The Kentucky Court of Appeals ruled against Lexington Friday in a case that involved a January 2008 attempt to close an Urban County Council meeting.
That meeting was scheduled to discuss the city's response to a request before the state Public Service Commission by Kentucky American Water to build a $162 million treatment plant and pipeline. That request was ultimately approved.
City officials had planned to meet behind closed doors. But the Herald-Leader objected, citing the state's Open Meetings Law.
The city argued the meeting fell under an exception that allows a public agency to discuss "proposed or pending litigation" out of the public's view.
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Fayette Circuit Judge Sheila Isaac agreed with the newspaper, and the 21/2 hour meeting was opened.
The city later asked Isaac to reconsider, but the judge dismissed the case without ruling on the "litigation exception" issue.
The city took the case to the appeals court, seeking a blanket ruling that the exception applies in all administrative proceedings.
The appeals court stood behind the lower court.
The unanimous eight-page ruling said exemptions "must be strictly construed." It also said the city failed to show that the same set of circumstances would occur again.
"If the same situation arises again, we would urge the parties and the trial court to expedite the proceedings on this issue," the ruling said.
The city did not immediately respond to a request for comment.