After oral argument, many U.S. Supreme Court watchers following the In re: Grand Jury case were left with the same feelings as U.S. Justice Neil Gorsuch in January: “struggling” and “really confused” by the parties’ presentations.
Counsel for both the law firm — seeking to have its multipurpose communications protected under the attorney-client privilege — and the U.S., which was trying to compel the communications’ production, appeared to shift their positions throughout their briefing and arguments.[1]
The law firm at first staked out the position that communications with a significant legal purpose should be protected, as then-U.S. Circuit Judge Brett Kavanaugh held for the U.S. Court of Appeals for the D.C. Circuit in its 2014 decision in In re: Kellogg Brown & Root Inc.[2]
Perhaps after reading the Association of Professional Responsibility Lawyers’ and the American Bar Association’s amicus briefs, the law firm pivoted to a much broader formulation, suggesting in its reply brief and at argument that communications with any bona fide legal purpose — i.e., one that was real and legitimate — should be protected.[3][4]
Meanwhile, the government argued in its briefing that communications with a primary legal purpose come under the privilege’s purview, as the U.S. Court of Appeals for the Ninth Circuit had held below in its 2021 decision in In re: Grand Jury.[5]
During argument, however, counsel appeared to suggest a significant legal purpose test might suffice, verging at one point on conceding that even a 60-40 communication where the legal purpose was secondary could be protected.
Some experts may have seen it coming, but few likely predicted the court would dismiss the case as improvidently granted — otherwise known as a DIG — a mere two weeks after argument.[6]
It is, of course, fun to speculate about the many reasons why the justices took this rarely traveled road. In the end, however, the key takeaway is that a three-way split remains among the courts of appeals on an important issue for the legal profession at large — especially for in-house counsel and corporate defense lawyers.
In other words, the question of how courts should apply the attorney-client privilege to multipurpose communications — those containing legal and nonlegal advice — remains open.
The justices have shown a desire to answer it by granting certiorari in In re: Grand Jury in the first place. Given their latest move, however, one is left to ponder what case — if any — will present the proper vehicle for them to do so? And how long until that happens?
The Tripartite Circuit Split on Multipurpose Communications
Before addressing the DIG, it is necessary to highlight the current — and, at least for now, entrenched — split among the U.S. circuit courts of appeals. At a broad level, there are at least three distinct approaches.
The first comes from the U.S. Court of Appeals for the Seventh Circuit’s 1999 decision in U.S. v. Frederick.[7] There, the Internal Revenue Service issued a summons to Richard Frederick, who was both a lawyer and an accountant. In this hybrid role, Frederick provided legal representation to, and prepared the tax returns for, various clients.
U.S. Circuit Judge Richard Posner, writing for a unanimous panel, found that such communications were not privileged. The court began its analysis by observing that “[t]here is no common law accountant’s or tax preparer’s privilege.”[8]
Thus, the court reasoned:
A taxpayer must not be allowed, by hiring a lawyer to do the work that an accountant, or other tax preparer, or the taxpayer himself or herself, normally would do, to obtain greater protection from government investigators than a taxpayer who did not use a lawyer as his tax preparer would be entitled to.[9]
Thus, the Seventh Circuit created a hardline rule that dual-purpose documents, such as “a document prepared for use in preparing tax returns and for use in litigation,” can never be privileged; “otherwise, people in or contemplating litigation would be able to invoke, in effect, an accountant’s privilege, provided that they used their lawyer to fill out their tax returns.”[10]
The D.C. Circuit broke with Frederick’s approach in its 2014 decision in In re: Kellogg Brown & Root.[11] Writing for the court, then-Judge Kavanaugh recognized the difficult problem presented by multipurpose documents — such as those created during internal investigations.
In doing so, the panel affirmed the use of the so-called primary purpose test, but warned against narrowing the privilege’s scope by applying any “but for” rationale on top of it.[12]
Otherwise, as then-Judge Kavanaugh put it, “if there was any other purpose behind the communication, the attorney-client privilege” would not apply.[13]
Indeed, if taken to its logical conclusion, that approach “would eliminate the attorney-client privilege for numerous communications that are made for both legal and business purposes and that heretofore have been covered by the attorney-client privilege.”[14]
But, according to the D.C. Circuit, the so-called “primary purpose test, sensibly and properly applied, cannot and does not draw a rigid distinction between a legal purpose on the one hand and a business purpose on the other.”[15]
Indeed, “trying 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.”[16]
As then-Judge Kavanaugh reasoned, “[i]t 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.”[17] Therefore, he suggested, courts cannot “presume that a communication can have only one primary purpose” any more than they can “try to find the one primary purpose in cases where a given communication plainly has multiple purposes.”[18]
Instead, the D.C. Circuit determined that the clearer, more precise and more predictable test would ask the following, simple question:
Was obtaining or providing legal advice a primary purpose of the communication, meaning one of the significant purposes of the communication?[19]
Seven years later, the Ninth Circuit announced a third approach in In re: Grand Jury.[20]
In that case — the same one argued before the Supreme Court in January — the Ninth Circuit expressly rejected the Seventh Circuit’s bright-line rule in Frederick,[21] before determining that when assessing multipurpose communications, it should “look at whether the primary purpose of the communication [was] to give or receive legal advice, as opposed to business or tax advice.”[22]
Departing from Kellogg, however, the Ninth Circuit reasoned that “[t]he natural implication of this inquiry is that a dual-purpose communication can only have a single ‘primary’ purpose.”[23] Thus, the Ninth Circuit concluded, “the district court did not clearly err in finding that the predominate purpose of the disputed communications was not to obtain legal advice.”[24]
Now there are three possible tests for applying the attorney-client privilege to multipurpose communications:
1. They are never covered, as in Frederick;
- They may be covered if a significant purpose of the communication related to legal advice, as in Kellogg; or
- They are covered only if the primary purpose of the communication was to request or provide legal advice, as in In re: Grand Jury.
