Can a non-Delaware resident or a Delaware-registered LLC owned by a non-resident demand Delaware Department of Insurance records under FOIA?

Official title

18-IB50 10/12/2018 FOIA Opinion Letter to Casey H. Nelson re: FOIA Complaint Concerning the Department of Insurance

Plain-English summary

Casey Nelson of Alistair Capital Management (ACM), a Texas-based investment firm, submitted five FOIA requests to the Delaware Department of Insurance (DOI) for hearing records, including a transcript of an AmTrust Financial Services hearing in which Nelson had personally spoken. DOI denied the requests because Nelson was not a Delaware citizen. Nelson petitioned the AG, arguing DOI acted in bad faith, that ACM's Delaware LLC registration made it a "Delaware citizen," that 29 Del. C. § 10112 required production, and that DOI's nationwide regulatory reach should create an exception to FOIA's citizens-only rule.

The AG rejected each argument. On the citizenship issue, Nelson conceded in his Reply that neither he nor ACM was a Delaware citizen, so the foundational question was settled. On precedent, the AG reaffirmed Delaware's adoption of McBurney v. Young, 569 U.S. 221 (2013), which had upheld a citizen-only state FOIA statute against Privileges and Immunities and dormant Commerce Clause challenges. Bad faith was rejected because DOI had a "well-supported basis" for the denial (the McBurney rule). The § 10112 argument was treated as outside FOIA's scope (the AG's FOIA jurisdiction does not extend to enforcing other statutes). And the "DOI's unique regulatory reach" argument got nowhere because the FOIA statute itself has no such exception.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Does Delaware FOIA really require citizenship?

At the time, yes. 29 Del. C. § 10003(a) provided that "[r]easonable access to and reasonable facilities for copying of these records shall not be denied to any citizen." The opinion explained that in Attorney General Opinion 16-IB20 and subsequent opinions, the AG's office accepted the reasoning of McBurney v. Young to conclude that Delaware's FOIA statute is applicable to Delaware citizens only.

Does forming a Delaware LLC make you a Delaware citizen for FOIA purposes?

Not in this analysis. Nelson conceded the point in his Reply, so the AG did not have to issue a holding. But the framing makes clear the AG would treat an LLC's state of formation as separate from "citizen" status, and prior decisions had consistently rejected creative readings of "Delaware citizen."

What about Privileges and Immunities or Commerce Clause challenges?

McBurney v. Young (2013) had decided both. The Privileges and Immunities Clause was not violated because FOIA access is not a fundamental privilege of state citizenship; the dormant Commerce Clause was not violated because the citizen-only rule did not create a discriminatory market. Delaware's identical statutory structure follows.

What about 29 Del. C. § 10112?

That provision sits in a different chapter and addresses something other than open records. The AG noted it had no FOIA jurisdiction to enforce other statutes. If Nelson wanted relief under § 10112, he would have to seek it through that statute's own procedures, not through a FOIA petition.

Does DOI's national regulatory scope change anything?

No. DOI regulates insurers that operate nationally, but that does not rewrite Delaware FOIA. The AG was direct: "we decline to adopt a new exception to Delaware's FOIA statute with no basis in the statute itself."

Could the speaker get a hearing transcript he personally testified in?

Not under FOIA, as a non-citizen. The opinion notes there is no FOIA exception for transcripts requested by participants. Procedural rules of the hearing itself, or DOI's own administrative practice, might offer separate access avenues outside FOIA.

Background and statutory framework

The Delaware FOIA citizen-only rule rests on three components at the time of this opinion:

1. The statutory text at 29 Del. C. § 10003(a) limits production rights to "any citizen."
2. The AG's office in 16-IB20 read "citizen" as "Delaware citizen" and adopted McBurney.
3. The opinion noted that 16-IB20 "and subsequent opinions" consistently reaffirmed that reading.

