Date: 10-17-2017

Case Style:

Case Number: 90

Judge: Stein

Court: New York Court of Appeals

Plaintiff's Attorney: Cindy Neidl

Defendant's Attorney: Jeffrey W. Lang

Description: The question before us is whether the Freedom of
Information Law exempts from disclosure certain records compiled
by respondent New York State Education Department relating to
municipalities' plans for auditing special education preschool
provider costs. We hold that the materials at issue, as
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redacted, are exempt from disclosure under Public Officers Law §
87 (2) (e) (i).
I.
The board of every school district is responsible for
providing special education services and programs to preschoolage
children with disabilities (see Education Law §§ 4410 [2];
see generally Education Law § 4401). Such programs are often
furnished by private providers approved by respondent New York
State Education Department (hereinafter, the Department) (see
Education Law §§ 4401 [2]; 4410 [9]; 8 NYCRR 200.20). Each
county and New York City (for the counties contained therein) is
charged with the costs of sending resident children to these
special education preschool programs (see Education Law § 4410
[1] [g]; [11] [a]). The tuition rates charged by such programs
are set by the Department -- based on financial statements
submitted by the provider, as well as State and municipal audits,
which establish, among other things, the costs of administering
such programs -- and municipalities are reimbursed by the State
for a statutory percentage of the costs paid out to providers
(see id. § 4410 [10], [11] [b] [i]; 8 NYCRR 200.9).
The Office of the State Comptroller conducted a series
of audits of approved preschool special education programs.
These audits revealed widespread fraud and abuse in the reporting
of allowed costs, and ultimately prompted several criminal
prosecutions and professional disciplinary investigations. As a
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result, in 2013, the legislature amended Education Law § 4410 in
an attempt to increase fiscal oversight and, specifically, to
incentivize municipal audits of such programs. Although
municipalities were already authorized to perform audits of
programs for which they bore fiscal responsibility, the 2013
amendments further permitted municipalities to recover
overpayments and retain all disallowed costs discovered (L 2013,
ch 57, § 24 [ii]; see Education Law § 4410 [11] [c] [i], [ii]; 8
NYCRR 200.18). The amendments to section 4410 also required the
Department to "provide guidelines on standards and procedures to
municipalities and boards, for fiscal audits of [preschool]
services or programs" (L 2013, ch 57, § 24 [i]; see Education Law
§ 4410 [11] [c] [1]). In addition to complying with that
statutory mandate, the Department amended its regulations to
require municipalities to submit, for approval by the Department,
new "detailed audit plan[s] and audit program[s]" consistent with
the Department's guidelines prior to undertaking any audits after
a specific date (8 NYCRR 200.18 [b] [2], [3]). Once approved, a
municipality's audit plan is valid for five years (see id.).
Shortly after the enactment of the statutory and
regulatory amendments relating to Education Law § 4410,
petitioner Pamela Madeiros submitted a request to the Department
pursuant to the Freedom of Information Law (see generally Public
Officers Law art 6 [FOIL]), seeking disclosure, as relevant here,
of
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"any and all [Education Law § 4410 (11) (c)
and 8 NYCRR 200.18] audit standards in [the
Department's] possession, including any audit
program and audit plan submitted by a
municipality or school district . . . ,
whether approved, not approved, disapproved,
pending or such other status."
The Department denied petitioner's request in its entirety,
asserting that the records were exempt from disclosure pursuant
to Public Officers Law § 87 (2) (e) because disclosure "would
interfere with investigations of compliance with the provisions
of the reimbursable cost manual and the preschool special
education rate setting system." Petitioner administratively
appealed, and the Department failed to respond within the
statutory time frame, thereby constructively denying her appeal
(see Public Officers Law § 89 [4] [a]).
Petitioner subsequently commenced the instant CPLR
article 78 proceeding, seeking a judgment vacating the denial of
her FOIL request and directing the Department to provide her with
the records sought. Petitioner also requested attorneys' fees
pursuant to Public Officers Law § 89 (4) (c).
Before answering the petition, the Department released
to petitioner 55 pages of documents responsive to her FOIL
inquiry. The documents consisted of the New York City and
Onondaga County Audit Plans, the contents of which were partially
