In the Supreme Court of United States: No. 09-750: Textron Inc. and subsidiaries, petitioner, v. United States of America respondent.

BRIEF OF TAX EXECUTIVES INSTITUTE, INC. AS AMICUS CURIAE IN SUPPORT OF THE PETITIONER

Interest of Amicus Curiae

Pursuant to Rule 37 of the Rules of this Court, Tax Executives Institute, Inc. respectfully submits this brief as amicus curiae in support of the petition for a writ of certiorari. (1) Tax Executives Institute (hereinafter "TEI" or "the Institute") is a voluntary, nonprofit association of corporate and other business executives, managers, and administrators who are responsible for the tax affairs of their employers. TEI was organized in 1944 under the laws of the State of New York and is exempt from taxation under section 501(c)(6) of the Internal Revenue Code (26 U.S.C.). The Institute is dedicated to promoting the uniform and equitable enforcement of the tax laws, reducing the costs and burdens of administration and compliance to the benefit of both the government and taxpayers, and vindicating the Commerce Clause and other constitutional rights of business taxpayers. Among the standards of professional conduct that all TEI members subscribe to is the following:

[The member] will present the facts required in tax returns and all the facts pertinent to the resolution of questions at issue with representatives of the government imposing the tax. (2) TEI has approximately 7,000 members who represent more than 3,000 of the leading corporations in the United States, Canada, Europe, and Asia. TEl members have a vital interest in the resolution of the work-product privilege issue in this case. Substantially all TEI members are employed by corporations that are subject to federal securities and tax laws, compliance with which requires the preparation of tax accrual workpapers or similar documents; most work for companies that, because of their size and complexity, are under continuous audit by the Internal Revenue Service (IRS). Consequently, TEI members or their coworkers are almost without exception involved in the preparation or review of tax accrual workpapers. As such, a decision by this Court whether to hear this case and resolve the interpretative questions about the scope of the work product privilege will directly affect TEI members and the companies by whom they are employed. Accordingly, the Institute has a special interest in this matter.

Background

In 2003, the IRS began an examination of the federal income tax returns of petitioner, Textron Inc., for the tax years 1998 to 2001. In connection with that examination, the IRS issued an administrative summons for petitioner's 2001 workpapers. Citing, among other things, the work-product privilege, Textron withheld certain documents, including a spreadsheet prepared by its lawyers listing items on its return that the IRS could potentially dispute and, as to each item, estimated the likelihood of success in the event of a dispute. The government filed a petition to enforce a summons for the documents in the U.S. District Court for the District of Rhode Island. The district court denied the petition. A panel of the U.S. Court of Appeals for the First Circuit initially affirmed. After granting rehearing en banc, the court of appeals reversed.

An Irreconcilable Three-Way Split Among the Circuit Courts Muddles the Application of the Work-Product Privilege, Spawning Uncertainty and Undermining the Attorney-Client Relationship

This case concerns the scope of the workproduct privilege codified in Rule 26(b)(3) of the Federal Rules of Civil Procedure and, specifically, the meaning of the phrase "in anticipation of litigation" in applying the privilege. More fundamentally, it involves whether the IRS can properly gain access to the thoughts, mental impressions, opinions, and legal theories of a taxpayer's attorneys about the merits of positions taken on a tax return.

Pursuant to Rule 10, one of the considerations governing the review of petitions for writs of certiorari is whether the underlying case involves a conflict among the U.S. courts of appeals or whether it involves a decision of a U.S. court of appeals on an important question of federal law that has not been, but should be, settled by the Court. Such a conflict exists here in respect of the proper scope of the work-product privilege. While not every circuit conflict merits resolution by the Court, where the law is thrown into disarray--here, with the emergence of not two, but three, divergent and irreconcilable views--the matter becomes "ripe for the Supreme Court to intervene and set the circuits straight on [the] issue." (App. 45a (Torruella, J., with Lipez, J., dissenting).) (3) Amicus TEI respectfully submits that the Court should act to end the confusion surrounding the proper scope of Rule 26(b)(3) and thereby provide the certainty essential to vindicate the policy undergirding the work-product privilege.

The work-product privilege was first recognized by this Court in Hickman v. Taylor, 329 U.S. 495 (1947). There, in discovery, the plaintiff sought materials "secured by an adverse party's counsel in the course of preparation for possible litigation after a claim has arisen." The Court held that the "work product" of the lawyer, "written materials obtained or prepared by an adversary's counsel with an eye toward litigation," was protected from disclosure. The Court explained that "proper preparation of a client's case demands that he assemble information ... prepare his legal theories and plan his strategy without undue and needless interference." Id. at 512. As Justice Jackson wrote in his concurring opinion, "[d]iscovery is hardly intended to enable a learned profession to perform its functions either without wits or with wits borrowed from the adversary." Id. at 516 (Jackson, J., concurring).

In 1970, the Federal Rules of Civil Procedure were amended to codify the workproduct privilege. Rule 26(b)(3) provides that the work-product privilege covers "documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative."

The work-product privilege is not absolute. Thus, where a party to litigation can show that it "has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means," the party can obtain production of otherwise protected materials. Fed. R. Civ. P. 26(b) (3)(A)(ii). Even such a showing, however, will not entitle a party to obtain "opinion work-product," i.e., materials that would "disclos[e] ... the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation." Fed. R. Civ. P. 26(b)(3)(B).

Thus, the work-product privilege must be applied in a manner that permits the attorney's analytical and strategic work to be done in private. Otherwise, its efficacy will be diminished. As the Court explained in Hickman, the privilege in respect of documents prepared "in anticipation of litigation" (as the term is used in Rule 26(b)(3)) is necessary because "it is essential that a lawyer work with a certain degree of privacy, free from...