In re Grand Jury
To what degree should work product or attorney client privilege afford protection to dual-purpose communications? As business organizations have grown in size and complexity, and as attorneys for and within these organizations serve as both lawyers and businesspersons, courts have struggled to articulate the proper standard to assess whether certain communications sought in the course of an investigation or litigation should be considered privileged information and thereby afforded protection from disclosure. Dual-purpose communications, or communications with “more than one
Attorney client privilege designates as sacrosanct certain communications, between a client and her lawyer, in which the client seeks legal
On the other hand, work product privilege seeks to protect from disclosure documents prepared by an attorney “in anticipation of
In sum: Both attorney client and work product privilege may be asserted properly for a given document or communication, but the two are distinct privileges justified on distinct grounds and focused on distinct inquiries.
These doctrines are relatively straightforward to apply—unless the communication was created by an attorney, but with more than one purpose in mind. Such communication, referred to as a dual purpose communication, may implicate thorny issues with respect to these two privileges. These dual purpose communications are often formed by an attorney “wear[ing] dual hats, serving as both lawyer and a trusted business
The tax law context, for instance, is rife with opportunities for privilege issues relating to dual purpose communications. “[S]ome communications might have more than one purpose, especially ‘in the tax law context, where an attorney’s advice may integrally involve both legal and non-legal
Facts Underlying the Recent Ninth Circuit Decision
Although some details of the underlying case remain shrouded in secrecy, the general facts giving rise to the privilege dispute in In re Grand
A year earlier, the Ninth Circuit in 2020 had declined an opportunity to decide this question, instead punting on the issue of a clear standard to assess attorney client privilege for dual purpose documents. In United States v. Sanmina Corp. & Subsidiaries,
On appeal in In re Grand Jury, the government argued in favor of the “primary purpose” test, naturally seeking for the circuit to adopt a narrow privilege rule. As the Ninth Circuit explained of the primary purpose 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 natural implication of this inquiry is that a dual-purpose communication can only have a single ‘primary’
In fact, the government sought to narrow substantially the protection offered by decrees of privilege, “suggesting that dual-purpose communications in the tax advice context can never be privileged . .
On the other hand, the appellants sought adoption of a privilege standard with as broad a reach as possible. The “because of” test proposed by appellants
“does not consider whether litigation was a primary or secondary motive behind the creation of a document.” It instead “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
However, the Ninth Circuit declines to adopt the “because of” test, finding the appellants’ alchemic arguments to transmute the work product “because of” test into the attorney client privilege inquiry in the context of dual-purpose communications
Rationale of the Ninth Circuit’s Decision
The Ninth Circuit correctly homes in on the distinction between attorney client and work product privilege. The two privileges, although complementary, serve distinct purposes and trace distinct historical developments along separate threads of the common law. The court explains the goal of work product privilege as preservation of “a zone of privacy in which a lawyer can prepare and develop legal theories and strategy with an eye toward litigation, free from unnecessary intrusion by his
The Ninth Circuit did not myopically tether its rationale only to the importance of maintaining a clear demarcation between two privileges imported and developed from common law. It also considered the practical realities. In explicating the rationale for its holding, the Ninth Circuit considered the incentive structure for attorneys and firms that would inevitably develop in reaction to adoption of a “because of” standard governing attorney client privilege inquiries of dual-purpose communications. The court explained that the “because of” test as applied to attorney-client privilege “would create perverse incentives for companies to add layers of lawyers to every business decision in hopes of insulating themselves from scrutiny in any future
Finally, the panel considered the governing standard in other circuits for assertions of attorney client privilege of dual-purpose communications. Of those which have confronted the issue, sister circuits generally have declined to import the “because of” standard into attorney client privilege inquiries for dual purpose
The D.C. Circuit’s Kellogg Test
Nearly a decade ago, the D.C. Circuit set forth its “a primary purpose”
In an opinion penned by then-Judge Kavanaugh, the Kellogg Court found that the district court had applied an incorrect standard—the “but for” test—in its determination that the defendant may not withhold the documents under a claim of attorney client
[T]rying to find the one primary purpose for a communication motivated by two sometimes overlapping purposes (one legal and one business, for example) can be an inherently impossible task. It is often not useful or even feasible to try to determine whether the purpose was A or B when the purpose was A and B. It is thus not correct for a court to presume that a communication can have only one primary purpose. It is likewise not correct for a court to try to find the one primary purpose in cases where a given communication plainly has multiple
Thus, the Kellogg court soundly rejects “the primary purpose” standard as the appropriate test in questions of attorney client privilege claims for dual purpose communications. Instead, the D.C. Circuit explains that the following inquiry governs: “Was obtaining or providing legal advice a primary purpose of the communication, meaning one of the significant purposes of the
Despite careful treatment of the issue and a seemingly unambiguous standard offered by the Kellogg court, commentators remain skeptical of Kellogg’s legacy: “[W]hether Kellogg represents a broad and significant development in attorney-client privilege remains to be
The Ninth Circuit, too, declined the opportunity to adopt the Kellogg test—despite arguments to the contrary made in In re Grand Jury. “Company” and “Law Firm” argued in the alternative that, should the court decline to adopt the “because of” test, the Kellogg “a primary purpose” test should
Implications of the Ruling
Where does this holding leave firms? Those subject to the Ninth Circuit’s jurisdiction will benefit from the clear rejection of the “because of” test in the context of attorney client privilege for dual-purpose communications. Both in-house and outside counsel should consider taking steps to designate the purpose for which documents meant to protect attorney client privilege in order to inoculate against potential future document requests. As some commentators have suggested:
“Regardless of how the purpose line is drawn by a court in a particular case, . . . attorneys and their clients may be able to influence—although perhaps not wholly control—the availability of the privilege by creating a record indicating why communications are occurring, or by segregating communications in aid of legal advice from those involving non-legal
Thus, critical examination by attorneys of existing processes may be warranted in order to protect client interests.
