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United States v. KPMG LLP

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA


October 10, 2003

UNITED STATES OF AMERICA, PETITIONER,
v.
KPMG LLP, RESPONDENT.

The opinion of the court was delivered by: Patrick J. Attridge, Special Master.

Report and Recommendation

The Special Master has examined all the remaining documents and supplemental submissions, and reexamined the privilege log, the entire record including the affidavits, transcripts and exhibits, and Judge Hogan's Memorandum Opinion of December 20, 2002.

The remaining documents, including those in which KPMG claims its oven privilege, are sought to be exempt from disclosure under 26 U.S.C. § 7525, the attorneyclient privilege or the attorney work product privilege. Many are claimed to be exempt under multiple privileges; viz, the attorney-client and attorney work product privileges; the attorney-client and § 7525 privileges; the attorney work product and § 7525, privileges and some under all three privileges. This Report and Recommendation shall address all the documents individually and in numerical order by grouping under the claimed privilege or privileges.

The following legal standards have been applied when reviewing each of the documents to determine the applicability of the claimed privilege or privileges.

Attorney-Client Privilege:

In order for the attorney client privilege to be successfully invoked, the party asserting the privilege must show that

(1) the holder of the privilege is or sought to become a client;

(2) the person to whom the communication was made (a) is a member of the bar of a court or his subordinate and (b) in connection with this communication is acting as a lawyer;

(3) the communication relates to a fact of which the attorney was informed

(a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and

(4) the privilege has been (a) claimed and (b) not waived by the. client. (citation omitted) Memorandum Opinion, Judge Hogan, December 20, 2002, p. 9

The 26 U.S.C. § 7525 Confidentiality Privilege:

Relying primarily on the 7th Circuit's United States v. Frederick's opinion 182 F. 3d 496 (7th Cir. 1999), cert. denied, 528 U.S. 1154 (2000), Judge Hogan held that the §7525 confidentiality privilege "protects communications between a taxpayer and a federally authorized tax practitioner `to the extent the communication would, be considered a privileged communication if it were between a taxpayer and an attorney."' Moreover, "(t)he new statute `does not protect work product' and "the privilege does not protect communications between a tax practitioner and a client simply for the preparation of a tax return.. See also, e.g. United States v. Lawless, 709 F2d 485, 488 (7th Cir. 1983)" Memorandum Opinion, Dec. 20, 2002, p.8. Thus, essentially, there must be a showing that the holder of the privilege communicated with a tax practitioner for the purpose of securing an opinion or tax advice on a tax matter.

The Work Product Privilege:

"The work product privilege protects written materials lawyers prepare 'in anticipation of litigation'. FED. R. CIV.. P. 26, (b) (3). By insuring that lawyers can prepare for litigation without fear that opponents may obtain their private notes, memoranda, correspondence, and other written materials, the privilege protects the adversary process. See In re Sealed Case, 323 U.S. App. D.C. 233, 107 F. 3d 46, 51 (D.C. Cir. 1997)" In re Sealed Case, 330 U.S. App. 368, 146 F. 3d 881, 884 (D.C. Cir 1998).

Explaining, the Court went on to say that "(t)he 'testing question for the work product privilege, .. .is 'whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation,' (citations omitted). For a document to meet this standard, the lawyer must at least have had a subjective belief that litigation was a real possibility, and that belief must have been objectively reasonable. (citations omitted). 146 F. 3d at 885.

The issue in In re Sealed Case was whether a "'specific claim' must have arisen at the time the lawyer prepared the documents before a court can conclude that they were in fact prepared 'because of the prospect of litigation ...." 146 F. 3d at 887. Under such circumstances, "... the absences of a specific claim represents just one factor that the courts should consider in determining whether the work-product privilege applies." 146 F. 3d at 887.

Documents Claimed To Be Subject To The Attorney Client Privilege

The Special Master has examined the following documents for which the attorney client privilege is claimed and, under the applicable law, makes the following findings and recommendations.

Documents 281 and 358 are faxes from a client to an attorney reciting facts and requesting an opinion or legal advice. They have been shown to contain the essential elements of the attorney client privileged document. It is recommended that they need not produced.

