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Submitted URL: https://link.law.com/click/31120318.34660/aHR0cHM6Ly93d3cubGF3LmNvbS8yMDIzLzA0LzA3L3N0YWxlbWF0ZS1vdmVyLWxlZ2lzbGF0aXZ...
Effective URL: https://www.law.com/2023/04/07/stalemate-over-legislative-power-does-auditors-office-have-privilege-in-attorney-clie...
Submission: On April 13 via api from US — Scanned from DE
Effective URL: https://www.law.com/2023/04/07/stalemate-over-legislative-power-does-auditors-office-have-privilege-in-attorney-clie...
Submission: On April 13 via api from US — Scanned from DE
Form analysis 4 forms found in the DOM
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<div id="menuClose" class="col-1 text-center floatLeft"><img class="close" alt="Close Menu" src="/assets/master-template/images/close-btn.png">
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<article class="menuTabsMargin-domain">
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<p class="membershipText">MEDIA BRANDS</p>
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<li><a class="tabContentList" href="/">Law.com</a></li>
<li><a class="tabContentList" href="/radar/">Law.com Radar</a></li>
<li><a class="tabContentList" href="/americanlawyer/">American Lawyer</a></li>
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<li><a class="tabContentList" href="/nationallawjournal/">National Law Journal</a></li>
<li><a class="tabContentList" href="/legaltechnews/">Legal Tech News</a></li>
<li><a class="tabContentList" href="/newyorklawjournal/">New York Law Journal</a></li>
<li><a class="tabContentList" href="/thelegalintelligencer/">The Legal Intelligencer</a></li>
<li><a class="tabContentList" href="/therecorder/">The Recorder</a></li>
<li><a class="tabContentList" href="/ctlawtribune/">Connecticut Law Tribune</a></li>
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<li><a class="tabContentList" href="/dailyreportonline/">Daily Report</a></li>
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<li><a class="tabContentList" href="/njlawjournal/">New Jersey Law Journal</a></li>
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<li><a class="tabContentList" href="/supremecourtbrief/">Supreme Court Brief</a></li>
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<div class="seeAllPadding"><span><a href="/topics/" class="contentTab-seeall">All Law Topics <img class="see-all-icon-img" src="/assets/master-template/images/CCA-images/util-icons/menu-more-arrow.svg"></a></span></div>
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<li><a class="tabContentList" href="http://www.lawjournalnewsletters.com/">Law Journal Newsletters</a></li>
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<li><a class="tabContentList" href="https://www.law.com/nationallawjournal/nlj-500/">NLJ 500</a></li>
<li><a class="tabContentList" href="https://www.law.com/americanlawyer/a-list/">A-List</a></li>
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<li><a class="tabContentList" href="/law-firm-profile/?id=20&name=Baker-McKenzie/">Baker McKenzie</a></li>
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<li><a class="tabContentList" href="/compass/">Law.com Compass</a></li>
<li><a class="tabContentList" href="https://www.clecenter.com/">CLE Center</a></li>
<li><a class="tabContentList" href="https://www.chinalawandpractice.com/">China Law & Practice</a></li>
<li><a class="tabContentList" href="/insurance-coverage-law-center/">Insurance Coverage Law Center</a></li>
<li><a class="tabContentList" href="https://www.lawjournalpress.com/">Law Journal Press</a></li>
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<li><a class="tabContentList" href="https://dictionary.law.com/">Legal Dictionary</a></li>
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<li><a class="tabContentList" href="/lma-member-benefits/">LMA Member Benefits</a></li>
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<li><a class="tabContentList" href="/best-of/">Best Of</a></li>
<li><a class="tabContentList" href="/trailblazers/">Trailblazers</a></li>
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<li><a class="tabContentList" href="https://www.clecenter.com/">CLE Center</a></li>
<li><a class="tabContentList" href="/radar/">Law.com Radar</a></li>
<li><a class="tabContentList" href="/asset-and-logo-licensing/">Asset & Logo Licensing</a></li>
<li><a class="tabContentList" href="/sitemap/">Sitemap</a></li>
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<div class="search-container">
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<label for="54" class="css-label">Slideshows <input id="54" type="checkbox" name="topic" value="slideshow">
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<div class="button-container">
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Page Printed From:
https://www.law.com/2023/04/07/stalemate-over-legislative-power-does-auditors-office-have-privilege-in-attorney-client-communications/?kw=%27Stalemate%27%20Over%20Legislative%20Power:%20Does%20Auditor%27s%20Office%20Have%20Privilege%20in%20Attorney-Client%20Communications&utm_source=email&utm_medium=enl&utm_campaign=afternoonupdate&utm_content=20230410&utm_term=law&enlcmp=nltrplt1&oly_enc_id=3770I1152245G1X
Supreme Court of Hawaii, in Honolulu. Credit: Don Ramey Logan via Wikimedia
Commons
NEWS
'STALEMATE' OVER LEGISLATIVE POWER: DOES AUDITOR'S OFFICE HAVE PRIVILEGE IN
ATTORNEY-CLIENT COMMUNICATIONS?
"With no protection, OHA's counsel made the right call—the only one consistent
with a lawyer's professional and ethical obligations," said Associate Justice
Todd W. Eddins, in his written opinion for the court.
