Ninth Circuit Applies “Primary Purpose” Test to Dual-Goal Communications in Analyzing Whether Attorney-Shopper Privilege Applies

Usually, only communications designed for the goal of supplying or receiving authorized information have been given the protections of the lawyer-shopper privilege. Attorneys, nonetheless, typically have on multiple hats and provide as both equally lawyers and business enterprise advisors for their customers. Thoughts about the applicability of the attorney-customer privilege for that reason often come up in so-known as “dual-purpose” communications that involve both lawful and small business issues.

Joining the United States Courts of Appeals for the 2nd, Fifth, Sixth, and D.C. Circuits,1 the United States Courtroom of Appeals for the Ninth Circuit in In re Grand Jury, 23 F.4th 1088, 1091 (9th Cir. Jan. 27, 2022) held that, in assessing no matter if twin-purpose communications that implicate each lawful and enterprise concerns are safeguarded by the attorney-client privilege, courts should really implement the “primary purpose” test, which appears at “whether the principal objective of the conversation is to give or receive legal guidance, as opposed to enterprise or tax advice.” The Ninth Circuit expressly turned down application of the broader “because of” examination, less than which the privilege applies to twin-function communications that would not have been made but for the require to give or acquire legal tips.

I. Factual and Procedural Background  

In connection with a felony investigation into the owner of an unnamed enterprise, a grand jury issued subpoenas to the organization and the company’s law organization, requesting documents and communications. In response, the corporation and regulation organization each created some documents but withheld some others on legal professional-consumer privilege and workproduct protection grounds.

The government moved to compel creation of the withheld documents, and the United States District Court for the Central District of California granted the motion in aspect. The district court docket explained that the files both were not safeguarded or ended up discoverable under the crime-fraud exception, keeping that specific paperwork determined as dual-purpose communications have been not privileged since the “primary purpose” of the documents was to get hold of tax assistance, not legal advice. In buying the paperwork manufactured, the district court docket rejected the company’s and law firm’s request to implement a “because of” check that would safeguard dual-purpose communications manufactured “because of” the have to have to give or obtain legal suggestions. 

The enterprise and the legislation agency disagreed with the district court’s ruling and ongoing to withhold the disputed files. On the government’s movement, the district court docket held the enterprise and the regulation agency in contempt. The corporation and the legislation company appealed the orders, arguing that the district court erred by relying on the “primary purpose” take a look at, rather of the broader “because of” take a look at for dual-function communications. 

II. The Ninth Circuit’s Decision 

On September 13, 2021,2 the Ninth Circuit affirmed the district court’s ruling, keeping that the “primary purpose” exam applies to lawyer-customer privilege promises for twin-objective communications.3 Analyzing rules of prevalent regulation, the needs and plan aims of the attorney-shopper privilege and perform item doctrine, and the functional outcomes of making use of the “primary purpose” or “because of” exams, the unanimous panel held that, constant with the typical regulation, the scope of the legal professional-shopper privilege ought to be outlined by the function of the communication, and as a result the “primary purpose” check really should apply to twin-intent communications. 

The court discussed the two potential tests for twin-goal communications. The “primary purpose” check seems at whether or not the principal reason of the interaction was to give or acquire legal guidance, as opposed to organization or tax tips. In re Grand Jury, 23 F.4th at 1091. The “because of” test, which generally applies in the workproduct context and is broader than the “primary purpose” test, “does not consider regardless of whether litigation was a main or secondary motive driving the development of the doc,” but instead “affords defense when it can be fairly said that the document was established mainly because of anticipated litigation, and would not have been designed in significantly very similar type but for the prospect of that litigation.” Id. at 1091-92 (citing In re Grand Jury Subpoena (Mark Torf/Torf Environmental Administration), 357 F.3d 900, 908 (9th Cir. 2004)). In the context of the attorney-client privilege, the “because of” exam could possibly talk to irrespective of whether a twin-goal interaction was built “because of” the need to give or receive lawful suggestions. 

