Court Opinion

ID: 2810342
Source: CourtListenerOpinion
Date Created: 2015-06-20 08:20:02.958726+00
Date Added: 2024-06-11T09:32:38.737277
License: Public Domain

IN THE SUPREME COURT OF TEXAS
                                         444444444444
                                           NO . 12-1007
                                         444444444444

 THE BOEING COMPANY AND THE GREATER KELLY DEVELOPMENT AUTHORITY
       N/K/A THE PORT AUTHORITY OF SAN ANTONIO, PETITIONERS,
                                                 v.

            KEN PAXTON, ATTORNEY GENERAL OF TEXAS, RESPONDENT

           4444444444444444444444444444444444444444444444444444
                            ON PETITION FOR REVIEW FROM THE
                     COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS
           4444444444444444444444444444444444444444444444444444

                                   Argued February 26, 2015

       JUSTICE DEVINE delivered the opinion of the Court, in which CHIEF JUSTICE HECHT , JUSTICE
GREEN , JUSTICE WILLETT , JUSTICE GUZMAN , JUSTICE LEHRMANN , and JUSTICE BROWN joined.

       JUSTICE BOYD filed a dissenting opinion.

       JUSTICE JOHNSON did not participate in the decision.

       The Texas Public Information Act gives the public the right to access information the

government collects. TEX . GOV ’T CODE § 552.221. Although most of this information is available

on request, the Act itself enumerates about sixty exceptions. See generally id. §§ 552.101–.154.

One of these exceptions is the focus of this appeal.

       The exception at issue purports to protect information “that, if released, would give

advantage to a competitor or bidder.” Id. § 552.104. The Attorney General, who is responsible for
maintaining uniformity in the Act’s application, operation, and interpretation, id. § 552.011, has

determined this exception protects the purchasing interests of a governmental body when conducting

competitive bidding, but not those of a private party that competes in the process. The court of

appeals has similarly concluded that the private party in this case lacked the right or standing to

claim this exception because the exception is only for the government’s benefit. 412 S.W.3d 1, 18

(Tex. App.—Austin 2012). We find no such limitation in the Act’s text, however, and conclude that

a private party may assert the exception to protect its competitively sensitive information.

Concluding further that the information withheld will benefit the private party’s competitors and thus

“give advantage to a competitor” of the private party asserting the exception, we reverse the court

of appeals’ judgment and render judgment for the private party.

                                                  I

       The Texas Public Information Act (PIA) “guarantees access to public information, subject

to certain exceptions.” Tex. Dep't of Pub. Safety v. Cox Tex. Newspapers, L.P., 343 S.W.3d 112, 114

(Tex. 2011). Public information includes information that is collected, assembled, or maintained by

or for a governmental body. TEX . GOV ’T CODE § 552.002(a). Such information is available by

request unless an exception applies. In re City of Georgetown, 53 S.W.3d 328, 331 (Tex. 2001).

       Typically, a request for public information involves two parties, the governmental body

holding the information and the citizen requesting it, and the governmental body must promptly ask

the Attorney General for a ruling, if it believes an exception applies. TEX . GOV ’T CODE § 522.301.

The government, however, gathers a great deal of information from people and companies doing

business in Texas, and some requests may also implicate the privacy or property interests of third

                                                  2
parties. When a citizen’s request involves this type of information, the PIA permits the third party

to raise the issue and any applicable exception to the information’s disclosure with the Attorney

General, or in district court, or both. See id. § 522.305(b) (permitting person whose privacy or

property interests are implicated to appear in the Attorney General’s administrative determination

of the request); id. § 552.325 (recognizing third party’s right to file suit seeking to withhold

information from a requestor). The Boeing Company is such a third party here.

        Boeing is the largest aerospace company in the world. About half of its business is building

commercial jetliners, but it also competes for military contracts. As demand for new military aircraft

has declined, this aspect of Boeing’s business has shifted to maintaining and overhauling older

aircraft for the military.

        In 1995, Boeing was performing this work in Tulsa, Oklahoma, but was about to lose the

space it leased from American Airlines there and needed to find a new facility. It conducted a

nationwide search and ultimately selected San Antonio’s Kelly Air Force Base as its new home.

