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In re Grand Jury

In re Grand Jury

United States Court of Appeals for the Ninth Circuit

June 7, 2021, Argued and Submitted, Pasadena, California; September 13, 2021, Filed

Nos. 21-55085, 21-55145

Opinion

 [*712]  LEE, Circuit Judge:

Given our increasingly complex regulatory landscape, attorneys often wear dual hats, serving as both a lawyer and a trusted business advisor. Our court, however, has yet to articulate a consistent standard for determining when the attorney-client privilege applies to dual-purpose communications that implicate both legal and business concerns.

In this case, the grand jury issued subpoenas related to a criminal investigation. The district court held Appellants—whom we identify as "Company" and "Law Firm"—in contempt after they failed to comply with the subpoenas. 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 argue that the district court erred in relying on the "primary purpose" test and should have instead relied on a broader "because of" test. ] We affirm and conclude that the primary-purpose test governs in assessing attorney-client [**4]  privilege for dual-purpose communications.2

 [*713]  BACKGROUND

Company and Law Firm were each served with grand jury subpoenas requesting documents and communications related to a criminal investigation. The target of the criminal investigation is the owner of Company as well as a client of Law Firm. In response to the grand jury subpoenas, Company and Law Firm each produced some documents but withheld others, citing attorney-client privilege and the work-product doctrine.

The government moved to compel production of the withheld documents, which the district court granted in part. In those orders, the district court explained that these documents were either not protected by any privilege or were discoverable under the crime-fraud exception. Company and Law Firm disagreed with the district court's privilege rulings, so they continued to withhold the disputed documents. The government followed up with motions to hold Company and Law Firm in contempt, both of which the district court again granted. These appeals followed, and we have jurisdiction under 28 U.S.C. § 1291.

STANDARD OF REVIEW

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13 F.4th 710 *; 2021 U.S. App. LEXIS 27420 **

IN RE GRAND JURY.

Subsequent History: Modified by, Rehearing denied by, En banc, Rehearing denied by, Motion denied by, As moot In re Grand Jury, 2021 U.S. App. LEXIS 39177 (9th Cir. Cal., Jan. 27, 2022)

Substituted opinion at In re Grand Jury, 2021 U.S. App. LEXIS 39178 (9th Cir. Cal., Jan. 27, 2022)

Prior History:  [**1] Appeal from the United States District Court for the Central District of California. D.C. Nos. 2:20-cm-00046-UA-1, 2:18-cm-01758-UA-1. John Kronstadt, District Judge, Presiding.

CORE TERMS

attorney-client, communications, primary purpose, dual-purpose, district court, legal advice, work-product, documents, common law, primary-purpose, privileged, advice, courts, tests

Civil Procedure, Discovery, Privileged Communications, Attorney-Client Privilege, Evidence, Privileges, Attorney-Client Privilege, Scope, Appeals, Standards of Review, Clearly Erroneous Review, Questions of Fact & Law, De Novo Review, Tax Law, Audits & Investigations, IRS Disclosures of Information, Confidentiality of Returns, Elements, Work Product Doctrine, Work Product Doctrine, Scope of Protection