Amicus Curiae Brief — In Re Grand Jury

No. 21-1397

In the

Supreme Court of the United States

__________________

IN RE GRAND JURY

__________________

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

__________________

AMICUS CURIAE BRIEF OF

CALIFORNIA LAWYERS ASSOCIATION

IN SUPPORT OF THE PETITIONER

__________________

ADRIA PRICE

Counsel of Record

PRICE & ASSOCIATES, LLC

43 N. Kringle Place

P.O. Box 100

Santa Claus, IN 47579

(812) 937-4444

adria@pricelaw.net

LAURA L. BUCKLEY

BUCKLEY TAX LAW, APC

2495 Truxtun Rd., Ste. 201

San Diego, CA 92106

(619) 943-1120

buckley@buckleytaxlaw.com

Counsel for Amicus Curiae

CALIFORNIA LAWYERS ASSOCIATION

November 23, 2022

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

i

CORPORATE DISCLOSURE STATEMENT

Under Supreme Court Rule 29.6, Amicus Curiae,

the California Lawyers Association certifies that it is a

nonprofit organization with no corporate parents or

stockholders.

ii

TABLE OF CONTENTS

CORPORATE DISCLOSURE STATEMENT . . . . . . i

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . iv

BRIEF OF THE CALIFORNIA LAWYERS

ASSOCIATION AS AMICUS CURIAE IN

SUPPORT OF PETITIONER. . . . . . . . . . . . . . . . 1

INTEREST OF AMICUS CURIAE . . . . . . . . . . . . . . 1

INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

SUMMARY OF THE ARGUMENT. . . . . . . . . . . . . . 7

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

I.

The attorney-client privilege is a hallmark of

Anglo-American jurisprudence that courts

carefully guard and seek to clearly delineate

to facilitate attorneys’ ability to provide fully

informed legal advice . . . . . . . . . . . . . . . . . . 10

II.

This Court should reject the Ninth Circuit’s

primary purpose test because it results in

uncertain and inconsistent application of the

attorney-client privilege to dual-purpose

communications. . . . . . . . . . . . . . . . . . . . . . . 12

III.

This Court should reject the Seventh

Circuit’s refusal to apply the attorney-client

privilege in the context of tax advice because

it exposes communications that should

remain confidential . . . . . . . . . . . . . . . . . . . . 16

iii

IV.

CLA urges this Court to approve the “a

significant purpose” test adopted by the D.C.

Circuit in Kellogg. . . . . . . . . . . . . . . . . . . . . . 20

V.

