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Ohio Bureau of Workers' Compensation v. MDL Active Duration Fund

July 6, 2006

THE OHIO BUREAU OF WORKERS' COMPENSATION, PLAINTIFF,
v.
MDL ACTIVE DURATION FUND, LTD., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Graham

ORDER

This case is currently before the Court to consider a motion filed by Ohio Inspector General Thomas P. Charles to quash a subpoena served upon the Inspector General by the defendants. For the following reasons, the motion will be denied without prejudice to the following of proper procedures concerning the assertion of the privileges described in the motion to quash.

The defendants served the Ohio Inspector General with a subpoena duces tecum on March 15, 2006. The subpoena was quite broad and described a large number of documents sought by the defendants, including documents relating to a large number of people involved in the Bureau of Worker's Compensation's investment with defendant MDL Capital Management. The Inspector General filed a motion to quash asserting four different reasons for non-disclosure. They are:(1) that the requested documents are confidential law enforcement records protected from disclosure because they would disclose investigative techniques of an ongoing investigation; (2) the records relate to ongoing state and federal grand jury investigations; (3) the documents are covered by executive privilege; and (4) they are covered by the deliberative process privilege. Although the motion invokes these four privileges, and the reply memorandum reargues two of them, neither of those filings was accompanied by any affidavits, declarations, privilege logs, or other documents identifying for the Court's benefit, either by category or individual document, the documents which are being withheld. Further, there are no factual submissions before the Court which would enable the Court to determine whether any of the factual assertions made in support of the non-production of these documents has a basis in fact.

The substantive claims in this complaint are based on Ohio law and, therefore, the Court is bound to apply the Ohio law with respect to privileges. Fed. R. Evid. 501. However, in order to determine whether a movant who has requested the Court to quash a subpoena issued under the Federal Rules of Civil Procedure has followed the appropriate procedures for asserting the privilege, federal law, and not state law, most likely applies. It does not matter, however, which procedural law is chosen, because both Ohio and federal law require a party seeking to withhold documents on grounds of a privilege to establish a factual basis for that claim.

The Ohio Supreme Court, dealing with the issue of executive privilege in State ex rel Dann v. Taft, 1 Ohio St. 3d 364 (2006)(Dann I) held that when such a privilege is invoked, whether in the context of a public records request or a discovery request, a formal assertion of the privilege by the holder of the privilege is required. The Court made clear that the formal assertion should be made by way an of affidavit or declaration signed by the privilege holder. See, State ex rel Dann v. Taft, ___ Ohio St. 3d ___, 2006 WL 1620754 (June 13, 2006) (Dann II). That holding simply reiterates established Ohio law that the burden of establishing the factual basis for a claim of privilege rests with the party asserting the privilege. See Lemley v. Kaiser, 6 Ohio St. 3d 258 (1983); see also Cargotec v. Westchester Fire Insurance Co., 155 Ohio App. 3d 653 (Lucas Co. 2003). Similarly, under federal law, "[i]t is axiomatic that the burden is on the party claiming protection of a privilege to establish those facts that are essential elements of the privileged relationship." In re Grand Jury Subpoena, 750 F.2d 223, 224 (2d Cir. 1984). Procedurally, the privilege holder "must do more than alert the Court to state privilege law or the generalized policies which support it" and must make a showing which "explain[s] the reasons for nondisclosure with particularity, so that the Court can make an intelligent and informed choice as to each requested piece of information." King v. Conde, 121 F.R.D. 180, 189 (E.D.N.Y. 1988).

Here, although the inspector general has asserted various privileges, the inspector general has not filed a declaration which would establish, as a factual matter, any of the foundations for any of the privileges asserted, nor is there any explanation as to how these privileges apply to various documents which are responsive to the subpoena. The subpoena itself does not specifically call for the production of privileged documents, but rather calls for the production of a broader array of documents, some of which, depending upon the manner in which they were created, the manner in which they were acquired, or their content, might be subject to some privilege. However, the Court is completely unable to determine that from the current record which is, in fact, no record at all.

Although the failure of the Inspector General to make any record on this issue might justify the denial of the motion to quash and a corresponding order that the documents be produced, the Court is concerned that important state privileges may be at issue here. Consequently, the Court will establish a procedure for dealing with these issues. Within 15 days of the date of this order, the Inspector General shall supply to counsel for the defendants a log indicating, with as much specificity as is consistent with the assertion of privilege, the identity of the documents which have been withheld and the basis for each withholding. The Inspector General shall also provide a declaration either from himself or someone with appropriate authority within the Inspector General's office that any privileges belonging to the Inspector General, such as executive or deliberate process privileges, are being invoked, and why. Counsel shall then meet and confer within 15 days thereafter to determine whether any of the claims of privilege can be resolved without the need for judicial intervention. If that does not completely resolve these issues, within 15 days after that meeting the Inspector General may renew the motion to quash. Any renewed motion must be adequately supported as described in the body of this order so that the Court may determine, on either a categorical or document-by-document basis, what privilege is being asserted with respect to each document or category of documents, and whether the factual foundation for the assertion of that privilege is present. That motion shall then be briefed in accordance with the Local Rules of Court. Pending the parties' compliance with these procedures, the motion to quash (#69) is denied.

Any party may, within ten (10) days after this Order is filed, file and serve on the opposing party a motion for reconsideration by a District Judge. 28 U.S.C. §636(b)(1)(A), Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt. I., F., 5. The motion must specifically designate the order or part in question and the basis for any objection. Responses to objections are due ten days after objections are filed and replies by the objecting party are due seven days thereafter. The District Judge, upon consideration of the motion, shall set aside any part of this Order found to be clearly erroneous or contrary to law.

This order is in full force and effect, notwithstanding the filing of any objections, unless stayed by the Magistrate Judge or District Judge. S.D. Ohio L.R. 72.4.

Terence P. Kemp United States Magistrate Judge

20060706

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