Document 606 is an e-mail from a KPMG member discussing legal advice given by the Office of General Counsel regarding a legal matter. It appears that the corporate lawyer was acting in a legal capacity providing legal advice and not business advice. The fact that the advice was given by' in-house counsel does not vitiate the privilege provided the communication concerned a legal matter and not a business matter or business advice. An examination of the document discloses that it falls within the attorney client privilege. It is recommended that it need not be produced.

Document 776 is a fax memorandum from a KPMG member to a client summarizing a conference telephone call with attorneys from two law firms, a member of another accounting firm and a third party regarding a statutory merger of two entities into a third entity. The memo discusses a reorganization to allow a contribution to a newly created private foundation. This memo discloses no legal opinions or advice. It merely summarizes investment and business matters. It has not been shown to be subject to the attorney client privilege. It is recommended that it be produced.

Documents 863 and 864 are an exchange of e-mails between KPMG members in which they discuss, among other things, legal advice requested and received from the Office of General Counsel about a legal matter. These documents have been shown to fall within the attorney client privilege. It is recommended that they need not be produced.

Document 865. This document consists of an e-mail exchange. It is a duplicate of Document 1028. Judge Hogan has ruled that he is "unable to determine if the e-mail(s) are related to legal advice or merely to a business decision". and, therefore concluded that KPMG had failed to establish that the privilege extends to Document 1028. Memorandum Opinion, Dec. 20, 2002, p 20. The same reasoning applies with respect to Document 865. It is recommended that it be produced.

Documents 866 and 1029 are duplicates and consist of an exchange of e-mails between KPMG personnel and an attached draft letter agreement to a third party. The e-mail was addressed to six KPMG personnel including the Office of General Counsel. The e-mails state that the attached agreement reflects changes made during an earlier telephone discussion.. The affidavit of John Bauman, an attorney in the Office of General Counsel (OGC) states " (T)he emails in document 866 contain ___'s request for my legal opinion... regarding the draft agreement with the ___ that is attached to the emails... The communications reflected in this document relate to my legal advice to KPMG..." However, nothing in the e-mails discloses any request for legal advice or assistance. Nor is any legal advice or assistance provided in any of the e-mails. Therefore, the privilege has not been shown to exist as to the e-mails. Nevertheless, the attached agreement was modified, according to Mr. Bauman's affidavit, based in part on his legal advice. Therefore, based on this affidavit, the attorney client privilege has been shown to exist as to the draft agreement. It is recommended that the e-mails be produced but that the draft agreement need not be produced.

Document 868 is an e-mail which discusses changes made to a document prepared by counsel. There is no showing that the document contains anything based on legal advice. Notwithstanding John Bauman's affidavit, the e-mail in my view discusses business matter changes made in order to bring finality to a business arrangement. The attorney client privilege has not been shown to be applicable. It is recommended that this document be produced.

Document 869 is an exchange of e-mails. This document contains legal advice by legal counsel regarding a legal matter following an inquiry by a client. It has been shown to fall within the attorney client privilege. It is recommended that it need not be produced.

Documents 882, 886, 1134, 1135, 1194 and 1195 are similar in that they contain a series of e-mails regarding an engagement letter. The series begins with Document 1135. There is no showing that this document contains any legal advice or opinion from a lawyer or request for legal assistance by a client in a legal proceeding. Moreover, there is no showing of tax advice to a tax payer so as to render the document privileged under § 7525. It is recommended that it be produced.

Document 1134 is the same as Document 1135 except for one additional e-mail. That additional e-mail, dated Aug. 5, 1998 at 10:52pm, requests legal advice beginning with the phrase " Is it permissible .. " (second sentence of the first paragraph) and concluding with the word "paid". (last sentence of the first paragraph). While these sentences contain a request for legal advice so as to bring them within the scope of the attorney client privilege, the remainder of the document neither requests or contains any legal advice or opinion. With the three sentences redacted in Document 1134, it is recommended that the document be produced in redacted form. There is no showing that tax advice was provided so as to bring them within the § 7525 privilege.

