In re Polaris, Inc., Petitioner, Colby Thompson, Respondent, vs. Polaris, Inc., Appellant.
A20-0427
STATE OF MINNESOTA IN SUPREME COURT
December 15, 2021
McKeig, J. Dissenting, Anderson, J., Gildea, C.J.
Court of Appeals Office of Appellate Courts
Richard C. Godfrey, Catherine L. Fitzpatrick, Kirkland & Ellis LLP, Chicago, Illinois, for appellant.
Mahesha P. Subbaraman, Subbaraman PLLC, Minneapolis, Minnesota;
Brian E. Wojtalewicz, Wojtalewicz Law Office, Ltd., Appleton, Minnesota; and
Jeffrey D. Eisenberg, Eric S. Olson, Christopher P. Higley, Eisenberg Cutt Kendell & Olson, Salt Lake City, Utah, for respondent.
Benjamin W. Hulse, Emily A. Ambrose, Blackwell Burke, P.A., Minneapolis, Minnesota, for amicus curiae Coalition of Minnesota Companies.
Sharon L. Van Dyck, Van Dyck Law Firm, PLLC, Minneapolis, Minnesota; and
Patrick Hedren, Manufacturers’ Center for Legal Action, Washington, D.C., for amicus curiae National Association of Manufacturers.
Michael R. Carey, Dykema Gossett PLLC, Minneapolis, Minnesota, for amicus curiae The Product Liability Advisory Council, Inc.
Adam W. Hansen, Apollo Law LLC, Minneapolis, Minnesota; and
Ellen Noble, Washington, D.C., for amicus curiae Public Justice.
S Y L L A B U S
- Minnesota appellate courts have jurisdiction to consider a petition for a writ of prohibition that challenges the district court‘s denial of a claw-back request made under
Minn. R. Civ. P. 26.02(f)(2) . - When deciding whether a document that contains both legal advice and business advice is protected by the attorney-client privilege, the district court must apply the predominant purpose test. Under the predominant purpose test, for the attorney-client privilege to apply to the document in its entirety, the predominant purpose of the communication must be legal advice.
- The district court did not clearly err by finding that the predominant purpose of the document at issue here is business advice. Therefore, the attorney-client privilege protects only the portions of the document that contain legal advice.
Affirmed; motion to dismiss denied.
MCKEIG, Justice.
The underlying litigation in this case involves a product-liability lawsuit brought by respondent Colby Thompson against appellant Polaris Inc. Before this litigation began, Polaris was subject to a government safety investigation and potential enforcement action under federal consumer product safety laws. Polaris retained outside counsel to conduct an audit into its safety processes and policies. After completing the audit, the lawyers provided a 32-page report, which included recommendations to improve compliance performance. Polaris inadvertently disclosed the audit report during discovery in the product-liability litigation with Thompson. Polaris then sought to claw the document back, asserting that the report is protected by the attorney-client privilege. Finding that the predominant purpose of the report was business advice, not legal advice, the district court denied the claw-back request while permitting redactions of the legal advice in the report. Polaris then sought a writ of prohibition to prevent disclosure of the report. The court of appeals denied the writ of prohibition, and Polaris sought further review.
At issue here is whether the report in its entirety is protected by the attorney-client privilege. Because we conclude that the district court did not clearly err by finding that the predominant purpose of the report is business advice, we affirm the denial of the writ of prohibition. We also deny Thompson‘s motion to dismiss the appeal for lack of jurisdiction.
Appellant Polaris Inc. is a Minnesota company that produces on-road and off-road vehicles. One model of Polaris‘s off-road recreational vehicles is a four-wheel all-terrain vehicle known as the RZR. In April 2016, Polaris announced a recall of 133,000 RZR 900 and RZR 1000 vehicles due to a fire hazard. The next month, the federal Consumer Product Safety Commission notified Polaris that it was investigating whether Polaris had “complied with the reporting requirements” of the Consumer Product Safety Act,
In May 2016, Polaris retained the law firm of Crowell & Moring, LLP—specifically attorney Cheryl Falvey, a former general counsel of the Commission and a partner at Crowell—to conduct an audit into the safety processes and policies of Polaris. In August 2016, Crowell communicated the information gathered from the audit to Polaris in a 32-page report. Each page of the audit report is marked “PRIVILEGED AND CONFIDENTIAL: Protected by Attorney Client Privilege and Attorney Work Product.” At issue here is whether the report in its entirety is protected by the attorney-client privilege.
The audit report, titled “Embracing Safety as a Business Priority,” states that Crowell was “asked to interview key witnesses and review company records and emails to determine what lessons can be learned from the process leading up” to the recall. The report clarified, however, that Crowell did “not represent the company” regarding the recall or responding to questions from the Commission regarding Polaris‘s execution of the
In August 2017, respondent Colby Thompson filed a lawsuit against Polaris after he suffered serious burns when the Polaris RZR vehicle he was driving started on fire. The complaint included claims for negligence, strict liability, manufacturing flaw, failure to warn, and breach of warranties. The district court assigned a special master to handle pretrial discovery issues. During discovery, Polaris inadvertently produced a copy of the audit report. Polaris did not learn of this disclosure until Thompson‘s attorney attempted to use the report during a deposition. Polaris objected to the use of the report and demanded its return, asserting a privilege claim. Thompson challenged the privileged status of the report.