The D.C. Circuit’s “significant purpose” test

aptly applies in numerous circumstances

other than tax law matters . . . . . . . . . . . . . . 22

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

iv

TABLE OF AUTHORITIES

CASES

Costco Wholesale Corp. v. Superior Court,

219 P.3d 736 (Cal. 2009). . . . . . . . . . . . . . . . . . . 21

Couch v. United States,

409 U.S. 322 (1973). . . . . . . . . . . . . . . . . . . . . . . 13

Dolby Labs. Licensing Corp. v. Adobe, Inc.,

402 F. Supp. 3d 855 (N.D. Cal. 2019) . . . . . . . . 24

Federal Trade Commission v. Boehringer Ingelheim

Pharmaceuticals, Inc.,

892 F.3d 1264 (D.C. Cir. 2018). . . . . . . . . . . . . . 24

Fisher v. United States,

425 U.S. 391 (1976). . . . . . . . . . . . . . . . . . . . 10, 11

Hercules, Inc. v. Exxon Corp.,

434 F. Supp. 136 (D. Del. 1977) . . . . . . . . . . . . . 24

Hunt v. Blackburn,

128 U.S. 464 (1888). . . . . . . . . . . . . . . . . . . . . . 3, 5

In re General Motors LLC Ignition Switch Litigation,

80 F. Supp. 3d 521 (S.D.N.Y. 2015) . . . . . . . . . . 24

In re Grand Jury,

23 F.4th 1088 (9th Cir. 2021) . . . . . . . . . . . passim

In re Grand Jury Investigation,

842 F.2d 1223 (11th Cir. 1987). . . . . . . . . . . . . . 13

In re Kellogg Brown & Root, Inc.,

756 F.3d 754 (D.C. Cir. 2014). . . . . . . . . . . passim

v

Koumoulis v. Indep. Fin. Mktg. Grp., Inc.,

29 F. Supp. 3d 142 (E.D.N.Y. 2014) . . . . . . . . . . 24

Los Angeles County Bd. of Supervisors v. Superior

Court, 386 P.3d 773 (Cal. 2016) . . . . . . . . . . . . . 10

Schaeffler v. U.S.,

806 F.3d 34 (2nd Cir. 2015) . . . . . . . . . . . . . . . . 19

Sedco Int’l S. A. v. Cory,

683 F.2d 1201 (8th Cir. 1982). . . . . . . . . . . . 14, 24

Swidler & Berlin,

524 U.S. 399 (1998). . . . . . . . . . . . . 8, 9, 15, 21, 23

United States v. Abrahams,

905 F.2d 1276 (9th Cir. 1990). . . . . . . . . . . . . . . 22

United States v. Arthur Young & Co.,

465 U.S. 805 (1984). . . . . . . . . . . . . . . . . . . . . . . 17

United States v. BDO Sideman, LLP,

492 F.3d 806 (2007) . . . . . . . . . . . . . . . . . . . . . . 13

United States v. Cote,

456 F.2d 142 (8th Cir. 1972). . . . . . . . . . . . . 17, 22

United States v. Frederick,

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

United States v. Jicarilla Apache Nation,

564 U.S. 162 (2011). . . . . . . . . . . . . . . . . . . . . . . 11

United States v. Lawless,

709 F.2d 485 (7th Cir. 1983). . . . . . . . . . . . . . . . 18

Upjohn Co. v. United States,

449 U.S. 383 (1981). . . . . . . . . . . . . . . . . . . passim

vi

STATUTES

26 U.S.C. § 7525 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

26 U.S.C. § 7525(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 13

41 U.S.C. §§ 51-58 . . . . . . . . . . . . . . . . . . . . . . . . . . 24

I.R.C. § 7525(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 13

CODES

Cal. Bus. & Prof. Code § 6068(e) . . . . . . . . . . . . . . . 11

RULES

Cal. Rules of Professional Conduct, Rule 1.6 . . 11, 12

OTHER AUTHORITIES

www.irs.gov/newsroom/irs-warns-taxpayers-ofdirty-dozen-tax-scams-for-2022 (IR-2022-113,

June 1, 2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

1

BRIEF OF THE CALIFORNIA LAWYERS

ASSOCIATION AS AMICUS CURIAE IN

SUPPORT OF PETITIONER

The California Lawyers Association (“CLA”)

respectfully submits this brief as amicus curiae in

support of Petitioner, a law firm.1

INTEREST OF AMICUS CURIAE

CLA is a nonprofit professional association

operating under Section 501(c)(6) of the Internal

Revenue Code. CLA has approximately 72,000

members; it is one of the largest statewide voluntary

bar associations in the United States. CLA’s members

include lawyers in private practice, in-house counsel,

government lawyers, judges and other judicial officers,

law professors and other academic professionals, and

others affiliated with the legal profession who are not

lawyers, although CLA’s members are predominantly

lawyers.

CLA’s mission is promoting excellence, diversity,

and inclusion in the legal profession and fairness in the

administration of justice and the rule of law. CLA is

engaged in a broad range of activities, including

advocating on behalf of the legal profession before the

legislative, executive, and judicial branches; providing

continuing legal education and other training for

lawyers; and partnering with lawyers, judges, affinity

1

Notice pursuant to Sup. Ct. R. 37.2(a) was given to all parties, all

parties consented to CLA filing this amicus brief, no party or

counsel for a party helped to draft this brief, and this brief was

funded solely by CLA. (Sup. Ct. R. 37.6.)

2

bar associations, local bar associations, and members

of the community to promote diversity, equity,

inclusion, and access to justice. CLA has the below

eighteen sections that focus on specific areas of

expertise:

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•

•

•

•

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•

•

•

•

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•

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Antitrust and Unfair Competition Law

Business Law

Criminal Law

Environmental Law

Family Law

Intellectual Property Law

International Law and Immigration

Labor and Employment Law

Law Practice Management and Technology

Litigation

New Lawyers

Public Law

Privacy Law

Real Property Law

Solo and Small Firm

Taxation

Trusts and Estates

Workers’ Compensation

CLA has several CLA-wide committees that deal

with issues of relevance to multiple practice areas and

the legal profession overall, such as the Ethics

Committee, which addresses opinions and rules

impacting attorney-ethics and professionalism, often

relating to confidential client information and the

attorney-client privilege.

3

This amicus brief is submitted by CLA but does not

necessarily reflect the views of all members of CLA,

including those who are government employees.

The attorney-client privilege, founded in common

law, is a principled evidentiary rule that advances the

fair administration of justice. As this Court explained

more than a century ago, “The rule which places the

seal of secrecy upon communications between client

and attorney is founded upon the necessity, in the

interest and administration of justice, of the aid of

persons having knowledge of the law and skilled in its

practice, which assistance can only be safely and

readily availed of when free from the consequences or

the apprehension of disclosure.” Hunt v. Blackburn,

128 U.S. 464, 470 (1888).

The test used to determine whether a

communication is protected by the attorney-client

privilege substantially affects a broad spectrum of

attorneys in all practice areas. CLA has a strong

interest in ensuring there are uniform and clear rules

regarding whether a communication is protected by the

attorney-client privilege. CLA has an equally strong

interest in ensuring that courts uphold the attorneyclient privilege whenever doing so enhances effective

legal representation and the orderly administration of

justice.

The Circuits have adopted three different tests

for when the attorney-client privilege applies in

the context of dual-purpose communications;

communications that provide both legal and non-legal

advice. This split of authority has created uncertainty

for CLA’s attorney members with multistate practices

4

and those who represent clients with national

interests.

In the case before this Court, the Ninth Circuit

adopted a primary purpose test, which CLA disfavors

because it relies on subjective balancing that creates

uncertainty in its application, will suppress the open

discourse between client and attorney, and result in the

disclosure of communications that should be privileged.

