The First Circuit has vacated its January decision in the Textron case, and a full panel of First Circuit judges will rehear the case in June.
The January decision (No. 07-2631 (1st Cir. 1/21/09)) had held that the work-product privilege could operate to prevent the disclosure to the IRS of workpapers prepared in anticipation of an IRS examination. At that time, the appeals court remanded the case to a lower court to decide if Textron had waived that privilege in this case. (Click here to read a discussion of the January opinion.)
The January decision did not squarely address what test should be applied for deciding whether workpapers were shielded by the privilege. The dissent in that case had argued that workpapers created in the ordinary course of business and not just in anticipation of litigation could not be privileged and that the January decision ran counter to prior First Circuit precedent. The June rehearing will give the First Circuit a chance to decide those issues. Because the earlier decision has been vacated, both the holding on the work-product privilege and the remand on the waiver issue are without effect.