The next day, Polaris, made a motion to “claw back” the audit report under
The special master denied Polaris‘s claw-back request. The special master described the “threshold inquiry” in the privilege analysis as whether the audit report “embodies a communication in which legal advice is sought or rendered,” Kobluk v. Univ. of Minn., 574 N.W.2d 436, 444 (Minn. 1998). The special master acknowledged that portions of the report “address the regulatory requirements related to recall reporting,” but found that was “not the predominant purpose of the report.” Rather, the special master found that the “majority” of the report was “giving business advice to management and the Board of Directors about promoting safety and making company changes so Polaris can in fact provide a safe product.” In essence, the special master found that the report was an “operational audit,” which made recommendations for “operational changes” relating to “safety, engineering, design, and corporate practices.” While denying the request to claw back the report, the special master stated that “it is appropriate to redact those limited sections” of the report that “contain legal opinions” regarding the interpretation of Commission regulations.
Polaris appealed the special master‘s decision to the district court. The district court adopted the special master‘s findings of fact and conclusions of law in total and affirmed the special master‘s order regarding the partially privileged nature of the audit report.
Polaris then sought a writ of prohibition in the court of appeals, asserting “irreparable harm” from “having its attorney-client privileged communications and attorney work product disclosed in litigation.” Polaris asserted that the audit report is
The court of appeals denied the writ of prohibition. In re Polaris, Inc., No. A20-0427, Order at 4 (Minn. App. filed July 1, 2020). The court of appeals concluded that “the advice provided” in the audit report was “primarily nonlegal in character.” Id. at 3. According to the court of appeals, the report “focused on corporate culture and safety issues, not legal strategy.” Id. The court of appeals stressed that the district court had specifically authorized the redaction of the sections of the report that contained legal opinions “regarding the interpretation of federal regulatory requirements.” Id. Therefore, the court of appeals concluded that Polaris “failed to establish that the district court ordered production of information that is clearly not discoverable.” Id.
Polaris sought further review of the court of appeals’ order denying the writ of prohibition. Polaris asked us to review whether the audit report is protected by the attorney client privilege. Polaris did not raise an issue regarding attorney work product. We granted the petition for review. After the conclusion of briefing, Thompson filed a motion to dismiss the appeal for lack of jurisdiction.
ANALYSIS
This appeal arises from Polaris‘s petition for a writ of prohibition to protect the confidentiality of the audit report prepared by the Crowell attorneys. “Prohibition is an extraordinary remedy and should be used only in extraordinary cases.” Thermorama, Inc. v. Shiller, 135 N.W.2d 43, 46 (Minn. 1965). In discovery disputes, a writ of prohibition
I.
We begin with the threshold issue of jurisdiction. For the first time on appeal, Thompson argues that Minnesota appellate courts lack jurisdiction to issue a writ of prohibition to address Polaris‘s claw-back request. A challenge to appellate jurisdiction may be raised at any time and cannot be waived or forfeited. Speyer v. Savogran Co., 124 N.W.2d 827, 829 (Minn. 1963). Whether we have appellate jurisdiction is a question of law that we review de novo. See City of Saint Paul v. Eldredge, 800 N.W.2d 643, 646 (Minn. 2011).
Thompson challenges the right of Polaris to seek a writ of prohibition for the district court‘s privilege ruling under
[T]he party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has and may not use or disclose the information until the claim is resolved. A receiving party may promptly present the information to the court under seal for a determination of the claim.
Polaris filed a petition for a writ of prohibition in the court of appeals under
Polaris responds that Thompson seeks to draw an “illusory” line between privileged documents that a party has inadvertently produced and privileged documents that a party has withheld from production. Polaris also maintains that Thompson‘s arguments go to the merits of whether Polaris is entitled to a writ of prohibition here.
Accordingly, the court of appeals had appellate jurisdiction to resolve the dispute over the privileged status of the audit report, and we have appellate jurisdiction to review the court of appeals’ denial of the writ of prohibition, see
II.
We now turn to the issue raised in Polaris‘s petition for review: whether the attorney-client privilege protects the audit report in its entirety from disclosure, and thus, whether it is appropriate to issue a writ of prohibition. “A district court has ‘broad discretion’ under
A.
Polaris argues that the court of appeals erred by creating a new privilege test that “parses the content of attorney-client communications line-by-line to determine which parts are ‘legal advice’ or ‘legal strategy.’ ” Determining the appropriate legal standard is a question of law that we review de novo. King‘s Cove Marina, LLC v. Lambert Com. Constr. LLC, 958 N.W.2d 310, 320 (Minn. 2021).
At issue here is the privileged status of the audit report related to the safety processes and policies of Polaris. “The purpose behind the attorney-client privilege is to promote open and honest discussion between clients and their attorneys.” Leer v. Chi., Milwaukee, St. Paul & Pac. Ry., 308 N.W.2d 305, 309 (Minn. 1981). The threshold inquiry in a privilege analysis is determining “whether the contested document embodies a communication in which legal advice is sought or rendered.” Kobluk v. Univ. of Minn., 574 N.W.2d 436, 444 (Minn. 1998). A document is “not cloaked with the privilege merely because it bears the label ‘privileged’ or ‘confidential.’ ” Id. at 441. Because “the attorney client privilege is a barrier to disclosure and tends to suppress relevant facts,” we strictly construe the privilege. Leer, 308 N.W.2d at 309.
