 of the civil

practice and remedies code or chapter 2009 of the government code.

Confidential Under Other Law: Judicial Decision/Common Law

                The Commission next maintains that the settlement letters are expressly

excepted from disclosure under the PIA because they contain information considered to be

confidential by judicial decision. See Tex. Gov’t Code Ann. § 552.101 (information expressly

considered confidential by judicial decision excepted from disclosure); In re City of Georgetown,

                                                  10
53 S.W.3d 328, 332 (Tex. 2001) (term “other law” in section 552.022(a) includes judicial decisions

and rules promulgated by the judiciary, such as rules of procedure and evidence). There is, however,

no judicially recognized privilege exempting settlement negotiations from disclosure, nor do Texas

courts recognize a common-law right to withhold settlement negotiations as confidential

communications. Although settlement negotiations are inadmissible at trial to prove liability for or

invalidity of a claim or its amount, see Tex. R. Evid. 408, they are admissible for other purposes and

are not exempt from discovery under the rules of civil procedure or evidence. See Tex. R. Civ. P.

192.3 (party may obtain discovery regarding any matter that is not privileged and is relevant to

subject matter of dispute); Tex. R. Evid. 408, 501-513 (identifying discovery privileges, none of

which protects settlement negotiations).

               The cases the Commission cites do not support its contention that Texas courts

recognize a “settlement negotiations” privilege. In Avary v. Bank of America, the court recognized

that confidentiality is “an important part of the statutory scheme of alternative dispute resolution.”

72 S.W.3d 779, 797 (Tex. App.—Dallas 2002, pet. denied) (emphasis added). The Avary court did

not recognize a common law privilege for settlement negotiations; rather, it discussed the statutorily

created confidentiality guarantees provided by the legislature in chapter 154 of the civil practice

and remedies code. Id. The Commission’s reliance on In re Acceptance Insurance Company,

33 S.W.3d 443 (Tex. App.—Fort Worth 2000, no pet.), is likewise misplaced. In that case, the court

addressed the confidentiality provided by section 154.073 of the civil practice and remedies code to

communications made by a participant to mediation. Id. at 452. The court did not recognize any

common-law privilege that shields settlement negotiations from disclosure to third parties.

                                                 11
               The Commission cites one case in which a federal court recognized a common-law

settlement negotiations privilege. See Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc.,

332 F.3d 976 (6th Cir. 2003). There, the Sixth Circuit noted that the question of whether

“communications made in furtherance of settlement negotiations are discoverable by litigants in

another action is a matter of first impression in this Circuit.” Id. at 979 (emphasis in original). The

court observed that rule 501 of the Federal Rules of Evidence authorizes federal courts to determine

new privileges by examining “common law . . . in the light of reason and experience.” Id. (citing

Jaffee v. Redmond, 518 U.S. 1, 8 (1996)). So authorized, the Sixth Circuit concluded that

communications made in furtherance of settlement are privileged. Id. at 983. Essential to the

Goodyear Tire holding, however, is the concept that federal courts are authorized to determine new

discovery privileges. See Fed. R. Evid. 501. Texas courts have no such authority. Rule 501 of the

Texas Rules of Evidence provides that:

       Except as otherwise provided by Constitution, by statute, by these rules, or by other
       rules prescribed pursuant to statutory authority, no person has a privilege to:

       (1) refuse to be a witness;

       (2) refuse to disclose any matter;

       (3) refuse to produce any object or writing;

       (4) prevent another from being a witness or disclosing any matter or producing any
       object or writing.

Tex. R. Evid. 501. Thus, rule 501 provides that only privileges grounded in certain specified

sources—the Constitution, statute, the rules of evidence, or other rules established pursuant to

                                                  12
statute—are recognized in Texas. This Court has no authority to create a new common-law

discovery privilege protecting settlement negotiations.5

                We agree with the Commission and GameTech that the legislature has plainly

expressed that it is the policy of the state to encourage peaceable resolution of suits, and that disputes

before governmental bodies should be resolved as fairly and expeditiously as possible. See Tex.

