Lund v. Donahoe – 7/28/2011
Arizona Court of Appeals Division One Holds That The Trial Court Abused Its Discretion in Imposing Sanctions Over a Reasonable Subpoena and Assertion of the Attorney-Client Privilege.
In a guardianship proceeding, a party served a subpoena asking for voluminous documents on an expert witness. The expert did not file an objection, but instead resigned from the case as a result of the burden posed by the subpoena. In response, the trial court stated that the subpoena was “overbroad and oppressive…intended more for harassment than anything else” and sua sponte quashed the subpoena. The court then set a show-cause hearing concerning possible sanctions and asked any attorney that participated in the decision to serve the subpoena to appear with their clients. At the show cause hearing, the court put the attorney who had served the subpoena, Mr. Sannes, under oath and asked him to identify all parties to the Common Interest Agreement. When Sannes asserted that the information was privileged, the court ordered him to answer or be held in civil contempt. The court also refused to stay its order to allow Sannes to seek special action relief. Sannes then disclosed the names of the other attorneys who were party to the common interest agreement. The court next asked whether the decision to issue the subpoena was a joint decision of all the parties to the agreement. Sanne refused to answer the question saying that he would be forced to disclose the nature of the conversations. The court then held Sannes in contempt and had him handcuffed in court.
Having determined that the subpoena was sanctionable, the court then purported to hold a culprit hearing and questioned other attorneys regarding whether there was a joint agreement to abuse the discovery process. The court rejected the argument that a five-year request for expert records was a standard discovery practice, although conceding that an identical subpoena might be appropriate in some cases. After all attorneys refused to disclose the substance of their communications regarding the issuance of the subpoena, the court stated “because nobody has denied it, I’m just going to assume that everybody participated and agreed to it” and announced its intention to sanction all counsel. The Court ordered Sannes released from handcuffs and made findings that the subpoena was oppressive and for the purpose of harassment and delay. As a sanction, the court ordered each attorney to pay $1,000 to the court clerk and $1,636.56 to opposing counsel. The court also prohibited the attorneys from charging their clients for activities related to the subpoena. After the attorneys’ motion for reconsideration and request for additional evidentiary hearings were denied, the attorneys filed petitions for special action. The Court of Appeals accepted jurisdiction.
The Court of Appeals determined that the subpoena was a proper means of gathering information in anticipation of the cross-examination of the expert. The Court reasoned that the five-year period was not per se overbroad and the expert could have eliminated the burden by sending an objection to Sannes. The Court of Appeals found that the trial court abused its discretion by bypassing the procedure provided by Rule 45 for the orderly resolution of objections and determining that the information sought by the subpoena would have no relevance and that the subpoena was intended to harass, despite acknowledging that an identical subpoena might have been acceptable in another case. Moreover, the Court of Appeals noted that the trial court failed to seek evidence regarding any improper motive for the subpoena and therefore could not support its imposition of sanctions based on vague hunches or inarticulable reasons.
The Court of Appeals further determined that the communications among counsel regarding who was in support of the subpoena was protected by the attorney-client privilege and not waived by the common interest agreement. The Court reasoned that identification of those who supported or opposed the issuance of the subpoena would have revealed communications and advice between client and attorney about active litigation and reflected strategic decisions individual to each client. Thus, the attorneys properly refused to answer the questions posed by the trial court.
The Court additionally determined that the “culprit hearing” held by the trial court violated due process. A culprit hearing provides an opportunity for the client to reveal to the court its lack of involvement in sanctionable conduct. The Court found that in this case, the trial court provided no opportunity for the various clients to consider waiver of the protection of the common interest agreement. Moreover, although the trial court characterized the hearing as an order to show cause hearing, it actually conducted an evidentiary hearing – providing no notice to counsel that they would be called upon to testify. The court failed to provide sufficient notice so that the parties were fully prepared to address the legal question at issue before imposing sanctions. Furthermore, the Court of Appeals found that the trial court additionally abused its discretion because it could not even articulate how the subpoena was offensive. The trial court stated that “some things just kind of jump out at you. You can’t articulate the reasons for it.”
The Court of Appeals determined that by failing to give the attorneys notice and refusing to allow them the opportunity for additional briefing or to seek immediate appellate review, the trial court left the attorneys no choice but to refuse compliance. The attorneys’ refusal to answer questions presented no threat to the administration of justice so severe as to warrant the summary imposition of contempt sanctions. The Court of Appeals granted relief and vacated the contempt finding against Sannes and all sanctions entered against all attorneys.
Judge Swann authored the opinion; Judges Irvine and Portley concurred.