The opinion is also a clean example of the AG's narrow construction of its own FOIA jurisdiction: § 10005 lets the AG decide whether a FOIA violation has occurred, but other statutory claims (like § 10112) are outside that lane.

Citations

• 29 Del. C. § 10003(a) (citizen-only access)
• 29 Del. C. § 10005(e) (Petition procedure)
• 29 Del. C. § 10112 (separate-chapter provision; outside FOIA)
• 29 Del. C. §§ 10001-10007 (Delaware FOIA generally)
• McBurney v. Young, 569 U.S. 221 (2013)
• Del. Op. Att'y Gen. 16-IB20 (Sept. 30, 2016)

Source

• Landing page: https://attorneygeneral.delaware.gov/2018/10/22/18-ib50-10-12-2018-foia-opinion-letter-casey-h-nelson-re-foia-complaint-concerning-department-insurance/
• Original PDF: https://attorneygeneral.delaware.gov/wp-content/uploads/sites/50/2018/10/Attorney-General-Opinion-No.-18-IB50.pdf

Original opinion text

PRINT VERSION: Attorney General Opinion No. 18-IB50

OFFICE OF THE ATTORNEY GENERAL OF THE STATE OF DELAWARE

Attorney General Opinion No. 18-IB50

October 12, 2018

VIA EMAIL

Casey H. Nelson

Alistair Capital Management, LLC

100 Crescent Court, Suite 575

Dallas, TX 75201

[email protected]

RE: FOIA Petition Regarding the Delaware Department of Insurance

Dear Mr. Nelson:

We write in response to your correspondence alleging that the Delaware Department of Insurance ("DOI") violated the Delaware Freedom of Information Act, 29 Del. C. §§ 10001-10007 ("FOIA"). We treat your correspondence as a Petition for a determination pursuant to 29 Del. C. § 10005(e) regarding whether a violation of FOIA has occurred or is about to occur. You allege that DOI has violated FOIA by denying records in response to your records requests. For the reasons set forth below, we conclude that DOI has not violated FOIA as alleged.

BACKGROUND

On September 11, 2018 and September 14, 2018, you sent DOI five records requests for various documents from five different hearing dockets, including but not limited to, hearing reports, orders, and records, in addition to the transcript of the AmTrust Financial Services ("AmTrust") hearing. DOI's FOIA Coordinator responded to your request on September 21, 2018 stating your request was denied since you were not a citizen of the State of Delaware.

You sent a Petition to this Office challenging this denial and alleging several inadequacies in the DOI's hearing involving AmTrust. In denying your request, you alleged DOI acted in bad faith and "the Department is actively obstructing someone attempting to help the Department protect policyholders from a massive, on-going fraud." Further, you alleged that since your firm, Alistair Capital Management, LLC ("ACM"), was formed and remains registered in Delaware, ACM is a Delaware citizen under the FOIA statute. Additionally, you argued that 29 Del. C. § 10112 requires DOI to provide records to you. Finally, you posited that DOI's regulatory scope over businesses across the country creates an exception under FOIA law, which requires DOI to produce records to all U.S. citizens.

On October 1, 2018, DOI submitted a letter in response to your Petition ("Response"). DOI noted that it is uncontested that you are a resident of Texas, and also asserted that your limited liability company is not a citizen of Delaware entitled to request records under FOIA. Further, DOI argued that 29 Del. C. § 10112 is inapplicable to this FOIA Petition, and your argument as to the unique circumstances is misplaced in the context of FOIA and misunderstands state insurance regulation.

