United States v. Sanmina Corp., No. 18-17036 (9th Cir. 2020)Annotate this Case
After Sanmina claimed a worthless stock deduction on its federal tax return, the IRS issued a summons for the memoranda authored by Sanmina in-house counsel. Sanmina objected on the basis that they were protected both by attorney-client privilege and the attorney work-product doctrine. On subsequent remand, the district court determined that the memoranda were covered by both attorney-client privilege and work-product protection, but that those privileges had been waived.
The Ninth Circuit held that Sanmina waived the attorney-client privilege when it disclosed the Attorney Memos to DLA Piper. However, the panel held that such disclosure did not automatically waive work-product protection over the Attorney Memos and, rather, waiver of work-product immunity requires either disclosure to an adversary or conduct that is inconsistent with the maintenance of secrecy against its adversary. In this case, the panel held that Sanmina did not expressly waive work-product immunity merely by providing the Attorney Memos to DLA Piper, but its subsequent use of the DLA Piper Report to support its tax deduction in an audit by the IRS was inconsistent with the maintenance of secrecy against its adversary. Therefore, the panel explained that Sanmina's implied waiver of the work-product protection only extends to the factual portions of the Attorney Memos. The panel granted in part and denied in part the IRS's petition to enforce its summons.