Document 882 contains the same e-mails found in Documents 1134 plus an additional e-mail from one KPMG member to another. Although this new e-mail, dated Aug 5, 1998 at 3:22 pm, discusses a legal issue and a lawyer from the Office of General Counsel's Office is copied in, the e-mail neither seeks response or assistance from a lawyer with respect to this legal issue. The issue, although legal, is discussed as it relates to a business matter. Even the e-mail itself begins with the phrase "As a business matter, you and ___ could agree to raise.... However, you should not agree to reduce...." The lay author's conclusion is a definitive factual statement not a shown to be subject to the attorney-client privilege. It is recommended that it be produced subject to the redaction discussed earlier with respect to the e-mail of Aug. 5, 1998 at 10:52pm (Document 1134). ( That same e mail is found in Document 882 but bears a transmission date of Aug 5, 1998 at 1:52pm)

Document 886 ( both the attorney client privilege and § 7525 privileges are claimed.) is the same as Document 882 (for which only the attorney client privilege is claimed) except for the inclusion of one additional e-mail dated Aug. 6, 1998. at 1:02pm from a lawyer in the OGC. That additional email has been shown to contain marginal legal advice in response to the request found in the previously discussed Aug. 5, 1998 at 10:52pm email. (Document 1134)(The e-mail of Aug 5, 1998 @ 10:52 am in Document 1134 is the same e-mail dated Aug 5, 1998 at 1:52 pm in Document 886). Since this document differs from Document 882 only by the inclusion of the e-mail of Aug. 6 which has been shown to be marginally subject to the attorney client privilege, it is recommended that it need not be produced. The new e-mail of Aug 6 contains no tax advice on a tax matter. Therefore, the § 7525 privilege has not been shown to be applicable.

Document 1194 is a continuation of the e-mails found in Documents 1134, 1135, 882 and 886 with a response from a lawyer in the Office of General Counsel dated Aug 15, 1998 at 8:34am which contains a legal opinion. This e-mail has been shown to be subject to the attorney client privilege. It is recommended that this document need not be produced.

Document 1195 is the last in this series of e-mails It memorializes a decision transmitted to a client. This e-mail contains no request for legal advice or opinion on a legal matter nor is any provided. It has not been shown to be subject to the attorney client privilege. It is recommended that this document be produced subject to the redaction in the e-mail discussed with respect to Document 1134.

Documents 1019, 1022 and 1023 are similar to Documents 1020, 1.021 1024 and 1025 about which Judge Hogan said that " the Court cannot confidently state that the privilege applies". The same can be said with respect to Documents 1019, 1022, and 1.023 which appear to relate to business, matters rather than to contain legal advice. The Special Master "cannot .. confidently state that the privilege applies". Memorandum Opinion, Dec. 20,2002, pp 19, 20. It is recommended that they be produced.

Document 1026 is part of a series of e-mails exchanges referring to conversations with legal counsel regarding a draft agreement. It is the same as Document 1028 except for the inclusion of three additional e-mails. Judge Hogan concluded that he was unable to find the attorney client privilege applicable to Document 1028. The same is true of Document 1026 with the exception of the last sentence in an e-mail dated Aug. 20 at 10:10 am which makes reference to legal counsel; that one sentence may be redacted. It is recommended that Document 1026 be produced with the one sentence redaction.

Document 1027 contains portions of Documents 866 and. 1026. Based on the affidavit of John Bauman, OGC, the attachment has been shown to fall within the scope of the attorney client privilege (see discussion of Document 866). The attachment is an amendment to an operating agreement. The e-mail discusses business matters and contains no legal advice or opinion other than the one innocuous sentence referred to in the discussion of Document 1026. It is recommended that this document be produced subject to the one sentence redaction and the redaction of the attached operating agreement.

Document 1030 is an e-mail. Although it is claimed to be privileged, it contains no legal advice or opinion but rather an editorial revision. This document has not been shown to be privileged. It is recommended that it be produced.

