Supreme Court finally hears ‘Frederick v. Falls City, EDGE’


Photo courtesy of The Lincoln Journal-Star
By Jason Schock   
     Lawyer Bonnie Boryca, of Erickson-Sederstrom’s Omaha Office, spoke on behalf of Falls City Development and Growth Enterprises, Inc., and the City of Falls City last Thursday morning in front of the Supreme Court at the State Capitol Building in Lincoln.  
    “Can a person demand any and all records from a private corporation just because that corporation contracts with a public body to perform services related to economic development? The answer is ‘no’ because economic development services are not a government function or government responsibility,” she said.
    The suggestion that EDGE is a private corporation made another Omaha lawyer, Steve D. Mossman, of Mattson-Ricketts, attorney for David Leon Frederick, introduce “Pinocchio,” in a select manner of speaking.
    “The City of Falls City is like the puppeteer operating EDGE,” Mossman said. “We’re not dealing with money given to a private entity with no strings attached. The MOU (Memorandum of Understanding) entered into between Falls City and EDGE has 32 separate duties in it. For economic development, 30 of them fell on the EDGE side, two fell on the City’s side. The two on the City’s side were: Cooperate with EDGE and pay them money. There were 30 strings attached.”
    Yes, after nearly two years, “David Leon Frederick v. Falls City Development and Growth Enterprises, Inc., and City of Falls City” came back to life Thursday in front of the Supreme Court of Nebraska.
    It’s been 20 months or so since Richardson County District Court Judge Daniel Bryan ruled that records Frederick requested — but was denied access to — from the City and EDGE are, indeed, public in nature, as defined by the Nebraska Public Records Act. Judge Bryan further found the City (the original suit was filed against the City, only, then later amended to include EDGE) liable for attorney fees and costs in the amount of $17,109.59. The ruling was made on Dec. 11, 2012 and the City filed its appeal about one month later. The Supreme Court will render its decision in the next “60 to 90” days.
    Boryca and City Attorney Mike Dunn worked in concert on behalf of the City/EDGE.
    “We have to protect the confidential nature of certain private entities’ records,” Boryca said. “Here EDGE engages in economic development business not for the City but for all of its hundreds of investors in Falls City and its businesses there, like CGB. Many of its records are confidential. Economic development is highly competitive and so that’s the policy that EDGE is asking this court to consider. EDGE is a private company; it’s a non-profit private corporation. The parties don’t dispute that. The district found that it certainly was,” she said.
    Dunn said the City had, in fact, delivered everything requested.
    “The record is clear that the City of Falls City in this case delivered all the documents that it had in its posseition. This suit is about a request made to the City for records that the City did not possess and had no real way to possess. Everything we had from them EDGE has been produced. Out of the 21-member EDGE board, we have the mayor and a city councilman on the EDGE board.
    The “records” in this case refers to unspecified information shared between EDGE Director Beckie Cromer and/or the City and Consolidated Grain & Barge Co., one of the largest shippers of grain in the world. The agricultural giant is owned by the Itochu Corporation, Japan’s third-largest, and ZEN-NOH, a federation of ag cooperatives in Japan that in 2013 reported $46.5 billion in earnings during the month of March. When CGB corresponded with Cromer in the early stages regarding potential expansion in southeast Nebraska, word traveled quickly, particularly among those in the business, namely Salem Grain, which is co-owned by David Leon Frederick. While enticing CGB to invest here and ultimately build what has become a bustling $23 million skyline-dominating facility was and has been a triumph for EDGE, it was naturally not cause for celebration to any smaller competitors, those who perhaps don’t have in the budget 100 acres at $16,500 a pop, etc.
    Intent nonwithstanding, Frederick and Salem Grain requested access to all documentation related to EDGE’s recruitment of CGB, but were admittedly denied certain company financial information. Cromer said conversations held in confidence is par for the course and companies often prefer some private facts remain private. To negate any private talks would likely turn off prospective clients and unduly hinder EDGE’s ability to recruit against similar economic bodies. EDGE and the City of Falls City argue that some records are not public records or are exempt from disclosure.
    Frederick says they’re public record, and Judge Bryan agreed, however, he also ruled that EDGE did not waive its right to claim statutory privileges by failing to provide “at least the following information: A description of the contents of the records withheld and a statement of the specific reasons for the denial; and the name of the public official or employee responsible for the decision to deny the request.” The Nebraska law also says “each public body shall maintain a file of all letters of denial of requests for records. This file shall be made available to any person on request.”
    Frederick filed a Cross-Appeal of that ruling by Judge Bryan.
    The City has provided $120,000 annually and Richardson County $20,000 each year for the operation of EDGE. Bryan concluded that 64% of EDGE’s “resources come from public entities” and City reps are on the EDGE board.
   “Based upon the structural makeup of EDGE it is unlikely that it is a private separate entity,” Judge Bryan wrote in his decision. “With the public officers that are included on its board of directors based upon their status as public officials it would seem ludicrous to accept EDGE’s claim that it does not have to provide any of its most confidential documents to the City. The City has direct access to these records and documents through their very officers being on EDGE’s board of directors as representatives of the city.”
    He continued, citing a section of the Public Records Act, which he wrote “does not permit public bodies to conceal pubic records by delegating their duties to a private party. Accepting EDGE’s argument would mock the spirit of open government.”
    EDGE is, for all practical purposes, a government organization, Mossman argued last Thursday.
    “The City of Falls City no longer has an economic development staff,” Mossman said. “They had an economic development body – that was eliminated. They voted to enter the MOU with EDGE and then EDGE was incorporated within days. The timing of this shows they shipped everything off to EDGE. The City of Falls City website the trademark is held by EDGE.
    “Edge is an entity created to serve Falls City,” Mossman said.
    Judge Bryan found that “the records held by EDGE are public records and subject to disclosure…EDGE did not comply with the requirements” established by Nebraska Statutes. However, he also ruled that EDGE did not waive its right to claim statutory privileges by failing to provide “at least the following information: A description of the contents of the records withheld and a statement of the specific reasons for the denial; and the name of the public official or employee responsible for the decision to deny the request.” The Nebraska law also says “each public body shall maintain a file of all letters of denial of requests for records. This file shall be made available to any person on request.”
    Frederick filed a Cross-Appeal of that ruling by Judge Bryan.
    In January 2013, the judge’s decision in Frederick’s favor was appealed. The Court, according to EDGE and the City of Falls City, erred in finding that EDGE’s records are public record, there was a clear duty existing on the part of the City to provide the records of EDGE to Frederick, EDGE prepared records under the City’s delegation of authority, the City was entitled to possess the materials to monitor EDGE performance, the records of EDGE are used by the City to make a decision affecting public interest, as well as, of course, the $17,109.59.
    Nearing the end of the hearing, Mossman was asked, by a Court Justice: “Why does your client want all the records from EDGE?”
    “It doesn’t matter,” the lawyer said.

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