Court Opinion

ID: 9582728
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:30:43.213749+00
Date Added: 2024-06-11T13:38:16.425822
License: Public Domain

VOSS, Presiding Judge,
dissenting.
It is best to first recognize the portions of the majority decision with which I agree. The majority concludes, and I agree, that because candid exchanges between attorney and client play a necessary part in corporate representation, the “attorney-client privilege is available to corporations under Arizona law.” Further, that Ms. Fraiz was factually qualified as a paralegal to Samaritan’s Legal Department and the fact that she conducted the interviews and wrote the subjective reports does not deprive the communications of the attorney-client privilege. I disagree, however, with the majority’s bifurcation of the classification of corporate employees between control and non-control groups and the qualification of the privilege attaching to the latter. I further disagree, assuming for argument a “qualified privilege” “substantial need” analysis applies, that the trial court or this court had the record before it to make any such evaluation.
The result reached by the majority creates a confusing hybrid where the absolute privilege for factual communications to corporation lawyers by control group employees is protected, but is qualified for non-control group members. While acknowledging that the notion of a qualified attorney-client privilege is “unfamiliar,” the majority opts for “a more flexible rule,” involving such motion-prolific terms as “substantial need,” “undue hardship,” and “substantial equivalent.” Beyond opening the door for future argument in virtually every case as to what is a “control” or “non-control” group,17 the qualification de*441scribed by the majority is incongruous for defining the parameters of the attorney-client privilege because the broad language and discretion granted the trial judge places corporate counsel in the untenable position of being unable to rely on the confidentiality of in-house information gathering and ignores the admitted need for such an availability. The majority acknowledges the need for and existence of the privilege and then destroys its practical availability by introducing uncertainty. The United States Supreme Court recognized this problem when it stated that “[a]n uncertain privilege ... is little better than no privilege at all.” Upjohn Co. v. United States, 449 U.S. 383, 393, 101 S.Ct. 677, 684, 66 L.Ed.2d 584 (1981).
Upjohn involved the precise issue before this court and in a unanimous18 decision extended the attorney-client privilege to corporations and refused to recognize the so-called control group test.19 Before deciding the issue, the Court described the importance of the attorney-client privilege:
The attorney-client privilege is the oldest of the privileges for confidential communications known to the common law. 8 J. Wigmore, Evidence § 2290 (McNaughton rev. 1961). Its purpose is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice. The privilege recognizes that sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer’s being fully informed by the client____ [I]n Fisher v. United States, 425 U.S. 391, 403, 96 S.Ct. 1569, 1577, 48 L.Ed.2d 39 (1976), we recognized the purpose of the privilege to be “to encourage clients to make full disclosure to their attorneys.” This rationale for the privilege has long been recognized by the Court, see Hunt v. Blackburn, 128 U.S. 464, 470, 9 S.Ct. 125, 127, 32 L.Ed. 488 (1888) (privilege is “founded upon the necessity, in the interest and administration of justice, of the aid of persons having knowledge of the law and skilled in its practice, which assistance can only be safely and readily availed of when free from the consequences or the apprehension of disclosure”).
Id. 449 U.S. at 389, 101 S.Ct. at 682.
In Upjohn, management became aware of alleged irregularities in payments to foreign government officials to secure government business. The chairman of the board ordered corporate counsel to conduct an investigation for the purpose of determining the nature of any such payments. Managers and employees were interviewed or sent questionnaires and were advised to treat the material as confidential. Corporate counsel prepared notes and memoranda relative to the interviews and questionnaire results. Within seventeen months of the chairman’s request to develop the information, the I.R.S., in an effort to determine the tax consequences of the payments, asked the district court to compel production of the material after the corporation had declined to do so. Id. at 386-88, 101 S.Ct. at 681-82.
Here, on February 2, 1988, the young daughter of a physician suffered cardiac *442arrest during surgery resulting in substantial impairment. On February 8, 1988, Samaritan’s in-house counsel received notice of the occurrence. Indisputably in anticipation of litigation,20 Blair D. Benjamin, general counsel, directed attorney Chester to investigate the incident in order to provide legal advice to Samaritan.21 Ms. Chester instructed Ms. Fraiz, a nurse paralegal employed by Samaritan in its legal department, to interview employees involved in the occurrence. The employees were interviewed in March of 1988, and were advised that the interviews were confidential. Notes were taken of the interviews, and Ms. Fraiz then prepared memoranda directed to general counsel and intended for the use of Mr. Benjamin and Ms. Chester in rendering legal opinions to Samaritan. The documents were maintained as confidential attorney-client records. Two years after the incident, plaintiffs’ counsel demanded the production of the memoranda, and Samaritan refused, citing the attorney-client privilege.
