United States v. Owensboro Dermatology Associates, P.S.C., 4:16-mc-00003

Drs. Michael Crowe and Artis Truett jointly owned Owensboro Dermatology and Dermatology Property; they and an affiliated captive insurer (Beveled Edge) were audited by the IRS over captive-insurance transactions and related tax return positions.
The law firm Moore Ingram Johnson & Steele (MIJS) provided captive and tax advice and captive-management services to the doctors and entities; a number of emails between MIJS and the doctors/agents were withheld as privileged.
The IRS issued summonses seeking documents; respondents produced many materials but withheld emails listed on privilege logs. The United States moved to compel production and, alternatively, for in camera review.
The magistrate judge conducted in camera review of the withheld emails and found they predominantly sought or conveyed legal advice and met the elements of the attorney–client privilege (including communications through authorized agents).
The Government argued respondents waived privilege by asserting a "reasonable cause"/reliance-on-counsel defense and by putting counsel’s advice at issue in petitions filed in the Tax Court; respondents argued the privilege was not waived or only waived narrowly.
The court concluded the common-interest/common-ownership context preserved the privilege for the withheld emails and declined to find an implicit waiver now; the motions to compel were denied pending state of Tax Court proceedings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether respondents waived attorney–client privilege by raising reliance-on-counsel/reasonable-cause defenses in Tax Court petitions	IRS: Petitioners put counsel’s advice at issue and thus forfeited privilege; the withheld emails are needed to assess good-faith reliance and economic-substance issues	Respondents: The withheld emails are either irrelevant to the asserted defenses or protected by common-interest; any waiver, if at all, should be narrowly construed or left to the Tax Court	Court: Denied motion to compel. Emails are privileged after in camera review; common-interest/common-ownership cuts against waiver now, and the Tax Court is the proper forum to press production if respondents persist in the reasonable-cause defense

Upjohn Co. v. United States, 449 U.S. 383 (1981) (describes purpose and scope of attorney–client privilege)
Fisher v. United States, 425 U.S. 391 (1976) (privilege encourages full disclosure to counsel; limits to obtain legal advice)
Zolin v. United States, 491 U.S. 554 (1989) (federal common law governs privilege questions in IRS summons proceedings)
In re Antitrust Grand Jury, 805 F.2d 155 (6th Cir. 1986) (privilege protects only communications necessary to obtain legal advice)
Goldberger & Dubin, P.C. v. United States, 935 F.2d 501 (2d Cir. 1991) (privilege strictly confined; may yield to countervailing public policy)
Reed v. Baxter, 134 F.3d 351 (6th Cir. 1998) (elements of attorney–client privilege and burden on proponent)
In re Lott, 424 F.3d 446 (6th Cir. 2005) (waiver can be express or implied; placing counsel’s advice at issue may implicitly waive privilege)