The Commissioner of the IRS did not invoke the executive privilege in this case. Rather, Sara Coe, Chief, Procedural Branch, Field Service Division, Office of Chief Counsel, IRS, invoked the privilege. Defendant claims that this is an acceptable "middle ground" and identifies Ms. Coe as a "high-level supervisor". (Defendant's Memorandum at 14 n. 9). Defendant also points to a Chief Counsel Directive -- "CCDM (35)5(13)6.1" -- which states that the executive privilege must be asserted by the "agency head or the Chief, Procedural Branch, rather than the docket attorney."
Based on the foregoing, this court concludes that the defendant has not properly invoked the executive privilege because it was not claimed by the head of the defendant agency, i.e., the Commissioner of the IRS. The executive privilege, therefore, does not protect the documents listed in the Log from discovery.
As an alternative response to plaintiff's argument, defendant requested that it be granted additional time to "permit a higher-ranking IRS official to review the documents and assert the privilege." (Defendant's Memorandum at 14 n.9). Defendant shall have seven (7) days from the date of the order accompanying this Memorandum Opinion to assert the executive privilege in accordance with this Memorandum Opinion. In the event that defendant elects to invoke this privilege, it shall simultaneously submit to this court copies of all documents which it claims are protected by the deliberative process privilege for in camera inspection so that this court may balance defendant's claim of privilege against plaintiff's need for the documents.
3. Attorney-Client Privilege. Defendant claims that the documents marked with an asterisk in the Log are protected by the attorney-client privilege as well as the executive privilege. Defendant asserts that these particular documents "involve instances where the author has either sought or provided legal advice or analysis." (Defendant's Memorandum at 11-12). Defendant claims that it has met its burden of establishing that these documents are subject to the attorney-client privilege and that the plaintiff has failed to prove its entitlement to them.
In order to establish that communications are protected by the attorney client privilege, the following elements must be present: (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his or her subordinate, and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion of law or (ii) legal services or (iii) assistance in some legal proceeding, and (d) not for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client. Rhone-Poulenc Rorer, Inc. v. Home Indem. Co., 32 F.3d 851, 862 (3d Cir. 1994). See also Glenmede Trust Company v. The Honorable Herbert J. Hutton, 56 F.3d 476, 486 n.15 (3d Cir. 1995) (same).
The purpose of the attorney-client privilege is "to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in observance of the law and administration of justice." Upjohn Co. v. United States, 449 U.S. 383, 389, 66 L. Ed. 2d 584, 101 S. Ct. 677 (1981). See also Westinghouse Electric Corporation v. The Republic of Philippines, 951 F.2d 1414, 1423 (3d Cir. 1991) (quoting same); In re Sunrise Securities Litigation, 130 F.R.D. 560, 570 (E.D. Pa. 1989) (same). The privilege extends to verbal statements, documents and tangible objects conveyed to an attorney in confidence for the purpose of any legal advice. Only the communication between the attorney and the client itself is privileged; the underlying facts as well as the factual circumstances surrounding the attorney-client relationship are not privileged. Upjohn, 449 U.S. at 389.
"Because the attorney client privilege obstructs the truth-finding process, it is construed narrowly." Westinghouse, 951 F.2d at 1423. See also In re Grand Jury Investigation, 599 F.2d 1224, 1235 (3d Cir. 1979) (same). Notwithstanding this apparent limitation, it generally is acknowledged that the attorney-client privilege is "so compellingly important" that the courts must, within their limits, "guard it jealously". Haines v. Liggett Group Inc., 975 F.2d 81, 90 (3d Cir. 1992). See also Rhone-Poulenc, 32 F.3d at 862 ("As the [attorney client] privilege serves the interests of justice, it is worthy of maximum legal protection"). "When the record is ambiguous as to the elements necessary to establish a claim of attorney-client privilege, the burden is on the party asserting it ... [to] show, by record evidence such as affidavits, sufficient facts as to bring the communications at issue within the narrow confines of the privilege." Sunrise Securities, 130 F.R.D. at 570 (quoting Delco Wire & Cable, Inc. v. Weinberger, 109 F.R.D. 680, 687-88 (E.D. Pa. 1986)).
Defendant asserts that the documents listed in the Log and marked with an asterisk are protected by the attorney-client privilege. Defendant bears the burden of proving that the attorney-client privilege applies to those documents. Plaintiff argues that the IRS failed to show that all documents to which it asserts the attorney-client privilege were maintained in a way that preserves the privilege. Specifically, plaintiff contends that it is "highly unlikely that the IRS maintained its administrative files in a way that preserved the attorney client privilege." (Plaintiff's Memorandum at 19). Rather, the plaintiff hypothesizes that the withheld documents were held in the IRS' administrative files which are available routinely to persons in the IRS.