Gov’t Code Ann. § 2009.002; Tex. Civ. Prac. & Rem. Code Ann. § 154.002. To encourage such

resolution, the legislature has enacted a statute to extend confidentiality to certain communications

and except them from disclosure. See Tex. Civ. Prac. & Rem. Code Ann. § 154.073. However, the

scope of the confidentiality protection provided for settlement communications encompasses only

communications made by participants in statutorily defined alternative dispute resolution procedures

during the course of the procedure; it does not extend to the offer and counter-offer of settlement

exchanged between the Commission and GameTech outside the context of an alternative dispute

resolution procedure.     See Tex. Gov’t Code Ann. §§ 2009.003, .051. If the scope of the

confidentiality protection is to be broadened, it is for the legislature, not this Court, to do so. See

City of Rockwall v. Hughes, 246 S.W.3d 621, 631 (Tex. 2008) (“If the Legislature desires to amend

the statute to add words so that the statute will then say what is contended for by the Estate, we are

confident it will do so. However, changing the meaning of the statute by adding words to it, we

believe, is a legislative function, not a judicial function.”); McIntyre v. Ramirez, 109 S.W.3d 741,

748 (Tex. 2003) (court is not to second-guess policy choices that inform statutes or weigh

        5
          Furthermore, at least one federal district court in Texas has expressly declined to recognize
a “settlement negotiations” privilege. See Performance Aftermarket Parts Group, Ltd. v. TI Group
Auto. Sys., Inc., No. H-05-4251, 2007 U.S. Dist. LEXIS 34650, at *9 (S. D. Tex. May 11, 2007).

                                                   13
effectiveness of their results; rather, court’s task is to interpret statutes in manner that effectuates

legislature’s intent); City of Lubbock v. Cornyn, 993 S.W.2d 461, 465 (Tex. App.—Austin 1999, no

pet.). The statutes as written manifest an intent by the legislature to confer confidentiality protection

only to communications made by parties to, and during the course of, a statutorily defined alternative

dispute resolution procedure.

Confidential Under Other Law: Right to Privacy

                Finally, GameTech asserts that a common-law right to privacy prevents disclosure

of its settlement negotiations with the Commission. The common-law right to privacy prevents

publicizing an individual’s private affairs with which the public has no legitimate concern.

Industrial Found. v. Texas Indus. Accident Bd., 540 S.W.2d 668, 682 (Tex. 1976). The right to

privacy prohibits the disclosure of embarrassing private facts about an individual. Id. In the context

of the PIA, public information is excepted from mandatory disclosure if it (1) contains highly

intimate or embarrassing facts about an individual, the publication of which would be highly

objectionable to a reasonable person; and (2) is not of legitimate public concern. Id. at 685; Austin

Chronicle Corp. v. City of Austin, No. 03-08-00596-CV, 2009 Tex. App. LEXIS 1381, at *14-15

(Tex. App.—Austin Feb. 24, 2009, no pet.) (mem. op.). There is no Texas authority recognizing a

right to privacy on the part of a corporation, and we decline to recognize one here. See Express One

Int’l v. Steinbeck, 53 S.W.3d 895-900 (Tex. App.—Dallas 2001, no pet.) (no authority in Texas

recognizing corporation’s right to privacy). In any event, even if a corporate right to privacy existed,

GameTech has not met its burden of showing that the settlement letters, containing an offer and

                                                   14
counter-offer of settlement, include highly intimate or embarrassing facts the disclosure of which

would be highly objectionable to a reasonable person.

                                        CONCLUSION

               Because the settlement letters are not “expressly confidential under other law,” see

Tex. Gov’t Code Ann. § 552.022(a), or “considered to be confidential by law, either constitutional,

statutory, or by judicial decision,” see id. § 552.101, we hold that they are not excepted from the

disclosure requirement of the PIA. See id. § 552.021. Accordingly, we reverse the district court

judgment granting the Commission’s and GameTech’s motions for summary judgment, and we

render judgment declaring that the settlement letters are not excepted from the disclosure

requirements of the PIA.

                                             _____________________________________________

                                             J. Woodfin Jones, Chief Justice

Before Chief Justice Jones, Justices Patterson and Puryear

Reversed and Rendered

Filed: June 17, 2009

                                                15