Applied Underwriters’- The Tale of Two Lobbyists – And Contributions …

Judge Considers Watchdog’s Public Records Dispute With Lara

A Los Angeles Superior Court appeared ready to reject Consumer Watchdog’s request for the court to force the California Department of Insurance to produce additional records under the California Public Records Act. After a hearing, however, it opted to take the issue under consideration.

The court’s tentative ruling held that the Department responded to the group’s request and did not have to redo the search as it wanted. A final decision was still pending as of this publication’s deadline.

The dispute links back to the failed influence campaign Applied Underwriters waged directly and through surrogates to win CDI approval of its buyback of California Insurance Company from Berkshire Hathaway. Consumer Watchdog filed the PRAs to obtain copies of communications between department officials and those at or representing Applied.

“As a preliminary matter, the court notes that the CPRA ‘does not prescribe specific methods of searching for … [responsive] documents,” the court noted in the tentative ruling. “Rather, the CPRA only imposes a duty to locate all records with ‘reasonable efforts,’ and does not ‘require that agencies undertake extraordinarily extensive or intrusive searches.’”

 Missing Names

The group alleges the Department failed to search for records involving Rusty Areias, Fabien Nunez, Eric Serna, and Jamie Sahara. They were representing or otherwise linked to Applied at the time. Consumer Watchdog maintains that the Department failed to follow the leads uncovered by its initial search to find additional records.

The group pointed out that CDI records produced during the searches showed Serna was the contact for a March 12, 2019, fundraising meeting involving Lara and Applied Underwriters. The group says other documents showed that Sahara contacted the Department to set an appointment between Lara and Applied Underwriters’ founder and chairman Steve Menzies.

Consumer Watchdog argued the Department should expand its searches to include the names uncovered in the previous searches. The court’s tentative ruling indicates that it disagrees.

“The scenario envisioned by Petitioner is not required by the CPRA,” the court wrote before the hearing. “The court finds Respondents’ failure to expand its search to names revealed in documents produced given the scope of Respondents’ search and terms used did not render the search unreasonable under the CPRA.”

Withheld Records

The court also indicates that it is disinclined to order the Department to hand over 96 documents that were withheld or unmask six others that were redacted before they were turned over. Thirty of the documents are communications regarding Applied Underwriters Form A filing for the California Insurance Company buyback.

The Department maintains that the withheld and/or redacted documents are exempt from the CPRA under Government Code section 6254(d) and Insurance Code section 735.5. Section 6254(d)(1) covers applications filed by insurance companies. Section 6254(d)(4) protects information it received in confidence.

The Department has the burden of proof to show these exemptions apply to the records. CDI offered declarations from the head of its financial surveillance branch that the 30 records contained information related to the Form A filing and that they came from confidential files accessible only to the Department.

“The court finds the evidence submitted by Respondents meets their burden of demonstrating the responsive documents are exempt from disclosure under the CPRA,” the court wrote in its tentative ruling. “That the sale of CIC is no longer pending is of no consequence to the confidential nature of the information.”

The court, however, is indicating that it will call on the Department to address Consumer Watchdog’s concerns about overly broad redactions. “As noted by Petitioner, Respondents are required to ‘use the equivalent of a surgical scalpel to separate those portions of a record subject to disclosure from privileged portions.’ It would seem bases on the publicly available Form A information statement some Form A communications are not exempt,” the court noted in the tentative ruling.

Petitioner contends Respondents use of redactions suggests other records withheld could have been redacted. The argument, however, cuts both ways,” the court notes. “Respondents demonstrate with redactions they understand exempt material in a record may be redacted and the balance of the document produced. That other records were withheld by Respondent and not redacted suggest the entire document is exempt or exempt and nonexempt material is not segregable. Respondents have met their burden of demonstrating that the withheld/redacted records were exempt.”

Copies of the Los Angeles Superior Court’s tentative ruling to deny the petition for writ are available in our Resources section or by clicking here.