Many companies justifiably worry about the discoverability of self-evaluation documents increasingly required (or proposed to be required) by heavy-handed government regulators. The First Circuit just issued an opinion offering hope to those companies and their lawyers.
In United States v. Textron Inc., No. 07-2631, 2009 U.S. App. LEXIS 1538 (1st Cir. Jan. 21, 2009), the First Circuit upheld Textron’s work product claim for its tax accrual work papers, which were prepared by nonlawyers and used by Textron’s lawyers to estimate the likelihood of success in any dispute with the IRS. The court adopted a remarkably broad view of the work product protection, holding that (1) adversarial disputes with the IRS counted as “litigation” for purposes of the work product protection; (2) Textron did not have to establish a “history of litigation with the IRS” to claim protection, because “Textron was effectively forced to operate under the hypothetical belief that litigation would occur,” and therefore could reasonably “forecast litigation” regardless of any “specific history with the IRS” (id. at *38); (3) Textron did not have to show that “there was some specific quantum of expectation that the position at issue would mature into full-fledged litigation” to claim the protection (id. at *37); (4) the work product doctrine protected documents prepared “‘because of'” anticipated litigation, even if they would not be used to “‘assist'” in the litigation (id. at *28 (citation omitted)); and (5) “dual purpose documents” motivated both by business and litigation concerns could deserve work product protection (id. at *27).
The debate might continue in the First Circuit, because a dissenting judge noted that several articles supporting the government’s position made “scholarly mince-meat of Textron’s position.” Id. at *60. At least for the time being, however, companies fighting government bureaucracy can applaud.