There is no dispute that the audit report contains both legal advice and business advice. The attorney-client privilege protects legal advice. Kobluk, 574 N.W.2d at 444. The privilege “does not protect ordinary business advice.” Sedco Int‘l, S.A. v. Cory, 683 F.2d 1201, 1205 (8th Cir. 1982); see also Bowne of New York City, Inc. v. AmBase Corp., 150 F.R.D. 465, 471 (S.D.N.Y. 1993) (“If the communication concerns business matters, the privilege does not apply.“). We have not previously determined whether a corporate report that contains both legal advice and business advice is protected in its entirety by the attorney-client privilege.
Polaris argues that the attorney-client privilege protects the entirety of the audit report because the purpose of the report was to provide legal advice. According to Polaris, “if the communication arises out of the attorney-client relationship and relates to the purpose of providing legal advice, then the communication is protected by the privilege in its entirety.” See State ex rel. Toledo Blade Co. v. Toledo-Lucas Cnty. Port Auth., 905 N.E.2d 1221, 1229 (Ohio 2009) (holding that the attorney-client privilege protects an investigative report prepared by outside counsel where the report was related to the “rendition of legal services“). Polaris contends that “it is error to parse the communication line-by-line in search of nuggets of a ‘nonlegal character’ and then apply the privilege piecemeal.” Thompson, in contrast, asks us to adopt the majority rule that “legal advice must predominate” over business advice for the entirety of a communication from an attorney to a client to be protected under the attorney-client privilege. Neuder v. Battelle Pac. Nw. Nat‘l Lab., 194 F.R.D. 289, 292 (D.D.C. 2000).
There is “general agreement” among courts that the protection of the attorney-client privilege “applies only if the primary or predominant purpose of the attorney-client consultation is to seek legal advice or assistance.” 1 Paul R. Rice, Attorney-Client Privilege in the United States § 7:6 (2020 ed.); see Harrington v. Freedom of Info. Comm‘n, 144 A.3d 405, 416 (Conn. 2016) (noting the “broad consensus in other jurisdictions” that
We formally adopt the predominant purpose test now. The predominant purpose test aligns with our strict construction of the attorney-client privilege as a barrier to the disclosure of relevant evidence. See Leer, 308 N.W.2d at 309. Because the purpose of the attorney-client privilege is “to promote the dissemination of sound legal advice,” the privilege applies “only to advice which is legal in nature.” Wachtel v. Health Net, Inc., 482 F.3d 225, 231 (3d Cir. 2007). The predominant purpose test therefore preserves “the
For these reasons, we hold that, when a document contains both legal advice and business advice, for the attorney-client privilege to apply to the document in its entirety, the predominant purpose of the communication must be legal advice. The privilege does not protect the entirety of the document if legal advice is merely one purpose and not the primary purpose of the communication. See Harrington, 144 A.3d at 416 & n.1.1 We stress, however, that even when the predominant purpose of the communication is business advice, the attorney-client privilege will protect any portions of the document that contain legal advice. See, e.g., In re Vioxx Prods. Liab. Litig., 501 F. Supp. 2d 789, 798 (E.D. La.
B.
We turn next to the application of the predominant purpose test to the audit report. But first we must resolve the parties’ disagreement about the standard of review. We have long held that whether a document is privileged is “a question of fact.” Brown v. St. Paul City Ry., 62 N.W.2d 688, 701 (Minn. 1954), quoted in In re Paul W. Abbott Co., 767 N.W.2d at 18; accord Sprader v. Mueller, 121 N.W.2d 176, 180 (Minn. 1963) (“The existence of the privilege is a question of fact which must be proved by the one asserting it.“).
Polaris argues that determining whether the predominant purpose of the audit report was legal advice or business advice is a question of law, relying on our decision in Kobluk v. University of Minnesota, 574 N.W.2d 436 (Minn. 1998). Although we reviewed the district court‘s privilege rulings in Kobluk de novo, id. at 439, that case is not on point. In Kobluk, an assistant professor at the University of Minnesota sought to obtain preliminary drafts of a letter denying him tenure under the Minnesota Government Data Practices Act, and the district court decided the privileged status of the draft letters on cross-motions for summary judgment. 574 N.W.2d at 438–39. We emphasized that the facts were “not disputed.” Id. at 439. In contrast, the privilege issue here arises from a claw-back request under
Accordingly, we review the district court‘s ruling on the predominant purpose of the audit report as a finding of fact. When reviewing privilege rulings, we “give great deference to the district court‘s findings of fact and will not set them aside unless clearly erroneous.” State v. Taylor, 869 N.W.2d 1, 21 (Minn. 2015) (citation omitted) (internal quotation marks omitted). “Findings of fact are not clearly erroneous unless we are left with the definite and firm conviction that a mistake has been made.” In re Pamela Andreas Stisser Grantor Tr., 818 N.W.2d 495, 507 (Minn. 2012) (citation omitted) (internal quotation marks omitted). We do not “reweigh the evidence when reviewing for clear error.” In re Civ. Commitment of Kenney, 963 N.W.2d 214, 221 (Minn. 2021). “When the record reasonably supports the findings at issue on appeal, it is immaterial that the record might also provide a reasonable basis for inferences and findings to the contrary.” Id. at 223 (citation omitted) (internal quotation marks omitted).