In this case, as in Upjohn, the
communications at issue were made by [petitioner’s] employees to counsel for [petitioner] acting as such, at the direction of corporate superiors in order to secure legal advice from counsel____ Information not available from upper-echelon management, was needed to supply a basis for legal advice concerning ... potential litigation____ The communications concerned matters within the scope of the employees’ corporate duties, and the employees themselves were sufficiently aware that they were being questioned in order that the corporation could obtain legal advice.
Id. at 394, 101 S.Ct. at 685 (footnotes omitted).
The law evaluated by Upjohn is also substantively the same. “Federal Rule of Evidence 501 provides that ‘the privilege of a witness ... shall be governed by the principles of the common law as they may be interpreted by the courts ... in light of reason and experience.’ ” Id. at 389, 101 S.Ct. at 682. Rule 501, Arizona Rules of Evidence, provides that “privilege shall be governed by the principles of the common law as they may be interpreted in light of reason and experience, or as they have been held to apply in former decisions” (emphasis added). Section 12-2234 of our statutes provides no qualification; it prohibits an examination “as to any communication made by the client” to his attorney. The Arizona Supreme Court has recognized “that privileged material is not discoverable.” Butler v. Doyle, 112 Ariz. 522, 524, 544 P.2d 204, 206 (1975) (emphasis added).
The trial court, and apparently the majority, are concerned about Samaritan, which is not a party to the litigation, “throw[ing] a blanket” over the case. This concern was considered and rejected by the Upjohn court.
The Court of Appeals declined to extend the attorney-client privilege beyond the limits of the control group test for fear that doing so would entail severe burdens on discovery and create a broad “zone of silence” over corporate affairs. Application of the attorney-client privilege to communications such as those involved here, however, puts the adversary in no worse position than if the communications had never taken place. The privilege only protects disclosure of communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney[.]
449 U.S. at 395, 101 S.Ct. at 685 (emphasis added).
*443The majority also asserts that the qualification of the privilege for non-control employees will not have any substantial impact on the privilege. I disagree. The qualified privilege created by the majority will be construed as an uncertain one because it is broadly defined, and review of its application is subject only to the wide parameters of the abuse of discretion standard.
Here, the wide latitude taken by the trial judge is manifest. While acknowledging the existence of the attorney-client privilege relative to the material, the trial judge wanted, through redaction, to reduce the client interview summaries to “the functional equivalent of a witness statement.” In articulating the justification, the court stated: “[T]his seems to me to be a reasonable solution to provide information so that these witnesses who don’t remember everything can have this information.” The court characterized the material as nothing more than “past recollection recorded.” The trial judge, in his September 25, 1990 order, alluded to the “rights” of the witnesses and the plaintiffs. “The witnesses have a right to have those memories refreshed, and plaintiffs’ have a right to see their recollections which were recorded on or about the times of the incident.” (Emphasis added.) Such an approach—if the witnesses need interview summaries to refresh their recollection years after an incident, they and the plaintiffs get them— shows the sheer fantasy of the majority’s contention that a qualified privilege will provide any protection. Such an approach
frustrates the very purpose of the privilege by discouraging the communication of relevant information by employees of the client to attorneys seeking to render legal advice to the client corporation. The attorney’s advice will also frequently be more significant to noncontrol group members than to those who officially sanction the advice, and the control group test makes it more difficult to convey full and frank legal advice to the employees who will put into effect the client corporation’s policy. See, e.g., Duplan Corp. v. Deering Milliken, Inc., 397 F.Supp. 1146, 1164 (DSC 1974) (“After the lawyer forms his or her opinion, it is of no immediate benefit to the Chairman of the Board or the President. It must be given to the corporate personnel who will apply it”).
The narrow scope given the attorney-client privilege ... not only makes it difficult for corporate attorneys to formulate sound advice when their client is faced with a specific legal problem but also threatens to limit the valuable efforts of corporate counsel to ensure their client’s compliance with the law. In light of the vast and complicated array of regulatory legislation confronting the modern corporation, corporations, unlike most individuals, “constantly go to lawyers to find out how to obey the law.”
Upjohn, 449 U.S. at 392, 101 S.Ct. at 684 (citation omitted).
Obviously a corporation is physically incapable of walking into an attorney’s office to report facts and seek legal advice. When a corporation “speaks,” it must do so through its officers and employees. Those individuals who make up the corporation and who do the work that affect people’s lives must be able to talk candidly and confidentially with corporate counsel. As such, the qualified privilege established by the majority for non-control employees in a hospital setting will be particularly destructive as doctors, nurses, and scrub technicians—the people actually doing the work—by this decision will fall into the non-control category. The flow of information to and from these vital personnel will be affected as in-house investigations may be curtailed to avoid discovery by potential litigants.