The Seventh Circuit’s test—which eliminates the

privilege as to any communication, even legal

correspondence, where tax return preparation is part

of the conversation—is likewise disfavored. Although

that test provides certainty, it is unduly restrictive and

therefore fails to further the salutary goals of the

privilege.

CLA supports adoption of the test formulated by

then-Judge Kavanaugh of the D.C. Circuit, which

applies the privilege whenever “a significant purpose”

of the communication is to convey legal advice, because

it provides the most clarity and certainty to attorneys

and their clients and preserves the foundation upon

which the attorney-client privilege was established.

For these reasons, CLA urges this Court to adopt

the D.C. Circuit’s “a significant legal purpose” test to

determine when the attorney-client privilege applies in

the context of dual-purpose communications.

5

INTRODUCTION

This case presents the issue of what test courts

should use to determine whether the attorney-client

privilege applies to dual-purpose communications that

provide both legal and non-legal advice. CLA urges

this Court to adopt the test formulated by Judge

Kavanaugh when he sat on the D.C. Circuit, which

upholds the privilege whenever “a significant purpose”

of the communication is to solicit or convey legal

advice. This test provides the most clarity and

certainty to attorneys and their clients, while

furthering the salient reasons why the attorney-client

privilege has been long recognized in Anglo-American

jurisprudence.

This Court has long recognized the attorney-client

privilege as a bedrock doctrine of the legal profession,

which is needed to protect the confidentiality of candid

communications between attorneys and clients made

for the purpose of obtaining or providing legal advice.

Hunt v. Blackburn, 128 U.S. 464, 470 (1888); Upjohn

Co. v. United States, 449 U.S. 383, 390 (1981). Courts

also have recognized that the attorney-client privilege

is inapplicable to “[c]ommunications from a client that

neither reflect the lawyer’s thinking nor are made for

the purpose of eliciting the lawyers’ professional advice

or other legal assistance . . . .” United States v.

Frederick, 182 F.3d 496, 500 (7th Cir. 1999). The line

between protected legal advice and unprotected nonlegal advice is often difficult to draw, especially when

Circuit Courts adopt different tests.

Attorneys often have multiple roles when advising

a client: that of lawyer, counselor, therapist, business

6

advisor, financial advisor, and confidant. Thus, many

communications between attorneys and their clients

contain both legal and non-legal advice, thereby

serving dual-purposes.

In this case, the Ninth Circuit employed a “primary

purpose” balancing test to determine if the

communications at issue were protected by the

attorney-client privilege. Under this test, courts are

required to compare the legal purposes to the non-legal

purposes of a communication to establish which is the

most significant. In re Grand Jury, 23 F.4th 1088,

1091 (9th Cir. 2021). If the legal purpose is weightier,

the communication is privileged and non-discoverable.

Id. The inverse is true if the court finds the non-legal

purpose to have greater significance, thereby making

the communication open to discovery. Id.

The Seventh and D.C. Circuits decide whether dualpurpose communications are discoverable using tests

that are irreconcilable with the test used in the Ninth

Circuit.

In the Seventh Circuit, “a dual-purpose document –

a document prepared for use in preparing tax returns

and for use in litigation – is not privileged.” Frederick,

182 F.3d at 501. There is no balancing of purposes and

no analysis to determine whether a significant legal

purpose motivated the communication. If a document

or communication was made “for use in connection with

the preparation of tax returns” it is not privileged

regardless of how much or in what context any legal

advice was sought or conveyed. Id. In the Seventh

Circuit, communications between attorneys and clients

are chilled by the knowledge that legal communications

7

related to the preparation tax returns are not protected

from compelled disclosure. Id. at 501-02.

In the D.C. Circuit, courts evaluate communications

to determine if the legal purpose motivating the

communication was “significant.” In re Kellogg Brown

& Root, Inc., 756 F.3d 754, 760 (D.C. Cir. 2014). Unlike

the Ninth Circuit, the D.C. Circuit test requires no

balancing; the legal purpose simply needs to be a

significant purpose for the privilege to apply. Id. at

759-60. If a significant purpose of the communication

was to provide legal advice, then it is protected by the

attorney-client privilege even if the communication

primarily served some non-legal purposes. Id.

Three divergent evidentiary standards make for an

unworkable environment for practitioners and their

clients trying to navigate the scope of the attorney-client

privilege applied to dual-purpose communications. CLA

urges this Court to adopt the D.C. Circuit’s test for

determining when the attorney-client privilege

attaches to dual-purpose communications because it

both provides a high degree of predictability and fosters

the open and candid communications between

attorneys and clients that is needed to ensure the

proper administration of justice.

