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Wood v. Jefferson County Economic Development Over Sight Committee, Inc.

Court of Appeals of Tennessee, Knoxville

September 26, 2017

OLIVER WOOD et al.
v.
JEFFERSON COUNTY ECONOMIC DEVELOPMENT OVER SIGHT COMMITTEE, INC.

          Session Date: April 18, 2017

         Appeal from the Chancery Court for Jefferson County No. 13-CV-212 Don R. Ash, Senior Judge [1]

         In 2009 and 2010, the legislative bodies of Jefferson County, Jefferson City, and Dandridge enacted resolutions requesting that the Jefferson County Chamber of Commerce create a non-profit corporation to be called the Jefferson County Economic Development Oversight Committee (EDOC). Its purpose was to promote economic development in the county. In 2013, a group of citizens filed this action seeking a declaration that EDOC is subject to the provisions of the Tennessee Public Records Act, Tenn. Code Ann. § 10-7-503 (2012), and the Open Meetings Act, Tenn. Code Ann. § 8-44-101 et seq. (2016). After a bench trial, the court denied the plaintiffs' requested relief. They appealed. We find and hold that the undisputed facts establish that EDOC performs a governmental function, recieves a substantial amount of taxpayer funding, and is significantly involved with and regulated by the governing city and county legislative bodies. In light of our duty to broadly construe and interpret the Public Records and Open Meetings Acts in favor of governmental transparency and accountability, we hold that the EDOC is subject to these acts. The judgment of the trial court is reversed.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed; Case Remanded

          D. Scott Hurley and Ryan N. Shamblin, Knoxville, Tennessee, for appellants, John Gunn, Clarice Gunn, Jack Kenley, Charlotte Kenley, Steve Monroe, Carol Monroe, Charles Crosby, Steve Hammer, Bandi Hammer, Leroy Malone, Annette Loy, and Peggy Corbett.

          James L. Gass and Anna C. Penland, Sevierville, Tennessee, for appellee, Jefferson County Economic Development Oversight Committee, Inc.

          Charles D. Susano, Jr., J., delivered the opinion of the court, in which D. Michael Swiney, C.J., and J. Steven Stafford, P.J., W.S., joined.

          OPINION

          CHARLES D. SUSANO, JR., JUDGE

         I.

         On July 21, 2009, the Jefferson County Commission enacted "a resolution requesting and approving the creation of a non-profit corporation to be known as the Jefferson County Economic Development Oversight Committee, Inc." The resolution provides, in pertinent part, as follows:

WHEREAS, through an extensive community planning process, Jefferson County, Tennessee (the "County"), along with other participants in the community, developed a strategic action plan (the "Strategic Plan") to promote economic development in the County; and
WHEREAS, the balanced growth of the economy in the County will help stabilize the tax base in the County and promote job opportunities for the citizens of the County; and
WHEREAS, a primary governmental purpose of the County is to promote economic development for the benefit of its citizens; and
WHEREAS, the County desires that a non-profit corporation be formed in order to coordinate the implementation of the Strategic Plan; and
WHEREAS, the County intends to provide significant funding for such non-profit corporation;
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the County (the "Governing Body"), as follows:
Section 1. Formation of Corporation. The County hereby requests that the Jefferson County Chamber of Commerce facilitate the creation of a non-profit corporation to be known as the Jefferson County Economic Development Oversight Committee, Inc. (the "Corporation"). The purpose of the Corporation shall be to promote economic development within the County and to oversee the utilization of public and private resources to implement the Strategic Plan.
Section 2. Representation on the Board of Directors. The Chairman of the County Commission, The County Mayor and the Finance Director of the County shall be directors of the Corporation with their service as such directors to coincide with the terms of office of such persons.
Section 3. Additional Authorizations. All additional acts and doings of the County Mayor and County Clerk of the County and any other representative or officer of the County which are in conformity with the purposes and intent of this Resolution shall be and the same hereby are in all respects, approved and confirmed.

(Italics added; underlining in original). On December 8, 2009, the Town of Dandridge's Board of Mayor and Aldermen enacted a functionally identical resolution. On January 4, 2010, the Jefferson City Council followed suit, enacting its own, nearly identically-worded, resolution.

         The EDOC was incorporated as a non-profit "public benefit corporation" on July 26, 2010. Its charter states that EDOC's purpose is "promoting economic development and alleviating unemployment in Jefferson County, Tennessee and other charitable purposes within the meaning of §§ 501(c)(3) and 170(c)" of the Internal Revenue Code. EDOC's application to the IRS for tax-exempt status under section 501(c)(3) states, in pertinent part, as follows:

The Jefferson County [EDOC] is the outgrowth of a comprehensive strategic planning initiative in Jefferson County, Tennessee to coordinate economic development activities among the governmental entities in the County and to plan and implement a new economic future for the County.
***
[EDOC's] primary purpose is to serve as the entity that will centralize the economic development activities of Jefferson County, the City of Jefferson City and Town of Dandridge in order to undertake those activities in the most efficient manner so that public funds are efficiently utilized while leveraging private support. The Chair of the County Commission and the Finance Director of Jefferson County are members of the Board of Directors of [EDOC], and the Mayors of the City of Jefferson City and the Town of Dandridge also serve on the Board of Directors. Therefore, public officials make up half of the members of the Board of Directors of [EDOC]. The bylaws of [EDOC] provide that these public officials serve ex officio on the Board of Directors of [EDOC]. The governing bodies of Jefferson County, the City of Jefferson City and the Town of Dandridge each adopted resolutions acknowledging that economic development is a primary governmental purpose and requesting the formation of [EDOC] in order to promote economic development on their behalves. . . . It is expected that the governmental entities referenced above will provide approximately 60% of the funding for [EDOC] to undertake its activities.
The specific activities that [EDOC] will undertake in order to fulfill its economic development mission on behalf of the County are several. First, [EDOC] will coordinate business recruitment efforts on behalf of the County. . . . Second, [EDOC] will provide support for existing local companies through counseling and technical assistance. Third, [EDOC] will make efforts to improve the retail climate in the County so that the County will be an attractive location for retail establishments. . . . Finally, [EDOC] will seek to enhance recognition of the County as a tourist destination.
***
[EDOC's] purpose is not to provide services to specific members. In fact, [EDOC] will have no members. Rather, [EDOC's] mission is to coordinate the strategic economic development efforts of the entire County, including the public entities therein.
***
[EDOC's] charitable mission is therefore at least twofold. First, it is lessening the burdens of government by undertaking the economic development activities on behalf of Jefferson County, the City of Jefferson City and the Town of Dandridge. This type of coordinated governmental effort is precisely what is needed is this time of limited resources, and through such coordination, [EDOC] is substantially lessening the burdens of government. Secondly, [EDOC] is promoting the social welfare of the community by reducing poverty through job growth and combating community deterioration by addressing the decline in the County's tax base.

(Emphasis added.)

         Plaintiffs filed their complaint on October 24, 2013. Following discovery and the trial court's grant of partial summary judgment to EDOC, which plaintiffs have not appealed, a trial was conducted on May 24 and 25, 2016. Several public officials testified: Darrell Helton, CEO of the Chamber of Commerce and former Jefferson City Mayor and Jefferson County Finance Director; David Seal, County Commissioner; George Gantte, Mayor of Dandridge; Marty Mills, former County Commission Chairman; and Mark Potts, Mayor of Jefferson City. Several plaintiffs also testified, as did Jay Moser, a member of the EDOC Board of Directors since its inception. The trial court ruled that "the EDOC: (1) is not a 'public body' so as to qualify as a 'governing body' subject to the Open Meetings Act and (2) is not the functional equivalent of a government agency subject to the Public Records Act." Plaintiffs timely filed a notice of appeal.

         II.

         The issues presented are as quoted from plaintiffs' brief:

1. Whether the trial court erred in determining that EDOC is not the functional equivalent of a government agency subject to the Public Records Act.
2. Whether the trial court erred in determining that EDOC is not a "public body" subject to the Open Meetings Act.

         III.

         The facts pertinent to this appeal are generally not in dispute. The interpretation and application of the Public Records Act and the Open Meetings Act involve questions of law, which we review de novo with no presumption of correctness. Memphis Publ'g Co. v. Cherokee Children & Family Servs., Inc., 87 S.W.3d 67, 79 (Tenn. 2002).

         IV.

         A.

         The Tennessee Public Records Act provides that "[a]ll state, county and municipal records shall, at all times during business hours . . . be open for personal inspection by any citizen of this state, and those in charge of the records shall not refuse such right of inspection to any citizen, unless otherwise provided by state law." Tenn. Code Ann. § 10-7-503(a)(2)(A). The Act further states that "[a]ny citizen of Tennessee who shall request the right of personal inspection of any state, county or municipal record as provided in § 10-7-503, and whose request has been in whole or in part denied . . . shall be entitled to petition for access to any such record and to obtain judicial review of the actions taken to deny the access." Tenn. Code Ann. § 10-7-505(a).

         In the seminal Memphis Publ'g Co. case, the Supreme Court thoroughly analyzed the Act and observed as follows:

The Tennessee Public Records Act "governs the right of access to records of government agencies in this state." Cole v. Campbell, 968 S.W.2d 274, 275 (Tenn. 1998). Through its provisions, the Act serves a crucial role in promoting accountability in government through public oversight of governmental activities.
***
The General Assembly has declared that the Act "shall be broadly construed so as to give the fullest possible public access to public records." Tenn. Code Ann. § 10-7-505(d) (1999). "Our . . . cases reflect the broad construction of 'record' under the Act and a consistent adherence to the policy of full public access." Tennessean v. Electric Power Bd., 979 S.W.2d 297, 301 (Tenn. 1998). Accordingly, we . . . interpret the terms of the Act liberally to enforce the public interest in open access to the records of state, county, and municipal governmental entities.

87 S.W.3d at 74. Addressing the issue of "whether [a] private entity's records should be subject to public access, " id. at 78, the High Court stated as follows:

[P]rivate entities that perform public services on behalf of a government often do so as independent contractors. Nonetheless, the public's fundamental right to scrutinize the performance of public services and the expenditure of public funds should not be subverted by government or by private entity merely because public duties have been delegated to an independent contractor. When a private entity's relationship with the government is so extensive that the entity serves as the functional equivalent of a governmental agency, the accountability created by public oversight should be preserved.
Consequently, in light of our duty to construe the Tennessee Public Records Act liberally in favor of "the fullest possible public access to public records, " we follow the Connecticut Supreme Court and interpret records "made or received . . . in connection with the transaction of official business by any governmental agency" to include those records in the hands of any private entity which operates as the functional equivalent of a governmental agency. In making this determination, we look to the totality of the circumstances in each given case, and no single factor will be dispositive. The cornerstone of this analysis, of course, is whether and to what extent the entity performs a governmental or public function, for we intend by our holding to ensure that a governmental agency cannot, intentionally or unintentionally, avoid its disclosure obligations under the Act by contractually delegating its responsibilities to a private entity. Beyond this consideration, additional factors relevant to the analysis include, but are not limited to, (1) the level of ...

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