redacted, certain unredacted Department records relating to the
regulatory amendments, and the guidelines promulgated by the
Department for fiscal audits of preschool providers undertaken by
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municipalities. After disclosing these documents, the Department
answered the petition and sought dismissal of the proceeding,
arguing that: petitioner's claim was moot in light of its
disclosures; the redactions were permitted under both sections 87
(2) (e) and (g) of the Public Officers Law; and petitioner had
failed to demonstrate her entitlement to attorneys' fees. The
Department submitted unredacted copies of the documents to the
trial court for in camera review.
Supreme Court granted the petition only to the limited
extent of requiring the Department to disclose two previously
redacted pages due to the Department's failure to invoke Public
Officers Law § 87 (g) as a basis for its administrative denial,
upheld the remainder of the redactions, and otherwise dismissed
the proceeding. Supreme Court reasoned that the majority of the
Department's redactions were appropriate under Public Officers
Law § 87 (2) (e) because the audit plans contained non-routine
audit techniques and procedures compiled for law enforcement
purposes, and disclosure would interfere with law enforcement
investigations (see Public Officers Law § 87 [2] [e] [i], [iv]).
Supreme Court did not award petitioner attorneys' fees. On
petitioner's appeal, the Appellate Division affirmed (133 AD3d
962 [3d Dept 2015]),1 and we granted petitioner leave to appeal
1 During the pendency of petitioner's appeal, New York City
released to petitioner an unredacted copy of its audit plan and
program. Thus, insofar as petitioner sought disclosure of that
plan, her request for that specific relief with regard to those
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(27 NY3d 903 [2016]).
II.
FOIL generally "requires government agencies to 'make
available for public inspection and copying all records' subject
to a number of exemptions" (Matter of Harbatkin v New York City
Dept. of Records & Info. Servs., 19 NY3d 373, 379 [2012]; quoting
Public Officers Law § 87 [2]). FOIL is based on a presumption of
access in accordance with the underlying "premise that the public
is vested with an inherent right to know and that official
secrecy is anathematic to our form of government" (Matter of Fink
v Lefkowitz, 47 NY2d 567, 571 [1979]; see Matter of Data Tree,
LLC v Romaine, 9 NY3d 454, 462 [2007]). The exemptions set forth
in the statute are interpreted narrowly in order to effect the
purpose of the statutory scheme (see Matter of Data Tree, 9 NY3d
at 462).
This appeal centers on the meaning and interpretation
of the exemption embodied in Public Officers Law § 87 (2) (e).
Pursuant to this provision, an agency may deny public access to
records or portions thereof that, as relevant here, "are compiled
for law enforcement purposes and which, if disclosed, would"
either "interfere with law enforcement investigations or judicial
proceedings" (subdivision [i]) or "reveal criminal investigative
techniques or procedures, except routine techniques and
particular documents is rendered academic (see Matter of Fappiano
v New York City Police Dept., 95 NY2d 738, 749 [2001]).
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procedures" (subdivision [iv]). Petitioner argues that the
courts below erred in concluding that the Department's redactions
of the documents responsive to her FOIL request are exempt
pursuant to either of these provisions. More specifically,
petitioner asserts that any records relating to municipal audit
plans were not compiled for law enforcement purposes, do not
relate to and would not interfere with a law enforcement
investigation or judicial proceeding, and are not criminal
investigative techniques. Petitioner further contends that she
is entitled to attorneys' fees because she has substantially
prevailed in this proceeding given the Department's belated
disclosures following its commencement. In response, the
Department urges us to affirm the Appellate Division order under
either subdivision (i) or (iv) of section 87 (2) (e), and
disputes petitioner's claim that she is entitled to attorneys'
fees.
III.
Initially, we reject the Department's reliance on
Public Officers Law § 87 (2) (e) (iv) -- pertaining to nonroutine
criminal investigative techniques -- because the
Department failed to invoke that particular exemption in its
denial of petitioner's FOIL request. "[J]udicial review of an
administrative determination is limited to the grounds invoked by
the agency" and "the court is powerless to affirm the
administrative action by substituting what it considers to be a
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more adequate or proper basis" (Matter of Scherbyn v Wayne-Finger
Lakes Bd. of Coop. Educ. Servs., 77 NY2d 753, 758 [1991]
[internal quotation marks and citations omitted]; see Matter of
