U.S. Supreme Court to Address the Corporate Attorney-Client Privilege: The Petitioner’s Rebuttal

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 (1) examined the Court of Appeals’ decision, (2) reviewed the appellant’s petition for writ of certiorari, the government’s opposition, and the supporting amici positions, (3) examined the petitioner’s merits arguments, (4) reviewed the briefs of the fourteen amicus parties, and (5) discussed the government’s merits opposition. The Petitioner filed its reply brief, available here, rebutting the government’s arguments and reinforcing its request that the Court adopt the Kellogg significant purpose test. This is the last brief, so let’s see if it proves persuasive.

The Type of Communications at Issue

The parties appear to agree about the type of communications to which the Court’s adopted standard would apply. For those multipurpose communications that can be segregated, the parties agree that trial courts should segregate the legal-advice portions, which the privilege protects, from the unprotected nonlegal portions. Courts can then apply the privilege to the legal-advice sections by ordering production of the nonlegal segments with the privileged pieced redacted.

The multipurpose communications at issue, then, are those where the legal and nonlegal purposes are inextricably intertwined and cannot be readily separated. The government argues that courts should evaluate and weigh a communication’s various purposes and determine whether the legal purpose predominates. If not, the party must produce the entire multipurpose communication. The petitioner argues that trial courts should simply evaluate the entire multipurpose communication and apply the privilege to the entire communication if one of its significant purposes relates to legal advice.

The Significant Purpose Test Still Permits “Every Man’s Evidence”

The government argued that the attorney-client privilege is an exception to the “every man’s evidence” maxim and that the significant purpose test would improperly expand the privilege. Citing Wigmore, Upjohn, and Fisher v. United States, 425 U.S. 391 (1976), the petitioner challenged this conclusory statement, showing that the significant purpose test squarely meets the privilege’s “classic formulation,” which protects confidential communications “where legal advice of any kind is sought” from a lawyer. Legal advice “of any kind” is necessarily part of communication intertwined with legal and nonlegal purposes, and the significant purpose test implements, rather than expands, the privilege as we have always applied it.

The petitioner also challenged the government’s characterization of the significant purpose test as “relatively novel,” returning to Upjohn to show that the Court has “never weighed the relative importance of the legal and business purposes to decide which predominated.”  The petitioner noted, correctly, that the “government attacks the significant purpose test but never states that Kellogg was wrongly decided.”

How to Define “Significant”

The government criticized the significant purpose test as “an amorphous concept” because “any proffered definition would be unlikely to provide the concrete guidance that this context requires,” but the petitioner responded that “the legal purpose must be bona fine—i.e., meaningful or legitimate.”  In other words—

If the lawyer is acting as a lawyer and the communication has a meaningful or legitimate legal purpose, it should be privileged.

Using the Webster-based definition, as many courts have, a court applying the significant purpose test would likely rule that the privilege does not protect a communication that merely “cc’s” a lawyer.  Nor would the privilege protect a communication that has a de minimis connection to legal advice.

Having countered the government’s challenges to the Kellogg test, the petitioner summed it up as follows:

The significant purpose test is by every measure the better approach. It ensures that communications properly subject to the attorney-client privilege are reliably and predictably protected from disclosure, and it poses no adverse risk of abuse.

Primary Purpose Test is an Improper “But-For” Test

Courts agree that one of the rationales for the attorney-client privilege is to encourage clients to have candid communications with their lawyers because, absent privilege protection, clients would not have these open discussions. The government argued that applying the primary purpose test complies with this rationale because, if a client-communication’s primary purpose relates to business advice, the it “would have been made absent the privilege.”

The petitioner described this argument as effectively advocating a “but-for” test to apply the privilege: if the client would not make the communication but for legal advice, then the privilege should not apply. But just as Upjohn and Kellogg rejected similar but-for rules, the Court should reject the primary purpose test for the same reason.

The petitioner also challenged the government’s characterization of the primary purpose test as the majority rule. It identified and distinguished a handful of cases upon which the government relied. As for the Minnesota Supreme Court’s adoption of the primary purpose test in In re Polaris, Inc., 967 S.W.2d 397 (Minn. 2021), the petitioner argued that the majority and dissenting opinions show the test’s subjectivity and illustrate “the intractable problems of administration that the primary purpose test produces.”

The petitioner noted that the Court in Upjohn rejected the control group test even though lower courts had overwhelmingly applied it when determining the scope of the corporate attorney-client privilege, and concluded–

Even if courts had been regularly applying the Ninth Circuit’s single primary purpose test, this Court should not perpetuate a flawed approach here.

Significant Purpose Test Applies Well in the Tax Context

The government argued that applying the significant purpose test to tax-related communications exacerbates the test’s inherent problems and raises to privileged status tax-preparation communications that are otherwise subject to government review. In short, the district court “got it right.”

The petitioner challenged this division of legal practice areas for privilege protection. The significant purpose test should apply to all legal communications, including those involving tax issues, and the government’s proposal is a “recipe for confusion.” It is “utterly impracticable,” the petitioner argued, to apply different privilege rules to different practice areas because courts and lawyers do not divide the law into “neat categories.” And, we do not know whether the district court “got it right” because it applied the wrong test. The Court should remand the matter to the district court to apply the significant purpose test because the documents at issue “reveal legal communications.”

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