The party asserting the attorney-client privilege has the burden of proving it. Sprader, 121 N.W.2d at 180. To establish that the entirety of the audit report is protected by the attorney-client privilege, Polaris was required to prove that the predominant purpose of the communication was legal advice and not business advice.2
Determining the predominant purpose of a document is “a highly fact-specific” inquiry, which requires courts to consider “the ‘totality of the circumstances’ surrounding each document.” In re Grand Jury Procs., 220 F.3d 568, 571–72 (7th Cir. 2000). Relevant factors include (1) the purpose of the communication, (2) the content of the communication, (3) the context of the communication, (4) the recipients of the communication, and (5) whether legal advice permeates the document or whether any privileged matters can be redacted. See generally 2 Andrew J. Levander & Hector Gonzalez, Successful Partnering Between Inside and Outside Counsel § 33:8 (2021) (citing cases). Although the line between legal advice and business advice in the corporate setting is “not always clear,” as a general matter, attorneys provide legal advice when they draw
Although we had not formally adopted the predominant purpose test when this dispute over the audit report arose, both parties, as well as the special master, analyzed the privilege issue in terms of the predominant purpose of the report. The special master found that the predominant purpose of the report was business advice. Polaris challenges this finding, asserting that the report focuses on legal compliance issues, which are “inextricably intertwined” with business advice. Polaris further argues that “safety is the subject of extensive federal regulation” and that failure to comply with safety regulations subjects its business to legal penalties. See Upjohn Co. v. United States, 449 U.S. 383, 392 (1981) (observing that, “[i]n light of the vast and complicated array of regulatory
The special master found that the predominant purpose of the audit report was “giving business advice,” reasoning that the report was distributed to Polaris management and the board of directors to “implement operational changes.”4 The report addresses the organizational culture of Polaris and discusses the areas of product design, engineering, and manufacturing practices, with the express goal of “improv[ing] the process Polaris uses to assess safety risks.”5 The special master essentially determined that the primary purpose of the report was setting corporate policy. We conclude that the special master did not clearly err in finding that these aspects of the report address business matters. See Marceau v. IBEW Local 1269, 246 F.R.D. 610, 613–14 (D. Ariz. 2007) (concluding that an audit
It is true that portions of the audit report focus on compliance with federal regulations; however, not all compliance advice is legal advice. See In re Nat‘l Prescription Opiate Litig., No. 1:17-MD-2804, 2020 WL 9211219, at *1 (N.D. Ohio Mar. 30, 2020). The attorney-client privilege “does not apply if the client seeks regulatory advice for a business purpose.” Fed. Trade Comm‘n v. Abbvie, Inc., No. 14-5151, 2015 WL 8623076, at *9 (E.D. Pa. Dec. 14, 2015). Tellingly, the title of the report here is “Embracing Safety as a Business Priority.” (Emphasis added.) Polaris suggests that, because safety is the focus of extensive regulation in the vehicle industry, any discussion of safety matters should be classified as legal matters. But we apply the privilege narrowly; “[t]he fact of extensive or pervasive regulation does not make the everyday business activities legally privileged from discovery.” In re Seroquel Prods. Liab. Litig., No. 6:06-md-1769-Orl-22DAB, 2008 WL 1995058, at *7 (M.D. Fla. May 7, 2008); see also Abbvie, 2015 WL 8623076, at *9 (observing that companies in highly regulated industries “consider regulatory matters in making nearly all” of their business decisions).
Polaris also stresses the context of the recall and the investigation by the Consumer Product Safety Commission, but the report makes clear that Crowell did not represent
Finally, the legal portions of the audit report are not “intimately intertwined” or “difficult to distinguish” from the nonlegal portions. Sedco Int‘l, S.A. v. Cory, 683 F.2d 1201, 1205 (8th Cir. 1982). The special master specifically found it possible “to redact those limited sections” of the report that “contain legal opinions” regarding the interpretation of Commission regulations.
In sum, we are not left with a definite and firm conviction that the special master erred in finding that Polaris did not establish that the predominant purpose of the audit report was legal advice. Under our deferential standard of review, we conclude that the record reasonably supports the special master’s finding and that the district court did not order “the production of information clearly not discoverable,” Thermorama, Inc. v. Shiller, 135 N.W.2d 43, 46 (Minn. 1965). We therefore affirm the court of appeals’ denial of a writ of prohibition. On remand, the district court must identify the portions of the report that contain legal advice, which should be redacted.6
For the foregoing reasons, we deny Thompson’s motion to dismiss the appeal for lack of jurisdiction and we affirm the decision of the court of appeals.
Affirmed; motion to dismiss denied.
ANDERSON, J. (dissenting).
