Background
The City of Davenport settled three harassment claims brought by city employees for approximately $1.9 million. Though publicly approved by the city council in December 2023, allegations emerged that the settlements had been negotiated before the November 2023 election, with the public announcement deliberately delayed until after voting. The Iowa Auditor of State initiated a reaudit of the City focused on these settlements and issued a subpoena demanding access to settlement-related documents and closed session meeting minutes and recordings from late 2023. The City objected, claiming attorney-client privilege and attorney work-product protection for the requested materials.
The district court held that while the City raised legitimate concerns about protected communications, Iowa Code § 11.41 grants the Auditor “broad access” to records and does not explicitly except attorney-client privileged communications (though it does exempt work product). The court ordered an in camera review of the closed sessions, directing production of the minutes and recordings for examination, with instructions to separate attorney work product (to be withheld) from attorney-client privileged communications (to be produced to the Auditor). The City appealed on an interlocutory basis.
The Court’s Holding
The Iowa Supreme Court reversed, holding that the attorney-client privilege limits the Auditor’s subpoena power despite the broad access granted by Iowa Code § 11.41. Justice Mansfield emphasized that the privilege is “of ancient origin” and premised on the right to consult with counsel free from fear of disclosure. Iowa has recognized this privilege since the state’s founding—at common law before any statute—and it exists independently of statutory creation.
Although § 11.41 grants access to “all papers, books, records, and documents” and even to information “required by law to be kept confidential,” the court reasoned that such language does not explicitly displace the attorney-client privilege. The court applied a rule of construction: because the privilege is so deeply rooted in common law, legislation to displace it must be explicit. Critically, the court distinguished between “confidential” and “privileged” information—the statute’s grant of access to confidential records does not encompass privileged communications. The court noted that other investigative bodies, including grand juries and the attorney general in criminal investigations, are also constrained by the privilege, making it anomalous for the Auditor alone to have broader access.
Key Takeaways
- The attorney-client privilege applies to state auditor subpoenas even when the auditor has statutory authority for “full access” to records
- Broad statutory language permitting access to records “required by be kept confidential” does not displace the attorney-client privilege without explicit statutory language to that effect
- Government investigative bodies—including auditors, grand juries, and prosecutors—are all bound by the attorney-client privilege; auditors have no special exception
- The distinction between “confidential” and “privileged” is legally significant; one does not include the other
Why It Matters
This decision clarifies an important limitation on government investigative power. Auditors play a crucial role in overseeing public funds and agency conduct, and the Iowa statute gave the Auditor remarkably broad authority to access records “required by law to be kept confidential.” However, the court’s holding preserves the attorney-client privilege as a fundamental principle existing independent of statute. For municipal and state counsel, this means sensitive legal advice and attorney-client communications made in closed sessions remain protected even during audits focused on potential misconduct or improper expenditures.
The ruling harmonizes auditor authority with the common law privilege and with the scope of privilege applied to other investigative bodies, preventing the auditor from obtaining materials that prosecutors and grand juries cannot access. For government agencies, it reaffirms that privileged communications are protected from production to auditors investigating settlements, municipal decisions, and other matters. The case demonstrates the court’s willingness to imply exceptions to broad statutory language when doing so protects a deeply established privilege. Notably, attorney work product remains unprotected from auditor access under the statute, and the district court on remand must determine what additional steps are appropriate in the reaudit.