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Volume XIII, Number 32

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The First Rulings of the New Term – Dismissing Attorney-Client Privilege Case, Denying Equitable Tolling in Veteran’s Benefits Case: SCOTUS Today

While many commentators were wondering when the Supreme Court would start issuing opinions, the backlog of argued cases now being substantial, today is their day.

The Supreme Court is back in live session, and so is this blog.

The Justices are actually seated today and announcing opinions in the traditional manner. And the Justices opened today’s round unanimously, although perhaps not happily for many observers, particularly litigators and corporate advisors. In a per curiam one-liner, the Court dismissed certiorari as improvidently granted in the Ninth Circuit case In Re Grand Jury. This is a widely discussed and anticipated case, at least among litigators and investigators and also in-house lawyers whose advice in sensitive matters is sought by executives. The issue as to which certiorari was granted is whether a communication between a lawyer and client involving both legal and non-legal (business strategy) advice is protected by attorney-client privilege when the request for or receipt of legal advice was a significant purpose behind the communication. While the Court’s dismissal order says nothing, I’ll add some background, inasmuch as the matter that led to this case is one that is in the procedural inbox of many practitioners, both in the private sector and in government.

The petitioner in In Re Grand Jury is an anonymous law firm that specializes in international taxation law. The firm was served with grand jury subpoenas for documents and communications in a grand jury investigation of a client. The client and law firm produced some of the requested material but withheld others, claiming attorney-client privilege and work-product protection. The law firm asserted that some of the protected documents were dual-purpose communications, i.e.they were created both in preparation of the client’s tax returns and to provide legal advice. The district court granted, in part, the government’s motion to compel production, rejecting the claim of privilege, and ultimately held the law firm and its client in contempt for not providing the materials. The Ninth Circuit affirmed.

The court of appeals emphasized that the attorney-client privilege protects confidential communications between attorneys and clients “which are made for the purpose of giving legal advice” and also noted that communications can have more than one purpose, especially “in the tax law context” where a communication can address both “tax compliance considerations” (a non-legal purpose) and “advice on what to do if the IRS challenged the deduction” (potentially a legal purpose). Consistent with the significant majority of legal opinions on the subject, the Ninth Circuit agreed with the district court that in determining whether a multi-purpose communication is protected by privilege, a court should look to its “primary purpose.” The circuit court found it unnecessary to address the petitioner’s argument that the primary purpose test should be satisfied whenever the communication in question was “one of the significant purposes of the communication.” The court saw logic in the approach of the D.C. Circuit in In re Kellogg Brown & Root, Inc., 756 F.3d 754, 759-760 (D.C. Cir. 2014), cert. denied, 574 U.S. 1122 (2015), which employed that approach, but held that this approach “would only change the outcome of a privilege analysis in truly close cases,” for instance, where legal and non-legal purposes are similarly significant, but that a tax case like this wasn’t one of them. The court of appeals therefore “le[ft] open” whether “the Kellogg formulation of the primary-purpose test” should apply in some or all future cases presenting primary-purpose issues. That question remains open, though practitioners and others should recognize that the great weight of authority supports the literal definition that “primary” means primacy, not mere significance.

Besides its per curiam order in In Re Grand Jury, the Court decided Arellano v. McDonough, a case in which a military veteran sought equitable tolling of his disability compensation claim that was based upon his traumatic psychiatric disorders, which he claimed to have suffered while serving on an aircraft carrier. Applying the default rule in 38 U. S. C. §5110(a)(1), the Department of Veterans Affairs (VA) assigned an effective date of June 3, 2011—the day that the agency received his claim—to Arellano’s disability award.

Arellano appealed, arguing that his award’s effective date should be governed by an exception in §5110(b)(1), which makes “[t]he effective date of an award of disability compensation . . . the day following the date of the veteran’s discharge or release if application therefor is received within one year from such date of discharge or release.” He argued that he was too ill to know that he could apply for disability benefits and that this exception’s one-year grace period should be equitably tolled to make his award effective on or about the day after his discharge from military service in 1981. The VA’s Board of Veterans’ Appeals denied Arellano’s request, a decision that was affirmed by the Court of Appeals for Veterans Claims and the Federal Circuit. So did the Supreme Court, in a unanimous opinion written by Justice Barrett, finding that a strict textual reading of what Congress was addressing demonstrates that Section 5110(b)(1) is not subject to equitable tolling. Equitable tolling “effectively extends an otherwise discrete limitations period set by Congress” when a litigant diligently pursues his rights but extraordinary circumstances prevent him from bringing a timely action. The Court recognized that federal statutes of limitations are subject to equitable tolling, but this presumption is rebutted if equitable tolling is inconsistent with the statutory scheme. Here, it is. Without reaching the VA’s argument that §5110(b)(1) is not a statute of limitations, all of the Justices agreed that there exists “good reason to believe that Congress did not want the equitable tolling doctrine to apply.” United States v. Brockamp, 519 U. S. 347, 350.

We can expect that the flow of opinions in this term of Court has begun. Other days will not be as harmonious as this one.

©2023 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume XIII, Number 24
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About this Author

Stuart Gerson, Health Care Attorney, Epstein Becker Law Firm
Member of the Firm

STUART M. GERSON is a Member of the Firm in the Litigation and Health Care & Life Sciences practices, in the firm's Washington, DC, and New York offices. Much of Mr. Gerson's practice has been centered on providing representation to clients in the health care industry (including insurers, hospitals, pharmaceutical manufacturers, managed care providers, and private equity funds, among others). He has extensive experience litigating cases involving the cybersecurity of health care information, trade secrets, and other confidential data as well as civil...

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