United States v. Sanmina Corporation
968 F.3d 1107
| 9th Cir. | 2020Background
- Sanmina claimed a $503 million worthless‑stock deduction for its Swiss subsidiary on its 2008 federal tax return; the IRS audited the deduction.
- Sanmina provided the IRS a 102‑page valuation report prepared by DLA Piper that, in a footnote, cited two internal attorney memoranda authored by Sanmina in‑house counsel (the Attorney Memos).
- Sanmina had previously shared the Attorney Memos with DLA Piper and with outside auditors (Ernst & Young, KPMG); the IRS issued a summons seeking the memoranda; Sanmina refused production invoking attorney‑client and work‑product protections.
- The district court initially found the memoranda privileged and not waived; on remand (after Ninth Circuit direction) the court held the memos were privileged but that Sanmina waived both privileges by disclosing the memos to DLA Piper and the DLA Piper Report to the IRS.
- The Ninth Circuit affirmed in part and reversed in part: it held Sanmina waived the attorney‑client privilege by disclosing the memos to DLA Piper, but did not waive work‑product protection simply by that disclosure; however, by giving the IRS the DLA Piper Report that expressly relied on the memoranda, Sanmina impliedly waived work‑product protection only as to the factual (non‑opinion) portions of the memos.
- The Court remanded to the district court to identify and order production of only the factual portions of the Attorney Memos relied on by the DLA Piper Report; opinion work product (mental impressions, legal theories) remains protected.
Issues
| Issue | Plaintiff's Argument (IRS) | Defendant's Argument (Sanmina) | Held |
|---|---|---|---|
| Whether disclosure of Attorney Memos to DLA Piper waived attorney‑client privilege | Disclosure to third party (DLA Piper) for valuation waived privilege; Sanmina later gave report to IRS | DLA Piper was retained for legal/tax advice, so communications remained confidential and privileged | Waived: Court affirmed district court that disclosure to DLA Piper (for valuation) waived attorney‑client privilege |
| Whether disclosure of Attorney Memos to DLA Piper waived work‑product protection | Waiver occurred when memos were shared with DLA Piper | Work‑product is not waived by disclosure to a non‑adversary third party; protection survives that disclosure | Not waived: Disclosure to DLA Piper alone did not waive work‑product protection |
| Whether providing the DLA Piper valuation report (which cited the memos) to the IRS waived work‑product protection | Citing memos in a report given to the IRS (an adversary) waived work product and requires full production | Report did not disclose memo contents; full work product (especially opinions) should remain protected | Implied waiver limited: Disclosure to IRS via the report waived only factual/non‑opinion work product relied on by DLA Piper; opinion work product remains protected; remand to identify factual portions |
Key Cases Cited
- Upjohn Co. v. United States, 449 U.S. 383 (privilege protects confidential communications for legal advice)
- Nobles v. United States, 422 U.S. 225 (work‑product shelters attorney mental processes)
- Weil v. Investment/Indicators, Research & Management, Inc., 647 F.2d 18 (9th Cir.) (subject‑matter waiver and fairness principle)
- United States v. Deloitte LLP, 610 F.3d 129 (D.C. Cir.) (work‑product not easily waived by disclosure to third party; tests for conduit/adversary)
- Transamerica Computer Co. v. Int’l Bus. Machines Corp., 573 F.2d 646 (9th Cir.) (distinction between waiver rules for privilege and work product)
- Hickman v. Taylor, 329 U.S. 495 (work‑product purpose and protection of adversary process)
- Holmgren v. State Farm Mut. Auto. Ins. Co., 976 F.2d 573 (9th Cir.) (opinion work product discoverable only in compelling circumstances)
- Bittaker v. Woodford, 331 F.3d 715 (9th Cir.) (fairness principle: cannot use privilege as both shield and sword)