Kelly was scheduled for closure under the Department of Defense’s Base Realignment and Closure

program and thus available to house Boeing’s commercial-refit facility for servicing heavy-lift

military aircraft.

        To facilitate Kelly’s transition to a private commercial hub, the City of San Antonio created

the Greater Kelly Development Authority, later renamed the Port Authority of San Antonio. The

Port is a tax-exempt, self-sustaining enterprise, incorporated by the city as a separate political

jurisdiction. It continues to manage and redevelop the former air force base.

                                                  3
        In 1998, Boeing signed a lease with the Port for 1.3 million square feet at Kelly Air Force

Base for a term of twenty years.1 The selection of Kelly and subsequent lease negotiations involved

a substantial commitment of Boeing’s time and resources. According to Boeing, the company

devoted two years and a team of twelve employees and additional outside consultants to evaluate and

negotiate a competitive agreement that would enable Boeing to compete for government aircraft

contracts during the lease’s twenty-year term.

        To induce Boeing’s relocation, the Port made improvements to the former air force base with

funds borrowed from the city. Boeing’s decision to move to Kelly was an instrumental part of the

base’s transformation. Upon signing the lease, Boeing became the Port’s largest tenant. It remains

so today, employing about 1,500 personnel. Boeing’s relocation has also drawn other businesses to

San Antonio, and its payments to the Port support the Port’s ability to repay its debt to the city.

        Several years after signing the Kelly lease, a former Boeing employee, Robert Silvas,

submitted a Public Information Act request to the Port for various Boeing corporate information,

including the lease. The Port notified Boeing of the request and its right to seek relief from the

Attorney General. Boeing provided a redacted version of the lease to Silvas and filed objections with

the Attorney General as to the redacted parts. Boeing asserts that the information withheld is

        1
         Boeing informs us that it recently signed a new lease with the Port for a term of fifteen years effective
December 23, 2014.

                                                        4
competitively sensitive information regarding its overhead costs at Kelly that would give advantage

to it competitors.2

         According to Boeing, a competitor could take the detailed information in Boeing’s lease and

determine Boeing’s physical plant costs at Kelly, allowing the competitor to underbid Boeing on

government contracts by enticing another landlord to offer a lower lease rental. Because of the

competitive nature of the military-refit market, Boeing submits that it takes special care to safeguard

certain information in the lease, including rental rates, share of common maintenance costs,

insurance coverage required by the Port, liquidated damages provisions, and lease incentives. The

information is not publicly available, and only about a dozen of Boeing’s 165,000 employees have

access to it.

         After considering Boeing’s objections, the Attorney General concluded in an Open-Records

Letter Ruling that none of the withheld information was exempt from disclosure under the Act.

Boeing promptly sought declaratory and injunctive relief from the ruling in the Travis County district

court, joining the Attorney General and the Port Authority.3 The parties agreed to a temporary

injunction, and the case was then tried to the court.

         The trial court denied Boeing’s requested relief and ordered the Port to provide the withheld

information. In findings of fact and conclusions of law, the court determined that the information

         2
           Information withheld by Boeing included: the percentage used to calculate Boeing’s share of the common
maintenance costs, the actual dollar figure for the insurance limits Boeing agreed to carry, the percentage used to
calculate Boeing’s penalty for early termination, the actual dollar caps on incentives Boeing might achieve for meeting
goals for contracting with certain small businesses, and the actual numbers used to calculate Boeing’s future rent.

         3
           The Public Information Act forbids “suit against the person requesting the information” and so Boeing did
not join the requestor. T EX . G O V ’T C O D E § 552.325(a). The requestor has the right to intervene in the suit, but Silvas
has not done so. Id.

                                                              5
was not exempt under section 552.110 of the Act because it was not Boeing’s proprietary

information, a trade secret, or otherwise the type of commercial or financial information to which

that exception applied.4 The court also concluded that Boeing did not have standing to assert section

552.104's disclosure exception, the exception that protects certain information related to competition

or bidding. Boeing appealed, and the court of appeals affirmed the trial court’s judgment. 412
S.W.3d 1, 18 (Tex. App.—Austin 2012).

