Individual Fund Information for Investments Made by a Public Agency were not Prepared, Owned, Used, or Retained by the Agency, and, thus, not Subject to Disclosure as Public Records

Reuters America LLC submitted a request pursuant to the California Public Records Act (“CPRA”) seeking individual fund information for current investments made by the Regents of the University of California (“Regents”).  While the trial court found that the information was available to the Regents, and thus within its "constructive possession" and subject to disclosure,  the Court of Appeal reversed and held that the information sought by Reuters was not prepared, owned, used, or retained by the Regents.  Therefore, according to the appellate court, the information was not a public record within the meaning of the CPRA, and the Regents was under no obligation to obtain the information for disclosure to the requestor.  (The Regents of the University of California v. The Superior Court of Alameda County (— Cal.Rptr.3d —-, Cal.App. 1 Dist., December 19, 2013).

Since 1979, the Regents have invested approximately two percent of its multi-billion dollar investment portfolio in “private equity,” or, in other words, “limited partnerships formed and managed by private parties to invest in private companies.  Until 2003, the private equity firms, including Kleiner Perkins Caulfield & Byers (“Kleiner”) and Sequoia Capital (“Sequoia”), sent the Regents information that allowed it to monitor its private equity investments.  The information, which was provided to investors in confidence, included information about the privately held companies in which the funds invested, the amounts invested, and other information that was regarded as confidential business information.  In 2003, a court ruled that the Regents failed to show that information requested about investments was not subject to a CPRA request.  The CPRA request sought the internal rate of return for 94 private equity funds.  There was no dispute that the requested records were “public records” within the meaning of the CPRA.

After the decision, Kleiner and Sequoia not only stopped providing the Regents with specific information about existing investments, with one exception, they also stopped inviting the Regents to participate in new funds.  As of October 2012, Regents owned investment assets of approximately $71.6 billion, with about two percent invested in private equity.  Reuters filed a petition for writ of mandate pursuant to the CPRA requesting individual fund information for investments made by the Regents.  The superior court ordered the Regents “to use ‘objectively reasonable efforts’ to obtain” individual fund information from Kleiner and Sequoia even though that information was not owned, used, prepared, or retained by the Regents.

The primary issue before the Court of Appeal was whether a public agency can be required under the CPRA “to seek records it does not, prepare, own, use or retain in the conduct of its business.”  The appellate court held that although “the information sought relates to public business,” the records sought are not public records because the records were “not prepared, owned, used or retained by the Regents.” 

California voters approved Proposition 59 in 2004 to amend the California Constitution to give the public a right of access to public records.  The Constitution now provides, “'The people have the right of access to information concerning the conduct of the people’s business, and therefore, the meetings of public bodies and the writings of public officials and agencies shall be open to public scrutiny.”  The plain language of the CPRA provides that a public record is “any writing containing information relating to the conduct of the public’s business prepared, owned, used, or retained by any state or local agency regardless of physical form or characteristics.”  However, the Court of Appeal held that the records Reuters sought from the Regents are not “public records” under the CPRA.  Unless a writing relates “to the conduct of the public’s business” and a public entity prepares, owns, uses, or uses the writing “it is not a public record under the CPRA, and its disclosure would not be governed by the Act.”  The court noted that there is nothing in the statute that suggests “that the public entity has an obligation to obtain documents even though it has not prepared, owned, used, or retained them.”

The Regents did not prepare, own, use, or retain the records sought by Reuters.  The court concluded that under the plain meaning of the CPRA and the requirements of the California Constitution, the Regents did not have the obligation to obtain the information sought by Reuters.


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