In claims of attorney-client privilege by an organization, such as a governmental agency or a corporation, the privilege extends to those communications between the attorney and all agents or employees of the organization who are authorized to act or speak for the organization in relation to the subject matter of the communication. Mead Data Control, Inc. v. U.S. Dep't. of the Air Force, 184 U.S. App. D.C. 350, 566 F.2d 242, 253 n.24 (D.C.Cir. 1977) (addressing a claim of attorney client privilege under the Freedom of Information Act ("FOIA")). In Coastal States Gas Corp. v. Dep't. of Energy, 199 U.S. App. D.C. 272, 617 F.2d 854 (D.C. Cir. 1980), the court denied the Department of Energy's claim of attorney-client privilege under the FOIA and concluded that it "failed to demonstrate a fundamental prerequisite to assertion of the privilege: confidentiality both at the time of the communication and maintained since." 617 F.2d at 863. The court further held that the "burden is on the agency to demonstrate that confidentiality was expected in the handling of these communications, and that it was reasonably careful to keep this confidential information protected from general disclosure." Id. The court found that the Department of Energy, which admitted that it did not know who had access to the memoranda, failed to affirmatively establish confidentiality and show the attempts taken to protect the confidentiality of the memoranda at issue within the agency. See also Commonwealth of Pennsylvania, Dept. of Public Welfare v. United States Dept. of Health and Human Services, 623 F. Supp. 301, 305 (M.D. Pa. 1985) (quoting Coastal States Gas and Mead Data).
This court finds that defendant failed to establish that the documents it claims are protected by the attorney-client privilege were maintained by the IRS in a confidential manner. In her Declaration, Sara Coe does not state the manner in which the documents were held by defendant. It is unclear whether they were maintained in files subject to open review by all members of the IRS or whether they were maintained with an expectation of confidentiality. Consequently, defendant's claim of attorney client privilege must fail.
For all of the foregoing reasons, the court makes the following decisions. Plaintiff is not entitled to the documents listed in the Log under the headings of RR 83-112 and 84-58 because the doctrine of variance precludes the court from considering claims relating to those revenue rulings since plaintiff did not raise those claims in his Refund Claim. Documents relating to RR 83-112 and 84-58, therefore, are irrelevant to plaintiff's claims in this action.
Defendant failed to properly invoke the executive or deliberative process privilege with respect to the documents listed in the Log. Consequently, that privilege does not protect documents relating to RR 88-98 and section 7805(b) from discovery.
Plaintiff failed to properly invoke the attorney-client privilege by not establishing that the documents were maintained in a way that maintained their confidentiality. Consequently, this privilege does not protect the documents relating to RR 88-98 and section 7805(b) from production.
This court has found that neither the deliberative process privilege nor the attorney-client privilege protects the documents listed in the Log relating to RR 88-98 and section 7805(b) from production. However, because defendant listed all of these documents as also protected by the deliberative process privilege, defendant need not produce any of the documents immediately. Rather, defendant shall have seven (7) days from the date of the Order accompanying this Memorandum Opinion to invoke the deliberative process privilege with respect to documents listed in the Log relating to RR 88-98 and section 7805(b) in accordance with this Memorandum Opinion. In the event that defendant elects to invoke this privilege, it shall simultaneously submit to this court copies of all documents which it claims are protected by the executive or deliberative process privilege for in camera inspection so that this court may balance defendant's claim of privilege against plaintiff's need for the documents.
An appropriate Order follows.
AND NOW, this 25th day of June, 1996, upon consideration of plaintiff's motion for production of documents, and all pleadings submitted relating thereto, and after oral argument on April 1, 1996, and for the reasons stated in the accompanying Memorandum Opinion, it is hereby
1. The motion is GRANTED IN PART and DENIED IN PART.
2. The motion is DENIED to the extent that it requests documents relating to Revenue Rulings 83-112 and 84-58.
3. Defendant failed to properly invoke the executive or deliberative process privilege with respect to the documents listed in the Log. Consequently, that privilege does not protect the documents from discovery.
4. Plaintiff failed to properly invoke the attorney-client privilege with respect to the documents listed in the Log and marked with an asterisk. Consequently, this privilege does not protect the documents listed in the Log relating to RR 88-98 and section 7805(b) from production.
5. Defendant shall have seven (7) days from the date of this Order to invoke the executive or deliberative process privilege with respect to documents listed in the Log relating to RR 88-98 and section 7805(b) in accordance with this court's accompanying Memorandum Opinion. In the event that defendant elects to invoke this privilege, it shall simultaneously submit to this court copies of all documents which it claims the executive or deliberative process privilege protects for in camera inspection so that this court may balance defendant's claim of privilege against plaintiff's need for the documents.
BY THE COURT:
THOMAS J. RUETER
United States Magistrate Judge