Iowa state auditor, attorney general at odds

The State Auditor's Office is asking a judge to remove the Iowa Attorney General's Office as its legal counsel in a Davenport records case over an impasse about how best to argue the matter in court.

At issue is whether the auditor's office should have confidential access to records of closed sessions as it audits how the city of Davenport executed settlement payments with three former city staffers in 2023 for almost $2 million.

Davenport sued to squash a subpoena from the auditor's office for records of closed sessions leading up to the settlements, arguing the records are protected by attorney-client privilege. The auditor's office pointed to a state law that it argues gives it access to materials relevant to an audit, even if they're confidential but not public. The auditor's office says the conversations are critical to determining whether proper procedures were followed in approving the settlements.

A district court earlier agreed with the auditor's office, set an evidentiary hearing and hinted it could order the city to produce the records for a judge's review. But the city filed an interlocutory appeal with the Iowa Supreme Court over the issue.

Now, the auditor's office and the attorney general's office disagree about how to best argue the case before the court — whether they should argue the auditor's office should have access to confidential records or whether to argue the timing of the city's appeal isn't right and should be remanded to lower courts for a decision first.

Initially, the attorney general planned to file a brief approved by the auditor's office focused on the scope-of-authority argument, but changed course. The auditor's office argues the attorney general’s office is conflicted in its position. But the attorney general's office argues the change was strategic to avoid a potential precedent-setting ruling against the auditor's office.

In a filing before the Iowa Supreme Court, the state auditor's office requested the court remove the attorney general's office as counsel and strike any brief it submits that is not reflective of the auditor's position "due to a conflict of loyalties, and the attorney general's refusal to withdraw due to that conflict."

The auditor's office stated it initially approved a brief by the attorney general's office arguing the auditor should have access to the confidential material in limited circumstances. But a day later, the attorney general's office said it would not be filing the brief and planned to file a new one.

The auditor's office states the new brief was substantially different.

"Among other revisions, (the attorney general's office) specifically removed the argument made by the District Court regarding the Auditor's ability to access confidential information," the auditor's office's court filing states.

In an email exchange attached to the brief, John McCormally, the auditor's chief of staff, said the reasoning behind including the argument is because the district court cited that access in ruling favorably for the auditor and it's what the auditor's office wants and thinks would be the best argument.

"What we have in Davenport is a city attorney who was a walking audit risk," McCormally wrote in one email to the attorney general's office. "He authorized $1.8 million in payments to employees without any public council approval. … From an audit perspective, the attorney-client discussion around these payments is critical to understanding the control environment around the issuance of the checks."

Leif Olson, with the attorney general's office, wrote in response that the argument poses a high-risk, low-reward scenario with the potential for the Supreme Court to rule against the auditor's office access, and the new argument would be more likely to get the auditor's office records it needed.

"The Auditor is right to seek the communications between the Davenport City Attorney and the City Council if they're relevant to uncovering potential misfeasance. But the worst way to get them is to argue to the Supreme Court that it should assume those documents are 'absolutely privileged' and that the Auditor should get access to them anyway," Olson wrote.

The attorney general's office stated that it does not recognize a conflict in representing the auditor's office, and that it intended to file the brief that it believed best represented the auditor's interests.

"Iowa law makes clear that it is the job of the Attorney General's Office to represent the state in court, not the Auditor's," Iowa Attorney General Brenna Bird said in a statement. "We have checks and balances for a reason. As we have thoroughly discussed with the Auditor's team, our brief makes the most sound and strategic arguments to help the State win its case in court."

In 2023, the city of Davenport approved settlement agreements of $1.6 million with former City Administrator Corri Spiegel that included $600,000 for lost wages and $1 million for emotional pain and suffering, and settlements of $157,000 and for $140,500 with two city employees. The City Council approved them without a public vote. Months later, council members approved them again — this time in a public session.