N.C. Court of Appeals Addresses Public Records Status of Records Held Solely by Third-Party Vendors

By Mitch Armbruster and Andrew Atkins

The North Carolina Court of Appeals recently issued an opinion on the question of when documents solely in the possession of a third-party contractor—and not a public body—are public records subject to production under the North Carolina Public Records Act.  In Gray Media Group, Inc. v. City of Charlotte (COA 23-154) (September 12, 2023), the Court ruled that survey information gathered from Charlotte City Council members via a hyperlinked platform on the internet, and held exclusively by a third-party vendor, were public records subject to the Public Records Act.

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In 2020, the City of Charlotte entered into a consulting contract with Ernst and Young (“EY”) to work on improving local government operations. Under the contract, the City had the right to access all data provided by the City and all data generated by the vendor. EY then created a survey, which it sent to each City Council member via an email with a hyperlink to access and complete the survey. The City did not receive a copy of the completed surveys.

A reporter with WBTV in Charlotte subsequently made a public records request for the EY survey and the responses. The City denied the request on the ground that it did not possess the survey or responses, and that documents solely in EY’s possession are not subject to a public records request. The City later produced the final report that EY created, and based in part on the surveys, but not the survey or survey responses themselves.

Gray Media Group, Inc., owner of WBTV, filed suit under the Public Records Act seeking the records. During discovery, the City eventually served a subpoena on EY and obtained the survey information, which was then produced. This was the first time the City had requested the information from EY. After that production, the City moved for summary judgment, which was granted on the ground that the City had now produced the documents, and held that the claims were now moot.

The Court of Appeals reversed on appeal in a unanimous decision. First, the Court determined the matter was not moot, holding that although the records had been produced (well after litigation had commenced), the plaintiff’s declaratory judgment claim would have “the practical implication of defining the public’s right to access records created by a public official but possessed solely by a third party.” Alternatively, the Court held that the matter fell within the mootness exception for issues capable of repetition, yet evading review.

On the core public records issue in the case, the Court held that the documents requested were indeed public records, and that the sole physical possession of those records by a third-party did not shield them from the Public Records Act.

The City conceded that, if the survey had been provided by an email attachment, it would be a public record. But the Court rejected the notion that using a hyperlinked survey should change that result, citing N.C. Gen. Stat. § 132-1(a)’s intentionally broad definition of a public record, which includes “all documents . . . electronic data-processing records. . . regardless of physical form or characteristics.”

The Court also rejected the City’s argument that it did not need to produce the records because it did not have actual possession or “substantial control” over EY to demand them. Citing the obligation of the Public Records Act in N.C. Gen. Stat. § 132-6 to allow inspection of records in a custodian’s “custody,” and common law meanings of “custody,” the Court noted that “actual possession” is not a requirement in the statute. The Court also noted that the vendor contract with EY gave the City exclusive ownership of the contract data, which must be promptly provided upon request to the vendor, giving the City “constructive possession” of the records.  

The Court also rejected the City’s argument that Womack Newspapers Inc. v. Town of Kitty Hawk, 181 N.C. App. 1, 639 S.E.2d 96 (2007), meant it had no duty to seek documents from contractors under the Public Records Act. The Court stated that Womack only applies to records made by contractors, kept by contractors, and never actually received by a public body. In this case, however, the Court opined that the surveys were “received” by the City Council members receiving an email with hyperlink access to the survey, and the survey responses were actually created by the council members.

Lastly, the Court also held that the plaintiff was entitled to an award of attorneys’ fees on remand for substantially prevailing in the suit. The City turned over the records only after a substantial amount of time in litigation. The panel also found that the City did not reasonably rely upon Womack and other case law as a defense to any obligation to produce. Presumably, if the City had settled with the Plaintiff as a condition of producing records, it could have avoided the risk of a fee award, though the media plaintiff may not have been amenable to settlement after so much time in litigation.  

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While the time for an appeal to the Supreme Court of North Carolina is still pending, if the decision stands, it may raise further issues down the road in a number of areas related to public records.

First, as to whether the survey records were public records, the Court was facing a novel question. Even the City agreed that a survey provided by, and responded to directly by email or email attachment, would be a public record. But here both the survey and the survey responses were gathered by a vendor on its own platform and were never actually a document in possession of the City. There was no easy way for the City Council members to capture the “record” as it was being created. A public body can carefully make sure it retains records it receives and creates in traditional hard copy and electronic forms, but the continuing march of technology into cloud-based platforms seems to be creating new challenges in that regard. The duty of a public body to maintain public records and not destroy them (under normal retention schedules, at least) is difficult to meet when some “records” are never captured at all. And oddly enough, if the vendor had done phone interviews with the City Council members and recorded their responses on the vendor end, it appears there would have been no record “made or received” by a public official to ever become a public record. Public bodies and vendors will likely need to analyze this case to develop ways to avoid creating such records or to capture them if they are creating records.  

Second, though the Court’s decision is grounded in a holding that the survey was “received” by public officials by accessing the hyperlink, who then “made” a further public record in responding, the Court’s decision is also reliant on the City’s contractual right to obtain its contract data upon demand. Contract clauses providing the right of access to public bodies are common in construction and many other public contracts. To the extent this case signals an expanding application of the North Carolina Public Records Act, it may raise future questions as to the extent that third-party vendors and public bodies can rely on Womack to avoid having to produce all the vendor records created on a public contract by virtue of having a right to access those records. The Court’s opinion was clear to distinguish Womack and other caselaw, but its holding that the public body had “constructive possession” of the survey records by contract may open up the question of whether contractual rights can also be used to create additional categories of public records from documents held exclusively by a vendor.

Smith Anderson will continue to track this and future cases addressing the North Carolina Public Records Act. We are ready to assist both public bodies with their Public Records Act obligations and private contractors with the protection of their proprietary information.