April 07, 2023 at 03:57 PM
5 minute read
Civil Appeals
COLLEEN MURPHY
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The Hawaii Supreme Court held that the Office of the Auditor for the state does
not have the authority to pierce the veil of attorney-client privilege and
obtain the confidential communications of the Office of Hawaiian Affairs.
According to the opinion, the two constitutionally-created state agencies found
themselves at odds over two laws—a section of the Hawaii Revised Statutes and a
law concerning attorney-client privilege. The Office of the Auditor believes
that HRS Section 23-5 entitles it to receive all records of an auditee,
including attorney-client communications, protected by Hawaii Rules of Evidence
(HRE) Rule 503. But the Office of Hawaiian Affairs, the subject of the audit,
sued, arguing that attorney-client privilege overcomes the authority of the
auditor and preserves the confidentiality of those communications.
Justice Todd W. Eddins, in his written opinion, stated that the state’s high
court disagreed that the auditor had the authority to obtain the confidential
communications and rejected the contention that the Office of the Auditor’s
jurisdiction and non-justiciability bars the suit.
Chief Justice Mark E. Recktenwald and Associate Justices Paula A. Nakayama,
Sabrina S. McKenna, and Michael D. Wilson joined Eddins.
The Hawaii Legislature passed Act 37, or the Office of Hawaiian Affairs
Appropriations Act of 2019, which conditioned the release of general funds from
OHA upon receipt of an audit report, according to the opinion. Defendants Leslie
H. Kondo, and the State of Hawaii Office of the Auditor, began the audit of the
Office of Hawaiian Affairs and the Board of Trustees of the Office of Hawaiian
Affairs.
According to the opinion, the auditor asked for records including unredacted
executive session minutes from the OHA. Since those minutes contained privileged
attorney-client communications, the OHA suggested that they provide the auditor
redacted minutes, according to the opinion,
“This dissatisfied the Auditor,” said Eddins. “The Office of the Auditor has
unlimited power to access all OHA records, he told OHA.”
The two agencies continued to disagree, resulting in a stalemate, according to
Eddins.
“Then the Auditor packed up his audit, explaining in a late December 2020 letter
to OHA that he could not finish the audit without OHA’s attorney-client
communications,” stated Eddins.
Before suspending the audit, Kondo told the OHA that he had “‘the ability to if
necessary to subpoena records, or subpoena people’” but that “‘I don’t believe
we ever need to pull that trigger for a State Agency. I believe a State Agency
must cooperate,’” the opinion said.
Eddins called the auditor’s decision not to subpoena the records “odd” as the
legislature has given him the power to do so.
As a result of the incomplete audit, the OHA did not receive its general funds.
But the legislature ultimately amended Act 37 to allow the funds the be
released. In the time between the audit suspension and the release of the funds,
the OHA sued Kondo and the Office of the Auditor. In a two-count complaint filed
in February 2020, the OHA sought for declaratory relief in the Circuit Court of
the First Circuit.
The first count, which was dismissed by the circuit court, sought a declaratory
judgment that the auditor violated Act 37 by failing to submit an audit. The
second sought declaratory judgment “that neither HRS Chapter 23 nor the Hawaii
State Constitution requires OHA to disclose to the State Auditor privileged
attorney-client communications protected from disclosure,” the opinion said.
“The circuit court sided with OHA, granting its motion for summary judgment and
denying the auditor’s motion for judgment on the pleadings,” stated Eddins.
“The Auditor contends that HRS § 23-5 and HRE Rule 503 do not conflict,” stated
Eddins. “And because there is no conflict, the Auditor’s superior powers snap
the attorney-client privilege.”
Eddins rejected those arguments and held that unless an audit’s subject waives
attorney-client privilege, or a court orders disclosure, the Office of the
Auditor may not access the privileged communications. The opinion went on to
state that the two laws in this case do not conflict.
“The Auditor’s powers and the attorney-client privilege can coexist,” said
Eddins. “The laws are not explicitly contrary or inconsistent. And courts, like
the circuit court here, can read HRE Rule 503 and HRS § 23-5 in harmony, giving
effect to both statutes. The laws do not need to incompatibly collide.”
Eddins stated that OHA argued that if it caves to the auditor absent a court
order, then attorney-client privilege would be waived. But the auditor insisted
that OHA doe not waive privilege by giving him the requested records.
“If Kondo promises OHA he won’t tell anybody, his argument seems to run, then
OHA hasn’t waived the privilege and should hand over its attorney-client
communications,” said Eddins.
The justice again disagreed with the auditor, stating that just because the
auditor, “shall not be required to disclose” records does not mean he will not
do so. Eddins said that there is no assurance in HRS Section 23-5 that any
“involuntary” disclosure will withstand challenge and remain confidential.
“With no protection, OHA’s counsel made the right call—the only one consistent
with a lawyer’s professional and ethical obligations,” said Eddins.
The state high court affirmed the order by First Circuit Judge Jeffrey Crabtree
granting OHA’s motion for summary judgment and denying the auditor’s motion for
judgment on the pleadings.
Neither counsel for Kondo and the Office of the Auditor, Douglas S. Chin of
Starn, O’Toole, Marcus & Fisher, nor counsel to the OHA, Kurt W. Klein of the
Klein Law Group, immediately responded to a message seeking comment.
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