The Unclear Privilege Test for Dual-Purpose Communications

• Pages: 32-33
• Date: 01 July 2023
• Author: Emma P. Murphy
• Subject Matter: Civil Law

Published in Litigation News Volume 48, Number 4, Summer 2 023. © 2023 by the Amer ican Bar Association . Reproduced with pe rmission. All rights re served. This info rmation or any porti on thereof may not be c opied or disseminated in an y

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This term, the U.S. Supreme

Court was poised to decide

one of the biggest attorney-

client privilege cases in decades

and resolve a three-circuit split

over the appropriate test to determine

whether a dual-purpose communica-

tion (meaning one pertaining to both

legal and non-legal advice) is covered

by the attorney-client privilege. After

hearing oral arguments, the Supreme

Court unexpectedly dismissed the case

on the ground that the writ of certio-

rari was “improvidently granted.”In

re Grand Jury, No. 21-1397, 2023 WL

349990, at *1 (U.S. Jan. 23, 2023).

In light of the dismissal, the con-

fusion among lower federal courts

regarding the proper privilege test to

apply to dual-purpose communications

remains. Practitioners must therefore

be aware of the potential tests courts

could apply so that they can avoid

inadvertently risking that communica-

tions with clients will later be deemed

discoverable.

The Ninth Circuit: The Primary

Purpose Test

The Supreme Court had granted cer-

tiorari to review a Ninth Circuit deci-

sion considering the applicability of the

attorney-client privilege to certain com-

pany tax documents prepared by a law

f‌irm.In re Grand Jury,23 F.4th 1088 (9th

Cir. 2021),cert. granted, 143 S. Ct. 80

(2022),cert. dismissed as improvidently

granted, No. 21-1397, 2023 WL 349990

(U.S. Jan. 23, 2023). When the law f‌irm

withheld these documents as privileged,

the District Court for the Central District

of California granted the government’s

motions to compel production and,

when the law f‌irm still refused to pro-

duce the documents, to hold the law

f‌irm and company in contempt.

On appeal, the Ninth Circuit

armed the contempt order. The Ninth

Circuit held the applicable privilege

test for such dual-purpose communi-

cations was the primary purpose test,

which considers “whethertheprimary

purpose of the communication [was] to

give or receive legal advice, as opposed

to business or tax advice.”Id.at 1091

(emphasis added). In reaching this con-

clusion, the Ninth Circuit rejected a

“because of” test, which would consider

whether, under the totality of the cir-

cumstances, a document “was created

because of anticipated litigation, and

would not have been created in substan-

tially similar form but for the prospect

of that litigation.”Id.at 1092 (quotingIn

re Grand Jury Subpoena (Mark Torf/Torf

Envtl. Mgmt.), 357 F.3d 900, 908 (9th Cir.

2004)). The court reasoned such a test

would encourage clients to copy lawyers

on all communications to suggest it was

being done because of anticipated litiga-

tion, making each communication there-

fore privileged.

The Ninth Circuit noted its primary

purpose test was the test used by the

majority of federal courts, including the

Second, Fifth, and Sixth Circuits. It also

considered and “s[aw] the merits of the

reasoning” of a D.C. Circuit case adopt-

ing a more expansive test to determine

whether a dual-purpose communication

was privileged, but left open the ques-

tion of whether it would adopt such a

rule in a closer case.Id.at 1094.

The D.C. Circuit : The Signif‌ic ant

Purpose Test

The D.C. Circuit case cited by the Ninth

Circuit was a decision authored by then

judge Brett Kavanaugh.In re Kellogg

Brown & Root, 756 F.3d 754 (D.C. Cir.

2014). In a case brought by a compa-

ny’s defense contractor under the False

Claims Act, the D.C. Circuit consid-

ered the discoverability of documents

related to the company’s internal inves-

tigation regarding the alleged fraud.

The D.C. Circuit explicitly

rejected the primary purpose test.

Judge Kavanaugh wrote, “trying to

f‌indtheone primary purpose for a

communication motivated by two

sometimes overlapping purposes

The Unclear Privilege Test for

Dual-Purpose Communications

By Emma P. Murphy, Litigation Section, Committee Member

© Getty Image s

(one legal and one business, for exam-

ple) can be an inherently impossible

task.”Id.at 759. Because it would be

dicult for lawyers and clients to pre-

dict whether a court would f‌ind a dual-

purpose communication privileged

under this test, the court expressed

concern it would potentially create a

chilling eect.

Instead, the D.C. Circuit adopted a

signif‌icant purpose test, which consid-

ers whether “obtaining or providing

legal advice [was]aprimary purpose

of the communication, meaning one of

the signif‌icant purposes of the com-

munication?”Id.at 760. With respect to

the documents sought in that case, the

court held they were privileged because

one of the signif‌icant purposes of the

internal investigation was to obtain or

provide legal advice, even if it was man-

dated by regulation and done for other

purposes as well.

No other courts of appeals have

explicitly adopted this signif‌icant pur-

pose test.

The Seventh Circui t: No Privilege

(at Least for Tax Document s)

In sharp contrast to the D.C. Circuit’s

broad conception of the attorney-

client privilege, the Seventh Circuit

has a bright-line rule rejecting the

privilege for dual-purpose commu-

nications, specif‌ically in the context

of tax documents. InUnited States v.

Frederick, the Seventh Circuit consid-

ered whether documents pertaining to

a lawyer’s preparation of a client’s tax

returns were discoverable in an Internal

Revenue Service investigation into the

client. 182 F.3d 496 (7th Cir. 1999).

The Seventh Circuit rejected the

possibility of these documents being

privileged. Recognizing there is no

accountant’s privilege, and not want-

ing to allow clients to eectively cre-

ate such a privilege by having a lawyer

perform the tasks of an accountant,

the court held “a dual-purpose docu-

ment—a document prepared for use in

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