Document 1031 is an e-mail cover sheet accompanying a draft document The privilege logs asserts that the e-mail and attachment are subject to the attorney client privilege. The e-mail, which is directed to legal counsel as well as others, requests comments from each recipient. In effect the sender is requesting each addressee to comment from his expertise perspective. Thus, the lawyer addressee is requested to comment on the legal aspects of the draft attachments. There is a sufficient showing to invoke the attorney client privilege with respect to the attachments. However, the e-mail cover sheet has not been shown to be subject to the attorney client privilege. It is recommended that the e-mail cover be produced but that the draft attachments to the email need not be produced.

Documents 1032 and 1033 are similar and consist of e-mails attached to which are several versions of a draft agreement. The e-mails discuss which version., from a business perspective, should be used. Although legal counsel is copied in no legal advice or opinion is sought, notwithstanding John Bauman's, OGC, belief as expressed in his affidavit, instead business related comment is sought. The e-mail requested the recipients to select one of the three options offered from a business standpoint. There is an insufficient showing to rule that these documents are subject to the attorney client privilege. It is recommended that they be produced.

Document 1121 and 1122 are a duplicate series of e-mails between KPMG personnel. The initial e-mail discuss in general terms an agreement form an d says that the form was transmitted for comment. These documents did not contain the agreement form. Although the OGC is copied in and asked to comments none of the reply e-mails contain any response from legal counsel and the request for comment is very general and not specific. The e-mails themselves contain no facts upon which a legal opinion is sought and no legal opinion is provided. These documents have not been shown to fall within the scope of the attorney client privilege. It is recommended that these documents be produced.

Document 1123 is a hand written note memorializing a discussion between KPMG personnel including legal counsel. John Bauman, OGC, states in his affidavit that his legal opinion was requested with respect to one area and that the document reflects his legal advice. It is difficult to read these handwritten cryptic notes but based on the affidavit, the attorney client privilege has been shown to established. It is recommended that this document need not be produced.

Documents 1126, 1127 and 1128 are similar e-mail cover sheets. Although legal counsel is copied in, the e-mails appear to discuss business related matters rather than legal issues or matters. The agreements to which the e-mails refer are not a part of this document. Therefore, based solely on the e-mails, KPMG has not shown that the attorney client privilege is applicable. It is recommended that these documents be produced.

Document 1147 is similar to Document 1144. Judge Hogan ruled that Document 1144 has not been shown to be privileged. The same is true of Document 1147. It is recommended that it be produced.

Document 1163 is a cover letter e-mail with a draft analysis of a tax matter. The document was forwarded to legal counsel for comment or opinion. The document communicates information to a lawyer for the purpose of obtaining a legal opinion or for assistance in a legal matter. The necessary showing has been made to protect this document from disclosure under the attorney client privilege. It is recommended that it need not be produced.

Documents 1169,1170,1171,1172 and 1173 are a series of e-mail exchanges similar to Documents 1020, 1021, 1024, 1025, 1028, 1145 and 1146 discussed by Judge Hogan in his analysis of the attorney client privilege on pages 19 to 21 of his memorandum opinion. Although legal counsel is included in the exchange, it is not clear that counsel's involvement was other than as a business advisor. It can not be said with any degree of confidence that legal advice or assistance was sought or given so as protect these document under the attorney client privilege. It is recommended that they be produced.

Document 1178 is an e-mail with a copy of a draft alliance agreement. The attachment is claimed to be privileged. Although legal counsel was included in the. distribution, no showing has been made that legal advice or counsel was sought or given. The attachment is nothing other than a template business agreement. KPMG has not made a sufficient showing that this document is privileged under the attorney client privilege. It is recommended that it be produced.

Document 1179 is an e-mail similar to Document 1025. However, it contains a multi-paged form attachment. The form is a business document prepared by a sponsoring partner and circulated among various KPMG personnel for comment on a prospective business relationship. It is strictly a business document which seeks no legal advice, opinion or assistance. There has been an insufficient showing that this document is subject to the attorney client privilege. It is recommended that it be produced.

