Samaritan Foundation v. Goodfarb
26 A.L.R. 5th 893, 176 Ariz. 497, 862 P.2d 870 (1993)
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Rule of Law:
When a corporation initiates an investigation, factual communications from an employee to corporate counsel are protected by the attorney-client privilege only if the communication concerns the employee's own conduct within the scope of their employment and is made to assist counsel in assessing the legal consequences of that conduct for the corporation.
Facts:
- In 1988, a child's heart stopped during surgery at Phoenix Children’s Hospital, located in the Good Samaritan Regional Medical Center.
- A lawyer for Good Samaritan, the parent corporation, initiated an investigation into the incident.
- The lawyer directed a nurse paralegal to interview three nurses and a scrub technician who were present during the surgery but were not the physicians performing the procedure.
- The paralegal summarized these interviews in memoranda and submitted them to Samaritan's corporate counsel.
- Each of the four employees also signed a form agreeing to accept legal representation from Samaritan’s legal department.
- Two years later, when deposed in a lawsuit, the four employees could not remember the details of what happened in the operating room.
Procedural Posture:
- The child and her parents sued Phoenix Children’s Hospital and the physicians in an Arizona trial court for medical negligence.
- During discovery, the plaintiffs sought the production of the interview summaries from Samaritan, a non-party.
- Samaritan and Phoenix Children's Hospital resisted production, asserting attorney-client privilege and work product protection.
- The trial court ordered the summaries produced for an in-camera review, finding they were not privileged but were protected as work product, and intended to release the factual witness statements.
- Samaritan and Phoenix Children's Hospital (petitioners) filed a special action in the Arizona Court of Appeals, an intermediate appellate court, to prevent the disclosure.
- The court of appeals denied relief, adopting the 'control group test' and holding the communications were not privileged.
- Samaritan and Phoenix Children's Hospital then filed petitions for review with the Supreme Court of Arizona, the state's highest court.
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Issue:
Does the corporate attorney-client privilege protect factual communications made by non-control group employees to corporate counsel during an internal investigation, when those communications concern the actions of others rather than the employees' own conduct?
Opinions:
Majority - Martone, Justice.
No, the corporate attorney-client privilege does not protect these communications. To determine if a corporate employee's communication is privileged, courts must use a functional approach that focuses on the nature of the communication, not the status of the employee. Communications initiated by an employee seeking legal advice are always privileged. However, for factual communications made during a corporation-initiated investigation, the privilege applies only if the communication concerns the employee’s own conduct within the scope of their employment and is made to assist the lawyer in assessing the legal consequences of that specific conduct for the corporate client. Here, the nurses and scrub technician were witnesses to the alleged negligence of the physicians; their statements did not concern their own conduct that could create liability for Samaritan. Therefore, they were mere witnesses, and their communications to counsel are not privileged.
Analysis:
This decision establishes a new, specific 'functional' test for corporate attorney-client privilege in Arizona, rejecting both the narrow 'control group' test and the potentially overbroad federal 'subject matter' test from Upjohn. By focusing on whether the communication concerns the employee's own conduct giving rise to potential liability, the court narrows the scope of the privilege. This approach prevents corporations from shielding simple witness statements under the privilege merely by having counsel conduct the interviews, thereby balancing a corporation's need for legal advice with the truth-seeking function of litigation. This ruling creates a clear standard in Arizona but may differ from the interpretation of federal privilege, creating potential complexity in cases involving both state and federal claims.
