Ohio Supreme Court Sets New Test for Determining Whether a Private Entity is Subject to Public Records Laws

Maria Armstrong
Bricker & Eckler LLP
October 2006

Full text of the Ohio Supreme Court
decision discussed in this article

Summary. The Ohio Supreme Court recently announced a new standard for determining whether a private entity is a public institution for purposes of application of the public records law. The case examined a private non-profit entity that contracted with a county community-based correctional facility to provide services. In a 4 to 3 decision, the Ohio Supreme Court found that although the county and the community-based correctional facility were each public offices, the private non-profit entity was not the functional equivalent of a public institution under the facts of this case. Thus, the private entity could not be forced to turn over records under Ohio’s public records law.

On October 4, 2006, the Ohio Supreme Court announced a new rule for determining whether a private entity is a public institution subject to Ohio public records laws. The case, State ex rel. Oriana House, Inc. v. Montgomery, involved a community-based correctional facility (“CBCF”) operated by the Summit County Ohio Judicial Corrections Board. The Board was responsible by law for operating the CBCF that, in turn, contracted with Oriana House to operate the Summit County CBCF.

Oriana House, a private non-profit corporation, had recently been the subject of state auditor’s review that resulted in litigation and a court finding that Oriana House could be subject to audit by the state auditor. See Bricker & Eckler LLP client bulletin Recent Changes Impact Private Corporations, Their Subsidiaries and Their Officers When State Funding is Accepted.

Although the court previously found that Oriana House was a public entity for purposes of state auditing law, the Court concluded that Oriana House was not a public institution for purposes of public records law. In doing so, the Court set forth a new “functional equivalency test” with a four-point test to determine when a private entity is subject to Ohio public records laws. In setting forth the new test, the Court made clear that the functional equivalency analysis begins with a presumption that private entities are not subject to the public records law. The Court also made clear the functional equivalency analysis must be applied by the courts in a case-by-case basis specific to the particular facts of any situation involved.

Functional Equivalency Test

In reviewing a public records request posed by the State Auditor to Oriana House, the Ohio Supreme Court reiterated that the general rule in public records law is to construe Ohio Revised Code Section 149.43 liberally and in favor of broad access and disclosure of records. As to Oriana House, the Court noted that the entity was a private non-profit corporation that did perform certain day-to-day operations on behalf of the Summit County CBCF, a public office performing public duties. The definition of a public office subject to the public records laws is contained in Ohio Revised Code Section 149.011(A), and broadly includes any state agency, public institution, political subdivision, or other entities, which are established by law for the exercise of any function of government. The Court reviewed a number of previous decisions it had issued outlining what constitutes a public institution and thus a public office for purposes of public records law. In previous cases, the Court had adopted a two or three part test for conducting that analysis.

The Court abandoned those earlier tests, noting the absence of a precise legislative definition for what constitutes a public office, and developed a new test called the “functional equivalency test.” The Court held that the functional equivalency test should be applied in future situations where a private entity or a hybrid public-private entity is asked to submit records pursuant to Ohio public records law. After an analysis of similar cases issued by the courts of other states, the Ohio Supreme Court adopted and announced the following: four factors to determine whether a private entity is a public institution subject to Ohio public records laws:

1. Whether the entity performs a governmental function;

2. The level of government funding;

3. The extent of government involvement or regulation; and

4. Whether the entity was created by the government or to avoid the requirements of the public records act.

The Court was careful to note that the functional equivalency analysis should begin with a presumption that private entities are not subject to the public records act. Absent a showing by clear and convincing evidence that the functional equivalency test is met, records held by a private entity are not subject to Ohio public records law.

Specific to Oriana House, the Ohio Supreme Court examined the four factors and concluded that Oriana House was not a public institution or public office, and could not be subject to public records law. First, the Court found that Oriana House performed a historically governmental function by operating a correctional facility. Second, as to the level of government funding, the Court noted that receiving government funds does not automatically convert a private entity into a public office. In the case of Oriana House specifically, the Court found that the level of government funding was significant. Thus the Court concluded that the first two prongs of the functional equivalency test had been met.

However, the Court found that the second two prongs were not met. The Court found no evidence that any governmental entity controlled the day-to-day operations of Oriana House thus the extent of government involvement was minimal. Similarly, the Court found no evidence that Oriana House was created specifically to avoid the requirements of the public records act.

The Supreme Court concluded that only two of the four prongs were met and proceeded to weigh the factors. Noting that Ohio Revised Code Section 149.43 requires liberal construction in favor of broad access to public records, the Court nonetheless concluded that there was not clear and convincing evidence that Oriana House was a public institution. Therefore, after considering and weighing all four factors, the Court found that Oriana House was not a public institution:

A private business does not open its records to public scrutiny merely by performing services on behalf of the state or a municipal government. It ought to be difficult for someone to compel a private entity to adhere to the dictates of the public records act, which are designed by the General Assembly to allow public scrutiny of public offices, and not all entities that receive funds previously controlled by the government.”

Three justices dissented. The dissent generally agreed with the adoption of the functional equivalency test, but disagreed with its application in this particular matter, arguing that clearer guidance as to the appropriate balancing of the different factors was needed. The three dissenting justices reviewed and applied the functional equivalency test to the facts and came to a different conclusion than did the majority. Under its analysis of the facts presented in this case and the four prongs of the functional equivalency test the dissent would have tipped the scales toward finding that Oriana House was a public institution subject to public records laws.