I agree with the court’s reasoning regarding our jurisdiction, the predominant purpose test, and the standard of review. But I disagree with the court’s conclusion that the report drafted by Crowell & Moring LLP (the Report) provides predominantly business advice and therefore is not subject to the attorney-client privilege in its entirety.
Appellant Polaris, Inc. (Polaris) sought professional assistance after receiving notice of an investigation from the Consumer Product Safety Commission (CPSC) regarding alleged violations of the
Despite Falvey’s expertise in CPSA compliance, the Report’s findings and recommendations regarding the regulatory environment for CPSA compliance, and its dearth of advice on how to increase the profitability of Polaris, the court concludes that the predominant purpose of the Report is business advice and, therefore, the Report is not
I respectfully dissent.
I.
I begin by discussing the importance of attorney-client privilege. A time-honored doctrine, it is the oldest of common law privileges. See In re Bank of N.Y. Mellon Corp. Forex Transactions Litig., 66 F. Supp. 3d 406, 409 (S.D.N.Y. 2014);
The purpose of attorney-client privilege is well-founded. “In order to promote freedom of consultation of legal advisers by clients, the apprehension of compelled disclosure by the legal advisers must be removed; hence the law must prohibit such
The Supreme Court of the United States has cautioned that, “for the attorney-client privilege to be effective, it must be predictable.” United States v. Jicarilla Apache Nation, 564 U.S. 162, 183 (2011). When this privilege is applied in an unpredictable manner, it is not just attorneys or clients who suffer, but also the public at large. If uncertainty clouds application of the privilege, “every one would be thrown upon his own legal resources; deprived of all professional assistance, a man would not venture to consult any skillful person, or would only dare to tell his counselor half his case.” Greenough v. Gaskell, 39 Eng. Rep. 618, 620 (Ch. 1833). The purpose of attorney-client privilege is therefore served when a client seeks legal advice to better understand and therefore follow the rule of law.
To further this purpose, we have relied on Wigmore’s “classic explication” of the privilege:
(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived.
Kobluk v. Univ. of Minn., 574 N.W.2d 436, 440 (Minn. 1998) (emphasis added) (quoting Wigmore, supra, at 554).
In applying the predominant purpose test, however, our precedent in Kobluk requires us to start from the presumption that a matter “committed to a professional legal adviser is prima facie so committed for the sake of the legal advice . . . .” 574 N.W.2d at 442 (quoting Wigmore, supra, at 567). This presumption is consistent with federal precedent. Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 610 (8th Cir. 1977) (en banc) (“Here, the matter was committed to . . . a professional legal adviser. Thus, it was prima facie committed for the sake of legal advice and was, therefore, within the privilege absent a clear showing to the contrary.“); Chen, 99 F.3d at 1501 (acknowledging a rebuttable presumption that a lawyer hired to give advice is hired to give legal advice, unless “the facts show that the lawyer was ‘employed without reference to his knowledge or discretion
In other words, once the proponent of privilege has established “the other factual elements of the privilege,” this presumption “shifts to the opponent [of the privilege] the equally difficult, if not greater, burden of demonstrating that the services were not legal.” 1 Paul R. Rice, Attorney-Client Privilege in the United States, § 7.10 (2020 ed.) (emphasis added). Because Polaris has carried its burden in meeting the other factual elements of the privilege, and because Polaris submitted this issue to a legal advisor, Crowell & Moring, the only issue before us is whether respondent Colby Thompson has carried his “equally difficult, if not greater burden” in rebutting the presumption of privilege. To do so, Thompson must show that the Report is clearly lacking in aspects that require legal advice, Kobluk, 574 N.W.2d at 442, because the Report predominately delivers “business advice.”
II.
With the question properly framed, the flaw in the court’s analysis becomes obvious. It fails to meaningfully articulate what “business advice” and “legal advice” mean. The court provides factors to look at but fails to provide guidance as to what a district court should look for. The court proclaims that legal advice draws on legal training and applies legal principles to specific circumstances. But everything a lawyer does will be informed by the lawyer’s training in some fashion; the court fails to articulate the
Although the court is correct that the distinction between legal and business advice can at times be murky, the court fails to acknowledge that this distinction has been applied repeatedly in federal cases. See Rice, supra, at §§ 7.4–7.10 (collecting cases). With ample guidance available, our court is more than capable of providing some contours to these terms. For that reason, I attempt to distinguish between “legal advice” and “business advice” for the benefit of Minnesota courts, clients, and attorneys.
A.
I begin with the definition of “legal advice.” Justice Holmes once explained that “[t]he object of our study . . . is prediction, the prediction of the incidence of public force through the instrumentalities of the courts.” Oliver Wendell Holmes, Path of the Law, 10 Harv. L. Rev. 457, 457 (Mar. 25, 1897). Describing legal advice as the “prediction” of the likelihood of legal consequences is apt, but not all-encompassing. Very similarly, legal advice has been described as that which “requires a lawyer to rely on legal education and experience to inform judgment” and “involves the interpretation and application of legal principles to guide future conduct or to assess past conduct.” In re County of Erie, 473 F.3d 413, 419 (2d Cir. 2007) (emphasis added).
