Supreme Court Fumbles Attempt to Define Privilege Standard: Part I

March 15, 2023

On January 23, 2023, the U.S. Supreme Court took the unusual step of dropping a case after oral argument. In re Grand Jury, 23 F.4th 1088 (9th Cir.), cert. granted, 143 S. Ct. 80 (2022), cert. dismissed as improvidently granted, 143 S. Ct. 543 (2023) (per curiam). Many commentators have noted the bizarre oral argument, in which both the plaintiff and the government seemed to shift their positions on the proper privilege standard. But what was the basic issue, why did the Supreme Court back away, and where does the Supreme Court’s move leave the law?

The story starts in 2014. In United States ex rel. Barko v. Halliburton Co., the court adopted a narrow version of the widely articulated “primary purpose” test for privilege protection — holding that “[t]he party invoking the privilege must show the ‘communication would not have been made “but for” the fact that legal advice was sought.'” 37 F. Supp. 3d 1, 5 (D.D.C. 2014) (citation omitted). The court held that the privilege did not protect communications during Kellogg Brown & Root (KBR)’s investigation into possible overseas fraud, because the investigation “resulted from the Defendants[҅] need to comply with government regulations.” Id. The D.C. Circuit Court vacated, with Judge Kavanaugh noting that the privilege could apply to KBR’s investigation and other similar investigations “even if there were also other purposes for the investigation and even if the investigation was mandated by regulation rather than simply an exercise of company discretion.” In re Kellogg Brown & Root, Inc., 756 F.3d 754, 758-59 (D.C. Cir. 2014).

Only a few district courts have adopted what became known as Judge Kavanaugh’s “one significant purpose” standard, and only one circuit court (In re Grand Jury, supra) had anything nice to say about it. The next two weeks’ Privilege Points will surmise why the Supreme Court backed away, and what might happen next.