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Colorado High Court Clarifies Crime-Fraud Exception to Attorney-Client Privilege

by Dale Chappell

In a case of first impression, the Supreme Court of Colorado held February 5, 2018, that a party seeking to invoke the crime-fraud exception to the attorney-client privilege must demonstrate “probable cause” that a crime or fraud is being committed by the client’s communications with his or her attorney.

When the State subpoenaed attorney Amy Brimha to produce her communications with her client, M.W., the owner of a company suspected of manufacturing herbal cigarettes laced with synthetic cannabinoids, she filed a motion to quash the subpoena, citing the attorney-client privilege.

The State, however, argued the crime-fraud exception to the attorney-client privilege applied because Brimha’s communications with M.W. helped to further his criminal conduct. Brimha countered that M.W.’s alleged criminal conduct had curtailed when she was retained, thus the crime-fraud exception did not apply since her communications with him did not involve a “continuing or future” crime. However, the district court agreed with the State and ordered Brimha to turn over her communications with M.W. to the State.

Before turning them over, Brimha petitioned the Colorado Supreme Court to determine (1) whether the crime-fraud exception applies and (2) whether the State was required to provide her with the intercepted wiretap communications obtained by the State before it entered them into evidence. Exercising its original jurisdiction, the Court agreed to answer both questions.

The attorney-client privilege applies to confidential matters between an attorney and her client regarding advice on the client’s rights or obligations and is the oldest confidentiality privilege rule under common law. The “crime-fraud exception” is one instance where that confidentiality may be broken and applies when communication between a client and his attorney is “made for the purpose of aiding the commission of a future crime or of a present continuing crime.”

In Colorado, there is a two-step process for determining whether the crime-fraud exception applies. First, the party invoking the exception must make a prima facie, or threshold, showing that there is a “factual basis adequate to support a good faith belief by a reasonable person” that wrongful conduct has occurred. Second, the invoking party must show “some foundation in fact” that the court should apply the exception.

The issue of first impression in this case was what “some foundation of fact” means. Brimha urged the Court to adopt the “probable cause” standard, requiring that the invoking party must make more than a threshold showing, but not quite to the point of beyond a reasonable doubt, that the exception applies. After canvassing several federal courts’ opinions on the issue, the Court agreed with Brimha’s proposal and adopted the “probable cause” standard.

Applying the newly announced standard to M.W.’s case, the Supreme Court found that the district court’s “blanket order” granting the State unfettered access to Brimha’s communications with her client to be too broad. The district court was required to find whether there was probable cause to believe M.W.’s communications with Brimha were to further a current or future crime. Simply because a company’s “sole” business activity is illegal does not mean all communication with its attorney was to further a crime, the Court said. The district court should have conducted an in camera review of the documents once the State made a threshold showing the exception applied and then determined whether the State demonstrated probable cause to invoke the exception, the Court concluded.

The next issue was whether the State’s summary of the intercepted wiretap of M.W.’s communications with Brimha should be allowed as evidence since the State failed to provide Brimha a copy of the court order authorizing the wiretap. The State argued that it was a grand jury proceeding, and the statute requiring a court order applies only in court proceedings, not grand jury proceedings. The Court disagreed.

Colorado statute § 16-15-102(9) provides that any intercepted communications from a wiretap “shall not be received in evidence or otherwise disclosed in any trial, hearing, or other proceeding in a state court, unless each party ... has been furnished a copy of the court order” authorizing the wiretap.

Although the State wished to present the communications to the grand jury, the immediate proceeding involved a contest outside the grand jury’s presence, and it was distinct from a grand jury proceeding, the Court said. Further, the State did not argue that disclosure of the wiretap communications would interfere with grand jury secrecy. The Court therefore held that § 16-15-102(9) did apply in this case.

Accordingly, the Supreme Court reversed the district court’s decision that the State is not required to disclose the authorization materials to M.W. before a hearing on the motion to quash. The Court remanded the case to the district court for further proceedings consistent with this opinion. See: In re 2015-2016 Jefferson County Grand Jury, 410 P.3d 53 (Colo. 2018). 

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