In the video game "Fortnite," players land on a digitally rendered island to battle for their virtual lives. All in all, that seems like a fairly peaceful scenario compared to the long-running court battle pitting Fortnite’s maker, Epic Games, against Apple.
The two tech giants are currently fighting over a permanent injunction issued in April that blocks Apple from collecting commissions from app developers on purchases made outside its App Store and also from impeding developers who wish to point customers to in-app purchasing methods outside the App Store.
The injunction, issued by Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California, takes Apple to task for its aggressive use of attorney-client privilege to shield internal corporate documents from Epic’s and the public’s view. It also accuses Apple executives of lying on the stand and refers the company to the U.S. Department of Justice for possible contempt charges.
The privilege issues have alarmed industry and in-house counsel groups, who say the judge went too far in removing attorney-client protections from documents that dealt with both legal and business matters. Apple has filed an appeal in the U.S. Court of Appeals for the Ninth Circuit, and oral argument is set for October.
In-House Support
In a joint amicus brief to the Ninth Circuit, the Association of Corporate Counsel (ACC) and TechNet, a group of technology CEOs and senior executives, including GCs, argue that the Ninth Circuit should adopt a framework that extends attorney-client privilege to so-called “dual-purpose communications”—internal documents from in-house counsel that simultaneously give both business and legal advice.
The organizations said the Ninth Circuit should follow the lead of the U.S. Court of Appeals for the D.C. Circuit, which provides privilege “where giving or soliciting legal advice was one of the significant purposes of the communications, even if business advice was also a significant purpose.”
Tech Net and the ACC contend that smaller businesses and start-ups rely extensively on in-house lawyers for advice on whether certain business or regulatory compliance options are legal. “These companies should not have to choose between forgoing privilege in such scenarios or retaining expensive outside counsel to make the discussions look “more” privileged,” their brief states.
Kavanaugh’s Model
To determine whether a communication is privileged, the Ninth Circuit and other federal appellate circuits apply a “primary-purpose test,” which, according to Tech Net and the ACC, typically looks “at whether the primary purpose of the communication is to give or receive legal advice, as opposed to business or tax advice.” But “business and legal advice may often be inextricably interwoven,” they say, and it can be difficult in such cases to neatly separate business purposes from legal purposes.
The D.C. Circuit also uses a primary purpose test, but attempts to gauge whether providing legal advice was one of the significant reasons for the attorney-client communication. In opinions written by U.S. Supreme Court Justice Brett Kavanaugh, then serving as a D.C. Circuit judge, the court found that “trying to find the one primary purpose for a communication motivated by two sometimes overlapping purposes (one legal and one business, for example) can be an inherently impossible task.”
Tech Net and the ACC say that “if in-house counsel wants to add value when assisting on the full range of corporate affairs, their legal advice may necessarily take on business undertones.”
The Ninth Circuit has considered whether to adopt the D.C. Circuit’s standard before, a fact Tech Net and the ACC note in their brief. In a 2021 opinion, the court said it saw the merits of the approach laid out by Kavanaugh, but saw no specific reason at that time to adopt that reasoning. “This Court should take this opportunity to adopt the D.C. Circuit’s framework,” Tech Net and the ACC say. “In this case, the communications on which the district court’s contempt order relied contained legal and business advice that were not just intertwined but were one and the same.”
Narrowing privilege for in-house counsel, they write in their brief, “would discourage companies from asking their lawyers for help in the first place, defeating the entire point of attorney-client privilege.” This is particularly dangerous, they say, in a period when statutory and regulatory issues are growing more complex and when high costs prohibit companies—particularly smaller businesses and start-ups—from seeking outside counsel for help.
“As a result, such companies rely more on in-house lawyers who are necessarily involved in both legal issues and business matters,” Tech Net and the ACC say in the brief. “And during times of economic uncertainty, companies of all sizes would find in-house counsel not only more attractive but critical to their company’s survival.”
A Hostile Court?
Though it did not call out Rogers by name, the amicus brief also takes aim at district courts in the Ninth Circuit that it claims are “overtly hostile” to claims of privilege by in-house lawyers.
It cited a previous opinion by Rogers that held that “unlike communications with outside counsel, which are presumed to be made for the purpose of seeking legal advice, there is no presumption that communications with in-house counsel are protected by attorney-client privilege.”
Judges in the Ninth Circuit, the brief says, are relying on United States v. ChevronTexaco Corp., a 2002 Northern District of California decision, which stated “the presumption that attaches to communications with outside counsel does not extend to communications with in-house counsel.” ChevronTexaco, however, “cited no Ninth Circuit or Supreme Court caselaw for the proposition. Indeed, there is no reason why the test for privilege would or should expressly turn on whether the attorney works in-house or is hired as outside counsel,” Tech Net and the ACC argue.