Documents 1181, 1182, 1184, 1185, 1186, 1187, 1188, 1215 and 1216 consist of a series of a-mails written over a two week period of time The e-mails discuss a draft of a marketing agreement. The draft is not attached nor is there anything other than a fleeting reference to its contents. These e-mails discuss what appears to be business matters. However, the agreement apparently contained some matter which attracted legal counsel's attention because he responded with three e-mails only one of which contains what might be considered legal advice. That advice is contained in an e-mail dated Aug. 11, 1998 at 6:01 pm. KPMG has not made a sufficient showing that any other portion of the documents is protected from disclosure under the attorney client privilege. It is recommended that these documents be produced subject to the redaction of the Aug. 11, 1998 at 6:01 pm e-mail from legal counsel.

Document 1183 consists of the same a-mails contained in Documents 1181 and 1182 plus an additional e-mail from legal counsel. The additional e-mail contains no legal advice, opinion or assistance. Counsel's comments relate to issues arising under accounting. guidelines and to business related matters. The Aug 11, 1998 at 6:01 pm discussed with respect to Document 1181 is part of this package of e-mails and may be redacted. The remaining e-mails including the new e-mail of Aug. 13, 1998 at 12:23 pm from counsel have not been shown to be protected from disclosure under the; attorney client privilege. It is recommended that this document be produced subject to redaction.

Document 1191 is similar to Document 1145. Judge Hogan ruled that KPMG has not shown that Document 1145 is subject to the claimed attorney client privilege. The same privilege is sought to preclude production of Document 1191. The reasons stated by Judge Hogan are equally applicable to this document. KPMG has not shown that this document is subject to the attorney client privilege. It is recommended that i' be produced.

Document 1198 is an exchange of e-mails between KPMG personnel regarding the terms of a confidentiality agreement. The agreement is not attached and the e-mails themselves neither seek nor offer any legal advice or opinion. KPMG has not made a sufficient showing that this document is privileged. It is recommended that it be produced.

Document 1199 contains three copies of nine pages of e-mails plus a cover sheet. The e-mails contain a discussion of an agreement with Presidio as well as the treatment of OPIS matters. Although the whole document is claimed to be subject to the attorney-client privilege, only two of the e-mails even make reference to legal counsel. The third paragraph in an e-mail dated June 5, 1998 at 11:40AM (FOP 037251) discloses legal advice regarding a legal matter and the fourth and last paragraph of an email dated June 3, 1998 at 1:13PM (FOP 037251) seek legal advice. While the fourth paragraph in the June 3, 1998 e-mail (FOP 037251) discusses legal relationships, there is no showing that this terminology was provided by legal counsel in response to a request.

However, the paragraph concludes with a determination to seek legal counsel with respect to this issue. Thus, the paragraph has been shown as a request for legal assistance..

In the last paragraph of the e-mail dated June 3, 1998 at 1:13PM, the author requests the legal opinion of legal counsel with respect to "the attachment"; the document does not contain "the attachment". However, the same e-mail including the attachment is found in Document 1221. Read collectively a showing has been made of a specific request from legal counsel for legal advice regarding a legal matter. The remainder of the document neither seeks nor provides any legal advice or opinion so as to subject it to the attorney-client privilege. It is recommended that Document 1199 be produced subject to the redaction of the second paragraph of the e-mail of June 5,1998 at 11:40AM (FOP 037251), and the fourth as well as last paragraph of the e-mail dated June 3, 1998 at 1:13PM (FOP 037251) including the duplicate copies of that e-mail found at pages FOP 037247 through 037249, FOP 037257 through 037259 and FOP 037267 through 037269.

Document 1200 consists of another ten pages of e-mails including the June 3 e-mail referred to in the discussion of Document 1199. "(T)he attachment" referred to in the June 3 e-mail is not included in this document (FOP 037281 and FOP 037286), but as discussed earlier it is attached to another similar document Therefore, the discussion and recommendation made with respect to that portion of Document 1199 is equally applicable to this document. Aside from the three paragraphs previously discussed (the last paragraph of the June 5,1998 at 11:40am e-mail, the fourth and last paragraphs of the June 5, 1998 at 1:13pm), none of the e-mails have been shown to be subject to the attorney-client privilege. The e mails discuss business matters and to the extent they discuss legal issues, it is a layman's discussion and not that involving professional legal advice or assistance. Therefore, it is recommended that Document 1200 be produced subject to redaction of the last paragraph of the June 5 e-mail and the fourth paragraph and last paragraphs of the June 3 e-mail (FOP 037280 and 037281; FOP 037285 and 037286).