National Fuel Gas Distrib. Corp. v Public Serv. Commn. of the
State of N.Y., 16 NY3d 360, 368 [2011]; Matter of Scanlan v
Buffalo Pub. School Sys., 90 NY2d 662, 678 [1997]). It is also
settled that the "agency relying on the applicability of [a FOIL]
exemption[], . . . ha[s] the burden of establishing that the
. . . documents qualif[y]" for the exemption and, to meet that
burden, the agency must "'articulate particularized and specific
justification'" for denying disclosure (Matter of West Harlem
Bus. Group v Empire State Dev. Corp., 13 NY3d 882, 885 [2009],
quoting Matter of Fink, 47 NY2d at 571; see Public Officers Law §
89 [4] [b]).
Here, the Department's administrative denial cited to
Public Officers Law § 87 (2) (e), without referencing a specific
subdivision. However, the justification offered -- namely, that
disclosure would "interfere with investigations of compliance" --
plainly tracks the language of subdivision (i), not subdivision
(iv). The Department did not make any contemporaneous claim that
the requested materials constituted non-routine "criminal
investigative techniques" (Public Officers Law § 87 [2] [e]
[iv]). Because the Department did not rely on subdivision (iv)
in its administrative denial, to allow it do so now would be
contrary to our precedent, as well as to the spirit and purpose
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of FOIL.
IV.
The propriety of the Department's redactions of the
disclosed records, therefore, turns on whether the redacted
portions qualify for exemption under Public Officers Law § 87 (2)
(e) (i). This requires us to address both prongs of the
exemption: (1) whether the records were compiled for law
enforcement purposes; and (2) whether disclosure of the records
would interfere with law enforcement investigations or judicial
proceedings. We conclude that, under the circumstances presented
here, both of these prongs are satisfied and the records were
properly redacted.
As to the first prong, we are persuaded that the
records at issue were compiled for law enforcement purposes. The
phrase "law enforcement purposes" is not defined in the FOIL
statutes (see Public Officers Law § 86 [definitions]). "In the
absence of a statutory definition, 'we construe words of ordinary
import with their usual and commonly understood meaning, and in
that connection have regarded dictionary definitions as useful
guideposts in determining the meaning of a word or phrase'"
(Yaniveth R. v LTD Realty Co., 27 NY3d 186, 192 [2016], quoting
Rosner v Metropolitan Prop. & Liab. Ins. Co., 96 NY2d 475,
479-480 [2001]). To that end, "law enforcement" is generally
defined by Black's Law Dictionary as "[t]he detection and
punishment of violations of the law" (Black's Law Dictionary
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[10th ed 2014], law enforcement). It is undisputed that the
Department lacks jurisdiction to punish criminal violations of
the law. However, as the dictionary further provides, the term
"law enforcement" is "not limited to the enforcement of criminal
laws" (Black's Law Dictionary [10th ed 2014], law enforcement).
Consistent with this definition, we conclude that the
exemption set forth in Public Officers Law § 87 (2) (e) does not
apply solely to records compiled for law enforcement purposes in
connection with criminal investigations and punishment of
violations of the criminal law. Notably, the exemptions provided
in two of the subdivisions under section 87 (2) (e) expressly
apply only to "criminal" matters, a limitation that would be
superfluous if the term "law enforcement" was confined to
criminal matters at the outset (Public Officers Law § 87 [2] [e]
[iii], [iv]).
In addition, we have recognized that "'[f]ederal case
law and legislative history . . . are instructive'" when
interpreting Public Officers Law § 87 (2) (e) because the FOIL
law enforcement exemption is modeled on the federal counterpart
found in the Freedom of Information Act (Matter of Lesher v
Hynes, 19 NY3d 57, 64, quoting Matter of Fink, 47 NY2d at 572 n;
see generally 5 USC § 552 [FOIA]). Significantly in that regard,
the federal analogue exempting certain materials compiled for law
enforcement purposes has been held to encompass both civil and
criminal law enforcement matters (see e.g. Sack v U.S. Dept. of
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Defense, 823 F3d 687, 694 [DC Cir 2016]; Cooper Cameron Corp. v
U.S. Dept. of Labor, Occupational Safety and Health Admin., 280
F3d 539, 545 [5th Cir 2002]; Tax Analysts v I.R.S., 294 F3d 71,
77 [DC Cir 2002]; Rugiero v U.S. Dept. of Justice, 257 F3d 534,
550 [6th Cir 2001]; see also Milner v Department of Navy, 562 US
562, 582 [2011] [Alito, J. concurring] ["The ordinary
understanding of law enforcement includes not just the
investigation and prosecution of offenses that have already been
committed, but also proactive steps designed to prevent criminal