Digging in on the DIG
This split will continue to affect the legal profession. Parties and their attorneys — especially in-house counsel and corporate defense lawyers — will continue to guess which of their communications will be privileged.
Given the lack of uniformity, that answer will continue to be different depending on the jurisdiction in which the communications are being sought.
Leaving such an important issue unresolved has left many questioning the justices’ apparently unanimous decision to DIG In re: Grand Jury. As noted earlier, this was a rare move on the court’s part, especially following oral argument.
Almost all cases that reach a court of last resort — including the Supreme Court — do so through discretionary grants of writs of certiorari. Only a handful are subjected to a DIG after receiving such a grant,[25] especially in the Roberts court.[26]
Even less have to face such a result after oral argument. The court gave no indication why it chose this course in In re: Grand Jury, and its decision left in place the Ninth Circuit’s decision, thereby deepening the split among the circuits. Still, one may attempt to read the tea leaves and discern some basis for the justices’ decision.
Renowned appellate practitioner and Supreme Court aficionado Kevin Russell has suggested in SCOTUSblog that there are typically three reasons why the court may choose this path in a given case.[27]
The first scenario occurs when the court discovers something after granting certiorari — such as a jurisdictional defect or preservation issue — that makes the case a poor vehicle to decide the issue before it.[28]
The second happens when the court believes there has been a bait-and-switch, such as when a party petitions for certiorari on one ground, but devotes its merits briefing on an entirely different issue.[29]
Finally, Russell’s third scenario occurs when the justices are simply unable to reach a consensus “and apparently believe that DIGing the case would be better than issuing a fractured opinion with no controlling rationale.”[30]
At first blush, none of these scenarios appears to explain what happened in In re: Grand Jury. Neither the court during argument nor the parties in their briefing identified some jurisdictional or preservation issue that would make the case a poor vehicle to rule on the issue before it.
Nor was there a bait-and-switch: The court granted certiorari on the attorney-client privilege’s application to multipurpose communications, and the parties argued only that point.
Finally, nothing occurred during argument suggesting the court would be unable to reach a consensus. The justices’ questions did not hint at an ideological split, and because they DIGed the case a mere two weeks after argument it appears that no substantive effort was made towards resolution before the justices threw in the towel.
Two alternative reasons may be behind the court’s chosen course. First, the parties presented moving targets for how the court should answer the question before it. They all agreed on what was at stake, but neither side presented a test for the court to impose to resolve the issue.
Although the court was free to announce whatever rubric it found appropriate, it is easy to guess that the justices may have simply been reluctant to do so when the parties appeared to be taking both contradictory and compatible positions at the same time.
Second — and most likely — the court may simply be waiting to see if courts in the Ninth Circuit apply in In re: Grand Jury in its literal sense, requiring judges to rank interrelated advice in multipurpose communications before determining whether they are privileged.
Indeed, it may turn out that the decision does not result in the parade of horribles suggested by the law firm. A soft landing is unlikely here, however, given the specific language used in the decision. Still, it seems that the justices were content to let the lower courts wrangle with and develop this issue before wading into the morass.
Conclusion
During argument Justice Elena Kagan cited “the ancient legal principle, if it ain’t broke, don’t fix it.” The court’s subsequent DIG of In re: Grand Jury suggests that not all, or even a majority, of the justices are convinced a split actually exists. In other words, from their view, nothing appears to be broken.
As noted above, however, Kellogg and In re: Grand Jury present irreconcilable tests for multipurpose communications, and as more circuits weigh in, that split is likely to deepen. Thus far few attorney-client privilege cases have made their way to the Supreme Court.
However, because the justices here showed a willingness to address the above privilege issues in multipurpose communications, one can easily surmise they will address such issues in the near future.
If so, the parties in such future cases should strive to articulate a coherent and simple test for the court to adopt or reject. Given the nebulous nature of the attorney-client privilege, as evidenced by the high-caliber of lawyers representing the law firm and government in In re: Grand Jury, however, that may prove to be a Sisyphean effort.
Nonetheless, hopefully the court will weigh in soon because, with all due respect to Justice Kagan, it does not appear as if these emerging complex privilege issues will fix themselves anytime soon.
