August 20, 2010
Confounding the expectations of this observer (and others), the government has allowed the deadline to pass without seeking rehearing of the Deloitte case in the D.C. Circuit. That development does not mean, however, that the government has decided to live with the Deloitte decision. To the contrary, the most likely explanation for the government’s inaction is that it plans to seek Supreme Court review and does not want to delay that process. A petition for certiorari is currently due on September 27. If the government files by that time, the Court will act on the petition in enough time for it to schedule oral argument in the spring and decide the case by June 2011 (assuming that the Court decides to grant certiorari). If the government had sought rehearing, it would have lost control of the schedule. Depending on how long the D.C. Circuit took to rule on the rehearing petition, it is possible that Supreme Court consideration then could have been pushed off until the 2011-12 Term.
So the government has until September 27 to figure out how to explain to the Court why the issue that it said was so unimportant last May in Textron suddenly requires Supreme Court intervention. As noted in our previous post, one thing that the government will likely argue is that Deloitte has created a circuit conflict that did not previously exist, because it is the first court of appeals decision to find work product protection for tax accrual workpapers prepared as a routine part of the audit process. In Textron, the government had argued that cases approving work product protection like United States v. Roxworthy, 457 F.3d 590 (6th Cir. 2006), and United States v. Adlman, 134 F.3d 1194 (2d Cir. 1998), did not actually conflict with Textron and El Paso because the tax documents in question were prepared in anticipation of litigation and not in the ordinary course of business for use by auditors. (A copy of the government’s brief in opposition to the certiorari petition in Textron is attached.)