State v. Schneider/Hanna – 3/30/2006

April 7, 2006

Arizona Court of Appeals Division One, on Special Action Review, Affirms the Trial Court’s Finding That Grand Jury Must Redetermine Probable Cause In Case Against City Council Members and City Clerk Because Former City Attorney Had Disclosed Attorney-Client Privileged Communications in His Grand Jury Testimony About His Communications with These City Officials.

Glendale City Attorney Richard Flaaen resigned his position after being informed that he would likely be terminated if he did not resign because an investigation apparently disclosed he had misused his City computer and internet access. After resigning, Flaaen initiated contact with the Maricopa County Attorney’s office. He alleged that four city council members and the city clerk had committed criminal acts related to their filing of 2002 financial disclosures, including backdating the disclosures. He appeared before the grand jury and testified to the content of communications he had shared with the city officials, while employed as the city attorney, in both private communications and executive sessions of the Glendale City Council. The grand jury indicted the four council members for presentment of false instruments, and indicted the city clerk on counts of tampering with public records and destroying public records.

The council members and city clerk filed a motion to remand to the grand jury, asserting, among other objections, that Flaaen’s testimony before the grand jury disclosed communications protected by the attorney-client privilege and therefore a redetermination of probable cause was necessary. The trial court agreed and remanded to the grand jury. The State brought a special action, and Division One accepted jurisdiction.

Division One affirmed the trial court’s determination, describing Arizona’s “functional approach” to determine whether the privilege exists, which focuses on “the relationship between the communicator and the need for legal services,” as well as whether the communication “concerns the employee’s own conduct within the scope of his or her employment and is made to assist the lawyer in assessing or responding to the legal consequences of that conduct.” Samaritan v. Goodfarb, 176 Ariz. 497, 862 P.2d 870 (1993). In determining Flaaen’s communications with the city officials were privileged, the court considered not only this common law definition of the privilege but also: (1) a Glendale ordinance requiring the city attorney to be “the chief legal adviser of all officers, departments, and agencies and of all officers and employees in matters relating to their official powers and duties, and (2) A.R.S. § 13-4062(2), specifying that “a person shall not be examined as a witness in the following cases . . . an attorney, without consent of the attorney’s client, as to any communication made by the client to the attorney, or the attorney’s advice given in the course of professional employment.”

The court rejected the State’s argument that the attorney-client privilege does not apply to any communications between a government official and a government attorney in a grand jury proceedings against the government official. The court reasoned that Flaaen’s communications fell within Samaritan’s definition of privilege as well as within the plain meaning of Section 13-4062, which does not purport to exclude communications made to government attorneys that would otherwise fit within the privilege. Although the State had cited two federal appellate decisions finding such an exception, the court was more persuaded by the competing policies articulated in a Second Circuit case holding otherwise. In re Grand Jury Investigation United States v. Doe, 399 F.3d 527, 534 (2d Cir. 2005). In that case, the Second Circuit explicitly rejected the approach adopted by other circuits, observing that government representatives need recourse to attorneys with whom they may have confidence in order to promote the full disclosure necessary to obtain accurate legal advice that leads to good government. A government entity is no less in need of informed legal advice than its private counterpart, and the privilege is intended to encourage the client in need of such advice to tell the lawyer the truth.

The court also rejected the State’s argument that even if the privilege does extend to communications between government officials an their government lawyers, Flaeen’s testimony did not disclose privileged information because it did not meet the other requirements of Samaritan; in particular, the communications at issue were not made for the purpose of seeking legal advice or were not treated as confidential. The court disagreed, noting that the existence of the attorney-client privilege is evaluated from the perspective of the communicant. In this case, the city officials were discussing the circumstances surrounding, and ramifications of, backdating the financial disclosures. These discussions were held either one-on-one with Flaaen, or with Flaaen along with other city officials in executive sessions. The court found the former to be “at the core of those covered by the attorney-client privilege” and the latter to be confidential because the statutes governing executive sessions specify that the disclosure of information during such a session does not constitute “a waiver of any privilege, including the attorney-client privilege.” A.R.S. § 38-431.03(F).

Judge Snow authored the opinion; Judge Ehrlich and Judge Gemmill conc