In defining legal advice, the focus must remain on the purpose for which the lawyer is acting. John W. Gergacz, Attorney-Corporate Client Privilege § 3:30 (2021 ed.). A lawyer acting in a purely investigative or fact-finding role is not covered by the privilege. E.g., Wartell v. Purdue Univ., No. 1:13–cv–00099, 2014 WL 3687233, at *5 (N.D. Ind. 2014); Cont‘l Cas. Co. v. Marsh, No. 01 C 0160, 2004 WL 42364, at *2 (N.D. Ill. Jan. 6, 2004); Metalsalts Corp. v. Weiss, 184 A.2d 435, 439 (N.J. Super. Ct. Ch. Div. 1962). But when a lawyer‘s investigation is “to provide information from which the attorney can develop legal advice,” the privilege will still attach. Gergacz, supra, at § 3:35.
Consider some examples. Courts have concluded that legal advice includes: tax advice and the preparation of tax returns by an attorney, see Colton v. U.S., 306 F.2d 633, 637 (2d Cir. 1962); advice on whether to file an amended return, see United States v. Cote, 456 F.2d 142, 144 (8th Cir. 1972); advice on tax implications and corporate-law consequences of a corporate restructuring, see In re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983 (1983 Subpoena), 731 F.2d 1032, 1037 (2d Cir. 1984);
While the above examples demonstrate that legal advice reaches a broad swath of practice areas, these decisions have one clear and obvious through-line: a requirement that an attorney employ his or her legal training or experience by providing recommendations for future conduct, or an analysis of past conduct, with an eye toward avoiding or obtaining certain legal outcomes. That is the definition of “legal advice” that is consistent with persuasive legal authority, see, e.g., Rice, supra, at § 7.10 (collecting cases); In re County of Erie, 473 F.3d at 419, and is therefore the definition that Minnesota courts should apply.
Now I turn to defining “business advice.” I begin by noting that the court’s conclusion that the Report is primarily business-oriented appears to be influenced by the fact that “safety, engineering, design, and corporate practices”2 are all activities associated with a “business“—that is, a corporation. But it cannot be that everything associated with a corporation is therefore “business.” Defining business advice in that way would transform virtually all legal advice to a corporate entity into unprotected business advice. See Rice, supra, at § 7.2 (“[V]irtually all internal legal communications are, to some extent, relevant to the business ends of the company.“). Rather than generically referring to corporate operations, the word “business” refers to the “activity by which people try to earn money.” Business, Garner’s Dictionary of Legal Usage 126 (3rd ed. 2011). It means “[a] commercial enterprise carried on for profit.” Business, Black‘s Law Dictionary (11th ed. 2019). The court believes that this definition is far too narrow. But the court offers nothing in its place.
Decisions that distinguish privileged legal advice from nonprivileged advice are consistent with a profit-focused definition of business. Thus, “business advice” has been described as mechanical or “mathematical calculations,” Cote, 456 F.2d at 144; advice on whether a corporate restructuring would be profitable, see 1983 Subpoena, 731 F.2d at 1037; “technical information,” Valente v. Pepsico, Inc., 68 F.R.D. 361, 367 (D. Del. 1975);
Similar to the decisions that identify privileged legal advice, the various types of advice that fall under the umbrella of “business” share one commonality. The advice at issue in these decisions all relates to making the client’s enterprise more profitable. This can include recommendations for improved efficiency of business processes, investment, marketing, and technological advice, or purely factual investigations. But one other characteristic is also worth mentioning. The increased profitability that is representative of business advice is not analogous to increased profit resulting from mitigated legal liability. See Exxon Mobil Corp. v. Hill, 751 F.3d 379, 382 (5th Cir. 2014) (holding that
I have now provided at least some contours to the concepts of business and legal advice. Legal advice is that which requires an attorney to employ her legal training or experience to provide a recommendation for future conduct, or an analysis of past conduct, with an eye toward avoiding or obtaining certain legal outcomes. Conversely, business advice is that which is intended to make a client’s enterprise more profitable other than through the mitigation of legal liability. With this distinction in mind, I now turn to the question of whether the Report is predominately legal advice or business advice.
III.
The determination of whether a communication falls under legal or business advice is “highly fact-specific.” Human Tissue, 2009 WL 1097671, at *2. To assess whether the predominant purpose of the Report is legal or business advice, we must examine both (1) the content and (2) the context in which it was written. Phillips, 290 F.R.D. at 629; see also Exxon Mobil, 751 F.3d at 382 (“Context here is key . . . .“). We must look at all “the facts surrounding the creation of the document and the nature of the document” itself. Phillips, 290 F.R.D. at 629. Again, we presume that a matter “committed to a professional legal adviser is prima facie so committed for the sake of the legal advice . . . unless it clearly
In determining that the Report is predominantly business-oriented, the court errs in at least two significant ways. First, it emphasizes mainly the content of the Report. The court concludes that the Report must be predominantly business advice because it devotes space to matters such as corporate “culture” as well as “corporate practices, safety, engineering, and product design.” But in so concluding, the court glosses over the context in which the Report was written. See Phillips, 290 F.R.D. at 629. Second, the court errs by flatly failing to adhere to the presumption in favor of privilege. Kobluk, 574 N.W.2d at 440–443. Ultimately, the court’s flawed analysis creates a completely unpredictable standard for, and therefore undermines the purpose of, the attorney-client privilege.
