The opinion of the court was delivered by: Byron G. Cudmore, U.S. Magistrate Judge:
E-FILED Friday, 09 September, 2011 10:10:33 AM Clerk, U.S. District Court, ILCD
On May 24, 2011, this Court entered an order deferring a ruling on Defendant Caterpillar, Inc.'s motions to quash the subpoenas directed to Howrey, LLP, Ernst and Young, LLP, and PricewaterhouseCoopers, LLP. Caterpillar subsequently filed privilege logs and the documents it seeks to withhold for an in camera review. On July 13, 2011, this Court ruled on Caterpillar's motion to quash the subpoena to Howrey, LLP. On August 19, 2011, the Court ruled on Caterpillar's motion to quash the subpoena to Ernst and Young, LLP. Now before the Court is Caterpillar's motion to quash the subpoena to PricewaterhouseCoopers, LLP ("PwC").
For the reasons below, the motion will be granted in part and denied in part.
As Plaintiff's claims relate to the subpoena to PwC, Plaintiff alleges that he reported what he believed to be a scheme by Caterpillar, Inc., ("Caterpillar") to improperly avoid over $2 billion in U.S. income tax, purportedly accomplished by shifting U.S. profits to offshore shell companies in Switzerland. (Complaint ¶ 3; d/e 35, Schlicksup Aff. ¶¶ 39-41). This plan has been referred to as the "Swiss Tax Structure," the "Global Value Enhancement Program" and the "Supply Chain Transactions." Plaintiff further alleges that the Switzerland profits were returned to the U.S. by way of a "Bermuda Tax Structure," also known as the "Luxembourg Structure" or the "Financing Center Transaction." Plaintiff alleges that he was retaliated against for essentially blowing the whistle on these transactions.
Caterpillar counters that these projects were legitimate business transactions which were disclosed on its tax returns. According to Caterpillar, the supply chain project was a "corporate restructuring of Caterpillar's international supply chains . . . in 2000 through 2004" in order to "streamlin[e] the acquisition of parts from our unrelated suppliers and present a single face to the dealer customers." (d/e 69, p. 69; Beran Aff. ¶ 5). The purpose of the financing center transaction, according to Caterpillar, was to efficiently finance foreign affiliates and foreign acquisitions, and to minimize taxes.
Plaintiff's subpoena to PwC seeks:
*Documents used to "market" the Global Value Enhancement program to Caterpillar or to Defendant Beran (Caterpillar's Tax Director and Assistant Treasurer)
*Invoices sent to the Caterpillar Tax Department in Peoria, Illinois for years 1999-2008 relating to the Global Value Enhancement program
* "Any and all memos written to provide supporting opinions for the . . . Global Value Enhancement tax structure and/or the Luxembourg/Bermuda tax structure."
*Documents "related to the audit of the tax provision on the Caterpillar Inc. financial statements for 1999 through 2010."
*Documents "related to the audit of the tax reserves on the Caterpillar Inc. financial statements for 1999 through 2010."
*Documents relating to the classification of PwC's fees charged to Caterpillar, as submitted by Sharad Jain (PwC audit partner) to PwC's national office*fn1
* Correspondence with Defendant Beran and/or Burritt (Caterpillar's Chief Financial Officer) from 1999-2010 (d/e 69-1, pp. 5-6).
Caterpillar moved to quash the subpoena, but this Court reserved a ruling because the documents had not been submitted for an in camera review with a detailed privilege log. Caterpillar has since complied with that directive and this Court has conducted an in camera review of each PwC document.
Caterpillar's privilege log asserts primarily the work-product doctrine and at times the "attorney-client communication" and/or the "tax advisor communication" privilege. As discussed in the Court's prior order, Caterpillar did not assert a "tax advisor" privilege in its motion to quash and has not briefed the issue. Accordingly, the Court addresses only the attorney-client privilege and work-product doctrine. The legal standard set forth below ...