District courts in the Ninth Circuit already have relied upon In re Grand Jury in order to determine the validity of assertions of privilege in contexts beyond tax. In an employment discrimination dispute, a magistrate judge for the District of Oregon conducted an in camera review of two email documents withheld by defendants on grounds of attorney client
Interestingly, and perhaps hinting at the degree to which the recent decision clarified the proper standard for assessment of privilege claims, at least one district court in the Ninth Circuit cited to In re Grand Jury for its explication of the “because of” standard in the work product
It remains possible that the Ninth Circuit will adopt the Kellogg test in a future dispute for which the difference between “a primary purpose” and “the primary purpose” carries weight. In fact, the Court signaled its openness to adoption of the Kellogg test—at least under circumstances closely mirroring those present in Kellogg, and for litigants for whom the difference in privilege application between “a primary purpose” and “the primary purpose” is
Although the likelihood is high for a dispute to emerge in the Ninth Circuit arguing in favor of the Kellogg standard, whether the Ninth Circuit will adopt the test remains opaque. Failure of the Kellogg “a primary purpose” test to gain traction since its 2014 promulgation suggests that sister circuits may be reluctant to broaden the attorney client inquiry at all. Moreover, many state courts have expressly rejected the Kellogg standard, favoring the narrower inquiry of “the primary
The Ninth Circuit’s In re Grand Jury holding clarifies the intra-circuit split left open by the Court a year prior in its Sanmina opinion. The In re Grand Jury court expressly rejects transporting the “because of” standard from the work product context to assess claims of attorney client privilege for dual purpose communications. Instead, the Ninth Circuit asserts that the “primary purpose” test reigns. But questions still linger as to the precise test that may be applied in future disputes. In the case of a dual purpose document formed with two equal purposes, what standard will apply? Will the Ninth Circuit ultimately join the D.C. Circuit in adopting the Kellogg “a primary purpose” framework? Or instead, will the Court reject Kellogg explicitly, or implicitly by choosing to characterize one of the purposes as “the primary purpose”? The Court’s signaling in In re Grand Jury of the existing open issue, and the lower courts’ amplification, with respect to adoption of Kellogg could not be clearer. The Ninth Circuit will likely confront this issue once again and preferably clarifies its stance on the Kellogg test.
To what degree should work product or attorney client privilege afford protection to dual-purpose communications? As business organizations have grown in size and complexity, and as attorneys for and within these organizations serve as both lawyers and businesspersons, courts have struggled to articulate the proper standard to assess whether certain communications sought in the course of an investigation or litigation should be considered privileged information and thereby afforded protection from disclosure. Dual-purpose communications, or communications with “more than one purpose,” have proven at times slippery for courts to fit neatly into existing privilege jurisprudence. The Ninth Circuit recently confronted an intra-circuit split on the proper standard for assessing privilege of dual-purpose communications, squarely rejecting the broader test in favor of a narrower inquiry. Some district courts had hewed to the focused “primary purpose” test, which looks to the “primary” reason for creation of the communication. Meanwhile, other district courts had assessed claims of privilege under the broader “because of” standard, which inquired into the “causal connection” animating creation of the document. The Ninth Circuit determined that the “primary purpose” test governs, underscoring the distinction between work product and attorney client privilege. However, although the court rejected the “because of” test in this context, it punted on the precise contours of the privilege standard by which to assess dual-purpose communications—leaving business organizations potentially in the dark as to whether certain documents may properly be withheld under a privilege assertion.