                                                            II

         Boeing complains that the court of appeals erred in failing to apply section 552.104 to its

circumstances. It argues that the information it redacted from the lease contains financial or

commercial information that would, if disclosed, put Boeing at a competitive disadvantage when

bidding on future large government contracts. Boeing claims that the information is exempt because

the Act excepts from mandatory disclosure “information that, if released, would give advantage to

a competitor or bidder.” TEX . GOV ’T CODE § 552.104(a).5

         4
             The exception reads:

§ 552.110. Exception: Confidentiality of Trade Secrets; Confidentiality of Certain Commercial or Financial Information
         (a) A trade secret obtained from a person and privileged or confidential by statute or judicial decision is
excepted from the requirements of Section 552.021.
         (b) Commercial or financial information for which it is demonstrated based on specific factual evidence that
disclosure would cause substantial competitive harm to the person from whom the information was obtained is excepted
from the requirements of Section 552.021.

         5
             The exception reads:

§ 552.104. Exception: Information Related to Competition or Bidding
         (a) Information is excepted from the requirements of Section 552.021 if it is information that, if released, would
give advantage to a competitor or bidder.
         (b) The requirement of Section 552.022 that a category of information listed under Section 552.022(a) is public
information and not excepted from required disclosure under this chapter unless expressly confidential under law does
not apply to information that is excepted from required disclosure under this section.

                                                            6
       The Attorney General, on the other hand, argues that this exemption does not apply to third

parties, like Boeing, and, in accordance with his office’s previous interpretations of the provision,

contends that this exception is exclusively for the government’s benefit. See Tex. Att’y Gen.

ORD–592, at 8–9 (1991) (determining that section 552.104's exception applies only to governmental

entities); Tex. Att’y Gen. ORD–541, at 4–7 (1990) (same).

       The court of appeals adopted the Attorney General’s view of the provision, agreeing that

Boeing lacks standing to invoke the exception. 412 S.W.3d at 18. One member of the panel,

however, did not agree with this part of the court’s decision. See id. at 21 (Pemberton, J. concurring)

(concluding that section 552.104 applies to both the government and private parties). Unlike the

majority, this justice found nothing in section 552.104's text to support the court’s conclusion that

the exception was only for the government’s benefit:

       Section 552.104 is addressed simply to “information that, if released, would give
       advantage to a competitor or bidder” without elaborating as to whether it is intended
       to protect the interests of “competitors” and “bidders,” a governmental body whose
       contract or business is being sought by “competitors” or “bidders,” or both. On its
       face, section 552.104 would seem to implicate the interests of both.

Id. at 20 (internal citation omitted). We agree that the provision on its face does not limit the

exemption to the government.

       The Attorney General argues, however, that we must read this exemption in the context of

the Act as a whole, which seeks to balance governmental transparency with third-party privacy and

confidentiality interests. Understanding how that balance is embodied in any given provision, the

                                                  7
Attorney General submits, requires that we consider how a given interpretation affects the rest of the

Act. Reading section 522.104 in isolation and according to its minimalist text would, according to

the Attorney General, create a super exception “so lenient that it would override the other

exceptions.” The better reading then is to harmonize the exception with the whole Act as the

Attorney General did in previous opinions limiting section 552.104's exception to governmental

bodies. Thus, the Attorney General argues that the exception (1) protects the government’s interest

in the competitive bidding process, (2) is subject to exhaustion and forfeiture rules, and (3) may only

be invoked by the governmental body in its discretion.

        Boeing responds that the Attorney General has not harmonized the Act’s provisions so much

as rewritten them. Nothing in the Act bars private standing to prevent public disclosure generally

and nothing in section 522.104 specifically limits its application to the government. Rather, the Act

generally, and as a whole, grants standing to any “person who claims to be the victim of a violation”

of the Act. TEX . GOV ’T CODE § 552.3215(a)(1), (b), (e). Boeing argues it is that “person” because

the Attorney General has ordered the release of its protected information, information exempted from

disclosure if it “would give advantage to a competitor.” Id. § 552.104(a). Finally, Boeing submits

that if section 552.104 is too lenient for the Attorney General as written, it is for the Legislature to

rewrite the statute, not the Attorney General under the guise of a “better reading.”

