Discovery and privilege


By Paul E. Pfeifer



If you live around Cuyahoga County, you may be familiar with the “Sweepstakes Club,” a couple of Internet sweepstakes cafés owned by J&C Marketing, L.L.C. The cafés purported to sell Internet access at the rate of $1 per four minutes, and to give free electronic promotional sweepstakes entries to customers based on the number of minutes they purchased.

No purchase was necessary to enter the sweepstakes and, upon request, the cafés would provide 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. Wining entries could be redeemed for cash or more Internet-access time.

At some point, law-enforcement officials in Cuyahoga County began investigating whether Internet sweepstakes cafés – there are others besides J&C’s – actually promoted illegal gambling. Undercover officers visited cafés throughout the county and filed reports that contained the identities of the officers and potential sources of information, the date and time surveillance occurred, and investigative techniques.

Based on these investigations, in May 2012 a grand jury returned an indictment 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.

That same day, the Cuyahoga County prosecuting attorney – Timothy J. McGinty – mailed letters to J&C and other 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, J&C and other café owners closed their businesses.

In June 2012, after closing both of its cafés, J&C filed an action in court for a temporary restraining order, and to prohibit McGinty from enforcing gambling laws against it with respect to Internet sweepstakes. J&C insisted that since payment to play its Internet sweepstakes games wasn’t required, its business did not promote gambling as defined in a 1954 United States Supreme Court ruling which held that gambling is the union of chance, prize, and consideration. J&C said that because it did not require customers to pay to enter the sweepstakes, it hadn’t violated the law.

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

J&C requested evidence that – McGinty claimed – showed that the company had received consideration from sweepstakes customers. McGinty objected to these requests, asserting the attorney-work-product privilege, deliberative-process privilege, and law-enforcement investigatory privilege.

The trial court ultimately ordered McGinty to produce investigative reports and e-mail exchanges with undercover officers, and answers to questions requiring the disclosure of confidential information about ongoing criminal investigations.

McGinty filed an appeal. The court of appeals reviewed the requested material and balanced the competing interests of J&C and McGinty. The court of appeals recognized the existence of the law-enforcement investigatory privilege but held that reports prepared during the undercover investigations were discoverable because they “are directly relevant to the alleged conduct of the Internet sweepstakes cafés…”

The court of appeals directed the trial court to redact the names of the undercover officers. Nonetheless, it ordered McGinty to answer questions regarding witnesses and evidence intended to be presented at trial despite recognizing that this ruling could result in revealing the identity of undercover officers. But the court of appeals held that e-mails between McGinty’s office and criminal investigators were protected by the law-enforcement investigatory privilege and the attorney-work-product privilege.

After that decision, McGinty brought an appeal before us – the Ohio Supreme Court. He argued that the court of appeals erred in balancing the competing interests involved because an absolute privilege protected the information at issue. But is the information protected by an absolute privilege?

The pertinent law states that unless otherwise ordered by the court, the scope of discovery is that parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject involved in the pending action.

Over the years, courts have recognized a qualified privilege for law-enforcement investigatory information, including confidential sources, surveillance information, and law-enforcement techniques and procedures.

However, the privilege is not absolute: it’s 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.” Parties seeking the information may obtain law-enforcement investigatory material only upon showing a “compelling need.”

Therefore, courts have applied a balancing test to determine whether the privilege applies. In a case from 1988 called Henneman v. Toledo, our court adopted a test to weigh the legitimate public interest in the confidentiality of the information obtained in a police department’s internal-affairs investigation against the needs of a person involved in the litigation to obtain evidence in support of a non-frivolous cause of action.

In J&C’s case, the interests of both parties were significant. McGinty must safeguard the integrity of the investigation, protect the safety of informants and others involved, and guard against nuisance lawsuits that are brought merely to gain access to investigative information.

But J&C’s interests in obtaining discovery were also strong, because by issuing the cease-and-desist letter, McGinty effectively shut down the business, even though J&C had never even been charged with violating the law. The court of appeals appropriately balanced these interests.

In conducting its review, the court of appeals acknowledged the “sweeping implications” of J&C’s case. Because information related to a law-enforcement investigation is not entitled to absolute privilege, the court of appeals did not err in determining that a balancing test was required.

By a six-to-one vote, we affirmed the court of appeals’ judgment. We concluded that the law-enforcement privilege is not absolute, and we reaffirmed the validity of the balancing test we adopted in Henneman for weighing the interests of law enforcement against the needs of a civil litigant who request information in discovery.

By Paul E. Pfeifer

Paul E. Pfeifer is a judge in the Court of Appeals.

Paul E. Pfeifer is a judge in the Court of Appeals.

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