The Minnesota Supreme Court has agreed to review a dispute about access to records between a small-town newspaper publisher and a corporate contractor doing government-funded work in northern Minnesota -- in a case that will affect how records held by private companies are treated when the work is done at public expense.
The state Court of Appeals ruled in October that Johnson Controls Inc. of Milwaukee must reveal to Timberjay Newspapers of Tower, Minn., details of its subcontract with a Duluth architectural firm to renovate and build schools in St. Louis County.
That ruling is now on hold until the Supreme Court either affirms or reverses it. The high court does not have a timetable, but Timberjay's attorney, Mark Anfinson, said it will likely be next fall before a decision is handed down.
"We won a very strong and helpful opinion at the Court of Appeals to the public's right to know about government and its operations," Anfinson said Wednesday. "I'm disappointed that the Supreme Court granted review. It's probably a waste of judicial resources."
But, he said, he's not surprised given that the issue has statewide significance.
"I remain confident," Anfinson said. "I continue to feel we have the much better argument from both a policy and legal perspective in terms of what the statute means."
Monica Zimmer, a spokeswoman for Johnson Controls, said in a written statement: "Johnson Controls respects Minnesota's Data Practices law, but we also believe that businesses should not be discouraged from participating in public contracts. The Supreme Court is the best place to decide how to balance these competing interests."
Publisher noticed flaws
The dispute began when Timberjay publisher Marshall Helmberger noticed flaws in a $78 million construction project that St. Louis County entered with Johnson Controls. In 2010, he asked for a copy of Johnson's subcontract with Architectural Resources Inc. under the state's Data Practices Act. Johnson refused, saying that the contract contained proprietary secrets and was not subject to open records laws.
Under the law, private residents or businesses contracting with the government must comply with the Data Practices Act "as if it were a government entity." In March 2011, the Minnesota Department of Administration sided with Helmberger, but an administrative law judge threw out the request because the subcontract "did not involve the performance of a governmental function."
The Appeals Court disagreed, ruling that the planning, design and construction of five public schools falls under the state laws that mandate the duty of a school district to "furnish school facilities" to children -- including "constructing and renovating buildings."
The Appeals Court ruling was a published opinion, meaning it included an extensive analysis of the facts and law. Published opinions can be used by courts faced with similar issues in the future.
Attorney David Lillehaug produced a petition from Johnson, filed Nov. 8, asking the high court to review the appellate decision.
The petition states that the contracts between the St. Louis County School District and Johnson Controls "were a matter of public record," but that the subcontracts were not.
Johnson Controls did not "contract to perform any privatized government function," the petition said. "The contracts show that JCI was an arms-length contractor, not an agent of the district, which retained full decision-making powers," it said.
"Most government contracts do not require contractors (much less subcontractors and suppliers) to open to public inspection their prices, subcontract terms, financial analysis, business methods and correspondence," the petition said. "Businesses cannot give government their best prices and perform efficiently if internal information cannot be kept confidential."
'Like kindergarten stuff'
Helmberger said in mid-October that he noticed troubling mistakes and added costs in the project to build and renovate the schools. As the project proceeded, he saw code violations, change orders and simple billing miscues, such as failing to include the cost of rebuilding an exterior wall.
"This was like kindergarten stuff," he said in October.
That's when he used the Data Practices Act to try to get a copy of the subcontracting agreement. He said in October that he has no idea whether those documents will show any surprises, but the more the company fights it the more suspicious he is.
Helmberger could not be reached for comment Wednesday. Anfinson said he sent Helmberger "an e-mail telling him the Supreme Court sent him a lump of coal for Christmas."
Said Anfinson: "Marshall is a great guy. He's got a thick skin. He accepts this as just the nature of the beast. He has seen it from day one as an important principle and he's prepared to stay the course."
Thursday is the 10th anniversary of a Court of Appeals ruling that established what "we all thought was binding precedent when my client first sought these records," Anfinson said. The 2002 case, WDSI Inc. vs. Steele County, involved access to construction records in a case similar to Timberjay's.
"The Court of Appeals ruled [then] that the public's right to obtain data from a contractor doing work for the government was a very broad and strong right," Anfinson said. "The significance is that in the 10 years that this has been the governing interpretation of this statute, the government has never sought to alter it in any small way.
"Johnson Controls disagrees," he said. "That's what makes legal drama."
Staff writers Abby Simons and Jon Tevlin contributed to this report. Pat Pheifer 952-746-3284