A.
Context is key in applying the predominant purpose test. Exxon Mobil, 751 F.3d at 382. Reading the Report in the context in which it was requested and written, it is obvious that the predominant purpose here is legal advice.
Polaris requested the Report in response to a letter alerting it to an investigation by the CPSC involving potential violations of the CPSA. See
As a manufacturer of consumer goods, Polaris is subject to the strictures of the CPSA. See
If, after investigation, the CPSA determines that a product presents an “unreasonable risk of injury” and that “no feasible consumer product safety standard” could “adequately protect the public,” the CPSC has the authority to impose an outright ban on the sale of that product.
The [CPSC] may consider . . . whether a person had at the time of the violation a reasonable and effective program or system for collecting and analyzing information related to safety issues. Examples of such information would include incident reports, lawsuits, warranty claims, and safety-related issues related to repairs or returns. The Commission may also consider whether a person conducted adequate and relevant premarket and production testing of the product at issue; had a program in place for continued compliance with all relevant mandatory and voluntary safety standards; and other factors as the Commission deems appropriate.
When read in this context, the Report is positively dripping with legal advice. A substantial portion of the Report addresses the question of who in Polaris knew what, and when. In other words, it advises Polaris on its potential legal exposure under its current
My conclusion is further bolstered by the recognition that we do not operate in a vacuum; the court’s decision causes us to break from the practice of other courts. When a corporation or business learns that it is under investigation by government regulators, they frequently turn to lawyers for aid. Although these lawyers investigate the underlying facts of the situation, their actions “are generally considered law-related and the attorneys considered lawyers for purposes of the privilege.” Gergacz, supra, at § 3:35.
In reaching a different conclusion, the court is perhaps led astray by the Report’s use of the term “safety audit” and its references to workplace culture. I address each point in turn.
The court suggests that the factual nature of the audit renders the Report predominately business advice because conceivably an audit could have been performed by a non-attorney. In support, the court relies solely on one case: Marceau v. IBEW Local 1269, 246 F.R.D. 610, 614 (D. Ariz. 2007). The court’s suggestion is incorrect for several reasons.
To begin with, the mere fact that a non-attorney may have been able to perform part of an investigation leading to the writing of a client memorandum is not dispositive. See, e.g., Rice, supra, at §§ 7.4 (“Interviews conducted by an attorney may fall within the ambit of the attorney-client privilege even though . . . lay investigators could conduct these interviews.“), 7.5 (“Whether the work could have been performed by a non-lawyer . . . is not persuasive evidence that the privilege should not apply.“); Diversified Indus., 572 F.2d at 610 (noting that the client could have hired accountants “to audit the books and records” and used lay investigators to interview employees, “but neither would have had the training, skills and background necessary to make the independent analysis and recommendations which the Board felt essential to the future welfare of the corporation“); In re County of Erie, 473 F.3d at 420–21 (stating that “[t]he predominant purpose” test should be applied “dynamically and in light of the advice being sought,” including consideration of whether it is ”advice that can be given by a non-lawyer” (emphases added)).
The court‘s mistake is to overlook the purpose for which an attorney has been hired: the focus is not on whether a non-attorney could have participated in the factual inquiry
For that reason, Marceau is distinguishable. The investigation in that case seems to have dealt mainly with determining whether the corporation‘s internal practices “were subject to abuse” by its employees. Marceau, 246 F.R.D. at 613. It is not clear that the attorneys needed to employ their legal training to determine what facts were relevant to their report, and it is further unclear that their recommendations were even related to the law.6 See id. at 614; see also In re Vioxx Prods. Liab. Litig., 501 F. Supp. 2d at 803–04 (“Suffice it to say, the advice envisioned by the attorney-client privilege is advice about
Instead of Marceau, this case is more similar to an Eighth Circuit decision, Diversified Industries, 572 F.2d 596. The plaintiff in that case sued the defendant for allegedly using a secret “slush fund” to bribe the plaintiff’s purchasing agents. Id. at 607. In response, the defendants hired a law firm “to conduct an investigation . . . for the purposes of eliciting facts, making certain findings, and providing to the Board of Directors of this Corporation a report possibly containing recommendations as to course of action.” Id. The report drafted by the law firm was very similar to the Report at issue in this case. It “summarized these interviews, analyzed the accounting data, evaluated the conduct of certain employees, drew conclusions as to the propriety of their conduct and made recommendations as to steps [the defendant] should take.” Id. at 608. Despite the fact that
Notably, the court applied the presumption that the matter was legal in character because it was committed to attorneys. Id. From there the court found it important that the attorneys in Diversified Industries were “given the authority to analyze . . . data [and] to evaluate and draw conclusions as to the propriety of past actions and to make recommendations for possible future courses of action.” Id. The same is true here.
2.
The court is also led astray by the Report’s mention of workplace culture. Specifically, the court states that the “report addresses the organizational culture of Polaris” and therefore is merely “setting corporate policy.” In different circumstances, the court’s conclusion might well have merit. For instance, advice on how to resolve a breach of contract claim may be entirely unrelated to the workplace culture in which the breach occurred. But the court is wrong to dismiss the legal relevance of that element in the work done here.