SUMMARY OF THE ARGUMENT

The attorney-client privilege is a foundational

doctrine of the legal profession needed to foster and

protect the confidentiality of candid communications

between attorneys and clients made for the purpose of

giving and receiving legal advice. The circuit courts

have articulated divergent and irreconcilable tests for

8

determining when the attorney-client privilege applies

to dual-purpose communications. A communication

has a “dual-purpose” when it was made for both legal

and non-legal purposes. The United States Court of

Appeals for the Ninth Circuit’s primary purpose test

requires a court to identify both the legal and non-legal

purposes of the communication and then weigh their

relative importance. If the legal purpose outweighs the

non-legal purpose, it is considered the communication’s

sole primary purpose and thus privileged. The

Ninth Circuit applied this test in In re Grand Jury

and determined that Petitioner’s dual-purpose

communications were not privileged. In re Grand Jury,

23 F.4th at 1090.

In order to promote the “observance of law and

administration of justice,” application of the attorneyclient privilege must be predictable and applied with

uniformity. Upjohn, 449 U.S. at 389. The Ninth

Circuit’s “primary purpose” test fails this requirement.

By requiring a court to determine a communication’s

primary purpose, the Ninth Circuit’s test produces

unpredictable and inconsistent results, thereby

creating uncertainty that is detrimental to the integrity

of the attorney-client privilege.

The Ninth Circuit’s test leaves the privilege to the

subjective discretion of the Court, is applied after-thefact, and limits the privilege to the point it frustrates

the purpose of encouraging full and frank

communications between attorney and client. This

Court previously rejected this type of judicial balancing

to determine privilege precisely because it created too

much uncertainty. Swidler & Berlin, 524 U.S. 399, 409

9

(1998); Upjohn, 499 U.S. at 393. For the same reason,

this Court should likewise reject the Ninth Circuit’s

primary purpose test.

The United States Court of Appeals for the Seventh

Circuit held that dual-purpose communications in the

tax return preparation context are not privileged.

Frederick, 182 F.3d at 501. CLA urges this Court to

disapprove Frederick, and hold that, while underlying

information that is disclosed on the return itself is

considered unprivileged because it is disclosed to a

third party outside of the attorney-client relationship

such as the Internal Revenue Service, communications

made for the purpose of giving or receiving legal advice

are protected by the attorney-client privilege in the

context of tax return preparation.

In Kellogg, the United States Court of Appeals for

the District of Columbia adopted the “significant

purpose” test, under which courts need not attempt to

decern a communication’s primary purpose. Instead,

courts uphold the assertion of privilege if seeking or

providing legal advice was “a significant purpose” of

the communication. Kellogg, 756 F.3d at 760 (emphasis

added).

The D.C. Circuit’s “significant purpose” test both

leads to predictable results and encourages the full and

open attorney-client communications needed for

effective representation and the orderly administration

of justice. Accordingly, CLA urges this Court to resolve

the current circuit split by adopting the D.C. Circuit’s

“a significant purpose” test for determining when dualpurpose communications are protected by the attorneyclient privilege.

10

ARGUMENT

I.

The attorney-client privilege is a hallmark

of Anglo-American jurisprudence that

courts carefully guard and seek to clearly

delineate to facilitate attorneys’ ability to

provide fully informed legal advice.

As the California Supreme Court has repeatedly

observed, the attorney-client privilege has been a

sacred “‘hallmark of Anglo-American jurisprudence for

[over] 400 years’ that ‘our judicial system has carefully

safeguarded with only a few specific exceptions.’” Los

Angeles County Bd. of Supervisors v. Superior Court,

386 P.3d 773, 778 (Cal. 2016). This privilege against

third party disclosure of attorney-client communications

exists to enable an attorney to provide legal advice based

on a client’s full and candid disclosures. Id.; accord,

Upjohn, 449 U.S. at 390 (The attorney-client privilege

“encourage[s] full and frank communication between

attorneys and their clients, and thereby promote[s]

broader public interest in the observance of law and

administration of justice”). “However, since the

privilege has the effect of withholding relevant

information from the factfinder, it applies only where

necessary to achieve its purpose. Accordingly, it

protects only those disclosures necessary to obtain

informed legal advice which might not have been made

absent the privilege.” Fisher v. United States, 425 U.S.

391, 403 (1976).

It is essential that attorneys and their clients know

the boundaries of the attorney-client privilege to

ensure that confidential communications will remain

confidential. Upjohn, 499 U.S. at 393 (“if the purpose

11

of the attorney-client privilege is to be served, the

attorney and client must be able to predict with some

degree of certainty whether particular discussions will

be protected”). An “uncertain privilege, or one which

purports to be certain but results in widely varying

applications by the courts, is little better than no

privilege at all.” Id. This Court has recognized that,

“[a]s a practical matter, if the client knows that

damaging information could more readily be obtained

from the attorney following disclosure than from

himself in the absence of disclosure, the client would be

reluctant to confide in his lawyer and it would be

difficult to obtain fully informed legal advice.” Fisher,

425 U.S. at 403.

In sum, “for the attorney-client privilege to be

effective, it must be predictable.” United States v.

Jicarilla Apache Nation, 564 U.S. 162, 183 (2011). The

scope of the privilege must be expansive enough to

encourage the full and frank communications between

attorneys and their clients that are essential to

effective legal representation.

