This Hurricane Season, the American Red Cross Seeks Trade Secret Protection for Hurricane Sandy Spending Information

At the start of this hurricane season, while many businesses and families are developing or reviewing their hurricane preparedness plans, the American Red Cross is facing an entirely different challenge – fighting to protect what it views as its “trade secrets” – information on its Hurricane Sandy fundraising and spending.  According to the Red Cross’s charter, the organization is to carry out responsibilities delegated by the federal government, including, of course, maintaining a system of domestic and international disaster relief.  Despite its unique connection to the federal government, the Red Cross is funded not by the government but by other sources such as voluntary contributions from private individuals and companies. Indeed, for many Americans, the Red Cross is the first charity that comes to mind when one wants to make a donation to help victims of a natural disaster.  Since Hurricane Sandy hit in 2012, the Red Cross has raised approximately $312 million for Sandy relief efforts.  This year, the non-profit investigative news source ProPublica requested information about the Red Cross’s Sandy spending, but the Red Cross declined to provide the information.  So ProPublica filed a public records request seeking information the Red Cross had provided to the New York Attorney General’s Office regarding the organization’s Sandy spending.  The Red Cross appealed to the New York Attorney General to block disclosure of certain information about the Red Cross’ fundraising, internal operations, and finances, arguing that information should be exempt from disclosure under the trade secret exemption of the New York Freedom of Information Law (FOIL).  Specifically, the Red Cross argued that certain redacted portions of the documents include “internal and proprietary methodology and procedures for fundraising, confidential information about its internal operations, and confidential financial information that is not normally made publicly available both in regard to its response to Superstorm Sandy and disaster relief in general.”  The Red Cross further argued that if those portions were disclosed, it “would suffer competitive harm because its competitors would be able to mimic the American Red Cross’s business model for an increased competitive advantage.”

In a June 23 letter, New York Assistant Attorney General Bruce D. Feldman granted in part the Red Cross’s request for an exception from disclosure, agreeing to redact some information when it releases the documents.  Feldman found that the redacted portions, with some exceptions which are laid out in the letter, “describe business strategies, internal operational procedures and decisions, and the internal deliberations and decision-making processes that affect fundraising and the allocation of donations[,]” and that “this information is proprietary and constitutes trade secrets, and that its disclosure would cause the Red Cross economic injury and put the Red Cross at an economic disadvantage.” 

The Red Cross has not stated whether it will appeal the Attorney General’s decision.  On its website, the Red Cross has responded to recent media coverage of its Sandy spending, stating that it “does provide information about [its] spending on disasters” and “has several publically available resources to ensure those we help and the general public are aware of how donations enable us to meet the short and long-term needs of communities impacted by disasters such as Hurricane Sandy… The vast majority of our 25-page July 29, 2013 letter to the New York Attorney General is being released and details our response efforts following Superstorm Sandy. We sought to keep confidential a small part of the letter that provided proprietary information important to maintaining our ability to raise funds and fulfill our mission.”  The Red Cross’s website provides a broad breakdown of its Sandy spending, including figures (through May 31, 2014) of approximately $94 million for food and shelter, $98 million for individual casework, $50 million for housing and community assistance, and $32 million for relief items.  The Red Cross also gives raw numbers of services provided in a different set of categories such as emergency vehicles activated; relief items distributed; overnight stays in shelters provided; and meals and snacks served.

This case raises important questions including what is a trade secret; whether those protections can and should be applied to information that arguably helps the public; whether releasing this information could lead to others attempting to provide the same services as the Red Cross and whether this would be beneficial or disruptive to disaster survivors—questions that are of particular importance not only to the Sandy survivors but also to those of us on the Gulf Coast at the beginning of another hurricane season.