In adopting the “primary purpose” test, the Ninth Circuit stated that interpretation of the legal professional-customer privilege will have to be guided by widespread legislation principles. In re Grand Jury, 23 F.4th at 1092 (citing Swidler & Berlin v. United States, 524 U.S. 399, 403 (1998)). The court docket emphasised that the scope of the privilege at frequent legislation traditionally has been outlined by the reason of the interaction, not its relation to expected litigation. Id. at 1092-93. The privilege “‘protects only people disclosures vital to obtain knowledgeable authorized tips which may not have been built absent the privilege.’” Id. at 1092 (quoting Fisher v. United States, 425 U.S. 391, 403 (1976)). 

The Ninth Circuit also discussed that the operate-products doctrine and lawyer-consumer privilege provide diverse policy plans, and hence it makes feeling to implement unique assessments to ascertain the scope of the independent protections. Id. at 1093. The work-item doctrine aims to defend the fairness of the adversarial process by permitting litigators to create legal theories and procedures without the need of dread that their adversaries can use the discovery approach to acquire entry to this operate. Id. By contrast, the attorney-customer privilege encourages full and frank communications between lawyers and their consumers. The privilege is not tied to the adversarial process and “provid[es] a sanctuary for candid communication about any lawful make a difference, not just impending litigation.” Id. The Ninth Circuit described that expanding the lawyer-shopper privilege by applying a broader “because of” examination may possibly “harm our adversarial method if functions try to withhold key paperwork as privileged by declaring that they had been developed ‘because of’ litigation problems.” Id. On top of that, applying a broader “because of” defense would create perverse incentives for firms to add levels of attorneys to just about every small business choice to protect resources from generation in any upcoming litigation. Id. at 1093- 94. 

Obtaining no persuasive reason possibly to abandon the widespread-law rule concentrating on the goal of the interaction, or to borrow the “because of” exam from the get the job done-products doctrine, or to depart from the holdings of most, if not all, of the other circuit courts that have dealt with this issue,4 the Ninth Circuit held that the “primary purpose” take a look at applies to twin-goal communications. Id. at 1094.

The Ninth Circuit explicitly declined to take into consideration no matter whether the “a primary purpose” rather than “the principal purpose” examination may utilize in some instances. In In re Kellogg Brown & Root, Inc., the D.C. Circuit adopted a edition of the “a most important purpose” examination, which asks, “[w]as getting or supplying legal information a major function of the conversation, indicating one particular of the substantial needs of the communication?” 756 F.3d 754, 760 (D.C. Cir. 2014). In Kellogg, a company done an inside investigation for both equally legal and organization factors, and the D.C. Circuit explained that getting “the just one most important function for a communication motivated by two often overlapping needs (one particular lawful and 1 company, for instance) can be an inherently extremely hard task” for the reason that often it is unachievable “to consider to establish no matter whether the function was A or B when the intent was A and B.” Id. at 759. Acknowledging that the “a main purpose” take a look at could profit courts by sparing them the burden of having to identify a predominate goal between many potentially equivalent purposes, the Ninth Circuit nevertheless declined to use the “a primary purpose” examination in In re Grand Jury. The Ninth Circuit distinguished Kellogg on the grounds that it dealt with “the really distinct context of corporate internal investigations” and “its reasoning does not use with equivalent power in the tax context” related to assessing the dual-purpose communications at problem. 23 F.4th at 1094-95. Regardless of whether the “a most important purpose” examination ought to be used to non-tax relevant twin-purpose communications continues to be an open up dilemma in the Ninth Circuit. 

III. Impications 

By signing up for circuit courts of appeals in the 2nd, Fifth, Sixth, and D.C. Circuits5 in making use of the narrow “primary purpose” check to dual-intent communications amongst attorneys and shoppers, the Ninth Circuit has clarified that, exactly where communications involving consumers and attorneys have multiple purposes, the communications will be guarded by the lawyer-shopper privilege when the primary objective of the communication is to give or get authorized advice, as opposed to company or tax assistance. 

When communicating with consumers, practitioners likely subject matter to the jurisdiction of the Ninth Circuit should be mindful of this likely limit on the scope of the lawyer-shopper privilege protections available to their purchasers. To the extent communications are twin-objective, the attorney-client privilege will not protect these kinds of communications from disclosure if the most important purpose of the communications is to dispense enterprise or tax suggestions. The place feasible, it could be sensible for practitioners to spotlight in their communications the legal assistance they are delivering and the importance of that advice to the broader troubles at hand.