State v. Lowry, C-9822

• Decision Date: 06 February 1991
• Docket Number: No. C-9822,C-9822
• Citation: 802 S.W.2d 669
• Court: Texas Supreme Court
• Parties: 1991-1 Trade Cases P 69,337 The STATE of Texas, Relator, v. The Honorable Peter M. LOWRY, Respondent

Page 669

802 S.W.2d 669

1991-1 Trade Cases P 69,337

The STATE of Texas, Relator, v. The Honorable Peter M. LOWRY, Respondent.

No. C-9822.

Feb. 6, 1991.

Allene D. Evans, Austin, for relator.

H. Lee Godfrey, Theodore E. Weiss, Houston, Curtis L. Frisbie, Jr., Dallas, David Cohen, Austin, E. Russell Nunnally, Dallas, Larry F. York, Austin, Fletcher L. Yarborough, Stacy R. Obenhaus, Dallas, Harry M. Reasoner, Houston, H. Robert Powell, Austin, James D. McCarthy, Dallas, P.M. Schenkkan, Austin, William J. Dyer, Houston, for respondent.

OPINION

DOGGETT, Justice.

We consider whether the Attorney General of Texas must produce certain documents pertaining to an investigation conducted pursuant to the Texas Free Enterprise and Antitrust Act. The trial court ordered production of materials obtained through presuit civil investigative demands (CIDs) and of relevant documents in the custody of subdivisions of the Attorney General's Office not directly involved in the underlying enforcement action and further required identification of the authors of related citizen complaint letters. We conditionally grant the writ of mandamus as to the citizen complaint letters, but deny all other relief.

After receiving consumer complaints about insurance practices, the Attorney General launched an investigation in 1986 concerning possible violations of the Texas Free Enterprise and Antitrust Act, Tex.Bus. & Com.Code Ann. §§ 15.01-15.51 (Vernon 1987 & Supp.1990). Pursuant to that statute, ¹ the Attorney General issued numerous CIDs to compel testimony and production of documents relevant to the inquiry. Based on the information received, the State of Texas brought suit in 1988 against a number of insurance companies and related entities, asserting antitrust violations and seeking imposition of a constructive trust, damages, and civil penalties. During this litigation, the defendant insurers jointly sought the production of all documents within the control of the Attorney General related to either the allegations in his pleadings or "the availability, affordability, or adequacy" of liability insurance. The Attorney General made available to the insurers all materials obtained pursuant to his CID powers that he intended to introduce into evidence at trial. The remainder, as to which privileges from discovery were claimed, were identified in a log and tendered to the court for inspection. The Attorney General also sought to protect the identity of each author of a complaint letter from whom consent for release could not be obtained and tendered the letters to the trial court for inspection. He further attempted to limit discovery directed to the Attorney General's Office solely to the Antitrust Division, which initiated this litigation. The trial court ordered production.

Affording parties full discovery promotes the fair resolution of disputes by the judiciary. This court has vigorously sought to ensure that lawsuits are "decided by what the facts reveal, not by what facts are concealed." Jampole v. Touchy, 673 S.W.2d 569, 573 (Tex.1984, orig. proceeding). Discovery is thus the linchpin of the search for truth, as it makes "a trial less of a game of blind man's bluff and more a fair contest with the issues and facts disclosed to the fullest practicable extent." United States v. Proctor and Gamble Co., 356 U.S. 677, 682, 78 S.Ct. 983, 986-87, 2 L.Ed.2d 1077, 1082 (1958). In recent years, we have sought to secure this objective through both revision of the Texas Rules of Civil Procedure and our opinions discouraging gamesmanship and secrecy. See, e.g., Axelson, Inc. v. McIlhany, 798 S.W.2d 550, 553 (Tex.1990, orig. proceeding) (observing that "litigants [should] obtain the fullest knowledge of the facts and issues prior to trial") (citing Gutierrez v. Dallas Indep. School Dist., 729 S.W.2d 691, 693 (Tex.1987)); Scott v. McIlhany, 798 S.W.2d 556 (Tex.1990, orig. proceeding); Garcia v. Peeples, 734 S.W.2d 343 (Tex.1987, orig. proceeding); Jampole, 673 S.W.2d 569.