Document 1201 consists of two e-mail messages and an attached confidentiality -agreement. The e-mails disclose legal advice from legal counsel on a legal issue. This document has been shown to be protected from disclosure by the attorney client privilege. It is recommended that the document need not be produced.

Document 1202 consists of duplicate copies of a fax cover sheet to which is attached a letter with hand written comments. This document from the Office of General Counsel to a KPMG member provides legal advice on a legal issue. It has been shown to be protected from disclosure by the attorney client privilege. It is recommended that it need not be produced.

Document 1203 consists of duplicate copies of an e-mail from associate general counsel to a KPMG member containing legal advice on a legal issue. It has been shown to be subject to the attorney client privilege and it is recommended that it need not be produced.

Document 1204 is a series of e-mails some of which contain hand written notes. The e-mails dated June 3 at 1:13PM (Document 1199) and June 5 at 11:40AM (Document 1199) are contained in this document. What was said about those e-mails when discussing Document 1199 is equally applicable here. Aside from those portions of the June 3 and June 5 e-mails ( FOP 037301 and FOP 037306) previously discussed with respect to Document 1.199, it has not been shown that the remainder of the e-mails and hand written notes in Document 1204 either seek or provide legal advice, opinion or assistance on a legal matter. Therefore, it is recommended that Document 1204 be produced subject to the redactions discussed with respect to Document 1199.

Document 1205 contains many of the same e-mails contained in Documents 1199, 1200 and 1204 with hand written notes. It has not been shown that hand written notes contain any request for legal opinion on a legal matter so as to subject the document to the attorney-client privilege. The e mails discuss business matters and policies and contain neither a request for or advice from legal counsel on a legal matter. It is recommended that this document be produced subject to the redaction of the fourth and last paragraph of the June 3 e-mail (FOP 037314 and FOP 037318) discussed with respect to Document 1199( the June 5 e-mail is not included in this batch).

Document 1207 is an exchange of e-mails between KPMG personnel. Only the email dated Sept. 1, 1998 at 1:06PM from legal counsel (FOP 037326 and FOP 037327) contains legal advice with respect to a legal matter. The remainder of the document. discusses business matters not protected by the attorney client privilege. It is recommended that this document be-produced subject to the redaction of the e-mail of Sept. 1, 1998 at 11;06 PM.

Document 1208 is an exchange of e-mails which discuss an attached engagement letter (not attached to the document) and anti-virus software. There is no showing that this document contains a request for legal opinion from legal counsel regarding a legal matter so as to protected from disclosure by the attorney-client privilege. It is recommended that it be produced.

Document 1209 is an e-mail to which is attached a detailed analysis of the tax matter. The e-mail itself is merely a covering letter sent to the National Partner in Charge. The e-mail has not been shown to be subject to the attorney client privilege. However, the attachment was also sent to legal counsel for comment, advice and opinion on a legal matter. The attachment to the e-mail has been shown to be protected from production by the attorney client privilege. It is recommended that the e-mail portion of the document be produced but that the attached analysis of a legal issue need not be produced.

Document 1211 consists of three email and a KPMG prospective business relationship form. The business relationship form is strictly a business matter form and appears to be a prelude to the preparation of a contract. The business relationship form discusses no legal issues or matters. It has not been shown to be protected from production by the attorney client privilege. The e-mails directed to legal counsel, among others, request opinions about the contents of an agreement (not the attached business relationship form) with an entity with whom KPMG hopes to form a business relationship. However, the agreement referred to in the e-mails was not a part of this document and the. e-marls themselves disclose no facts or factual matters upon which a legal opinion is sought. At best the e-mails merely reference sections of the agreement by number and letter but disclose no other factual information. If the e-mails were accompanied by the agreement the combination may very well have been shown to be protected by the attorney-client privilege. But the e-mails, in and of themselves, fail to disclose facts or information about which a legal opinion or advice is sought. These e-mails are merely a discussion of business issues prior to entering into a contractual agreement. It is recommended that this document be produced.