By adopting the D.C. Circuit’s approach to the primary-purpose test, Tech Net and the ACC say, the Ninth Circuit would “rebuke the notion” that in-house lawyers are “somehow inherently less worthy of receiving privilege protections.” This is critical, they assert, because the in-house counsel role “is set to become only more entrenched. And because in-house counsel are often involved in evaluating the legal consequences of business decisions, their communications are more likely to be dual-purpose in nature.”
A Blistering Opinion
Rogers has overseen the case since it was originally filed in 2020 as an antitrust action against Apple by Epic. In a 2021 decision, she found for Apple on nine out of 10 antitrust issues, and ruled for Epic on a claim that Apple had violated California law by engaging in anti-steering efforts. At the time, she issued an injunction ordering Apple to halt the activity.
Epic revived the case in 2024, saying Apple was failing to live by the injunction. In her April 30 order, Rogers agreed, and issued a blistering opinion that found Apple executives had lied under oath, and that the company’s CEO, Tim Smith, ignored internal advice to comply with the injunction. “Cook chose poorly,” Rogers said.
One of the tactics Apple used to delay proceedings was asserting attorney-client privilege over tens of thousands of documents, she said. After a magistrate judge pushed back in earlier proceedings, Apple withdrew 42 percent of the privilege claims. “These dilatory tactics were unwarranted, wasted party and judicial resources, and delayed the court’s ability to effectuate relief,” Rogers wrote.
In one example cited by Rogers, Apple asserted privilege over minor word changes made by an in-house lawyer in a slide presentation. The lawyer wrote, “can we change the ‘Prepared at the Request of Counsel’ label in the slides to ‘Prepared at the Request of External Counsel.’ ” Rogers noted that every email this exchange was designated privileged, as was every slide in the presentation, “even though the vast majority of information…do not contain privileged information, but rather documents the business assessment Apple was conducting that is central to enforcement of the injunction.”
In another example, Rogers cited a 2023 email from an Apple lawyer to Cook alerting him that wording changes he requested had been made. “Nothing about this email indicates the presence or provision of legal advice, but rather implementing Mr. Cook’s request,” Rogers wrote. Instead, she said the effort to make such exchanges privileged was driven by “a desire to conceal Apple’s real decision-making process, particularly where those decisions involved senior Apple executives.”
“Adding a lawyer’s name to a document does not create a privilege,” Rogers said.
‘Not a Negotiation’
Rogers also rejected Apple’s arguments that the overuse of privilege was simply a mistake resulting from errors by its document review vendors and counsel, the compressed timeline for responding to the court’s instructions, and size of Epic’s request for documents. “In its defense, Apple blames everyone but itself,” Rogers wrote.
She added that Apple’s claim that a series of mistakes drove the abuse of privilege was “not credible.” “Almost all ‘mistakes’ and ‘inconsistencies’ flow in one direction: toward withholding and redacting,” she said, adding that the court “rejects Apple’s finger-pointing to justify its own misconduct.”
Apple argued it made good-faith attempts to correct the errors, and thus punitive sanctions were unwarranted. Rogers bristled: “Complying with a court order cannot be deemed a sanction…This is an injunction, not a negotiation. There are no do-overs once a party willfully disregards a court order. Time is of the essence. The Court will not tolerate further delays.”
Rogers ordered the company to immediately adhere to the injunction, stop collecting commissions on out-of-app purchases, and pay Epic’s attorney’s fees, as well as the costs of a special master’s review. In addition, she referred the matter to the U.S. attorney’s office to investigate whether criminal contempt charges should be brought against Apple.
Other Companies, Too
Apple is not the only major tech company to recently run afoul of the courts over privilege issues. Amazon and Google have both faced accusations that they have abused attorney-client privilege, the Wall Street Journal reported.
The Federal Trade Commission is currently seeking sanctions against Amazon for holding back some 70,000 documents in a case over whether the tech giant scammed millions of customers by signing them up to its Prime service without their consent. The FTC, according to the Journal, has said Amazon engaged in a “systematic abuse of privilege” during the course of the case, a claim the company denies.
In its own fight with Epic Games, Google has also been upbraided by a U.S. district court judge in San Francisco for failing to save evidence. “And its behavior has become a yoke as the Justice Department seeks to break up the search giant,” the Journal wrote.
Some place the blame squarely on the companies’ lawyers. “The lawyers are the people who are supposed to be saying no when something crosses a line, and they aren’t even failing that duty—they are actively encouraging this stuff," John Newman, a law professor at the University of Miami and a former FTC deputy director, told the Wall Street Journal.
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David L. Brown is a legal affairs writer and consultant, who has served as head of editorial at ALM Media, editor-in-chief of The National Law Journal and Legal Times, and executive editor of The American Lawyer. He consults on thought leadership strategy and creates in-depth content for legal industry clients and works closely with Best Law Firms as senior content consultant.