By letter dated the same day ("Reply"), you countered DOI's arguments. First, you asserted that DOI's denial of records was made in bad faith, especially in regard to the transcript for the AmTrust hearing. Second, you stated that you "concede that neither I, nor ACM are Delaware citizens." Third, you revisited the argument about 29 Del. C. § 10112 to clarify that you meant to "highlight the absurdity of denying my [FOIA] request," but stated again that you wished this Office to direct compliance with 29 Del. C. § 10112. Finally, in support of your contention that DOI should respond to FOIA requests from all U.S. citizens, you distinguished the DOI's circumstances from those in the McBurney v. Young case, which affirmed that a citizens-only FOIA statute does not violate the Privileges and Immunities Clause or the dormant Commerce Clause of the U.S. Constitution. You also maintained that precluding non-citizens from requesting records for publicly-traded companies improperly interfered with interstate securities markets.

By email dated October 5, 2018, you provided an Addendum to your Reply in which you pointed to a previous order issued by then-Insurance Commissioner Matthew Denn stating in part: "this Department has placed an appropriate emphasis on the public's right to examine, comment upon and inspect non-confidential information in the possession of the Department." You contended that this language supports that DOI has a special obligation under FOIA to provide documents to the public at large and not only Delaware citizens.

DISCUSSION

One of FOIA's primary purposes is to grant citizens access to public records. Specifically, the statute provides that "public records shall be open to inspection and copying during regular business hours by the custodian of the records for the appropriate public body" and that "[r]reasonable access to and reasonable facilities for copying of these records shall not be denied to any citizen." In Attorney General Opinion 16-IB20 and subsequent opinions, this Office accepted the reasoning of the McBurney case to conclude that the Delaware's FOIA statute is applicable to Delaware citizens only.

As discussed above, your Reply refined the Petition into three primary arguments: 1) DOI denied your record requests in bad faith; 2) the records must be produced pursuant to 29 Del. C. § 10112; and 3) the unique circumstances here require this Office to distinguish the McBurney case and this Office's precedent and find that DOI must produce records to all U.S. citizens under the FOIA statute. Each argument is separately addressed below.

Denial of Records in Bad Faith

Although you also referred to objections to DOI's actions in a separate matter outside of the FOIA context, the bad faith claim is primarily based upon the fact that you spoke at the hearing. You believe that the denial of your request for a transcript of a hearing in which you made comments is absurd. However, except for the statutory exemptions, FOIA does not distinguish treatment for any category of "public records" and does not contain an exception for transcripts requested by speakers recorded in the transcript. Instead, DOI set forth a well-supported basis for the denial of records, as further discussed herein. We find that this factual record does not support a finding of bad faith.

Records Pursuant to 29 Del. C. § 10112

In your Reply, you requested that this Office direct DOI's counsel to comply with your "lawful Section 10112 request," which is in reference to a separate chapter of Delaware Code. You submitted a Petition to this Office pursuant to 29 Del. C . § 10005. We have no authority under FOIA to direct DOI with regard to this Office's interpretation of any other Delaware statute.

Unique Circumstances of DOI

Finally, you alleged that DOI has a unique position in Delaware because DOI is charged with oversight of companies that operate across the country. Due to this expansive regulatory scope, you argued that DOI must respond to FOIA records requests from all U.S. citizens. In support of this argument, you cited to Attorney General Denn's aforementioned statements in support of transparency. You also argued that McBurney was based upon the creation of a market for records through a FOIA program but DOI has created a country-wide market for its documents. Further, you asserted that the refusal to produce records for companies with publicly-traded securities would interfere with interstate markets. However, none of these factors bear on the FOIA analysis here, and you pointed to nothing within the FOIA statute in support of your argument. This Office has clearly adopted and affirmed that Delaware's FOIA statute only requires production of records to Delaware citizens, and we decline to adopt a new exception to Delaware's FOIA statute with no basis in the statute itself. Therefore, we find that DOI did not violate FOIA in its reliance on McBurney and other legal authority to deny your records requests.

CONCLUSION

Based on the foregoing, we conclude that DOI has not violated FOIA as alleged.

Very truly yours,

/s/ Michelle E. Whalen

Michelle E. Whalen

Deputy Attorney General

cc:

Kathleen Makowski, Deputy Attorney General

Dorey Cole, Deputy Attorney General