U.S. v. Textron Inc.

NCLC filed twice at the First Circuit in this case, and also filed in this case before the Supreme Court. NCLC filed its first amicus brief with the First Circuit's three judge panel and its second brief en banc.

NCLC urged the First Circuit to hold that the work product doctrine protects the confidentiality of tax workpapers prepared for the purposes of financial statements and related disclosures. In this case, Textron had prepared workpapers to assist its independent auditor with its work on the company's financial statements. The IRS filed a claim against Textron in district court, arguing the company was utilizing a tax shelter. In its brief, NCLC argued that failure to protect confidentiality of tax workpapers would undermine the financial statement disclosure process, the corporate counsel/client relationship and the policies behind the work product doctrine itself.

The First Circuit held en banc that the work product doctrine does not protect the confidentiality of tax workpapers prepared for the purposes of financial statements. Because the workpapers had been prepared previously for the purpose of financial statements, and not as a result of the ensuing IRS litigation, the First Circuit ruled that the workpapers were not subject to work-product protection. Had the documents been prepared because of the litigation, they could have been protected.

Previously, the U.S. Court of Appeals for the First Circuit ruled that Textron's tax accrual papers are protected work product; but the court remanded the case to the trial court to determine whether Textron waived that protection by sharing the workpapers with its accountant and whether the accountant's workpapers, based on Textron's tax accrual papers, are discoverable.

Amicus brief filed 4/9/08. Decided 1/21/09. Amicus brief en banc filed 4/22/09. Decided 8/13/09.