activity"]). The Committee on Open Government -- which issues
advisory opinions relating to FOIL obligations -- has also
recognized that "entities other than criminal law enforcement
agencies may in certain circumstances cite [Public Officers Law]
§ 87 (2) (e) as a basis for denial," providing, as an example, an
agency audit that uncovers possible illegality (Comm on Open Govt
FOIL-AO-7332 [1992]).
Our decision should not be read to hold that every
audit necessarily serves "law enforcement purposes" (Public
Officers Law § [2] [e]). The audits at issue here, however, are
not simply routine fiscal audits. The statutory scheme of
Education Law § 4410, as amended in 2013, and the Department's
regulations pertaining to municipal audit plans and audit
programs, indicate that these audits are specifically targeted at
ferreting out the improper and potentially illegal or fraudulent
reporting of costs by preschool special education providers. The
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goal of the statutory and regulatory scheme and, in particular
the 2013 amendments, is not only to ensure the establishment of
an accurate tuition rate, but also to encourage compliance with
the applicable reporting rules and curb existing fraud and abuse
(see generally Senate Introducer's Mem in Support, Bill Jacket, L
2013, ch 545 at 9). Thus, the obvious inference arising from the
statutory requirement that the Department issue guidelines for
municipalities in conducting these audits, is that the
legislature sought to increase the efficacy of audit procedures
in an effort to strengthen enforcement measures. Under these
circumstances, we conclude that the records sought by petitioner
were compiled for law enforcement purposes.
Turning to the second inquiry, we agree with the courts
below that the redactions made by the Department were necessary
to prevent interference with a law enforcement investigation (see
Public Officers Law § 87 [2] [e] [i]). We have cautioned that
"the purpose of [FOIL] is not to enable persons to use agency
records to frustrate pending or threatened investigations nor to
use that information to construct a defense to impede a
prosecution" (Matter of Fink, 47 NY2d at 572). Here, the
Executive Coordinator for Special Education explained that the
Department's redactions were imperative because releasing
specific methods and procedures used by auditors in particular
counties would supply providers subject to audit with "a roadmap
to avoid disclosure of inappropriate costs" and would enable such
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providers to more effectively conceal fraudulent and criminal
activities, thereby undermining the audit process. In other
words, "disclosure of th[e redacted] procedures would give rise
to a substantial likelihood that violators could evade detection
by deliberately tailoring their conduct in anticipation of
avenues of inquiry to be pursued by agency personnel" (Matter of
Fink, 47 NY2d at 572).
To the extent petitioner claims that Public Officers
Law § 87 (2) (e) (i) is inapplicable because there were no
ongoing audits at the time that she submitted her FOIL request,
her argument is unpersuasive. While an agency may not rely on
section 87 (2) (e) (i) to refuse disclosure of records upon a
wholly speculative claim of potential interference with an
unspecified future investigation to which the documents may or
may not be relevant (see Church of Scientology of N.Y. v State of
New York, 61 AD2d 942, 943 [1st Dept 1978], affd on other grounds
46 NY2d 906, 907 [1979]), that is not the case here. Rather, the
municipal audits of special education preschool providers were
expressly encouraged by statute and were plainly contemplated in
the near future.
A municipality must submit an audit plan for approval
as the necessary first step to conducting an audit (see 8 NYCRR
200.18). That is, the very purpose of a municipality's
submission of an audit plan to the Department for approval is to
obtain authorization to conduct such investigations. We have
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previously recognized that section 87 (2) (e) (i) applies to
prospective investigations (see Matter of Lesher, 19 NY3d at 68
[observing that disclosure may be required where there was "no
longer any pending or potential law enforcement investigation"
(emphasis added)]; see also Sussman v U.S. Marshals Serv., 494
F3d 1106, 1114 [DC Cir 2007] [under FOIA, the interference need
not be with an ongoing investigation, as disclosure may be
refused if it would interfere with a reasonably anticipated
proceeding]; Lynch v Dept. of Treasury, 210 F3d 384 [9th Cir
2000] [FOIA exemption applied where legal action was
"'contemplated' or 'in prospect'"], cert denied 530 US 1215
[2000]; Manna v U.S. Dept. of Justice, 51 F3d 1158, 1164 [3d Cir
1995] [under FOIA, the agency must show that an enforcement