The workplace culture of an organization is an important factor examined by regulators, including the CPSC. See
Because the context reveals that the Report’s findings and recommendations relating to Polaris are purely focused on CPSA compliance, a topic squarely within Falvey’s legal training, expertise, and experience, I would conclude that the predominant purpose of the Report is legal advice and therefore it is privileged in its entirety.9
This conclusion is mandated by our decision in Kobluk, 574 N.W.2d at 440–43. The plaintiff in that case presented an argument nearly identical to the argument advanced by Thompson. See id. at 441. Kobluk argued that two drafts of a letter “represented a request for and provision of literary or personnel, rather than legal, advice.” Id. We rejected that argument by explicitly relying on the presumption that a matter “committed to a professional legal adviser is prima facie so committed for the sake of the legal advice . . . unless it clearly appears to be lacking in aspects requiring legal advice.” Id. at 442 (quoting Wigmore, supra, at 567).
As I have explained, the reliance by Thompson and the court on the Report’s discussion of workplace culture and process improvements aimed at CPSA compliance fails as evidence of business advice. Rather, in the context of the regulatory environment in which Polaris operates and its regulatory obligations for CPSA compliance, those discussions are classic legal advice justifying the protection of the attorney-client privilege. Because Thompson’s sole argument on this point fails, he essentially urges us to do precisely what we rejected in Kobluk. He asks us to conclude that he has overcome the presumption of legal advice because he makes a “mere assertion” that the Report is “of a nonlegal character.” Id. That argument failed in Kobluk, and stare decisis requires that we reject it here. What, then, does the court rely on to rebut Kobluk’s presumption in this case?
Nothing. The court essentially overrules the Kobluk presumption—in a footnote. The court attempts to distinguish Kobluk by declaring that the presumption has “limited
As a matter of stare decisis, “we are ‘extremely reluctant’ to overturn our precedent and ‘require a compelling reason to do so.’ ” County of Hennepin v. Laechelt, 949 N.W.2d 288, 292 n.1 (Minn. 2020) (quoting Warren v. Dinter, 926 N.W.2d 370, 377 n.7 (Minn. 2019)). This is doubly true for issues—such as attorney client privilege—that rely on stability and uniformity. See Jicarilla Apache Nation, 564 U.S. at 183 (“[F]or the attorney client privilege to be effective, it must be predictable.“). The court offers no compelling reason to depart from our precedent in Kobluk.
Nor could Thompson carry the “equally difficult, if not greater, burden of demonstrating that the services were not legal.” Rice, supra, at § 7.10. The court acknowledges that the Report discusses Polaris‘s legal duties, litigation defenses, and the role that lawyers play in responding to CPSC requests and investigations. But then the court simply declares that the Report does not embody a communication in which legal advice is sought or rendered. From there, the court concludes that the portions of the Report containing legal advice are not “intimately intertwined with and difficult to distinguish from” the parts of the Report that contain “business advice.” See Sedco Int‘l, S. A. v. Cory, 683 F.2d 1201, 1205 (8th Cir. 1982). Thus, in a matter of paragraphs, the court concludes that the Special Master reached the correct decision and all that remains is to redact portions of the Report as the Special Master directed.
More importantly, requiring district courts to closely parse attorney-client communications in this manner will inevitably lead to inconsistent results. This Report is a prime example. By failing to adhere to the Kobluk presumption that the Report predominately relates to legal advice, the court’s holding would allow some district courts to conclude that certain portions of the Report are privileged and, at the same time, would allow other district courts to reach contrary conclusions. The lack of predictability
Similar to the approach rejected in Jicarilla Apache Nation, the court’s reasoning creates a dilemma for businesses considering seeking legal advice. Although a client might think a problem is entirely legal, that client “will not always be able to predict” what type of advice an attorney would provide. Id. Lawyers should account for “moral, economic, social, and political factors,”
Rather than confront the risk that a variable and hard-to-define standard might yield damaging disclosures, businesses will inevitably choose to forgo seeking legal advice altogether. Or, to avoid the line-by-line redaction the court adopts, lawyers will be forced to drape advice and recommendations in the fabric of legal citations and legal research—formalities that thus far no court has insisted on and an expense that few clients will want to incur. Thus, the court today has, perhaps inadvertently, undercut the prime rationale for the attorney-client privilege, first advanced hundreds of years ago. See Wigmore, supra, at 545. In short, the court has significantly limited the “freedom of consultation of legal advisers by clients” by reinstating “the apprehension of compelled disclosure by the legal advisers.” Id.
For these reasons, we should hold the entirety of the Report privileged. I would conclude that the Report predominately delivers legal advice, grant the petition for a writ of prohibition, and remand to the district court with instructions to grant the motion of Polaris to claw back the Report.
GILDEA, Chief Justice (dissenting).
I join in the dissent of Justice Anderson.
Notes
If the Government were required to identify the specific interests it considered in each communication, its ability to receive confidential legal advice would be substantially compromised. The Government will not always be able to predict what considerations qualify as a “specific competing interest,” especially in advance of receiving counsel’s advice. Forcing the Government to monitor all the considerations contained in each communication with counsel would render its attorney-client privilege “little better than no privilege at all.”