In California, as in most jurisdictions, the attorney

is required to keep client communications confidential,

or risk disciplinary action. California Business and

Professions Code section 6068, subdivision (e), states

that it is the duty of an attorney to “maintain inviolate

the confidence, and at every peril to himself or herself

to preserve the secrets, of his or her client.” This duty

is subject to a very narrow exception.2 California Rules

2

Under section 6068, an “attorney may, but is not required to,

reveal confidential information relating to the representation of a

12

of Professional Conduct, Rule 1.6, which mirrors the

American Bar Association’s Rule 1.6 in most respects,

states that: “A lawyer shall not reveal information

protected from disclosure by Business and Professions

Code section 6068 . . . .” Attorneys who disclose

information protected by the attorney-client privilege

without client consent face potential disciplinary

action, not to mention a potential civil lawsuit by the

client. Moreover, the disciplinary power of the State

Bar of California extends both to breaches outside of

California if the attorney is licensed in California and

to breaches inside California even if the lawyer is

licensed in a different jurisdiction. Thus, attorneys and

their clients must have a predictable rule regarding

when the attorney-client privilege applies, and

the Kellogg “substantial purpose” test best meets that

need.

II.

This Court should reject the Ninth Circuit’s

primary purpose test because it results in

uncertain and inconsistent application of

the attorney-client privilege to dualpurpose communications.

This case concerns the discoverability of dualpurpose communications related to tax advice by an

attorney who acted both as legal counsel and tax return

preparer. In re Grand Jury, 23 F.4th at 1091; Pet.

App. 24a-28a. While the attorney-client privilege is

client to the extent that the attorney reasonably believes the

disclosure is necessary to prevent a criminal act that the attorney

reasonably believes is likely to result in death of, or substantial

bodily harm to, an individual.”

13

sacrosanct, there is no accountant-client privilege.3

Couch v. United States, 409 U.S. 322, 335 (1973). The

Ninth Circuit therefore adopted a balancing test to

determine whether the primary purpose of the

communication “is to give or receive legal advice, as

opposed to business or tax advice.” In re Grand Jury,

23 F.4th at 1091. The assertion of privilege is upheld

only when the legal purpose predominates. Id.

Under the Ninth Circuit’s test, courts must examine

the communication to parse the legal and non-legal

portions. Id. Courts must then balance the two and

determine whether the legal or non-legal purpose is the

most predominant. Id. Only when the legal purpose of

the communication is more significant than the nonlegal purpose will the attorney-client privilege apply.

Id. “The natural implication of this inquiry is that a

dual-purpose communication can only have a single

‘primary’ purpose.” Id.

3

Subject to certain limitations, 26 U.S.C. § 7525 extends the “same

common law protections of confidentiality which apply to a

communication between a taxpayer and an attorney…to a

communication between a taxpayer and any federally authorized

tax practitioner to the extent the communication would be

considered a privileged communication if it were between a

taxpayer and an attorney.” 26 U.S.C. § 7525(a)(1). This privilege

does not apply to work product and does not protect the

preparation of tax returns and other documents filed with the

Internal Revenue Service. See, Frederick, 182 F.3d at 502 and In

re Grand Jury Investigation, 842 F.2d 1223, 1224-1225 (11th Cir.

1987). This privilege also does not apply in criminal contexts.

I.R.C. § 7525(a)(2); United States v. BDO Sideman, LLP, 492 F.3d

806, 821 (2007).

14

The Ninth Circuit’s test creates unpredictability by

leaving much to the subjective discretion of the

presiding court. Uncertainty already exists in

determining what defines legal versus non-legal advice

in many settings, whether lawyers are providing nonlitigation, prelitigation, and/or litigation services. In

those circumstances, there is no clear delineation on

where legal advice stops and business advice starts.

See Sedco Int’l S. A. v. Cory, 683 F.2d 1201, 1205 (8th

Cir. 1982) (“[L]egal advice concerning commercial

transactions is often intimately intertwined with and

difficult to distinguish from business advice.”). That

uncertainty is compounded and creates an unworkable

situation when the court is left to decide on a case-bycase basis how important the legal advice is compared

to the non-legal advice in every communication.

Courts balancing whether legal or non-legal aspects

of attorney-client communications predominate must

consider and weigh the nature of the attorney-client

relationship, what motivated the particular attorneyclient communication, the nature of the advice sought,

and what precisely was said in each communication.

Balancing these factors necessarily leads to a

subjective determination by the court regarding

whether to apply the privilege. Under this “primary

purpose” test, it is impossible for attorneys and clients

exchanging dual-purpose communications to predict in

advance how courts may later balance the purposes

motivating the communications to determine whether

it will be protected by the privilege.

The attorney-client privilege only works to

effectively foster open dialog between client and

15

attorney when they know at the outset that courts will

use a test producing predicable results as to what is

privileged. For that reason, this Court has previously

rejected a balancing test to determine the breadth of

the attorney-client privilege after the fact. Swidler,

524 U.S. at 409; see also, Upjohn 499 U.S. at 393 (“The

test adopted by the court below is difficult to apply in

practice, though no abstractly formulated and

unvarying “test” will necessarily enable courts to decide

questions such as this with mathematical precision.

But if the purpose of the attorney-client privilege is to

be served, the attorney and client must be able to

predict with some degree of certainty whether

particular discussions will be protected’‘). This Court

should similarly rule that the Ninth Circuit’s test is

unacceptably uncertain and impermissibly frustrates

attorneys’ ability to counsel their clients based on full

and candid information.

