In In re Grand Jury, Nos. 21-55085 & 21-55145 (9th Cir. 9/13/21), CA 9 here,
the Court held that the “because of” test imported from the work-product context
did not apply to the attorney-client privilege and instead applied a predominant
purpose test for dual-purpose communications.
The opinion is short (14 pages) and the summary offered by the Court is
good, so I just copy and paste the summary here.
Grand Jury Subpoenas
affirmed the district court’s orders holding appellants, a company and a law
firm, in contempt for failure to comply with grand jury subpoenas related to a
criminal investigation, in a case in which the district court ruled that
certain dual-purpose communications were not privileged because the “primary
purpose” of the documents was to obtain tax advice, not legal advice.
argued that the district court erred in relying on the “primary purpose” test
and should have instead relied on a broader “because of” test. Under the
“primary purpose” test, courts look at whether the primary purpose of the
communication is to give or receive legal advice, as opposed to business or tax
advice. The “because of” test—which typically applies in the work-product
context—considers the totality of the circumstances and affords protection when
it can fairly be said that the document
was created because of anticipated litigation, and would not have been created
in substantially similar form but for the prospect of that litigation. The
panel rejected appellants’ invitation to extend the “because of” test to the
attorney-client privilege context, and held that the “primary purpose” test
applies to dual-purpose communications.
left open whether this court should adopt “a primary purpose” instead of “the
primary purpose” as the [*3] test, as the D.C. Circuit did in In re Kellogg
Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014). The panel wrote that
Kellogg’s reasoning in the very specific context of corporate internal
investigations does not apply with equal force in the tax context, and that the
disputed communications in this case do not fall within the narrow universe
where the Kellogg test would change the outcome of the privilege analysis.
addressed remaining issues in a concurrently filed, sealed memorandum
1. This footnote caught my attention (p. 8 n2):
n2 The government
suggests that dual-purpose communications in the tax advice context can never
be privileged, but we reject that argument. The case law, at least in the Ninth
Circuit, does not go so far. See Abrahams, 905 F.2d at 1284 (holding that
attorney-client privilege might apply to legal advice about what to claim on a
tax return, even if it does not apply to the numbers themselves). But see
United States v. Frederick, 182 F.3d 496, 501 (7th Cir. 1999) (“Put
differently, a dual-purpose document—a document prepared for use in preparing
tax returns and for use in litigation—is not privileged. . . .”).
I think there is a lot to unpack in that footnote. Unfortunately, I am in travel status and may not be able to do any unpacking for a while. As always, I invite comments on the footnote
and any other aspect of the opinion