Court Opinion

ID: 7075864
Source: CourtListenerOpinion
Date Created: 2022-07-24 08:14:08.838478+00
Date Added: 2024-06-11T16:12:45.943710
License: Public Domain

BARNES, Judge,
dissenting with separate opinion.
I respectfully dissent. I am not comfortable with affirming the IURC's decision by relying on its assessment of an outside-the-record document that this court cannot review.
Here, SBC filed a petition seeking to maintain the confidentiality of information regarding the number of SBC access lines associated with each central or local exchange office throughout Indiana; from this information can be derived the number of SBC customers served by each local exchange office. In support of this petition, SBC filed a sworn affidavit from Brenda K. Barnes, SBC employee (and no relation to this writer), in which she asserted that SBC derived independent economic value from this information remaining confidential, outlined the extensive steps SBC takes to maintain the confidentiality of this information, and further expressly stated, "No amount of independent research could yield this information to Ameritech Indiana's existing or potential competitors." App. p. 28. This affidavit satisfied the four requirements of a pro-tectable trade secret: it concerns information having independent economic value that SBC has taken reasonable steps to keep confidential, and which is not readily ascertainable by others using proper means. See Hydraulic Exchange and Repair, Inc. v. KM Specialty Pumps, Inc., 690 N.E.2d 782, 785-86 (Ind.Ct.App.1998). No party has ever filed any evidence to contradict this assertion; the Office of Utility Consumer Counselor, who had notice of SBC's confidentiality request, never responded to it and has not participated in this appeal.
In its order denying confidential treatment to SBC's local central office access line information, the IURC did not attempt to refute SBC's assertions that the *1188information was in fact "information" for trade secret purposes, or that SBC has taken reasonable steps to protect its confidentiality, It did attempt to refute SBC's claim that the information was not readily ascertainable by others, stating as follows:
SBC Indiana has made an effort in recent months to convince the Indiana General Assembly that its access lines are open to CLECs. In support of this assertion, in an effort to demonstrate the existence of competition in the telephone industry, SBC Indiana has prepared 4 detailed report that estimates the number of lines, in various catégo-ries, served by CLECs. In its report, SBC Indiana describes the methodologies used to make its estimations: "... SBC estimates the number of CLEC access lines by using two different methodologies, one based on interconnection trunks, and the other based on EQ11 database listings. These are the same conservative methodologies used by SBC and reviewed by the FCC in connection with the Texas, Kansas/Oklahoma and Missouri/Arkansas 271 Applications." SBC 4Q.'02 Report, Corporate Competitive Analysis, date 2/3/08. If SBC Indiana can calculate this type of estimation, then so can other telephone companies. And even though these are admittedly estimations, this context of number of access lines, etc., is not like that of estimating a secret formula's components, for to have an accurate estimation of the number of access lines is, for competitive purposes, as useful as having the exact numbers.
App. p. 12.
There are two problems with this analysis. First, it relies upon evidence not found in the record of this proceeding, namely the "SBC 4Q '02 Report" to which the IURC refers. It is axiomatic, and has been for many years, that facts found by an administrative ageney must be based on substantial evidence in the agency's record of proceedings. City of Muncie v. Public Serv. Comm'n, 177 Ind.App. 155, 158, 878 N.E.2d 896, 898 (1978) (emphasis added). "When substantial evidence cannot be found in the record to support the agency's order, that order must be reversed as being contrary to law." Id. "[The [IURC's] orders must be based upon substantial evi-denee in the record and be specific enough to enable this court to intelligently review the [IURC's] decision." United Tel. Co. of Indiana, Inc. v. Public Serv. Comm'n, 402 N.E.2d 1013, 1016 (Ind.Ct.App.1980). I do not see how we can intelligently review the IURC's decision to deny trade secret protection to SBC's information without being able to view the document it relied upon to find that the information was readily accessible by others.
'of proceedings. It does appear, pursuant to the TURC's down regulations, that it may take "administrative notice" of other documents filed with the IURC in other matters.2 Ind. Admin. Code tit. 170, r. 1-1.1-21(j). However, in order for the IURC to do so, a party must be notified of the IURC's intention to rely on such a document, given an opportunity to respond to it, and the document must be included in the record 170 IAC and (n). Here, SBC apparently had no advance notice that the IURC would rely on an 'outside-the-record document in making its decision, no opportunity to respond to it, and the document was not made part of the record in this case, in contravention of the IURC's own rules.
The second, problem with the IURC's rationale concerning the ready accessibility of the information SBC sought to keep confidential is that the IURC seems to be *1189on a different page than SBC as to what SBC precisely wished to keep confidential. SBC essentially seeks confidential treatment of the numbers of customers it has in each discrete area of Indiana served by a local exchange office. However, SBC contends that the report and information the IURC referred to in finding ready accessibility related to SBC's total number of access lines and customers in its entire service area. SBC also argues that the number of customers in discrete marketing areas is much different from knowing the number of customers SBC has statewide, as the local customer information allows competitors to make targeted market-entry and pricing decisions. IURC's order never discusses this distinction-again, perhaps because it relied on extra-record evidence to make its ruling, without notice and opportunity to respond to this evidence by SBC. Also, we have no good way to evaluate the merits of SBC's argument regarding this distinction because of the IURC's reliance on extra-record evidence, but that is the IURC's fault, not SBC's. I further note that the IURC in its brief does not respond to this argument in any way.
Additionally, both the IURC and the majority acknowledge that the information SBC seeks to keep confidential has independent economic value, but nevertheless decline to afford trade seeret protection to the information because that value is "limited" or lacks "significance." Op. p. 1185; App. p. 12. However, the trade secret statute affords protection to information 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...." Ind.Code § 24-2-3-2. The statute does not require a showing that the information has "significant" or more than "limited" economic value.
It appears that the IURC is apt to narrowly construe the definition of "trade secret" to further the goal of increasing telecommunication industry "competition." That may possibly be a laudable goal, depending on one's perspective, but in my view the IURC cannot accomplish that goal by relying on extra-record evidence to support its findings or by placing requirements for trade secret protection that are not found in the statute. Also, the statute does not indicate that the elements of the trade secret test should be balanced against other factors, such as the desire to increase competition in a recently deregulated industry. Of course, the keeping of any trade secret may lessen competition; the corollary may or may not be true. Is it a "given" that not giving certain information trade secret protection will increase competition? Perhaps so, or maybe most likely so, but the point is that the decision made here was one made with facts outside the record. I decline to jump on the "competition" train without the sufficient tracks of on-the-record evidence being present.3 I would reverse the IURC's order denying trade seeret protection to the information SBC seeks to keep confidential.

. It is not clear that the report the IURC : relied upon was ever filed with it or was only presented to the General Assembly. I will assume it was filed with the IURC.

. I would also note that SBC's predecessors devoted substantial time, energy, and resources in putting the current telephone infrastructure in place. I think, for all of the trumpeting of the value of "competition" in telecommunications services, that SBC's investment in creating the telephone infrastructure should be given some consideration in determining whether its local customer information ought to be kept confidential and that the focus should not be solely on increasing "competition."