        The concurring opinion in the court of appeals also rejected the Attorney General’s reading

of this provision. Looking at the exception’s text and its place in the Act as a whole, the concurring

justice concluded that Boeing had the right (or standing) to protect its own privacy or property

interests implicated by an open-records request through the assertion of section 552.104's exception

                                                   8
in the judicial remedy afforded to private parties under the Act, with or without its participation in

the open-records process. 412 S.W.3d at 21 (Pemberton, J., concurring). The justice nevertheless

concurred in the court’s judgment because he found the evidence inconclusive as to whether

“disclosure of the information ‘would give advantage’ to Boeing’s competitors, as required by

section 552.104.” Id. at 19 (emphasis in original).

       The majority, however, analyzed the case differently. It viewed the open-records request as

one involving a disagreement or conflict of interest between the Port and Boeing, framing the issue

as “whether the PIA affords a private party, like Boeing, the right to enjoin a governmental body

from disclosing public information on grounds that it is excepted from disclosure under section

552.104.” Id. at 12. The court reasoned that section 552.104 was “a purely discretionary exception”

that the Port was free to waive because the protected information was neither “confidential under

law” nor “prohibited by law” from disclosure. Id. at 13; see TEX . GOV ’T CODE § 552.007

(permitting governmental body to voluntarily disclose “part or all of its information [] to the public,

unless the disclosure is expressly prohibited by law or the information is confidential under law”).

As a permissive exception, the court reasoned further that, regardless of Boeing’s rights under

section 552.104, any decision to waive the disclosure exception belonged solely to the governmental

body, which in this instance waived its protection by not presenting the exception to the Attorney

General in the open-records administrative process. 412 S.W.3d at 13. In short, the court adopted

the Attorney General’s construction, interpreting the exception as a right exclusive to the

governmental body that could be waived if not raised before the Attorney General in the open-

records process.

                                                  9
       The court of appeals’ view of Boeing and the Port as antagonists, however, misstates the

nature of the underlying dispute. The Port has never indicated a desire to release this information

over Boeing’s objection but has instead deferred to Boeing to protect its own interests. The issue

then is not whether Boeing can enjoin the Port from releasing Boeing’s private information (an issue

we need not decide) but rather whether Boeing has the right under the Act to assert its own interests

in protecting that information. Although the Port took no position on section 552.104's application

before the Attorney General, it now expressly opposes releasing the information. But again, the

court of appeals interprets this exception as the governmental body’s exclusive right—a right that

can be waived if not raised before the Attorney General during the open-records process.

       Indeed, as a general rule, the Public Information Act requires a governmental body to raise

and argue any applicable disclosure exception to the Attorney General as a prerequisite to judicial

review. See TEX . GOV ’T CODE §§ 552.301-.303 (describing procedure for a governmental body to

request an Attorney General decision on one of the Act’s exceptions); see also id. §§ 552.324-.325

(providing for review of the Attorney General’s decision). This general rule does not apply,

however, when the requested information implicates another person’s privacy or property interests.

Id. § 552.305(a), (c). Under those circumstances, the “governmental body may, but is not required”

to raise specific exceptions. Id. § 552.305(c). The governmental body may also defer to the person

whose interests are at stake and that person may, in turn, “submit in writing to the attorney general

the person’s reasons why the information should be withheld or released.” Id. § 552.305(b). Thus,

when a third party’s interests are at issue, a governmental body need not raise an exception

                                                 10
“involving the property or privacy interests of another person” before the Attorney General as a

prerequisite to raising the issue in a suit for judicial review. Id. § 552.326.

        Because the Port was not required to raise the exception before the Attorney General, its

failure to do so did not affect a waiver as to Boeing’s private information. TEX . GOV ’T CODE §

552.305. The Port has simply deferred to Boeing to protect its own interests. The concurring justice

found this entirely permissible, observing that the statute “reflects legislative recognition that third

parties with interests implicated by a request [will] often have the most at stake and be in the best

position to argue that the information is protected from disclosure.” 412 S.W.3d at 21.

