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Morgan v. XLK International, LLC

Supreme Court of Mississippi

October 25, 2018

JOHN MORGAN
v.
XLK INTERNATIONAL, LLC

          DATE OF JUDGMENT: 09/15/2016

          CHANCERY COURT OF THE FIRST, JOHN DAVID SANFORD JUDGE.

          TRIAL COURT ATTORNEYS: JOHN DAVID SANFORD MARC E. BRAND GENE W. GARDNER ROBERT MOAK.

          ATTORNEYS FOR APPELLANT: GENE W. GARDNER ROBERT MOAK.

          ATTORNEYS FOR APPELLEE: JOHN DAVID SANFORD BRETT R. KOEHN.

          BEFORE KITCHENS, P.J., BEAM AND CHAMBERLIN, JJ.

          KITCHENS, PRESIDING JUSTICE.

         ¶1. John Morgan submitted a public records request to the Mississippi State Hospital ("MSH") after it had awarded a contract for insurance plan administration to XLK International, LLC (XLK). Morgan, whose bid for the insurance plan administration contract had been unsuccessful, demanded access to all documents XLK had submitted in response to the state hospital's request for proposal (RFP). XLK sought and obtained a protective order in the Chancery Court of the First Judicial District of Hinds County. The chancery court allowed Morgan to intervene and held a hearing on his Motion to Set Aside Protective Order. The chancery court ruled that the documents XLK had submitted in response to MSH's RFP were not subject to disclosure under the Mississippi Public Records Act, with the exception of the contract between MSH and XLK. Because the chancery court correctly applied the Mississippi Public Records Act, this Court affirms its judgment.

         FACTS AND PROCEDURAL HISTORY

         ¶2. The Mississippi Department of Mental Health at the Mississippi State Hospital published an RFP under Mississippi Code Section 25-15-301 (Rev. 2010), in which it sought proposals for administration of group insurance plans for state employees. On July 24, 2014, XLK responded to the RFP by submitting its proposal to MSH. Ultimately, MSH awarded the contract for insurance plan administration to XLK.

         ¶3. On October 23, 2015, MSH notified XLK that a public records request had been submitted by John Morgan. Morgan sought a copy of the successful proposal. MSH informed XLK that, without a protective order, it would turn over XLK's proposal to Morgan. In response, on October 28, 2015, XLK filed its Petition for a Protective Order in the Chancery Court of the First Judicial District of Hinds County. XLK argued that, "[w]ithin the Proposal and all other submitted documents including, but not limited to, quotes, complimentary product packages, and presentation handouts, XLK included trade secrets and confidential commercial and financial information of a proprietary nature." According to XLK, "[i]f any of this information is divulged to its competitors, XLK will lose its competitive edge in an extremely competitive business." Attached to the Petition for a Protective Order was an affidavit from James M. Knox, XLK's president, attesting that disclosure of the proprietary information belonging to XLK contained in the documents submitted in response to the RFP "would harm XLK International, LLC's ability to compete in the insurance administration business."

         ¶4. On October 28, 2015, the chancery court entered a protective order, holding that "[t]he Proposal and all other documents submitted to the Mississippi State Hospital and Department of Mental Heath, State of Mississippi, contain trade secrets and financial information of a proprietary nature, which are exempt from the Mississippi Public Records Act" under Mississippi Code Section 25-61-9.

         ¶5. On January 13, 2016, Morgan filed a Motion to Intervene under Mississippi Rule of Civil Procedure 24, arguing that he had a right to examine what he claimed to be public records and that the protective order deprived him of that right. Morgan attached to his Motion to Intervene a Motion to Set Aside Protective Order, in which he argued that "[r]outine insurance quotes and a recitation of services to be provided by an insurance agency are not confidential, nor proprietary, and[, ] therefore, should be accessible [to] the public at large."

         ¶6. Following a hearing on February 24, 2016, the chancery court, on February 29, 2016, entered an order granting Morgan's Motion to Intervene. The chancery court continued "Morgan's Motion to Set Aside Protective Order is ordered filed and the parties are directed to set this matter for full hearing on Morgan's Motion."

         ¶7. A hearing was held before the chancery court on August 9, 2016, on Morgan's Motion to Set Aside Protective Order. The court entered a final order on September 15, 2016, in which it held, on the basis of Mississippi Code Section 25-61-9(1), that documents submitted by XLK in response to the RFP "contain trade secrets or confidential commercial or financial information . . . ." The chancery court recognized, however, the "exception set forth in Miss. Code Ann. § 25-61-9(7)," and, accordingly, amended the October 28, 2015, protective order "to allow disclosure of the 'Agreement Between Mississippi State Hospital of Whitfield Mississippi (MSH) and XLK International, LLC[, ]' a seven (7) page document signed by XLK on September 25, 2016." The court held that "[t]his 'Agreement' constitutes a 'contract which contain[s] the commodities purchased or the personal or professional services provided, the price to be paid, and the term of the contract.'" Accordingly, while "MSH and/or the Mississippi Department of Mental Health shall be permitted to disclose said 'Agreement' in its entirety of Morgan in response to his Public Records Request, '" the "other documents submitted by XLK shall remain protected and exempt from disclosure under the October 28, 2015[, ] Protective Order." Morgan filed a notice of appeal on October 14, 2016.

         XLK's Motion to Docket and Dismiss Appeal

         ¶8. XLK filed, on May 18, 2017, a Motion to Docket and Dismiss Appeal and Motion to Stay Briefing Schedule Pending Ruling on Instant Motion. XLK argued that, because Morgan's Motion to Set Aside Protective Order had been filed only as an attachment to his Motion to Intervene, XLK was deprived of the opportunity to respond to the Motion to Set Aside Protective Order. XLK acknowledges that it "is not representing that it did not have notice of the underlying Motion to Set Aside Protective Order." XLK also represented that "the only issue on appeal, whether or not Appellant is entitled to the pricing component of a procurement contract pursuant to Miss. Code Ann. 25-61-9(7), is moot since there was no price paid by the State of Mississippi to Appellee."

         ¶9. Morgan responded that the trial court had ordered the Motion to Set Aside Protective Order filed, so no reason existed for his refiling "the Motion which had already been ordered filed by the Chancellor." Moreover, Morgan averred that XLK, following the February 29, 2016, order permitting Morgan to intervene and ordering filed his Motion to Set Aside Protective Order, had waived any procedural objection by not raising the issue before the trial court. With regard to XLK's mootness argument, Morgan responds that XLK ...


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