J&C Mktg., L. L.C. v. Mcginty

• Decision Date: 07 April 2015
• Docket Number: No. 2013–1963.,2013–1963.
• Citation: 37 N.E.3d 1183,2015 Ohio 1310,143 Ohio St.3d 315
• Parties: J & C MARKETING, L.L.C., Appellee, et al., v. McGINTY, Pros. Atty., Appellant.
• Court: Ohio Supreme Court

143 Ohio St.3d 315

37 N.E.3d 1183

2015 Ohio 1310

J & C MARKETING, L.L.C., Appellee, et al.,

v.McGINTY, Pros. Atty., Appellant.

No. 2013–1963.

Supreme Court of Ohio.

Submitted Sept. 10, 2014.

Decided April 7, 2015.

Timothy J. McGinty, Cuyahoga County Prosecuting Attorney, and Brian R. Gutkoski and Charles E. Hannan, Assistant Prosecuting Attorneys, for appellant.

KENNEDY, J.

{¶ 1} In this discretionary appeal from the Eighth District Court of Appeals, we consider whether information related to a criminal law-enforcement investigation is absolutely privileged against disclosure in a civil suit brought by the alleged target of the criminal investigation. Cuyahoga County Prosecuting Attorney Timothy J. McGinty appeals from a judgment affirming in part the trial court's order compelling him to produce in discovery in a civil action certain information related to a criminal law-enforcement investigation.

{¶ 2} We hold that the law-enforcement investigatory privilege is not absolute, and we reaffirm the validity of the balancing test we adopted in Henneman v. Toledo, 35 Ohio St.3d 241, 245, 520 N.E.2d 207 (1988), for weighing the interests of law enforcement in keeping the information confidential against the needs of a civil litigant who requests the information in discovery. We therefore affirm the judgment of the court of appeals.

Facts and Procedural History

{¶ 3} Appellee, J & C Marketing, L.L.C., owns two Internet sweepstakes cafés called "Sweepstakes Club" in Cuyahoga County, and the cafés purported to sell Internet access at the rate of $1 per four minutes of use and to give free electronic promotional sweepstakes entries to customers based on the number of minutes they purchase. J & C Marketing claimed that no purchase was necessary to enter the sweepstakes and that upon request, the cafés would provide a free entry in the sweepstakes. Customers could then use a café's computer terminals to play games to reveal the results of their sweepstakes entries. Winning entries could be redeemed for cash or more Internet-access time.

{¶ 4} At some point, law-enforcement officials in Cuyahoga County began investigating whether Internet sweepstakes cafés in fact promote illegal gambling. Undercover officers visited Internet sweepstakes cafés throughout the county and summarized their findings in reports that reveal the identities of the officers and potential sources of information, the date and time surveillance occurred at a particular café, and the techniques and procedures used to conduct the investigation.

{¶ 5} Based on these investigations, a Cuyahoga County grand jury returned an indictment on May 30, 2012, against ten individuals and seven companies, alleging that they had used an Internet gambling system known as "VS2" to conceal illegal gambling by presenting it as an Internet sweepstakes.

{¶ 6} That same day, the Cuyahoga County prosecuting attorney mailed letters to J & C Marketing and various other proprietors of Internet sweepstakes cafés that had not used the VS2 software and threatened criminal prosecution if they did not immediately stop running the sweepstakes. To avoid possible indictment, appellee and other owners of Internet-sweepstakes cafés closed their businesses.

{¶ 7} On June 4, 2012, after closing both of its Internet sweepstakes cafés, J & C Marketing filed this action for a declaratory judgment, a temporary restraining order, and temporary and permanent injunctive relief to prohibit the Cuyahoga County prosecuting attorney from enforcing gambling laws against it with respect to Internet sweepstakes. See Peltz v. S. Euclid, 11 Ohio St.2d 128, 228 N.E.2d 320 (1967), paragraph one of the syllabus (a party threatened with criminal penalties if he proceeds to act has standing to test the validity of the law criminalizing the act). Various other operators of Internet sweepstakes cafés that received similar cease-and-desist letters intervened, but they are not parties here.

{¶ 8} Appellee insisted that payment to play its Internet sweepstakes games was not required. Therefore, appellee asserted, its business did not promote gambling as defined in Fed. Communications Comm. v. Am. Broadcasting Co., Inc., 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699 (1954), which held that gambling is the union of chance, prize, and consideration, id. at 290, 74 S.Ct. 593. Appellee said that because it did not require customers to pay to enter the sweepstakes, its business did not violate the law.