proceeding is "pending or prospective"], cert denied 516 US 975
[1995]; Miller v U.S. Dept. of Agric., 13 F3d 260, 263 [8th Cir
1993] [same]).
Here, considering the municipalities' submissions of
audit plans in the context of the statutory and regulatory
amendments aiming to uncover and curtail fraudulent and criminal
reporting, the existence of reasonably anticipated investigations
at the time of petitioner's FOIL request is clear. The
municipalities in question, by virtue of having submitted plans
pursuant to which audits could be conducted, were plainly
contemplating impending audits of preschool program providers for
which they bore financial responsibility. Thus, the redactions
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at issue fit squarely within the exemption permitting an agency
to deny access to records compiled for law enforcement purposes
where their disclosure would interfere with an investigation.
V.
As a final matter, we agree with petitioner that, even
accepting the Department's redactions as proper, she
"substantially prevailed" in this litigation (Public Officers Law
§ 89 [4] [c]). The Public Officers Law authorizes an award of
attorneys' fees where the petitioner "has substantially
prevailed" in the FOIL proceeding and the agency either lacked a
reasonable basis for denying access to the requested records or
"failed to respond to a request or appeal within the statutory
time" (Public Officers Law § 89 [4] [c] [i], [ii]). "Where . . .
a court determines that one of the requirements has not been met,
we review whether the court erred as a matter of law in reaching
that conclusion" (Matter of Beechwood Restorative Care Ctr. v
Signor, 5 NY3d 435, 441 [2005]; see Matter of Niagara Envtl.
Action v City of Niagara Falls, 63 NY2d 651, 652 [1984]). If the
statutory requirements have been satisfied, the determination of
whether to award fees rests within the court's discretion,
subject to review only for an abuse of that discretion (see
Matter of Capital Newspapers Div. of the Hearst Corp. v City of
Albany, 15 NY3d 759, 761 [2010]; Matter of Beechwood Restorative
Care Ctr., 5 NY3d at 441; Governor's Approval Mem, Bill Jacket, L
1982, ch 73 at 8).
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Here, the Appellate Division concluded that the
statutory requirement that petitioner "substantially prevail" was
not met because the "majority of the [Department's] challenged
redactions were appropriate" (133 AD3d at 965). However, this
analysis fails to take into account that the Department made no
disclosures, redacted or otherwise, prior to petitioner's
commencement of this CPLR article 78 proceeding. Although the
Department's redactions in the eventually-released records have
been upheld, petitioner's legal action ultimately succeeded in
obtaining substantial unredacted post-commencement disclosure
responsive to her FOIL request -- including both disclosure that
was volunteered by the agency and disclosure that was compelled
by Supreme Court's order.
Under these circumstances, petitioner substantially
prevailed within the meaning of Public Officers Law § 89 (4) (c)
and the Appellate Division erred in determining that petitioner
failed to meet the statutory prerequisites for an award of
attorneys' fees. Indeed, to conclude otherwise would be to
permit agencies to circumvent section 89 (4) (c) because "only a
petitioner who fully litigated a matter to a successful
conclusion could ever expect an award of counsel fees and a
respondent whose position was meritless need never be concerned
about the possible imposition of such an award so long as they
ultimately settled a matter -- however dilatorily" (Matter of New
York Civ. Liberties Union v City of Saratoga Springs, 87 AD3d
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336, 339-340 [3d Dept 2011]; see Matter of Kohler-Hausmann v New
York City Police Dept., 133 AD3d 437, 438 [1st Dept 2015]; Matter
of Jaronczyk v Mangano, 121 AD3d 995, 997 [2d Dept 2014]; Matter
of Purcell v Jefferson County Dist. Attorney, 77 AD3d 1328, 1329
[4th Dept 2010]; Matter of Powhida v City of Albany, 147 AD2d
236, 239 [3d Dept 1989]). We, therefore, must remit for Supreme
Court to exercise its discretion in relation to petitioner's fee
request.
Accordingly, the order of the Appellate Division should
be modified, without costs, by remitting the matter to Supreme
Court for further proceedings in accordance with this opinion
and, as so modified, affirmed.
* * * * * * * * * * * * * * * * *
Order modified, without costs, by remitting to Supreme Court,
Albany County, for further proceedings in accordance with the
opinion herein and, as so modified, affirmed. Opinion by Judge
Stein. Chief Judge DiFiore and Judges Rivera, Fahey, Garcia,
Wilson and Feinman concur.
Decided October 17, 2017
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Outcome: Reversed

Plaintiff's Experts:

Defendant's Experts:

Comments: