U.S. Supreme Court to Address Corporate Attorney-Client Privilege: The Petition Stage

For the first time in some time, the United States Supreme Court agreed to hear a case involving the corporate attorney–client privilege.  The issue is the proper standard courts should use to determine whether the attorney–client privilege protects dual-purpose communications—those created for legal and non-legal purposes.  In re Grand Jury, No. 21–1397 (U.S.).  The specific question presented is—

Whether a communication involving both legal and non-legal advice is protected by attorney–client privilege where obtaining or providing legal advice was one of the significant purposes behind the communication.

In a series of posts, I’ll follow and comment on the case and final decision.  I previously examined the Court of Appeals’ decision and will now tackle the appellant’s petition for writ of certiorari, the opposition, and the amici positions. I later explore the petitioner’s merits arguments, the positions of fourteen amici, and the government’s opposition.

Petition for Writ of Certiorari

While grand jury subpoenas were issued to the target’s company and law firm, only the law firm withheld dual-purpose communications on privilege grounds, making the law firm the lone petitioner.  The petitioner–law firm put forward three arguments: (1) a circuit split exists over proper privilege application to dual-purpose communications; (2) the Ninth Circuit’s standard is impractical and would chill attorney–client communications; and (3) this case offers a rare vehicle for Supreme Court review on an exceptionally important issue.  You may read the petition here.

A Circuit Split Exists

The Petitioner identified a three-way split among the circuits regarding how to apply the attorney–client privilege to dual-purpose communications.  First, the D.C. Circuit applies the privilege to a dual-purpose communication so long as one of its primary purposes is to provide or obtain legal advice. In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014) (Kavanaugh, J.) (discussed in this blog post); FTC v. Boehringer Ingelheim Pharmaceuticals, Inc., 892 F.3d 1264 (D.C. Cir. 2018) (Kavanaugh, J.) (discussed in this blog post).

Second, the Ninth Circuit, in the underlying case, adopted “the primary purpose” test, which necessarily tasks the trial court with weighing a communication’s various purposes and determining whether the primary one is legal-advice related.  The Petitioner described this test as follows (citations omitted):

If a non-legal purpose is the more significant motivator, then the communication is not privileged. If a legal purpose is the more significant motivator, then the communication is not privileged.  Only in the “narrow universe” of cases where two purposes are in equipoise is it an open question in the Ninth Circuit whether the communication is privileged.

Third, the Seventh Circuit has taken, according to the Petitioner, “an even more extreme approach than the Ninth Circuit.”  At least in tax-related cases, the privilege never protects dual-purpose communications. United States v. Frederick, 182 F.3d 496, 501 (CA7 1999).  The Petitioner acknowledged, however, that a district court within the Seventh Circuit, in a non-tax case, found this dual-purpose issue open and applied the D.C. Circuit standard, citing Smith-Brown v. Ulta Beauty, Inc., 2019 WL 2644243 (N.D. Ill. June 27, 2019), which I discussed in detail in Court Adopts “Primary Purpose” Test for In-House Counsel’s Dual-Purpose Emails.

The Ninth Circuit’s Standard “Is Wrong”

The Petitioner stated the privilege’s purpose is “to encourage full and frank communication between attorneys and their clients,” citing Upjohn Co. v. United States, 449 U.S. 383 (1981).  Without a firm promise of confidentiality, however, clients will be reluctant to provide candid information and lawyers will be reluctant to give their clients all-embracing legal advice.  The Ninth Circuit’s adopted test “is wrong,” the Petitioner argued, because it frustrates this purpose in two ways.

First, the test “creates intolerable uncertainty” in privilege application because “the test is difficult, if not impossible, to apply.”  Moreover, asking trial courts to weigh competing purposes is essentially asking them to engage in “an artificial and unworkable exercise.”

Second, this unpredictability will chill communications between clients and their lawyers because asking judges to conduct a weigh-and-balance approach—long after the communication was created—will make some clients reluctant to provide information to their lawyers.

Rare Situation

The Petitioner emphasized that this case presents an “excellent vehicle” for the Court to consider this tremendously important privilege issue, primarily because “appellate decisions regarding privilege are relatively rare.”  Most privilege opinions are not immediately appealable following the Court’s decision in Mohawk Indus. v. Carpenter, 558 U.S. 100 (2009) (ruling that the parties may not appeal adverse privilege opinions under the collateral-order doctrine) (read the opinion here).  And with interlocutory appeal and mandamus petitions difficult to obtain, “most litigants must wait until after a final judgment to appeal an adverse privilege decision.” In sum,

The Court may not have another opportunity to address the question presented for many years.  Particularly given the need for clarity in this area of law, the Court should take up the issue now.

Amicus Parties

Three amicus parties supported the Petitioner’s writ of certiorari.  The California Lawyers Association, in an amicus brief available here, urged the Court to grant the petition because this privilege issue “has widespread significance” that affects “attorneys in nearly every conceivable area of practice.” This group argued for the “a primary purpose” test adopted in Kellogg.

The Washington Legal Foundation, in an amicus brief available here, argued that the Ninth Circuit’s approach would “cripple corporate compliance programs.”  The WLF feared that the Ninth Circuit’s approach would strip the privilege “where corporate policy encourages employees to report legally significant facts to in-house lawyers,” which would, in essence, penalize companies with compliance programs.

The U.S. Chamber of Commerce offered its opinions in an amicus brief available here. The Chamber urged the Court to “seize this golden opportunity” to resolve a circuit split over this privilege issue.  The Chamber criticized the Ninth Circuit’s standard as not understanding “the modern role that lawyers play in advising businesses.”  In particular, this test will marginalize in-house lawyers, “whose responsibilities often include a multitude of non-legal tasks.”

Government’s Opposition

The United States responded that the District Court and the Ninth Circuit properly rejected privilege protection for the tax-related documents at issue in this case and that Ninth’s Circuit’s decision “does not implicate any conflict among the court of appeals.”  Emphasizing that the privilege issue here concerns tax advice, coupled with the lack of a federal common-law accountant–client privilege (read more about that in this blog post), the government argued that the Ninth Circuit properly used and applied the primary purpose test.

The government distinguished the Kellogg rule, saying that Kellogg involved an internal investigation where the D.C. Circuit reversed the district court’s use of a “sole purpose” standard. The Ninth Circuit used the primary purpose test and did not look for the sole purpose.  Indeed, the court permitted redactions of legal advice, it just did not shield the business advice.  In short, the Ninth Circuit’s

Application of the primary purpose approach did not require the disclosure of any legal advice that could be redacted.

The Ninth Circuit’s decision, the government argued, did not conflict with Kellogg because the Ninth Circuit “left open” that question for future cases.  And the Seventh Circuit’s tax-related primary-purpose rule was cabined to, well, tax cases.  Moreover, because this case arises in the tax context, “this case would be a poor vehicle for further review of the question presented.”

Court Grants the Petition for Writ of Certiorari

The Supreme Court granted the writ of certiorari on October 3, 2022.  Now, on to the merits briefing.

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