        Boeing certainly could have petitioned the Attorney General to exempt its private information

from disclosure under section 552.104, but the Act does not require that it do so. See TEX . GOV ’T

CODE § 552.305(b) (stating that an affected third party “may” petition the Attorney General to

protect its information). The Act only requires a governmental body to petition the Attorney General

to exempt information from disclosure and even that is not required when a private party’s

information under section 552.104 is in issue. Id. §§ 552.301(a), 552.305(c). The court of appeals

was therefore mistaken to suggest that the Port’s inaction here amounted to either a waiver of the

exception or acquiescence in the disclosure of the information. See 412 S.W.3d at 13.

        That the Port has not voluntarily waived the exception, however, does not answer the central

question of Boeing’s standing or right to raise the exception itself. As to that issue, the Attorney

General argues that we should defer to his office’s longstanding interpretation of section 552.104

because “maintain[ing] uniformity in application, operation, and interpretation” of the PIA is

committed to his office by statute. See TEX . GOV ’T CODE § 552.011. While the Attorney General’s

                                                  11
interpretation of the Act is entitled to due consideration, as with other administrative statutory

constructions, such deference must yield to unambiguous statutory language. See City of Dallas v.

Abbott, 304 S.W.3d 380, 384 (Tex. 2010) (rejecting Attorney General’s interpretation of PIA

provision).

           The Office of Attorney General has long taken the position that section 552.104 grants third

parties like Boeing no protection and no standing to object; it can be invoked only by governmental

entities and thus can be waived by them. But no statutory language limits section 552.104 to the

government. On the contrary, the statute treats section 552.104 as it does other provisions that

potentially implicate “a person’s privacy or property interests.” TEX . GOV ’T CODE § 552.305(a).

In fact, in the PIA provision aptly titled, “Information Involving Privacy and Property Interests of

Third Party,” the Legislature expressly includes section 552.104's disclosure exception as one of

several examples that might involve third party privacy or property concerns. See id. § 552.305(a)

(“In a case in which information is requested under this chapter and a person’s privacy or property

interests may be involved, including a case under Section 552.101, 552.104, 552.110, or 552.114

. . .”).

           Boeing submits that no reason exists to include section 552.104 as an example here if a third

party like itself has no right to assert the exception. The concurring justice similarly read the

inclusion of section 552.104 here, along with the Act’s apparent deference to third-party privacy and

property rights, and its provision for judicial review of such rights as indicative of Boeing’s right to

assert the exception. After discussing the PIA’s pertinent features, the concurrence concluded:

                                                    12
         Considering this statutory scheme, I would hold that the Legislature intended private
         parties whose “competitors” or rival “bidders” would be “advantaged” by disclosure
         to have standing or the right to protect their interest in the information protected by
         section 552.104 through the judicial remedy provided in section 552.325.
412 S.W.3d at 21 (Pemberton, J., concurring). That is our view as well. Accordingly, we hold that

section 522.104's exception applies to both the government and private parties and may be invoked

by either to protect the privacy and property interests of a private party in accordance with its terms.

                                                            III

         By its terms, section 552.104 exempts from disclosure information that, “if released, would

give advantage to a competitor or bidder.” TEX . GOV ’T CODE § 552.104(a). Because the trial court

concluded that Boeing lacked standing to assert this exception, it did not determine whether the

information at issue would give advantage to Boeing’s competitors.6 Boeing argues, however, that

it will and that it conclusively established the exception’s application to the withheld information.

         The evidence at trial demonstrated the intense competition that exists in the aerospace

industry for large government contracts like those that sustain Boeing’s operations at Kelly. The

only evidence on the withheld information’s value came from a Boeing manager with long

experience in bidding for military projects. The manager testified that most components in billion-

         6
               The court also concluded that section 522.110(b) could not be used to exclude this information from
disclosure. This latter provision protects a person’s commercial or financial information if its disclosure would cause
that person “substantial competitive harm.” T EX . G O V ’T C O D E § 552.110(b). At the time of this request, the exception
did not protect such information unless the information was “expressly confidential under other law”— meaning law
outside the Act itself. See Act of May 25, 1999, 76th Leg., R.S., ch. 1319, § 5, 1999 Tex. Gen. Laws 4500, 4501-02.
Amendments to the Act in 2011 repealed the “other law” requirement and presently all exceptions in the Act apply
without regard to the previous “other law” limitation. See Act of June 17, 2011, 82nd Leg. R.S., ch. 1229, § 2, 2011 Tex.
Gen. Laws 3271, 3271; see also T EX . G O V ’T C OD E § 552.022(a). The exception in section 522.104 was not subject to
the “other law” limitation at the time of this request and thus the 2011 Amendments have no relevance as to it. See T EX .
G O V ’T C O D E § 522.104(b) (excluding exception from this limitation).