The majority concludes that nurse Wilson’s deposition, taken some two years and three months after the incident, was not sufficiently fact intensive. While failing to discuss other information sources or the lack of any complaint about information availability by plaintiff until the existence of the interview summaries was disclosed, the majority concludes that the lack of production deprives the plaintiff of “the truth.” On the facts here, such a holding will allow plaintiff’s lawyers, armed with “I *444do not recall” answers, to obtain not only any lawyer’s summaries of interviews but to depose him or her to determine if anyone said anything in the context of the privilege. The result will be that corporate counsel will discontinue investigating incidents that need investigation and the public will suffer. Cf. Samaritan Health Servs., Inc. v. Superior Court, 142 Ariz. 435, 690 P.2d 154 (App.1984) (The parties concede that after Samaritan, counsel discontinued the practice of showing witnesses’ summaries of prior statements). The privilege is founded on the necessity that communications be free of even the “apprehension of disclosure.” Hunt v. Blackburn, 128 U.S. 464, 470, 9 S.Ct. 125, 127, 32 L.Ed. 408 (1888). If an attorney cannot promise to maintain the confidentiality of his client’s communications, the only advice he or she could provide to the client would be “Don’t talk to me.” Southern Cal. Gas Co. v. Public Util. Comm’n, 50 Cal.3d 31, 265 Cal.Rptr. 801, 803-04, 784 P.2d 1373, 1375-76 (1990).
In Samaritan Health Services, counsel sought to obtain interview summaries of employees of the hospital. The issues before the court were whether the attorney-client and work product privileges applied but were waived when the employees reviewed the interview summaries to refresh their recollections prior to giving testimony. In holding that a waiver had occurred, the court noted the existence of the attorney-client privilege.
[W]e hold that by using the interview summaries to refresh the recollections of its employees, Samaritan waived, except as qualified hereafter, the attorney-client ... privilege[] that initially attached to the interview summaries.
Samaritan Health Servs., 142 Ariz. at 438, 690 P.2d at 157 (emphasis added).
This court’s holding in Samaritan Health Services acknowledged that the attorney-client privilege attaches to interview summaries. The only difference between the case here and Samaritan Health Services is that the attorney in Samaritan Health Services interviewed and drafted the summaries rather than a paralegal, and here the summaries were never used in á manner that waived the privilege. As held by the majority, and I agree, the use of a paralegal does not affect the attachment of the privilege.
The trial court and the majority also rely on a perceived hardship placed on plaintiff without the production of the interview summaries. In Admiral Insurance Co. v. United States District Court, 881 F.2d 1486 (9th Cir.1989), the court had before it an interlocutory review of a trial court’s order requiring a party to produce written statements that ostensibly were covered by the attorney-client privilege. Like here, attorneys for the corporation had interviewed employees regarding the incident that gave rise to the litigation. The court rejected the plaintiffs’ contention that their inability to obtain the information from another source entitled them to discovery of what otherwise would have been protected under the attorney-client privilege:
The attorney-client privilege, like all other evidentiary privileges, may obstruct a party’s access to the truth. Although it may be inequitable that information contained in privileged materials is available to only one side in a dispute, a determination that communications or materials are privileged is simply a choice to protect the communication and relationship against* claims of competing interests. Any inequity in terms of access to information is the price the system pays to maintain the integrity of the privilege. An unavailability exception is, therefore, inconsistent with the nature and purpose of the privilege.
This conclusion is bolstered by the effect such an exception would necessarily have on the attorney-client privilege. An unavailability exception to the privilege would force counsel to warn their clients against communicating sensitive information for fear of subsequent forced disclosure. Here, but for the attorney-client privilege, [the corporation] might not have directed [its employee] to speak with counsel for fear of creating a transcribed statement for plaintiffs’ benefit____
*445In ordering production of a privileged statement on the facts of plaintiffs’ assertion that they could not otherwise obtain the information contained in the statement, the district court confused the attorney-client privilege with the work-product rule____ Although the rule affords special protections for work-product that reveals an attorney’s mental impressions and opinions, other work-product materials nonetheless may be ordered produced upon an adverse party’s demonstration of substantial need or inability to obtain the equivalent without undue hardship. See Upjohn, 449 U.S. at 401, 101 S.Ct. at 688.
... Accordingly, when a party makes a substantial showing that he is unable through his efforts to obtain needed information, the balance of equities shifts in favor of disclosure of trial preparation materials.

