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Cleveland Clinic Foundation v. Levin

December 4, 2008

CLEVELAND CLINIC FOUNDATION ET AL., APPELLANTS,
v.
LEVIN, TAX COMMR., ET AL., APPELLEES.



APPEAL from the Board of Tax Appeals, Nos. 2005-V-1726, 2006-V-99, and 2006-H-117.

SYLLABUS BY THE COURT

On motion to dismiss - Motion denied, order vacated in part, and cause remanded.

Submitted September 30, 2008

ON MOTION TO DISMISS

{¶1} This cause is pending before the court as an interlocutory appeal from the Board of Tax Appeals ("BTA"). Appellants Cleveland Clinic Foundation and Fairview Hospital (together, "CCF") have filed a notice of appeal from an interim order of the BTA dated January 25, 2008. That order denied a portion of CCF's motion for protective order. Specifically, although the BTA adopted a stipulated confidentiality order between the parties, the BTA declined to rule on the trade-secret status of particular documents. CCF asserts that unless the BTA issues a prehearing ruling that confers trade-secret protection on particular documents, its confidentiality rights may suffer irretrievable loss. The Tax Commissioner has moved to dismiss the appeal for lack of jurisdiction, claiming that the interlocutory order is not final and appealable.

{¶2} This case involves a claim of tax exemption for real property based on alleged charitable use of the property. R.C. 5709.12(B) and 5709.121. CCF applied to exempt three healthcare facilities. For its Taussig Cancer Center and Fairview Hospital, CCF sought exemption for the 2002 tax year along with remission of taxes for 2001, 1999, and 1998. For the Beachwood Family Health and Surgery Center, CCF sought exemption for the 2004 tax year along with remission of taxes for 2003, 2002, and 2001. The Tax Commissioner granted exemption to the Taussig Center and Fairview Hospital, but denied exemption to the Beachwood facility. The Cleveland Municipal School District Board of Education ("Cleveland BOE") appealed the exemptions that the commissioner had granted, and CCF appealed the denied application. The Cleveland BOE and the Beachwood City School District Board of Education (together, the "school boards") pursued extensive written discovery at the BTA.

{¶3} At issue are interrogatories and document requests served by the school boards that, as the BTA stated, "relat[e] to, inter alia, CCF's physician and executive compensation, joint ventures, spin-offs, conflicts of interest, pricing and debt collection, and marketing" during the period for which exemption is claimed. Cleveland Clinic Found. v. Levin (Jan. 25, 2008), BTA Nos. 2005-V-1726, 2006-V-99, and 2006-H-117 at 3-4. CCF has claimed that a number of such documents contain or constitute trade secrets protected from disclosure by R.C. 1333.61 et seq.

{¶4} In the January 25, 2008 interim order, the BTA ruled on a motion to compel and a motion for protective order. Having previously held a hearing that concerned the confidential status of categories of documents, the BTA ordered CCF to produce a large number of the requested documents. To protect confidentiality during discovery, the BTA adopted and reinforced a stipulated confidentiality order to which the school boards and CCF had agreed. The BTA also limited the Tax Commissioner's access to the documents to the extent that he would decline to sign the stipulated confidentiality order. CCF contests the BTA's refusal to make a definitive determination that certain documents are confidential and to order that such documents should be produced under seal.

{¶5} Although the parties analyze the order's finality and appealability under R.C. 2505.02(B)(4), we have held that the appealability of an interim order of the BTA should be analyzed under R.C. 2505.02(B)(2). Southside Community Dev. Corp. v. Levin, 116 Ohio St.3d 1209, 2007-Ohio-6665, 878 N.E.2d 1048, ¶ 5. As we stated in Southside, quoting R.C. 2505.02(B)(2), an interim order of the BTA is final and appealable if it is an " 'order that affects a substantial right.' "*fn1

Id.

{¶6} Furthermore, an order qualifies as one that "affects a substantial right" if it satisfies a two-pronged test. First, the order must implicate "a right" that "a statute [or other law] * * * entitles a person to enforce or protect." R.C. 2505.02(A)(1). Because the Revised Code at Sections 1333.61 et seq. defines and provides remedies for protecting trade secrets, the BTA order satisfies the first prong of the test.

{¶7} More difficult is the analysis under the second prong. An interim order of the BTA qualifies as one that affects a substantial right only when it is an order that " 'if not immediately appealable, would foreclose appropriate relief in the future.' " Southside, 116 Ohio St.3d 1209, 2007-Ohio-6665, 878 N.E.2d 1048, ¶ 7, quoting Bell v. Mt. Sinai Med. Ctr. (1993), 67 Ohio St.3d 60, 63, 616 N.E.2d 181.

{¶8} CCF asserts two reasons that the January 25, 2008 order in this case might expose its trade secrets to irretrievable loss. We reject the first, but accept the second.

{ΒΆ9} First, CCF fears a loss of confidentiality during the discovery process. To be sure, the BTA adopted and reinforced the stipulated confidentiality order of the parties, and that order furnishes various protections that even CCF might regard as sufficient in a case involving only private litigants. The source of CCF's concern lies in the nature of the school boards as "public offices." Because the school boards are subject to the Public Records Act, R.C. 149.43, CCF fears that they ...


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