Notably, the Ninth Circuit did not completely reject

the significant purpose test adopted by the D.C. Circuit

in Kellogg. In re Grand Jury, 23 F.4th at 1094. It did,

however, limit the application of Kellogg to only “truly

close cases, like where the legal purpose is just as

significant as a non-legal purpose.” In re Grand Jury,

23 F.4th at 1095. Apparently, the Kellogg significant

purpose test applies in the Ninth Circuit only in the

rare instance where the court finds a perfect 50-50

balance between the legal and non-legal purposes of a

communication. It is, of course, impossible to predict

when a court may find such a perfect 50-50 balance of

purposes, so this remote possibility does little to

encourage the type of frank and open communications

16

between attorneys and their clients that is needed to

ensure that proper legal advice is conveyed.

The Ninth Circuit’s test for when to apply

the attorney-client privilege to dual-purpose

communications chills such communications, contrary

to the intent behind the privilege. It also creates

uncertainty for both attorney and client and lends itself

to a lack of uniformity in application by requiring the

courts to engage in a subjective balancing of purposes.

For these reasons, this Court should reject the primary

purpose balancing test adopted by the Ninth Circuit.

III.

This Court should reject the Seventh

Circuit’s refusal to apply the attorneyclient privilege in the context of tax advice

because it exposes communications that

should remain confidential.

In United States v. Frederick, the Seven Circuit

rejected the assertion of the attorney-client privilege to

communications relating to both tax return preparation

and litigation in a case where the attorney was

providing both legal advice and non-legal accounting

services. Frederick, 182 F.3d at 499, 501. Unlike the

Ninth Circuit, the Seventh Circuit does not require

courts to determine or balance the significance of the

legal purpose motivating a dual-purpose

communication. The mere fact that the document

contains nonlegal information renders the privilege

inapplicable. Id. (“The Lenzes undoubtedly benefited

from having their lawyer do their returns, but they

must take the bad with the good; if his legal thinking

infects his worksheets, that does not cast the cloak of

privilege over the worksheets; they are still

17

accountants’ worksheets, unprotected no matter who

prepares them.”)

Frederick creates a dilemma for tax attorneys

practicing in the Seventh Circuit. While it creates

certainty in the knowledge that no privilege will apply

to dual-purpose communications, it greatly inhibits the

ability of tax attorneys and their clients to have full

and honest discourse for purposes of securing both

sound legal advice and tax preparation services. The

tax system in the United States relies upon the honesty

of the taxpayer to self-report income and pay the

correct amount of taxes due thereon. While preparing

and filing an income tax return is supposed to be

possible for the average taxpayer, the Internal Revenue

Code’s complexity and harsh penalties for noncompliance often make that an arduous and often

impossible task. In many instances, such as in the

business or international context, preparing and filing

a tax return without first consulting a multitude of

professionals, including tax attorneys, is ill-advised.

It is settled that information provided to the

attorney that later appears on a tax return, is not

privileged. United States v. Cote, 456 F.2d 142, 144 (8th

Cir. 1972). (“[C]ommunications made solely for tax

return preparation are not privileged.”); see also,

Frederick, 182 F.3d at 501, citing, United States v.

Arthur Young & Co., 465 U.S. 805, 817-819 (1984) (“a

lawyer’s privilege…is no greater when he is doing

accountant’s work”). “[I]f the client transmitted the

information so that it might be used on the tax return,

such a transmission destroys any expectation of

confidentiality.” Frederick, 182 F.3d at 500-501, citing,

18

United States v. Lawless, 709 F.2d 485, 487 (7th Cir.

1983).

However, there are often situations where an

attorney must render legal advice related to a client’s

tax return, and that legal advice should be protected by

the attorney-client privilege. For example, the Internal

Revenue Service frequently issues audit initiatives and

annually publishes its Dirty Dozen list of transactions

that it has identified as scams and without substantive

tax basis. www.irs.gov/newsroom/irs-warns-taxpayersof-dirty-dozen-tax-scams-for-2022 (IR-2022-113, June

1, 2022). Many of those purported scams are founded

on a legitimate transaction that is manipulated to

achieve illegitimate results, such as overinflated

deductions or artificially suppressed income. A client

might consult their tax attorney to determine if a

transaction meets the guidelines in the Internal

Revenue Code, associated regulations, and IRS

guidance prior to adopting a position with respect to

that transaction on their income tax return. That

determination requires legal research and analysis that

is best described as core legal advice and not

accounting work or the mere transcribing of numbers

on a return. Accordingly, communications related to

that research and the attorney’s legal opinion and

advice should be protected from disclosure by the

attorney-client privilege. Under the Seventh Circuit’s

test, that protection is largely eviscerated. See,

Frederick, 182 F.3d at 501.

Nevertheless, even the Seventh Circuit recognized

that “it cannot be assumed that everything the

taxpayer gave [his counsel] was intended to assist him

19

in his tax-preparation function and so might be

conveyed to the IRS, rather than in his legalrepresentation function.” Frederick, 182 F.3d 501.

