The Minnesota Supreme Court said that a report authored for Polaris by regulatory compliance lawyers is not protected from disclosure by the attorney client privilege and can be discovered in a products liability lawsuit against the company. In doing so, the Minnesota Supreme Court formally adopted the “predominant purpose test,” joining the majority of jurisdictions nationwide.
The predominant purpose test asks whether the predominant purpose of a document is to render or solicit legal advice. If so, then the attorney-client privilege protects the entirety of the document from disclosure. If not, then portions of the document that contain legal advice are protected by redaction but the document is otherwise discoverable.
The Polaris Audit Report and In Re Polaris
In April 2016, Polaris announced a recall of certain vehicles due to a fire hazard. In May 2016, the U.S. Consumer Product Safety Commission (CPSC) notified Polaris that it was investigating whether Polaris complied with reporting requirements of the Consumer Product Safety Act and advised Polaris of possible enforcement action “including reasonably anticipated litigation.”
Also in May 2016, Polaris hired counsel to conduct an audit of Polaris’s safety professes and policies. The report was marked “PRIVILEGED AND CONFIDENTIAL: Protected by Attorney Client Privilege and Attorney Work Product” on each page. Other notable features of the report include: (1) it was titled “Embracing Safety as a Business Priority”; (2) it stated that counsel 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; (3) it stated that counsel did “not represent the company” regarding the recall or responding to the CPSC regarding execution of the recall; (4) it stated that counsel was “hired for an entirely different purpose” which was “to make the company better when it comes to dealing with safety concerns”; and (5) it stated that counsel agreed to provide a “privileged and confidential assessment of the current state of the safety processes and procedures and provide recommendations for process improvements”; and (6) it included nineteen pages of detailed fact-finding.
In In re Polaris Inc., No. A20-0427 (Minn. Dec. 15, 2021), respondent Colby Thompson filed a products liability lawsuit against Polaris claiming he suffered serious burns when the Polaris vehicle he was driving started on fire. During discovery, a copy of the audit report was inadvertently produced by Polaris. Polaris moved to claw-back the audit report, arguing that it was protected by the attorney-client privilege and work product doctrine. The special master denied Polaris’s motion, and the district court affirmed the special master’s order. Polaris’s request for a writ of prohibition was denied by the Minnesota Court of Appeals, and Polaris appealed to the Minnesota Supreme Court.
In a 5-2 decision, the Court ruled that the Special Master’s finding that the predominant purpose of the audit report was to render business advice regarding operational changes was not clearly erroneous. As a result, the audit report is discoverable and only those portions of the report that constitute legal advice will be protected by the privilege and redacted.
Attorneys generally provide legal advice when they employ their legal training and apply legal principles to the specific circumstances of their client, the Court said. The Court did not define business advice, but rejected the argument that it should be limited to advice intended to increase profitability through means other than mitigation of legal liability. Notably, the Court also rejected the argument that a communication regarding a matter committed to an attorney is entitled to a presumption that the communication is for the sake of legal advice. Both the majority opinion and dissent agree, however, that application of the predominant purpose test is a fact-specific, case-by-case question of fact.
The Court’s adoption of the predominant purpose test, and its lack of clear guidance on how to define legal and business advice, means that attorneys need to consider the attorney-client privilege analysis while they are drafting client communications.
First, attorneys authoring client communications should consider including a statement clearly and carefully defining the purpose of the communication as rendering legal advice and not for a business purpose. The Court examined the Polaris audit report’s title, statement of purpose, and the attorney’s stated scope of representation as factors demonstrating a predominantly business or non-legal purpose. This may be especially important for attorneys communicating with clients about regulatory compliance advice, as the Court rejected Polaris’s argument that all compliance advice is legal advice. Using titles and statements that reinforce the legal advice being offered may demonstrate the primarily legal purpose of the document.
Second, attorneys should consider including the legal authority relevant to their advice in the written communication. Although legal advice does not necessarily require legal research, the inclusion of authority may provide a stronger showing that the author is applying legal principles to the client’s circumstances. This may also help show that the attorney is not acting in a purely investigative or factfinding role which is not covered by the attorney-client privilege.
Finally, attorneys authoring client communications that might arguably involve a combination of legal and business advice must be aware that the entire document may not be entitled to the attorney-client privilege. In such a case, an attorney’s detailed reporting of facts may be left unprotected by the privilege and discoverable in litigation.