Section of Taxation Publications
  VOL. 60
NO. 2

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Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.


The Battle Over the Scope of Work Product: The Status of “In Anticipation of Litigation” After United States v. Roxworthy
Jeremy Scanlan


Discovery of information about the opposing party is a major feature of litigation. However, the ground rules for federal litigation impose several restrictions on discovery. One of the most crucial restrictions involves whether and to what extent a party must disclose work product created in connection with the lawsuit. In turn, a central test is whether the target material has been prepared “in anticipation of litigation.” For companies engaged in transactions with significant tax consequences, application of this rule may entail large amounts of money. In United States v. Roxworthy, the Sixth Circuit adopted what has become known as the “because of” standard to determine when documents qualify for work product protection as having been prepared “in anticipation of litigation.” Under this standard, documents are prepared because of the prospect of litigation when the party had a “subjective belief that litigation was a real possibility, [which belief was] objectively reasonable.”

In Roxworthy, the court held that the work product rule protected certain internal memoranda prepared by KPMG, LLP (“KPMG”), an audit and consulting firm, analyzing the tax consequences of certain transactions in which Yum! Brands, Inc. (“Yum”) was engaged, including the creation of a captive insurance company and related stock transfers. However, the because of test as applied cuts too broadly. It strikes an inappropriate balance between the values underlying the work product rule and the Service’s competing interest in assuring complete disclosure in the tax reporting process. As a result, the test may unfairly handicap the Service’s ability to apply the tax law. This note asserts that a stricter work product standard, such as the one employed by the Fifth Circuit, would better strike the delicate balance between protecting the secrets held by diligent tax attorneys, and allowing the Service the proper legal framework within which to enforce administrative summonses and obtain all relevant documents.

Part I of this Note presents the facts and procedural disposition of the Roxworthy case. Part II discusses the Sixth Circuit’s because of standard and its application in Roxworthy. Part III discusses the competing interests underlying work product in the tax law, and asserts that the Service’s interest in assuring complete disclosure ought to be considered at least as important as the interests underlying the work product rule. Part IV critiques the internal logic of the because of standard and contrasts it with the logic of a stricter, “primary purpose” work product test. Part IV also asserts that the stricter standard would strike a better balance in the tax law, and suggests that Rule 26(b)(3) is susceptible of the stricter interpretation.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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