                                                            13
dollar military-aircraft bids are set by federal standards dictating the work to be performed, parts to

be used, and hourly wages and fringe benefits to be paid. As both the work required and the labor

rates are standardized, the primary difference between competitors and their bids is overhead

included in the final bid price—the cost of the huge hangars, runways and other physical assets

needed to service large military aircraft. In the competitive military re-fit market, contracts can be

awarded on bid differences of less than one percent.

       Because bid margins are so thin, Boeing protects certain financial aspects of its lease with

the Port, including rental rates, its share of common maintenance costs, insurance coverage required

by the Port, liquidated damages provisions, and lease incentives. Boeing protects future overhead

figures and its components even though the Port must, in connection with public audits, disclose

gross amounts that Boeing has paid in the past. Boeing’s concern is that the disclosure of the

additional details in the lease concerning its overhead will enable other military-service contractors

to reverse engineer Boeing’s own bid, the better to undercut it. Indeed, this has already occurred as

Northrop Grumman Corporation in Lake Charles, Louisiana, underbid Boeing by about one percent

and now has the contract for one heavy-lift aircraft that Boeing formerly serviced at Kelly.

       Although the trial court filed findings of fact and conclusions of law, it did not find that this

information would give no advantage to Boeing’s competitors. Boeing submits that had such a

finding been made, it would have no evidentiary support because as Boeing argues: “Knowing some,

if not most, of a competitor’s cards is an advantage over knowing none of them.” Boeing concludes

that it proved what the statute requires—that disclosure would give an advantage to its competitors.

                                                  14
         The Attorney General contends, however, that Boeing’s theory of “advantage” is too

attenuated and hypothetical to satisfy section 552.104, even assuming the exception applies to a third

party like Boeing. Moreover, the Attorney General contends that this exception requires a showing

of specific competitive harm in particular ongoing competitive bidding, and no evidence shows that

this is the case here.7 Tex. Att’y Gen. ORD–541, at 4 (1990); Tex. Att’y Gen. ORD–514, at 2

(1998). Finally, the Attorney General submits that no evidence demonstrates that the release of this

information will affect Boeing’s lease arrangement with the Port because its space at Kelly is so

unique that only one other aviation company in the world, Europe’s Airbus, could fully utilize its

capacity, and further because the Port has no apparent interest in finding a new tenant for Kelly.

         But Boeing’s concern is not that Airbus or any other competitor may take away its lease with

the Port. Its concern is that another city or state will choose to rent its abandoned air base to a

Boeing competitor at rates that undercut the Port. Boeing submits that that is what makes this case

unique—it’s not just Boeing’s competitors that would gain advantage if this information is publicly

disclosed, it is also competitors of San Antonio and the Port.

         Boeing describes the information withheld as “minimal redactions—literally one attachment,

two tables and a few sentence fragments.” Boeing has withheld the percentage used to calculate

Boeing’s share of the common maintenance costs, the actual dollar figure for the insurance limits

Boeing agreed to carry, the percentage used to calculate Boeing’s penalty for early termination, a

table showing the actual dollar caps on incentives Boeing might achieve for meeting goals for

         7
           The dissent here similarly argues that Boeing has at best only demonstrated that this information “could give
advantage to a competitor,” not that it “would give advantage.” ___ S.W .3d at ___ (Boyd, J. dissenting).

                                                          15
contracting with certain small businesses, and an attachment with the actual numbers used to

calculate Boeing’s future rent, month to month, quarter to quarter, and year to year.