That recognition is small comfort to tax attorneys and

their client because their entire communication

becomes unprivileged whenever any part of it is used to

prepare a return. “[A] dual-purpose document—a

document prepared for use in preparing tax returns

and for use in litigation—is not privileged.” Id.

While the holding in Frederick concerns a document

created both to prepare an income tax return and for

use in litigation, the same rationale could apply to nontax dual-purpose communications, especially in

situations where the attorney is providing legal advice

and preparing documents to be submitted to a third

party, such as in the business or regulatory landscape.

The Frederick holding has not been adopted outside the

Seventh Circuit, but it nevertheless has resulted in

unworkable complexity and uncertainty for

practitioners and their clients, especially those who

practice in multiple jurisdictions. See, e.g., Schaeffler

v. U.S., 806 F.3d 34, 44, fn. 4 (2nd Cir. 2015)

(discussing the inapplicability of Frederick in situations

where the client is accompanied by counsel in an audit

for the purposes of providing advice on statutory

interpretation or case law).

For the above reasons, this Court should disapprove

of the Seventh Circuit’s decision in Frederick. As we

now explain, this Court should approve the D.C.

Circuit’s substantial purpose test adopted in Kellogg for

determining when the attorney-client privilege applies

to dual-purpose communications.

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IV.

CLA urges this Court to approve the “a

significant purpose” test adopted by the

D.C. Circuit in Kellogg.

In In re Kellogg Brown & Root, Inc., the D.C. Circuit

adopted the “significant purpose” test when it held that

the attorney-client privilege applied to dual-purpose

documents created during an internal investigation.

Kellogg 756 F.3d at 759-760. The test adopted in

Kellogg requires courts to identify the legal purpose

behind a communication and determine whether it is

significant. Id. at 759. If the answer is yes, the

privilege applies. Id. at 760 (“Sensibly and properly

applied, the test boils down to whether obtaining or

providing legal advice was one of the significant

purposes of the attorney-client communication.”

(Emphasis added)).

Under the significant purpose standard, there is no

balancing as required by the Ninth Circuit. As thenJudge Kavanaugh articulated:

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 purposes.

Rather, it is clearer, more precise, and more

predictable to articulate the test as follows: Was

obtaining or providing legal advice a primary

purpose of the communication, meaning one

21

of the significant

communication?

purposes

of

the

Kellogg, 756 F.3d at 759-760 (emphasis in original).

Under the D.C. Circuit’s test, the court need not

compare the significance of any contemporaneous

nonlegal purposes that also may have motivated the

communications. Id. at 759–60.

The D.C. Circuit’s significant purpose test is

broader and more protective than the Ninth Circuit’s

primary purpose test. While the D.C. Circuit’s test will

shield more communications from discovery than the

tests used in the Seventh and Ninth Circuits, the

privilege is worthy of the deference afforded it under

the Kellogg test. “[W]e acknowledge that the privilege

carries costs. The privilege means that potentially

critical evidence may be withheld from the

factfinder . . . . But our legal system tolerates those

costs because the privilege is intended to encourage full

and frank communications between attorneys and their

clients and thereby promote broader public interests in

the observance of law and the administration of

justice.” Kellogg, 756 F.3d at 764, citing, Swidler, 534

U.S. at 403 (quoting Upjohn, 499 U.S. at 389) (internal

quotations omitted); see also Costco Wholesale Corp. v.

Superior Court, 219 P.3d 736, 740–41 (Cal. 2009)

(“Although exercise of the privilege may occasionally

result in the suppression of relevant evidence, . . .these

concerns are outweighed by the importance of

preserving confidentiality in the attorney-client

relationship. . . . ‘The privilege is given on grounds of

public policy in the belief that the benefits derived

therefrom justify the risk that unjust decisions may

22

sometimes result from the suppression of relevant

evidence.’”).

The facts in In re Grand Jury concern the

application of the attorney-client privilege to

communications between tax attorneys and their

clients. 23 F.4th at 1091. Tax attorneys routinely

advise clients about the likely tax consequences of

proposed actions and how to structure transactions to

achieve both compliant and favorable tax consequences.

This is legal advice that should be privileged.

“[C]ommunications made to acquire legal advice about

what to claim on tax returns may be privileged.”

United States v. Abrahams, 905 F.2d 1276, 1284 (9th

Cir. 1990). United States v. Cote, 456 F.2d 142, 144

(8th Cir. 1972) (“Tax advice rendered by an attorney is

legal advice within the ambit of the privilege.”)

Adopting the D.C. Circuit’s “significant purpose” test

rather than the Ninth Circuit’s “primary purpose” test

will lead to the proper application of privilege in these

circumstances.

V.

The D.C. Circuit’s “significant purpose”

test aptly applies in numerous

circumstances other than tax law matters.

While tax attorneys undoubtedly have a clear

interest in the applicable test to determine the

protections afforded dual-purpose attorney-client

communications, adopting the Kellogg “significant

purpose” test has universal application to all practices

of law. In today’s varied legal world, no practice area

is immune to the inconsistent application of the

privilege to dual-purpose communications that

currently exists.

