Summary of United States v. Adlman, United States Court of Appeals for the Second Circuit, 1998 134 F.3d 1194
Facts: Sequa (D) was thinking about a merger but knew that it would produce an enormous loss and tax refund which would be challenged by the IRS and result in litigation. Adlman, VP for taxes at Sequa, asked Sheahen, an accountant and lawyer, to evaluate the tax implications; Sheahen wrote a memo that proposed possible legal theories or strategies for Sequa to adopt in response to litigation, as well as other things. Sequa went ahead with the restructuring. IRS (P) served summons on Adlman for production of the memorandum. Adlman refused, stating that it was protected by attorney-client and work-product privileges.
Procedural History: District court rejected both privileges. It rejected the work-product privilege because the memo was prepared for litigation based on actions or events that had no yet occurred at the time of its creation.
Issue: Does the non-occurrence of events giving rise to litigation prior to preparation of documents necessarily preclude using the work-product privilege?
Holding: No. Court affirmed district courts denial of attorney-client privilege, but decided the district court had evaluated Adlmans claim of work-product privilege under the wrong standard.
Reasoning (Leval): When a party is choosing whether to engage in an event that is almost certainly going to result in litigation and the party prepares documents, these documents may be protected under 26(b)(3). The text of the rule does not only state that the work-product privilege applies to documents prepared for trial, but it also refers to those prepared in anticipation of litigation. Documents should be deemed prepared in anticipation of litigation, and thus within the scope of the rule, if in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation [this is the Wright and Miller because of formulation]. This case should be remanded to the district court and if the district court concludes: (1) that the same memo would have been prepared in any eventthen the court should adhere to its prior ruling because the memo was not prepared because of the expected litigation (2) that the memo would not have been prepared but for Sequas anticipation of litigationjudgment should be overturned.