A state superior court judge has ruled that the University of California must disclose data on how the university's private investments for retirees are faring.

Also Friday, one of the valley's most respected venture firms, Sequoia Capital, said it has ejected the University of Michigan from its latest fund for disclosing investment results. Sequoia did so, said partner Michael Moritz, because the firm doesn't want to face the ``perpetual threat of FOIA (Freedom of Information Act) requests,'' adding that it is uncomfortable even with the release of basic performance data such as the ``internal rate of return.''

In the UC case, the Mercury News and the Coalition of University Employees had filed suit against the university in April, arguing that the California Public Records Act obligated UC to disclose the performance results of venture capital funds it has invested in.

The university receives money from the state and, therefore, is subject to disclosure laws, the suit argued.

In a ruling released Friday, Judge James Richman agreed. He rejected the university's argument that disclosure would cause damage greater than any benefits. The university feared that better-performing venture capital firms would shut out the university from investing.

This is the first time public law has been tested on the issue. The Mercury News had reached an earlier settlement with CalPERS, the nation's largest public pension fund, on the release of similar information. A number of other public pension funds and universities have released such data.

Richman concluded that the public interest outweighs any drawbacks. ``Only in this way can the public be certain, for example, that there is not a conspiracy of silence,'' he said.

Christopher Patti, UC's counsel, said: ``We're disappointed in the ruling, we don't agree with the judge's analysis. We're seriously considering our appeal options.''

Claudia Horning, president of CUE, called the lawsuit ``a David-and-Goliath struggle between low-paid clerical employees and wealthy, politically connected Regents and the billionaire venture capitalists who take public money and don't want to disclose how public investments perform. This time, David won.''

The Mercury News argued in both cases that California taxpayers and public employees have a right to know how their tax dollars and retirement plans are performing. If such data is kept secret, the lawsuit said, politically appointed or elected officials might make investment decisions based on favoritism and not on merit alone. In the case of CalPERS, the Mercury News reported how managers of many venture firms invested in by CalPERS had contributed money to elected state officials on the CalPERS board.

$34 billion managed

The UC retirement plan manages $34 billion for 173,343 people, including 35,165 current retirees and beneficiaries. The value of its endowment fund fell 10.7 percent last year, more than any other of the 10 largest U.S. university endowments, except for the Massachusetts Institute of Technology, which dropped 12.6 percent.

The judge also ruled that the minutes of UC Regents investment committee meetings held in January and March 2000 and October and November 2002 should be disclosed, something the lawsuit had also requested.

In reaction to the ruling, several venture firms said the ruling wouldn't upset them enough to eject UC from investing in their funds.

Peter Wagner, partner at Palo Alto's Accel Partners, a firm widely considered among the best in the industry, said the ruling wouldn't affect his relationship with UC. He said his firm is proud to work with UC and other entities with laudable goals. ``It feels good to further a lot of those goals, to the extent we can play a small role in that,'' he said.

Flip Gianos, partner at Menlo Park's Interwest Partners, said: ``I can't imagine us doing anything other than welcoming them as ongoing investors.''

Participant ousted

However, Menlo Park's Sequoia Capital notified the University of Michigan Friday that it was ousting the university from participating in the firm's latest fund, Sequoia XI.

Partner Moritz said: ``It's with unbelievable regret that we're doing this.''

Michigan acknowledged receiving the notice, and said it is reviewing the situation.

``We have worked hard to maintain a good relationship with Sequoia Capital while honoring our obligation under Michigan's Freedom of Information Act. We're disappointed that Sequoia has chosen this course of action,'' said Joel Seguine, media relations manager at Michigan.

Michigan will have to decide whether Sequoia's rejection amounts to a breach of contract. The confidentiality agreement signed by the two parties, obtained by the Mercury News, allows for Michigan to release performance data if required by law.

The judge's ruling in the UC case came after Sequoia's decision about Michigan. UC is also an investor in Sequoia, but Moritz declined to comment on what the firm's decision will be in that case.