This rationale cannot logically be extended to support an unavailability exception to the attorney-client privilege. While the work-product rule protects a client’s investment in his attorney’s labor to prevent unfair exploitation, the [attorney-client] privilege protects communications between client and counsel to encourage the client to be forthcoming with his attorney so that appropriate legal advice can be offered. As Professor Saltzburg explained:

The principal difference between the attorney-client privilege and the work-product doctrine, in terms of the protections each provides, is that the privilege cannot be overcome by a showing of need, whereas a showing of need may justify discovery of an attorney’s work product. Saltzburg, Corporate and Related Attorney-Client Privilege: A Suggested Approach, 12 Hofstra L.Rev. 279, 299 (1984).
Id. at 1494 (emphasis added) (footnote omitted). The holding in Admiral Insurance recently has been adopted by the Montana Supreme Court. “While recognizing that the privilege denies access to these communications, the [Admiral] court held that the legal system’s need for the privilege outweighs an asserted need for the information. We conclude that the reasoning of the Ninth Circuit in Admiral Ins. is compelling and correct.” State ex rel. United States Fidelity & Guaranty Co. v. Second Judicial Dist. Court, 240 Mont. 5, 783 P.2d 911, 915 (1989) (emphasis added).
I find the reasoning of Upjohn and its progeny compelling, and I would grant relief on that basis.
Even if I were to agree with the majority and adopt a control group test as a defining factor in determining whether an attorney-client privilege exists, and further evaluate the application of the privilege under a substantial need and unavailability analysis, under the facts here I would still disagree with the majority’s application of its own test.
The surgery and cardiac arrest occurred on February 2, 1988. Plaintiffs’ counsel was retained early, and, in late March of 1988, demanded all the treatment and hospital records for the child. Suit was filed on September 20, 1988. The depositions of Miller, Gilboa, Wilson, and Covey were not taken until January 19, 1989, March 22, 1989, May 30, 1990, and June 11, 1990, respectively. Plaintiffs did not complain about the witnesses’ failed recall until disclosure of the existence of the interview summaries.
The trial judge’s order best outlines the problems.
Where plaintiffs’ opportunity to prove its case is as effectively blocked as defendants’ theories would claim in the fourteen motions before this Court, due process would seem to call for some form of remedy. Rather than the drastic remedy of a change in burden of proof, this Court chooses to allow the discovery of the functional equivalent of important witness statements, in a case where there is no other way for the evidence to be secured.
(Emphasis added.)
First, the trial judge applied, without analysis or citation of authority, a due process evaluation. This, after conceding the application of the attorney-client privilege. *446The majority declined to review the trial court’s due process evaluation as “increased calcification ... would follow a ruling on constitutional grounds.” How can the majority, using an attorney-client privilege analysis, say what the trial court did is correct when the trial judge decided the motion for protective order as a due process issue?
Next, the special action was filed initially by Samaritan, a non-party, based on the trial judge’s refusal to grant its request for a protective order for the four interview summaries. The trial judge appears in his order to be weighing the options of “changpng] the burden of proof” versus ordering disclosure. What strikes me is that changing the burden of proof involves exclusively plaintiffs’ negligent supervision claim against defendant Phoenix Children’s Hospital. Whether the judge wants to shift the burden of proof on a negligent supervision claim against a defendant in the lawsuit should have nothing to do with an evaluation of whether Samaritan’s communications with its employees enjoy attorney-client protection.
