A company and law firm were served with grand jury subpoenas requesting documents related to a criminal investigation. The company and law firm each produced some documents but withheld others, citing attorney-client privilege and the work-product doctrine. In an order compelling production of the withheld documents, the district court explained that the documents were either not protected by any privilege or were discoverable under the crime-fraud exception. The company and law firm continued to withhold the disputed documents and were ultimately held in contempt. The contempt orders were appealed to the Ninth Circuit Court of Appeals, which affirmed the district court. The Ninth Circuit applied the primary purpose test and concluded that the primary purpose of the subpoenaed documents was to obtain tax advice, not legal advice.
The Supreme Court granted certiorari to resolve a circuit court split over the proper test to use when the disputed documents and communications have both legal and non-legal purposes.
Inside the Supreme Court
During oral argument, Supreme Court Justices highlighted both the broad nature of Petitioner's proposed test and the difficulty of administering with exactitude the Government's preferred test.
Petitioner asserted that the Government's preferred primary purpose test would deny privilege to communications that have a legal purpose anytime a court later finds that the non-legal purpose outweighs the legal purpose, "even by a little bit." To resolve this issue, Petitioner asked the Court to eliminate this comparative approach and adopt in its place a "significant purpose" test that would allow attorney-client privilege to attach to a communication that contains a legitimate legal purpose, regardless of its relative quantum. Justices Alito and Gorsuch deduced that Petitioner was truly advancing an expansive "any legitimate purpose" test, to which Justice Jackson asked: "Why shouldn't I worry that . . . we are going from one extreme to the other?"
The Government argued that Petitioner's proposed legitimate purpose test would create a sweeping sea change in light of the fact that the primary purpose test is used by the vast majority of states. The Government warned that the legitimate purpose test would permit individuals to "buy their way into a privilege" by simply hiring a lawyer to cursorily comment on emails or in meetings that are truly about the business of the company. The Government maintained that a primary purpose test is necessary to further the long-standing principle that the public has a right to every man's evidence. The Government conceded, however, that in difficult cases in which the legal and non-legal purposes cannot be disentangled and no purpose clearly predominates, "the tie goes to the runner" and privilege may attach.
But on 23 January, the Supreme Court dismissed the writ of certiorari as "improvidently granted," leaving the circuit courts split on the issue of attorney-client privilege. Accordingly, the following considerations are important as companies and counsel navigate ways to protect their communications.
The Justices deliberated over one common attorney-client example--the hours-long business meeting at which a lawyer is present and chimes in for 15 minutes about the business and legal implications of a particular course of conduct. If circuit courts apply a legitimate purpose test, the entire 15 minutes could be privileged, so long as the proponent of the privilege can show that the lawyer brought his or her legal judgment to bear at any moment in that 15 minutes. If circuits follow the primary purpose test, courts will make a judgment call as to the principal thrust of the lawyer's communication.
Still, depending on the legal context in which the dual-purpose communication is provided, there may be a third option.
In United States v. Frederick, 182 F.3d 496 (7th Cir. 1999), the Seventh Circuit suggested that, in the tax context, the proper test is whether the lawyer is dealing with issues of statutory interpretation or case law.
In In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014), authored by then-Judge Kavanaugh, the D.C. Circuit adopted the primary purpose test but explained in a corporate internal investigations context that "trying to find the one primary purpose for a communication . . . can be an inherently impossible task".1 Accordingly, the D.C. Circuit concluded that "courts applying the primary purpose test should determine whether obtaining or providing legal advice was one of the significant purposes of the attorney-client communication".2
This test was again applied in FTC v. Boehringer Ingelheim Pharm., Inc., 892 F.3d 1264 (2018), when the D.C. Circuit, in another opinion authored by Judge Kavanaugh, held in the corporate context that "[t]he attorney-client privilege applies to a communication between attorney and client if at least 'one of the significant purposes' of the communication was to obtain or provide legal advice".3
However, as the Ninth Circuit underscored in In re Grand Jury, "[n]one of [the] other sister circuits have openly embraced Kellogg".4
The Supreme Court's decision to dismiss the case may have been predicted by some experts in light of the discussion at oral argument. There, the Justices reiterated that the vast majority of states currently use the primary purpose test; that federal courts are not having a difficult time applying the primary purpose test; and, as Justice Coney Barrett remarked, that sometimes the best solution is "to say nothing." On the other hand, circuit courts will remain vocal as they continue to resolve attorney-client privilege issues with little guidance from the Supreme Court.
One case to watch is Securities and Exchange Commission v. Covington & Burling LLP. On 10 January, the SEC filed an application in the United States District Court for the District of Columbia seeking an order directing Covington to comply with an investigative subpoena for documents that the law firm asserts are privileged and confidential.5
1 756 F.3d at 759 (emphasis added).
2 892 F.3d. at 1267-68.
3 Id. at 1266.
4 13 F.4th at 717.
5 Securities and Exchange Commision's Memorandum of points and authorities in support of application for an order to show case and for an order compelling compliance with investigative subpoena.