Jan 14

Did Penn State’s General Counsel Fumble by Appearing at the Grand Jury Appearances of its Officers?

With the announcement by Penn State that it has hired James Franklin as its new head football coach, the university has taken yet another step on the field away from the Jerry Sandusky scandal.  But the fallout continues in the courtroom with the prosecution of former President Graham Spanier, Vice President Gary Schultz and Athletic Director Tim Curley.  The three former Penn State administrators have been indicted for perjury, obstruction of justice, and violations of Pennsylvania’s child endangerment statute.  One issue that recently arose in the Commonwealth’s prosecution is the role of former Penn State General Counsel (and former Pennsylvania Supreme Court Justice) Cynthia Baldwin.

Back in 2011, Baldwin accompanied these administrators into the Commonwealth’s investigating grand jury.  She told the grand jury judge (before Spanier appeared in the courtroom) that she represented “the university solely,” but when Spanier was asked if he had a lawyer with him, he identified Baldwin.  Baldwin didn’t object or clarify her involvement.

Baldwin later testified before the 2012 grand jury proceedings that led to the charges against Spanier, Schultz, and Curley.  She testified, among other things, that Spanier lied to her and in a news report about his knowledge of the Sandusky allegations.  Now, the three have filed motions to dismiss certain of the charges, asserting that Baldwin misled them into believing that she represented them at the grand jury and thus should have been precluded from testifying.

Notwithstanding that the former administrators previously raised this issue before the grand jury judge, who ruled that he did not have jurisdiction to hear the argument (and rejected the argument, anyway), Spanier, Schultz and Curley have now raised the issue before the trial judge.  As my partner, Ellen Brotman, recently noted in The Legal Intelligencer, Spanier’s confusion over his counsel could implicate due process violations that create a defect in the grand jury:  “A grand jury can have a defect that nullifies it.  Could this be that kind of defect?  I think it could be.”  Brotman added that the lawyer – Baldwin – and even the prosecutors and the trial judge have “a duty to protect the integrity of the grand jury process and a duty not to violate his rights, or permit him to testify when he believes he’s being represented and they are aware that his belief is incorrect.”

So what’s a general counsel to do?

First, it’s a wonder how Penn State’s general counsel ever got into the grand jury in the first place.  A general counsel may relish the thought of attending grand jury proceedings where an employee is testifying (not to mention where another employee – a former assistant football coach – is the target of the grand jury).  Yet, under the Pennsylvania criminal rule governing “Who May Be Present During Session of an Investigating Grand Jury,” while an attorney for the witness may be present, the grand jury is off limits for others (unless ordered by the supervising judge).  So, as the administrators have argued, if Baldwin wasn’t representing them, what was she doing in the room?

Second, as a lawyer, Baldwin has a duty to make clear who she represents and who she doesn’t.  In house and outside counsel should give corporate officers and employees Upjohn warnings, notifying the individual that the lawyer represents the company, not the individual, and that any attorney-client privilege belongs to – and may be waived by – the company.  While such a warning may risk chilling the witness – and, in Baldwin’s case, may have gotten her booted from the grand jury room – such a fate would be better than potential adverse claims and sanctions (not to mention the potential dismissal of charges in any follow up criminal action against the witness).

Third, where in house counsel has reason to believe that an employee’s interests are (or are likely to become) adverse to the organization or if an employee may have potential criminal liability, in house counsel should advise the employee to seek separate counsel and may recommend counsel to the employee (for which the corporation may be required to pay under the corporation’s bylaws).  Depending on the extent of the conflict, in such circumstances, the entity and the represented employee may seek to enter a joint defense agreement so as to protect communications among counsel and encourage the free-flow of information between the corporate entity and its employee.

For now, while Happy Valley basks in the glow of a new era in Penn State football, the prosecution of Spanier, Schultz, and Curley marches on, with the court soon to receive additional submissions and poised to shed further light on what Penn State’s general counsel was doing in the grand jury room and who she represented.

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