Slade v. Superior Court – 3/6/2006

March 6, 2006

Arizona Court of Appeals Division One Holds That, Despite Confidentiality Statute, Arizona Corporation Commission Must Disclose Case File of Expert Witness and Names of Witnesses Referred to in Fact Investigator’s Filed Affidavit.

Defendants in a securities fraud action brought by the Arizona Corporation Commission (the “Commission”) sought to discover information regarding the identities of investors who had made allegations against them, and information and documents gathered by the Commission’s accountant and investigator. The accountant and investigator had each provided an affidavit filed by the Commission in an ex parte application for a Temporary Restraining Order. The trial court ordered disclosure of all communications to the accountant, regardless of otherwise applicable work-product or attorney-client privilege protections, because the Commission had designated him as an expert witness. The trial court ordered a limited deposition of the fact investigator and required disclosure of the accountant’s notes regarding only those investors already identified.

The court of appeals granted special action jurisdiction to review the trial court’s decision in light of A.R.S. § 44-2042(A) (the “Confidentiality Statute”), which protects the confidentiality of information obtained during an investigation by the Commission “unless the names, information or documents are made a matter of public record.” The appellate court held that, because of his designation as an expert witness, the accountant’s entire case file was discoverable notwithstanding the Confidentiality Statute, except for any items that could be shown to not relate to the subject matter of the accountant’s testimony. See Emergency Care Dynamics, Ltd. v. Super. Ct., 188 Ariz. 32, 33, 932 P.2d 297, 298 (App. 1997) (finding loss of work-product protection for communications with expert witness). Because the investigator was not a testifying expert witness, however, materials in his case file retained work-product immunity.

The trial court erred, however, by limiting discovery to the names of investors already disclosed. Because the investigator’s affidavit referred to allegations regarding groups of unnamed investors, thereby making the information a “matter of public record” under the Confidentiality Statute, the Commission was required to disclose the names of all investors referred to in the affidavit, and any materials upon which the investigator relied in compiling or assessing the information disclosed in the affidavit.

Judge Orozco wrote the opinion for the panel; Judge Snow and Judge Irvine concurred.