       The information, which the court of appeals ordered disclosed, could not be disclosed by the

Air Force under the federal Freedom of Information Act. The D.C. Circuit has rejected three such

requests in the last sixteen years. See Canadian Commercial Corp. v. Dep’t of the Air Force, 514
F.3d 37, 38 (D.C. Cir. 2008); McDonnell Douglas Corp. v. United States Dep’t of the Air Force, 375
F.3d 1182, 1185 (D.C. Cir. 2004); McDonnell Douglas Corp. v. Nat’l Aeronautics & Space Admin.,

180 F.3d 303, 304 (D.C. Cir. 1999); see also Gulf & W. Indus., Inc. v. United States, 615 F.2d 527,

528-29 (D.C. Cir. 1979).

       Although the Attorney General urges that 552.104 only applies to “ongoing competitive

bidding,” nothing in the exception’s text says as much. While disclosing bids after a contract award

may rarely give competitors any advantage, the federal cases indicate that the aerospace industry is

different because the disclosure of current contract prices gives competitors a distinct advantage by

telling them precisely how to undercut the current contractor when contracts are re-bid. Canadian

Commercial Corp., 514 F.3d at 42.

       The court of appeals speculated, however, that no harm would actually occur, pointing to the

“myriad of other factors” that might influence future Boeing bids such as utilities, indirect labor,

management, and profits. 412 S.W.3d at 11. But Boeing points out that no evidence exists in the

record that these other cost factors would differ much between competitors or yield a competitive

advantage. The justices apparently assumed these factors were important based on their own general

business knowledge. But the record indicates that competition among aerospace firms is unlike other

                                                 16
competitive business ventures.8 In this industry a few giant companies compete for a handful of

billion-dollar contracts and thus have a much higher incentive to watch their competitors closely.

In that context rental overhead is not simply one of a myriad of factors. Moreover, the test under

section 522.104 is whether knowing another bidder’s overhead costs would be an advantage, not

whether it would be a decisive advantage. This is the test the Attorney General has applied to the

government, and the test Boeing claims should be applied to it as well.

         For example, the Attorney General recently ruled that information concerning the Governor’s

marketing meetings with businesses in other states was exempted from disclosure under section

522.104. Tex. Att’y Gen. OR2013-08386. The Governor represented that his office “is competing

against other states attempting to recruit businesses to relocate or expand,” and that release of the

information “would disadvantage Texas by permitting other states to directly approach these entities

with competing incentives.” Id. at 2. In contrast, Boeing submits that its record shows in much

more detail its competitors’ identities and how they may use the information in future bidding.

Although Boeing is a private party, section 522.104 does not state different protection standards for

businesses and governors.

         The record establishes that Boeing’s work for the federal government is continually re-bid,

and that contracts have been lost to competitors over as little as one percent. The record also

         8
            David W . Bouse, a thirty-year Boeing employee and member of its new-business-opportunities leadership
team, testified about his long experience in competing for business in the aerospace industry and the value Boeing’s
competitors would put on learning the details of Boeing’s overhead costs at Kelly. He also testified about recent and
future contract opportunities for Boeing’s facility at Kelly. Bouse’s testimony was specific as to a recently completed
bid that had brought an additional federal contract to Kelly, but he did not want to give specifics as to future opportunities
on which Boeing might bid.

                                                             17
demonstrates that the major bid component that a competitor does not know is the contractor’s

overhead costs—precisely the information Boeing wishes to withhold. No reasonable trier of fact

could conclude that Boeing has no competitors, that the Defense Department won’t re-bid its

contracts, or that the physical plant is not the biggest variable cost in such bids. The undisputed

evidence allows only a single logical inference—that the information at issue “if released would give

advantage to a competitor or bidder.” TEX . GOV ’T CODE § 522.104(a); see also City of Keller v.

Wilson, 168 S.W.3d 802, 814 (Tex. 2005).

                                             *****

       Because Boeing has demonstrated that the information at issue is competitively sensitive and

will give advantage to its competitors if released and because section 552.104's exception applies

to both the government and to private parties, Boeing has the right to protect its own privacy and

property interest through the judicial remedy section 552.325 provides. TEX . GOV ’T CODE §§

522.104, 552.325. The court of appeals’ judgment is accordingly reversed and judgment is rendered

for Boeing sustaining its objection to the mandatory release of this information.

                                                      _____________________________
                                                      John P. Devine
                                                      Justice

Opinion Delivered: June 19, 2015

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