Wednesday, December 15, 2021

Predominant Purpose Was Business Advice

The Minnesota Supreme Court affirmed a district court's finding that a report prepared by outside counsel was not protected by attorney-client privilege.

The report had been provided inadvertently in discovery and a "claw back" motion had been filed

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.


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.7. 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.

Standard of review

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.” 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.” 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.

Justice Anderson dissented

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 Consumer Product Safety Act (CPSA). Polaris specifically desired legal advice regarding compliance weaknesses and how to successfully address those weaknesses. To that end, Polaris did not hire a business consultant; nor did it retain an engineer, a public relations expert, or an operations analyst. The company hired an attorney; specifically, Polaris retained the former general counsel of the very government agency investigating it—the CPSC. That attorney, Cheryl Falvey, along with her law firm, Crowell & Moring, investigated Polaris for CPSA compliance issues and, in a 32-page Report, provided recommendations on how to address those issues. Polaris did not ask Falvey for her input on better engine design. And Polaris did not ask for—nor does the Report provide—advice on how to run its business more profitably.

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 entirely privileged. Not only is the court’s conclusion wrong, but it will also frustrate
attorney-client relations, discourage businesses from seeking legal advice, and require lawyers to pepper client communications with legalese and superfluous citations.

I respectfully dissent.

Chief Justice Gildea joined the dissent. (Mike Frisch)

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