Also, the trial judge concludes that this is a case where “there is no other way for the evidence to be secured.” (Emphasis added.) The plaintiffs have multiple sources of information. Taking judicial notice22 of state court files (The Superior Court of the State of Arizona), it is clear that in addition to the subject nurses, there were at least eight other nurses or technicians and six doctors in and out of the operating room during this occurrence. The trial file in this action contains eighteen volumes of documents excluding discovery and transcripts. The record before the superior court indicates that the parties filed eighty-three notices of deposition; thirty-eight notices of deposition taken; nine notices of deposition with certificates of service; seven amended notices of deposition with certification of service; and, one amended notice of deposition. A lawyer at oral argument characterized the discovery record as containing “hundreds of pages” of depositions.
This is not a case where the majority can say, based on the record, that the defendant has all the facts and plaintiff has no means to develop them. The file before this court, like the trial court, contains only a fraction of the discovery. We do not have one complete deposition or any other written discovery. All this record contains are snapshots of depositions of the four nurses. It is impossible for the majority to have reviewed the unavailability element of its own test because we do not have the complete record. The trial judge also did not make this evaluation because the discovery material—depositions, written discovery—is not in the trial file.
The “evidence” alluded to by the trial court in the statement contending that there is “no other way” for it to be secured, is the interview summaries. The court, at the time it made this statement, could not have had any idea what the “evidence” was as the summaries were ordered to be produced for in camera inspection in the same order that contained the statement.
The majority concludes that the trial court was not “derelict in applying the substantial need and unavailability standards to the materials tendered for review.” As seen by the trial court’s own order, it did not apply that test and, it could not have because it could not compare interview summaries that it had not seen with discovery not available for it to read.
At a minimum, I would remand the matter to the trial court with instructions to determine the substantial need and unavailability issues after it has read the discovered material in the case. The majority’s decision approves an evaluation that simply never took place.
The majority must make two assumptions to conclude that the plaintiff is deprived of the truth on this record. First, *447that the record does not contain an adequate account of what transpired in the operating room.23 Second, that the inadequacy is a result of some systemic conspiracy. The trial court accuses the petitioner of “sendpng] in [the] troops ..., and then all of a sudden everything is gone.” The implication is that the entire hospital staff—the doctors, nurses, and technicians—are lying. From this record, I will not participate in such an implication.
If the majority does not believe that corporations can be trusted with a meaningful attorney-client privilege, they should say so and attempt to justify such a conclusion. The trial judge, unable to justify production when confronted with the attorney-client privilege, reached for the Due Process Clause. The majority, unable to justify a due process analysis, qualified the privilege. To first extol the benefits of the corporate privilege and then to say, on this record, that access to “the truth” requires a qualification, is simply manufactured.
As I disagree with the creation of the control versus non-control paradigm with an overlay of pliant terms such as “substantial need,” I respectfully dissent.24