23

Clients, particularly laypersons, seeking legal

advice in all contexts frequently do not know precisely

what information is or is not required to receive

adequate legal advice, and attorneys providing such

advice may not know how to categorize the client’s

information until all communications have been

received. See Swidler, 524 U.S. at 409 (“[A] client may

not know at the time he discloses information to his

attorney whether it will later be relevant to a civil or a

criminal matter”).

As a result, dual-purpose

communications are ubiquitous in all legal practices.

One need only look to the variety of practices

involved in published opinions to understand the

complexity of this issue. Notably, two cases cited

frequently in the parties’ merits briefing, Upjohn and

Kellogg, both concern the application of the attorneyclient privilege to communications produced by inhouse counsel during an internal investigation. See

generally, Upjohn, 449 U.S. 383 (concerning reports

disclosed to the Securities and Exchange Commission

(“SEC”) and the Internal Revenue Service (“IRS”)

regarding questionable payments made by a foreign

subsidiary to foreign government officials) and Kellogg,

756 F.3d 754 (concerning federal defense contractor

regulations). Both cases stemmed from the companies’

responses to regulatory requirements to ensure

corporate compliance with the law. See Kellogg, 756

F.3d at 757 (finding the issues presented before it to be

materially indistinguishable from the underlying

factual issues in Upjohn).

Other cases illustrate various circumstances in

which privilege questions in the context of dual-

24

purpose communications can arise. In Federal Trade

Commission v. Boehringer Ingelheim Pharmaceuticals,

Inc., the court found the attorney-client privilege

applied to documents concerning a settlement reached

in an antitrust matter. Federal Trade Commission v.

Boehringer Ingelheim Pharmaceuticals, Inc., 892 F.3d

1264, 1267 (D.C. Cir. 2018). Cases have also arisen

concerning the application of the attorney-client

privilege to dual-purpose communications in products

liability (In re General Motors LLC Ignition Switch

Litigation, 80 F. Supp. 3d 521 (S.D.N.Y. 2015)),

commercial transactions (Sedco Int’l S.A. v. Cory, 683

F.2d at 1205), employment law (Koumoulis v. Indep.

Fin. Mktg. Grp., Inc., 29 F. Supp. 3d 142, 146 (E.D.N.Y.

2014)), patent law (Hercules, Inc. v. Exxon Corp., 434 F.

Supp. 136, 143 (D. Del. 1977)), and corporate matters

(Dolby Labs. Licensing Corp. v. Adobe, Inc., 402 F.

Supp. 3d 855, 873 (N.D. Cal. 2019).

It is significant that in Kellogg, based on the

findings of its internal investigation, the company

made disclosures to the Department of Defense

(“DOD”) pursuant to its obligations under 41 U.S.C.

§§ 51-58 (the Anti-Kickback Act), but properly declined

to disclose the investigative report itself to the DOD

because it was protected by the attorney-client

privilege. Kellogg, 796 F.3d at 142. Similarly,

disclosures were made to the SEC and the IRS in

Upjohn based on a corporation’s internal investigation.

Upjohn, 449 U.S. at 387. In both Upjohn and Kellogg,

assertions of the attorney-client privilege were upheld,

which is inconsistent with the Seventh Circuit’s rule

that any third-party disclosure waives the privilege

25

regarding the disclosed subject matter. See Frederick,

182 F.3d at 500-01.

In sum, the D.C. Circuit’s significant purpose test

best promotes the uniform and consistent application

of the privilege across numerous practice areas and

provides a reliable framework for complex and dynamic

advice provided by attorneys to their clients. That

test, which when “[s]ensibly and properly

applied…boils down to whether obtaining or providing

legal advice was one of the significant purposes of the

attorney-client communication,” best fits with the

evolving landscape of the legal profession and promotes

the open discourse the attorney-client privilege was

designed to protect. Kellogg, 756 F.3d at 760.

For these reasons, CLA urges this Court to

expressly adopt the Kellogg “significant purpose”

standard as the appropriate test for determining when

the attorney-client privilege applies to dual-purpose

communications, regardless of the type of law at issue.

By doing so, the Court will safeguard the full and frank

communications needed between attorney and client

and ensure that dual-purpose communications

containing significant legal advice remain privileged.

CONCLUSION

Uniformity in the application of the attorney-client

privilege to dual-purpose communications is imperative

to promote full and candid communications between

attorneys and their clients, which is essential to proper

legal representation and the fair administration of the

law. To meet these dual objectives, this Court should

approve the “significant purpose” test adopted by

26

Justice Kavanaugh in the D.C. Circuit’s Kellogg

decision, reverse the Ninth Circuit’s decision in this

case, and disapprove the Seventh Circuit’s Frederick

decision.

Respectfully submitted by,

ADRIA PRICE

Counsel of Record

PRICE & ASSOCIATES, LLC

43 N. Kringle Place

P.O. Box 100

Santa Claus, IN 47579

(812) 937-4444

adria@pricelaw.net

LAURA L. BUCKLEY

BUCKLEY TAX LAW, APC

2495 Truxtun Rd., Ste. 201

San Diego, CA 92106

(619) 943-1120

buckley@buckleytaxlaw.com

Counsel for Amicus Curiae

CALIFORNIA LAWYERS ASSOCIATION