After initially granting certiorari and hearing oral arguments in In re Grand Jury ─ a matter concerning the application of the attorney-client privilege to dual-purpose communications ─ the United States Supreme Court “dismissed as improvidently granted” the case. Tax practitioners had hoped that a ruling by the Supreme Court would resolve a circuit split regarding the extent to which such communications fall within the ambit of the privilege.
In United States v. Sanmina Corp. & Subsidiaries, No. 18-17036, 2020 U.S. App. LEXIS 24936 (9th Cir. Aug. 7, 2020 ), the Ninth Circuit embraced the D.C. Circuit’s decision in United States v. Deloitte LLP, 610 F.3d 129 (D.C. Cir. 2010) confirming that the disclosure of a work product to certain third parties, like a law firm providing valuation services or an independent auditor, does not waive protection. The Ninth Circuit’s holding should give some comfort to taxpayers wondering where the Ninth Circuit comes down in the split between Textron and Deloitte, as described below. As also described below, the Ninth Circuit’s analysis of implied waiver provides guidance to taxpayers defending work product claims during an audit and in litigation.