Fred E. (Trey) Bourn III and P. Thomas DiStanislao are attorneys at Butler Snow LLP.
This article was originally posted as a Law360 Expert Analysis.
[1] See Fred E. (Trey) Bourn III & Thomas DiStanislao, Atty-Client Privilege Args Give Justices a Moving Target, Law360 (Jan. 18, 2023), https://www.law360.com/articles/1566463/atty-client-privilege-arguments-give-justices-a-moving-target.
[2] 756 F.3d 754 (D.C. Cir. 2014); accord Federal Trade Comm’n v. Boehringer Ingelheim Pharms., Inc., 892 F.3d 1264, 1267–68 (D.C. Cir. 2018) (Kavanaugh, J.) (reiterating that “[i]n a situation . . . where a communication has multiple purposes . . . what matters is whether obtaining or providing legal advice was one of the significant purposes”).
[3] See Prof. Resp. Laws. Ass’n Amicus Br. 3, In re Grand Jury, U.S. (No. 21-1397) (arguing “that the privilege should apply to any communication where at least one purpose of the communication is that the client is in the process of seeking or the lawyer is rendering legal advice or seeking to gather information to assist in rendering legal advice to the client, and that tests requiring that there be a ‘significant’ or ‘primary’ purpose should be rejected or abrogated” altogether).
[4] See Am. Bar. Ass’n Amicus Br. 5, In re Grand Jury, U.S. (No. 21-1397) (“[W]hile a ‘significant purpose’ test is certainly better [than one requiring a primary purpose] . . . it still would leave substantial uncertainty and less protection for clients searching for legal advice.”)
[5] 23 F.4th 1088 (2021).
[6] See, e.g., Stephen Gillers, A “DIG” on Attorney-Client Privilege: Why the Court Decided Not to Decide In re Grand Jury, SCOTUSblog (Jan. 25, 2023), https://www.scotusblog.com/2023/01/a-dig-on-attorney-client-privilege-why-the-court-decided-not-to-decide-in-re-grand-jury//
[7] 182 F.3d 496 (7th Cir. 1999).
[8] Id. at 500 (citation omitted).
[9] Id.
[10] Id. at 501.
[11] 756 F.3d 754 (D.C. Cir. 2014).
[12] Id. at 759.
[13] Id.
[14] Id.
[15] Id.
[16] Id.
[17] Id. (emphasis added).
[18] Id. at 759–60.
[19] Id. at 760 (citing 1 Restatement (Third) of the Law Governing Lawyers §72 Reporter’s Note, at 554 (2000) (“In general, American decisions agree that the privilege applies if one of the significant purposes of a client in communicating with a lawyer is that of obtaining legal assistance.”)). The D.C. Circuit subsequently applied this test in the context of a regulatory investigation in Federal Trade Commission v. Boehringer Ingelheim Pharmaceuticals, Inc., 892 F.3d 1264 (D.C. Cir. 2018). Then-Judge Kavanaugh, again writing for the court, reiterated that “[i]n a situation . . . where a communication has multiple purposes . . . what matters is whether obtaining or providing legal advice was one of the significant purposes.” Id. at 1267–68. If so, the communication is privileged and protected from disclosure.
[20] 23 F.4th 1088 (2021).
[21] Id. at 1092 n. 2 (“The government suggests that dual-purpose communications in the tax advice context can never be privileged, but we reject that argument.”).
[22] Id. at 1091 (emphasis added) (citing In re Cnty. of Erie, 473 F.3d 413, 420 (2d Cir. 2007) (“We consider whether the predominant purpose of the communication is to render or solicit legal advice.”)
[23] Id. (emphasis added). Though the court saw “the merits of the reasoning in Kellogg,” it nevertheless declined to adopt the D.C. Circuit Court’s approach, observing that”[n]one of [its] sister courts” had and that Kellogg “dealt with the very specific context of corporate internal investigations, and its reasoning does not apply with equal force in the tax context.” Id. at 1094–95. To that end, the Ninth Circuit determined that “[t]he Kellogg test would only change the outcome of a privilege analysis in truly close cases, like where the legal purpose is just as significant as a non-legal purpose.” Id.
[24] Id.
[25] See Michael E. Solimine & Rafael Gely, The Supreme Court and the Sophisticated Use of DIGs, 18 Supr. Ct. Econ. Rev. 155–76 (2010) (Supreme Court DIGged 155 cases from 1954 to 2004, approximately 3.04 cases per term).
[26] Bryan Gividen, The Roberts Court and DIGs, Above The Law (March 5, 2021), https://abovethelaw.com/2021/03/the-roberts-court-and-digs/ (Roberts Court DIGs approximately 1.67 cases per term).
[27] Kevin Russell, Practice Pointer: Digging into DIGs (SCOTUSblog Apr. 25, 2019), https://www.scotusblog.com/2019/04/practice-pointer-digging-into-digs/.
[28] Id.
[29] Id. (citing Visa, Inc. v. Osborn, 15-961 (U.S.)).
[30] Id.