. The very terms of the test ... suggest the unpredictability of its application. The test [of what is a control group] restricts the availability of the privilege to those officers who play a ‘substantial role’ in deciding and directing a corporation’s legal response. Disparate decisions in cases applying this test illustrate its unpredictability. Compare, e.g., Hogan v. Zletz, 43 F.R.D. 308, 315-316 (ND Okl.1967), aff'd in part sub nom. Natta v. Hogan, 392 F.2d 686 (CA 10 1968) (control group includes managers and assistant managers of patent *441division and research and development department), with Congoleum Industries, Inc. v. GAP Corp., 49 F.R.D. 82, 83-85 (ED Pa.1969), aff'd, 478 F.2d 1398 (CA3 1973) (control group includes only division and corporate vice presidents, and not two directors of research and vice president for production and research).
Upjohn, 449 U.S. at 393, 101 S.Ct. at 684.

. Chief Justice Burger filed a concurring opinion but "agree[d] fully with the Court’s rejection of the so-called ‘control group’ test, its reasons for doing so, and its ultimate holding that the communications at issue are privileged.” Id. at 402, 101 S.Ct. at 689.

. Id. at 397, 101 S.Ct. at 686. Citing Upjohn, the California Court of Appeal in Bobele v. Superior Court, 199 Cal.App.3d 708, 245 Cal.Rptr. 144 (1988), reaffirmed that ‘‘[t]he attorney-client privilege applies to corporations,” id. 245 Cal.Rptr. at 146, and recognized the "need to insure that privileged communications remain privileged!' Id. at 148 (emphasis added). Other cases adopting the reasoning of Upjohn are Sullivan v. Fairmont Homes, Inc., 543 N.E.2d 1130, 1134 (Ind.App.1989), and SICPA North Am. v. Donaldson Enters., Inc., 179 N.J.Super. 56, 430 A.2d 262, 264 (Law Div.1981).

. The trial judge understood the need for the contact:
MR. CRAWFORD: These basic foundational matters have not been contradicted by the plaintiffs, that Kathy [sic] Chester directed a paralegal in the legal department to interview these people for her because the hospital felt there was a reasonable possibility they might get sued. That’s not contradicted.
THE COURT: I agree with that.
Samaritan’s concern was confirmed as counsel for plaintiff had hand delivered on March 30, 1988, a letter demanding copies of all records concerning the admission and treatment of the plaintiff.

. Samaritan is not a party to the underlying litigation, but became involved through its objections to plaintiffs’ discovery efforts.

. The court of appeals may take judicial notice of state court files. See Morris K. Udall et al., Arizona Practice: Law of Evidence § 152, at 331 (3d ed. 1991).

. The majority criticizes my assumption that “in so intensely processed a case, equivalent information must be somehow available from some other source.” Is my assumption somehow worse than the majority's that the information is not available in the volumes of discovery? My point is that neither the majority nor I should make any assumptions. The trial judge and the appellate court should read the entire record before coming to conclusions about what it contains. This is certainly not an unreasonable expectation.

. The majority spends much time discussing Rule 26(b)(3), the work product privilege. The rule only allows discovery of material that is "otherwise discoverable.” As the trial court did not base its decision on the work product privilege, and as I conclude that the material is not "otherwise discoverable” because of the application of the attorney-client privilege, I do not feel additional discussion of the issue is necessary. Butler, 112 Ariz. at 524, 544 P.2d at 206. ("[P]rivileged material is not discoverable.”)