{¶ 9} The trial court granted a temporary restraining order and made preliminary findings that the Internet sweepstakes cafés were not the subject of a pending criminal case and did not promote illegal gambling. J & C Marketing then sought to compel discovery of records and information related to the ongoing criminal investigation of Internet sweepstakes cafés in Cuyahoga County.

In its discovery requests, through depositions, requests for production of documents, requests for admission, and interrogatories, appellee sought to obtain the evidence that the prosecuting attorney alleged showed that appellee had received consideration from sweepstakes customers. The prosecuting attorney objected to these requests, asserting the attorney-work-product privilege, deliberative-process privilege, and law-enforcement investigatory privilege.

{¶ 10} The trial court conducted an in camera inspection of the documents that J & C Marketing sought, and it reviewed the propounded interrogatories. It ordered the prosecuting attorney to produce investigative reports compiled by undercover officers, e-mail exchanges between the prosecuting attorney's office and investigators, and answers to interrogatories requiring the disclosure of confidential information about ongoing criminal investigations.

{¶ 11} The prosecuting attorney filed an interlocutory appeal. The Eighth District Court of Appeals reviewed the requested material, balanced the competing interests of J & C Marketing and the prosecuting attorney, and affirmed in part and reversed in part the ruling of the trial court. It recognized the existence of the law-enforcement investigatory privilege but held that reports prepared during the undercover investigation of the Internet sweepstakes cafés were discoverable because they "are directly relevant to the alleged conduct of the internet sweepstakes cafés involved in this case because any factual disputes regarding the nature of their business must necessarily be resolved prior to the ultimate resolution of the legal question at the heart of this declaratory judgment action." 2013-Ohio-4805, 4 N.E.3d 1063, ¶ 25 (8th Dist.).

{¶ 12} The court of appeals directed the trial court to redact the names of the undercover officers when the reports were produced. Nonetheless, it ordered the prosecuting attorney to answer interrogatories regarding witnesses and evidence intended to be presented at trial despite recognizing that this ruling could result in revealing the identity of undercover officers.

{¶ 13} But the appellate court held that e-mails between the prosecuting attorney's office and criminal investigators were protected by the law-enforcement investigatory privilege and the attorney-work-product privilege.

{¶ 14} The prosecuting attorney appealed to this court, and we accepted for review his one proposition of law: "Records and information generated during the course of an open and ongoing undercover criminal investigation are not subject to disclosure based on the law enforcement investigatory privilege."

Legal Analysis

{¶ 15} The prosecuting attorney alleges that the court of appeals erred in balancing the competing interests involved here because an absolute privilege protected the information at issue. Whether the information was protected by an absolute privilege is a question of law, which we review de novo.

{¶ 16} We begin our analysis with Civ.R. 26(B), which states:

Unless otherwise ordered by the court in accordance with these rules, the scope of discovery is as follows:

(1) In General. Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action * * *.

(Italics sic.)

{¶ 17} The common law recognizes a qualified privilege for law-enforcement investigatory information, including confidential sources, surveillance information, and law-enforcement techniques and procedures. See, e.g., In re New York City, 607 F.3d 923, 941 (2d Cir.2010) ; Puerto Rico v. United States, 490 F.3d 50, 64 (1st Cir.2007) ; In re United States Dept. of Homeland Sec., 459 F.3d 565, 570 (5th Cir.2006) ; Dellwood Farms, Inc. v. Cargill, Inc., 128 F.3d 1122, 1124 (7th Cir.1997) (the law-enforcement investigatory privilege is a "judge-fashioned evidentiary privilege").

{¶ 18} However, the privilege is not absolute: it is limited by "the fundamental requirements of fairness," so that when the privileged information "is relevant and helpful to the defense of an accused, or is essential to a fair determination of a cause, the privilege must give way." Roviaro v. United States, 353 U.S. 53, 60–61, 77 S.Ct. 623, 1 L.Ed.2d 639 (1957). A strong presumption militates against lifting the privilege. In re New York City at 929. Plaintiffs may obtain law-enforcement investigatory material only upon showing a "compelling need." Id.

{¶ 19} Therefore, courts have applied a balancing test to determine whether the privilege applies. In re New York City at 945; Black v. Sheraton Corp. of Am., 564 F.2d 531, 545 (D.C.Cir.1977) ; 26A Wright & Miller, Federal Practice and Procedure, Section 5681 (1992). In Henneman, 35 Ohio St.3d 241, 520 N.E.2d 207, we weighed the legitimate public interest in the confidentiality of the information obtained in a police department's internal-affairs investigation against the needs of a litigant to obtain evidence in support of a nonfrivolous cause of action. Id. at 242, 520 N.E.2d 207. With regard to the claims brought under federal law, we applied the factors delineated in Frankenhauser...