Only in certain narrow circumstances is it appropriate to obstruct the search for truth by denying discovery. Very limited exceptions to the strongly preferred policy of openness are recognized in our state procedural rules and statutes. See Tex.R.Civ.Evid. 501; Tex.R.Civ.P. 166b(3). The burden is on the party seeking to avoid discovery to plead the basis for exemption or immunity and to produce evidence supporting that claim. Tex.R.Civ.P. 166b(4); see also Loftin v. Martin, 776 S.W.2d 145, 147 (Tex.1989, orig. proceeding). This means a party should provide evidence to the trial court in the form of affidavits ² or testimony to establish the claimed privilege; albeit in some limited circumstances the documents themselves may, standing alone, constitute sufficient proof. Weisel Enters., Inc. v. Curry, 718 S.W.2d 56, 58 (Tex.1986, orig. proceeding) (per curiam). If the trial court determines that an in camera inspection of the requested discovery is necessary, the materials must be segregated and produced to the court. Tex.R.Civ.P. 166b(4); see Peeples v. Fourth Court of Appeals, 701 S.W.2d 635, 637 (Tex.1985, orig. proceeding).

The bulk of the materials at issue were shown, by affidavits introduced at the hearing, to have been gathered by the Attorney General pursuant to his statutory CID power. These include depositions, written interrogatory questions and answers, as well as related exhibits. In seeking to resist production, the State asserted a statutory privilege against discovery, Tex.Bus. & Com.Code Ann. § 15.10(i), ³ which provides that CID materials are not generally "available for examination" without the consent of the CID recipient. The confidentiality accorded by this statute, however, is qualified in two ways: (1) "except as provided in this section" or (2) if "ordered by a court for good cause shown." Id.

With respect to the first of these limitations, the insurers interpret section 15.10(i)(2), which vests in the Attorney General the discretion to make available CID materials in a judicial proceeding, as requiring the disclosure in response to a request for discovery once suit is initiated. The basis for this construction of the statute is the Federal Antitrust Civil Process Act, 15 U.S.C. §§ 1311-14 (1982), after which the Texas CID provisions are patterned. Although nothing in the wording of the federal statute explicitly so provides, its legislative history makes clear that once an enforcement action is commenced in court, the investigative materials are subject to discovery in accordance with federal procedural rules. H.R.Rep. No. 1343, 94th Cong., 2d Sess. 15, reprinted in 1976 U.S.Code Cong. & Admin.News 2572, 2596, 2609-10. Not found in the federal statute is the "good cause" predicate to disclosure of CID materials which was added to the state statute. Rather than adopting the distinction between presuit and postsuit that was engrafted upon its federal counterpart to determine what CID materials must be made available, the Texas CID statute hinges the issue of disclosure on the existence of good cause. The rules of statutory construction are not well-served by reading into section 15.10(i) a distinction that is neither reflected in the plain words of the statute nor the history leading to its enactment. ⁴ Although strong policy reasons support the right of one accused of wrongdoing by the government to obtain the documentation leading to a complaint, we cannot ignore the balance that has been legislatively achieved.

The insurers further argue that the language of section 15.10--"[e]xcept as provided in this section"--should be interpreted to include section 15.12 of the Act. ⁵ Because that section provides that the Texas Rules of Civil Procedure apply once a lawsuit is filed, the insurers rely on those rules as permitting discovery of the CID materials without any showing of good cause. Such a reading would violate a basic principle of statutory construction that "the entire statute is intended to be effective." Code Construction Act, Tex.Gov't Code Ann. § 311.021 (Vernon 1988). We cannot interpret the words "this section" as used in section 15.10 to refer to another section of the Act, section 15.12. By choosing the words it did, the legislature clearly did not intend the provisions of section 15.12 to overrule the confidentiality provisions of section 15.10.

The insurers assert, in the alternative, that good cause mandates disclosure of the CID materials. They further contend that they have overcome the additional privileges to discovery asserted by the State under Texas Rule of Civil Procedure 166b(3) through demonstrating as provided therein--"that the party seeking discovery has substantial need of the materials and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means...." While necessarily determined by the facts of a particular case, good cause, we believe, may ordinarily be established by such a showing.

With respect to the substantial need prong of the good cause standard, all of the information sought to be discovered was gathered by the State during the investigation that led to the filing of this antitrust enforcement action. The State has refused to provide materials requested by the insurers that could lead to evidence supporting their defense. It is difficult for the insurers to make a more particularized showing of need for these documents, the contents of which are unknown to them. We determine that a sufficient showing was made to establish substantial need.

As for the undue hardship prong of the good cause standard, the insurers urge, and the State does not appear to dispute, the extreme difficulty and burden of replicating the investigative materials it has amassed. Copies of the CID materials cannot easily be obtained directly from third party sources because the State has refused to disclose which persons identified as having knowledge of relevant facts...