Can a North Carolina public body close a meeting to talk with its attorney about potential lawsuits that have not yet been filed, or does the open meetings law require an actual existing lawsuit before the body can go behind closed doors?

Plain-English summary

The Centennial Authority (the public body that built and operated the Entertainment and Sports Arena in Raleigh, now PNC Arena) ran into delivery delays from its construction contractors during the arena project. In late 1998 or early 1999, the Authority's Design and Construction Committee held a closed-session meeting with its lawyer to talk about "potential claims by the Centennial Authority against our contractors for late delivery of the arena and potential claims against the Authority filed by the contractors."

That phrasing, "potential claims," raised an open-meetings question. The Authority's chairman, E. Stephen Stroud, asked the Attorney General whether closing the meeting was lawful under G.S. § 143-318.11(a)(3), the attorney-client exception in the state's open-meetings law. The text of the exception lets a public body close a meeting "[t]o consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege" and to "consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, mediation, arbitration, or administrative procedure." A separate procedural subsection, § 143-318.11(c), requires the closing motion to "identify the parties in each existing lawsuit concerning which the public body expects to receive advice during the closed session."

The literal "existing lawsuit" language in subsection (c) might be read to bar closure when no lawsuit has actually been filed. But AG Mike Easley's office concluded that would be a misreading.

The substantive exception is broader than just "existing lawsuit." The text of (a)(3) authorizes closure for two overlapping purposes: (1) attorney instruction on a list that includes "claim, judicial action, mediation, arbitration, or administrative procedure," and (2) preservation of the attorney-client privilege generally. Both purposes can be implicated by potential litigation, not just by litigation already underway.

The attorney-client privilege itself extends to discussions of potential claims. The AG cited North Carolina cases (State v. Murvin, 304 N.C. 523 (1981); State v. Davenport, 227 N.C. 475 (1947)) for the general principle that the privilege exists even where actual litigation is not contemplated. While North Carolina courts had not yet directly addressed the privilege in the public-body, threatened-litigation context, the AG looked to persuasive authority from Washington, Virginia, Nebraska, Minnesota, and California, all of which agreed that confidential consultation about threatened or contemplated litigation falls within the privilege as applied to government bodies.

The procedural language in (c) doesn't narrow the substantive exception in (a)(3). Subsection (c)'s "existing lawsuit" language addresses what the motion has to recite when there is an existing lawsuit. It does not, by negative implication, forbid closure for any other reason listed in (a)(3). The AG read the procedural rule as supplementing, not constricting, the substantive grant.

Practical limits. Closure is justified when the public body has a "reasonable basis to believe" that a confidential discussion with its lawyer is needed. Strategy sessions about claims avoidance and settlement of disputes that might evolve into litigation fit. Generic policy discussions do not (the statute explicitly excludes "general policy matters" from the exception even when an attorney is present).

The AG accordingly concluded that, assuming the Design and Construction Committee had a reasonable basis to think confidential advice on the contractor dispute was needed, closing the meeting was lawful.

A footnote in the opinion offered a practice tip: even though the statute does not literally require it, the closing motion for a potential-litigation meeting should state that potential litigation is the purpose and identify the parties to the extent doing so is consistent with the privilege. That gives the public a meaningful record of why the meeting closed, without giving away the legal strategy.

Currency note

This opinion was issued in 1999. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The open meetings law's attorney-client closed-session provision has been re-examined repeatedly in the years since 1999, and the courts have continued to develop the rules around closing motions and the scope of "potential litigation." The structural reading the AG gave (substantive exception in (a)(3), procedural rule in (c)) has held up, but the precise contours of what counts as "reasonable basis to believe a confidential discussion is necessary" continue to be tested case-by-case.

Common questions readers actually have

Does this opinion let a public body close a meeting any time it wants by saying "we're worried about potential lawsuits"?

No. The "reasonable basis" requirement is real and is not just a verbal formula. A board would need to be able to point to something specific (a demand letter, a notice of claim, a pattern of communications, an ongoing dispute with identifiable parties) to support the closure. Bare speculation about possible future suits would not be enough.

What is the "general policy" carveout in the statute?

G.S. § 143-318.11(a)(3) explicitly says general policy matters may not be discussed in closed session, and a meeting cannot be closed "merely because an attorney employed or retained by the public body is a participant." The presence of a lawyer doesn't make a session privileged; the purpose of the consultation does.

What about the requirement to disclose settlements?

The same subsection requires that, if the public body considers or approves a settlement in closed session (other than a hospital-malpractice settlement), the terms must be reported to the body and entered into the minutes "as soon as possible within a reasonable time after the settlement is concluded." So the closed session itself is private, but the settlement terms are not.

What does the closing motion actually need to say?

For an existing lawsuit, the motion must identify the parties. For potential litigation, the AG recommended (though the statute did not strictly require) that the motion state the purpose is to discuss potential litigation and identify the parties to the extent consistent with the privilege. That standard practice has since become the recommended template across most North Carolina local-government and public-body practice.

Are these closed-session minutes public?

Closed-session minutes are kept separately and remain confidential while their disclosure would frustrate the purpose for which the session was closed. Once that purpose ends (e.g., the litigation resolves), the minutes generally become public. This was true under the 1999 statute and continues under the current version.

What is the Centennial Authority?

It was a public body created to plan, finance, build, and operate a multi-purpose arena in Raleigh. The arena (originally Entertainment and Sports Arena, now PNC Arena) opened in 1999. Construction-delay disputes around the opening were the proximate context for this advisory opinion.

Background and statutory framework

The North Carolina open meetings law

G.S. § 143-318.9 states that hearings, deliberations, and actions of public bodies are public policy required to be conducted openly.

G.S. § 143-318.10 requires that, with limited exceptions, every official meeting of a public body be open to the public.

G.S. § 143-318.11(a) lists the exceptions. Subsection (a)(3) is the attorney-client exception.

G.S. § 143-318.11(c) sets out the procedural requirements for closing a session, including the motion-content rule.

What G.S. § 143-318.11(a)(3) actually says

The text covers two slightly different things. First, it allows a closed session "[t]o consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body." Second, it allows closure to "consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, mediation, arbitration, or administrative procedure." It then carves out general policy matters and the bare presence of an attorney, and it requires post-hoc disclosure of any settlements considered.

Out-of-state cases the AG looked to

• Port of Seattle v. Rio, 16 Wash. App. 718 (1977): land-condemnation settlement strategy properly held in closed session.
• Parvin v. Virginia Department of Transportation, 15 Va. Cir. 349 (1989): notices of intent to file a claim constituted threatened litigation that justified the privilege.
• Becker v. Allen, 1996 Neb. App. (unpublished): "strategic meetings a public body does have with its attorney, in which it may give direction to its attorney, when it is threatened with or engaged in litigation, are protected by the attorney-client privilege."
• Soltani-Rastegar v. Superior Court, 208 Cal. App. 3d 424 (1989), and Holm v. Superior Court, 42 Cal. 2d 500 (1954): private-litigation cases extending the privilege to communications about potential litigation.
• Minneapolis Star & Tribune v. H.R.A., 310 Minn. 313 (1976), and Sacramento Newspaper Guild v. Sacramento County Bd. of Suprs., 263 Cal. App. 2d 41 (1968): policy reasoning for closed strategy sessions.

The signing official

The opinion was signed by Grayson G. Kelley, Senior Deputy Attorney General, with initials GGK/sp.

Source

• Landing page: https://ncdoj.gov/opinions/meetings-of-public-bodies-closed-sessions-to-preserve-attorney-client-relationship/

Original opinion text

REPLY TO: Grayson G. Kelley
Special Litigation
(919) 716-6900
FAX: (919) 716-6763

February 9, 1999

Mr. E. Stephen Stroud
Chairman, Centennial Authority
1520 Blue Ridge Road
Suite 201
Raleigh, North Carolina 27607

Re: Advisory Opinion: Meetings of Public Bodies; Closed Sessions to Preserve Attorney-Client Relationship; G.S. § 143-318.11

Dear Mr. Stroud:

You request our opinion as to the circumstances under which a public body may lawfully hold a closed meeting to consult with an attorney under the exception to North Carolina's open meetings requirement found in G.S. § 143-318.11(a)(3). You reference a specific meeting which the Design and Construction Committee of the Centennial Authority held in closed session to discuss with legal counsel ". . . potential claims by the Centennial Authority against our contractors for late delivery of the arena and potential claims against the Authority filed by the contractors."

G.S. § 143-318.9 declares it to be the public policy of this state that hearings, deliberations and actions of public bodies be conducted openly. G.S. § 143-318.10 requires that, with certain exceptions, ". . . each official meeting of a public body shall be open to the public, and any person is entitled to attend such a meeting." One exception to this requirement is G.S. § 143-318.11(a)(3), which allows a meeting to be closed when required:

To consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body, which privilege is hereby acknowledged. General policy matters may not be discussed in closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant. The public body may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, mediation, arbitration, or administrative procedure. If the public body has approved or considered a settlement, other than a malpractice settlement by or on behalf of a hospital, in closed session, the terms of that settlement shall be reported to the public body and entered into its minutes as soon as possible within a reasonable time after the settlement is concluded.

The exception therefore authorizes closure of a meeting only as required to discuss the handling of a claim, judicial action, mediation, arbitration or administrative procedure, or in order to preserve the attorney-client privilege between the attorney and the public body. The statute specifically acknowledges that the attorney-client privilege may be invoked by public bodies.

Your letter indicates that the meeting in question was closed in order to discuss "potential claims" by the Authority against contractors and potential claims filed by contractors against the Authority. It is unclear whether the Authority has actually been notified or served with claims by one or more contractors. If, in fact, the Authority has been served with claims by its contractors, the plain language of G.S. § 143-318.11(3) authorizes closure of a meeting to discuss with attorneys the handling or settlement of such claims. If claims have not been served, closure of the meeting is allowed only if the discussion of potential claims by or against contractors necessitated the protections of the attorney-client privilege.

Confidential discussions between a public body and its attorneys concerning potential litigation may frequently be as critical to protection of the public body's legal position as discussions occurring after litigation has been initiated. Strategy sessions focused on claims avoidance or settlement of disputes which may evolve into litigation cannot, as a practical matter, be held in the presence of opposing parties. As the Minnesota Supreme Court has noted:

A basic understanding of the adversary system indicates that certain phases of litigation strategy may be impaired if every discussion [by a public body with its attorney] is available for the benefit of opposing parties who may have as a purpose a private gain in contravention to the public need as construed by the agency.

Minneapolis Star & Tribune v. H.R.A., 310 Minn. 313, 323 (1976). "Settlement and avoidance of litigation are particularly sensitive activities, whose conduct would be grossly confounded, often made impossible, by undiscriminating insistence on open lawyer-client conferences." Sacramento Newspaper Guild v. Sacramento County Bd. of Suprs., 263 Cal. App. 2d 41, 56 (1968). The necessity for such confidential conferences appears to have been recognized by our General Assembly through the specific, statutory acknowledgment of the attorney-client privilege exception to the open meetings law.

It is the law of this jurisdiction that the attorney-client privilege exists even where actual litigation may not be contemplated. State v. Murvin, 304 N.C. 523 (1981); State v. Davenport, 227 N.C. 475 (1947). We are not, however, aware of a North Carolina case addressing the application of the attorney-client privilege to discussions of potential claims by or against public bodies. Courts in at least three other states have concluded that threatened, noticed or contemplated litigation by or against a public body justified confidential consultation with attorneys. In Port of Seattle v. Rio, 16 Wash. App. 718 (1977), the Court of Appeals of Washington considered whether, in a land condemnation action, a settlement offer to the property owner was required by Washington's Open Public Meetings Act to be discussed and approved in a public meeting. The court concluded that when a communication with legal counsel concerns contemplated or pending litigation or settlement offers, the necessity for the attorney-client privilege exists between a public agency and its lawyers to the same extent as between other clients and their counsel. In a similar case the Circuit Court of the City of Richmond, Virginia rejected an attempt by a highway contractor to obtain privileged documents through Virginia's Freedom of Information Act, finding that notices of intent to file a claim submitted by the contractor constituted threatened litigation which justified the attorney-client exception to disclosure under the Act. Parvin v. Virginia Department of Transportation, 15 Va. Cir. 349 (1989).

The Nebraska Court of Appeals concluded, in a challenge to a closed meeting held by the University of Nebraska's Board of Regents that ". . . strategic meetings a public body does have with its attorney, in which it may give direction to its attorney, when it is threatened with or engaged in litigation, are protected by the attorney-client privilege." Becker v. Allen, 1996 Neb. App. (unpublished). Courts in cases involving private litigants have also held that communications with attorneys related to potential litigation are protected by the attorney-client privilege. See Soltani-Rastegar v. Superior Court, 208 Cal. App. 3d 424 (1989); Holm v. Superior Court, 42 Cal. 2d 500 (1954). In our view, the principles discussed in these cases provide a sound basis for concluding that the protections of the attorney-client privilege may be invoked where a public body has a reasonable basis for believing there is a need to discuss potential claims or potential litigation with its legal counsel.

It is noted that G.S. § 143-318.11(c) mandates certain procedural requirements for calling a closed session of a public body. Included is a requirement that a motion based on the necessity to consult with an attorney under the exception in (a)(3) " . . . shall identify the parties in each existing lawsuit concerning which the public body expects to receive advice during the closed session." Although the reference to "existing lawsuit" may arguably be viewed as a further restriction on the purposes for which a meeting may be closed, we do not believe this procedural requirement was intended to supersede the substantive provisions authorizing closure when required to consult with an attorney regarding a claim, judicial action, mediation, arbitration, administrative procedure or to otherwise preserve the attorney-client privilege.

It is therefore our opinion that the attorney-client privilege exception to the open meetings requirement may be invoked where the purpose of the meeting is to conduct confidential discussions with attorneys regarding an actual claim, judicial action, mediation, arbitration or administrative procedure. Where the purpose of closing a meeting is to discuss potential claims or litigation, the public body should have a reasonable basis to believe a confidential discussion with its legal counsel is necessary. Assuming, as suggested in your letter, that the Design and Construction Committee had a reasonable basis to believe that potential legal claims by and against the Authority necessitated a confidential discussion with its attorneys, we believe that closure of the meeting was a lawful application of the statutory exception in G.S. § 143-318.11(a)(3).

Sincerely,

Grayson G. Kelley
Senior Deputy Attorney General

GGK/sp

Though not specifically required by statute, a public body meeting with its attorney in closed session to discuss potential litigation should state, through a duly adopted motion, that the purpose of the closed session is to discuss potential litigation and identify the parties to the potential litigation to the extent it can do so consistent with the privilege.