Supreme Court Grants Cert to Determine Whether Dual-Purpose Communications Involving Legal and Non-Legal Advice (in Tax Return Preparation Setting) is Protected by Attorney-Client Privilege (10/3/22; 10/6/22)

The Supreme Court accepted certiorari in In Re Grand Jury (Sup Ct. No. 21-1397). See docket entries here. The acceptance does not state or refine the issue presented; presumably, the issue presented that the parties will brief is the one in the petition for cert as follows:

            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.

Added 10/6/22 11:44am:  The foregoing is the question presented that appears on the Supreme Court's docket entries questions presented link, here.

The Solicitor General in its brief in opposition states the issue slightly differently (with some spin) as follows:

             Whether the district court permissibly denied petitioner’s general claim of attorney-client privilege over communications, related to the preparation of a tax return, that did not have obtaining legal advice as their primary purpose, while instructing that all legal advice contained in the communications be redacted.

 The amended opinion below is In re Grand Jury, 23 F.4th 1088 (9th Cir. 2022), CA9 here and GS here. The Ninth Circuit’s Summary (not included in GS opinion) is:

SUMMARY*
* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.

Grand Jury Subpoenas

            The panel affirmed the district court’s orders holding appellants, a company and a law firm, in contempt for failure to comply with grand jury subpoenas related to a criminal investigation, in a case in which the district court ruled that certain dual-purpose communications were not privileged because the “primary purpose” of the documents was to obtain tax advice, not legal advice.

            Appellants argued that the district court erred in relying on the “primary purpose” test and should have instead relied on a broader “because of” test. Under the “primary purpose” test, courts look at whether the primary purpose of the communication is to give or receive legal advice, as opposed to business or tax advice. The “because of” test—which typically applies in the work-product context—considers the totality of the circumstances and affords protection when it can fairly be said that the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of that litigation. The panel rejected appellants’ invitation to extend the “because of” test to the attorney-client privilege context, and held that the “primary purpose” test applies to dual-purpose communications.

            The panel left open whether this court should adopt “a primary purpose” instead of “the primary purpose” as the [*3] test, as the D.C. Circuit did in In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014). The panel wrote that Kellogg’s reasoning in the very specific context of corporate internal  investigations does not apply with equal force in the tax context, and that the disputed communications in this case do not fall within the narrow universe where the Kellogg test would change the outcome of the privilege analysis.

            The panel addressed remaining issues in a concurrently filed, sealed memorandum disposition.

JAT Comments (Bit Off Topic):

1. I perused (but did not study closely) the amicus briefs in support of granting certiorari.  The amicus briefs were filed by the Washington Legal Foundation, the California Lawyers Association, and the Chamber of Commerce. I am not sure what they add to the petition, but perhaps I need to study them more.  (I wonder what purpose many amicus briefs serve when they do not add anything material other than to let the Court know that the amicus parties are interested; perhaps there could be some type of simple "me too" filings for such parties that will prevent the necessity that some Justice or clerks might feel to actually read and study amicus briefs; maybe when amicus briefs on the merits are filed they can add something meaningful but given the quality of counsel on the petition, I am skeptical.)

2. Note above that the Ninth Circuit summary has a disclaimer "* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader."  The summary thus functions like the Supreme Court Syllabus and like a similar summary in T.C. opinions and in some T.C. Memo opinions.  I am not sure that such summaries are nothing burgers in terms of understanding what the opinion says.  See Supreme Court Opinion Syllabus as Persuasive Authority? (Federal Tax Procedure Blog 2/8/21), here.

 This blog post is cross-posted on the Federal Tax Crimes Blog here.