Document 1212 contains two e-mails in which KPMG members discuss the status of an agreement. In-house counsel is copied in on the response to an inquiry. Although a revised agreement with a third party is referred to the contents of that agreement are not disclosed. Nothing in the exchange discloses any facts upon which legal advice or opinion was requested nor do they disclose any legal advice or opinion on a legal matter. This exchange of e-mails merely resolves the status of a business matter. This document has not been shown to be protected from disclosure by the attorney client privilege. It is recommended that it be produced.

Document 1213 is the same as Document 121.2 except for one additional short email requesting a copy of the agreement discussed in Document 1212. The additional email adds nothing to the document so as to preclude its production. It is recommended that this document be produced.

Document 1214. This series of e-mails between KPMG members discusses issues related to the consummation of an agreement with a third party as well as the status of OPTS. The e-mails contain no request for legal advice or opinion; nor do they contain any legal advice or opinion on a legal matter. The e-mails relate solely to a discussion of business matters and the difficulties surrounding a resolution of business issues. There has been no showing that this document is subject to the protection of the attorney client privilege. It is recommended that it be produced.

Document 1217 is an e-mail attached to which is an engagement letter. The attachment is a final product incorporating previous changes recommended in a series of e-mails among KPMG members including the Office of General Counsel. There is no showing that legal advice is being sought with respect to the final product. This now becomes a business document involving a business matter and has not been shown to be subject to the protection of the attorney-client privilege. It is recommended that it be produced.

Documents 1218, 1219 are e-mail exchanges dated June 5, 1998 at 1:59pm and 2:20pm to and from legal counsel regarding a legal matter in which a legal opinion is given. These documents have been shown to fall within the protection of the attorneyclient privilege. It is recommended that they need not be produced.

Documents 1220,1.222, 1223,1224,1225,1229 and 1233 consist of a series of emails between KPMG members. The June 3 e-mail found in Document 1199 is part of these documents as well as the June 4 at 11:13 AM e-mail found in Document 1200. None of these documents have been shown to be subject to the attorney-client privilege other than the fourth and last paragraphs of the June 3 e-mail (FOP 037408 and FOP 037421-22 and FOP 037437 and FOP 037434 and FOP 037440 and FOP 037 473 and 7: FOP 037506) discussed previously with respect to Document 1199. The e-mails themselves consist of a discussion of business related matters and virus filters between two businessmen. Although legal counsel is copied in, legal comment, advice or opinion is sought only with respect to the attachment which is not a part of these documents. It is recommended that these documents be produced subject to redaction of the fourth and last paragraphs of the June 3 e-mail.

Document 1221 and 1228. The only difference between these documents and Document 1220 is the inclusion of the draft engagement letter and some additional e-mail exchanges. The June 3 e-mail request legal counsel's input on that letter, a legal document. The fourth paragraph of that e-mail (FOP 037412 and FOP 037462-63) (previously discussed with respect to Document 1199) also seeks legal advice on a legal matter. The respondent has shown that a portion of these documents are subject to the attorney client privilege. It is recommended that they be produced subject to the redaction of the fourth and last paragraphs of the June 3 e-mail and the attached engagement letter.

Document 1226, 1227, 1230, 1231 and 1232 are similar and consist essentially of the same e-mails found in Documents 1220 through 1225. However, they include an attachment not found in the other documents. This attachment is not the engagement letter found. in Document 1221. It is an instruction sheet dated June 28, 1998 and first made reference to in an e-mail dated June 29. This attachment relates to business matters. It discusses KPMG's business policies. These documents have not been shown to be subject to the attorney client privilege. It is recommended that these documents be produced subject to the redaction of the fourth and last paragraphs of the June 3 e-mail (FOP 037446 and FOP 037455 and FOP 037 479 and FOP 037488 and FOP 037498) discussed earlier.

Document 1234 consist of an exchange of e-mails between two KPMG members to which is attached three draft alternative engagement letters. The e-mails discuss the billing and fee aspects of the drafts; issues which involve business related matters. Although legal counsel is copied in as are other KPMG members, legal advise or opinion is not requested or provided. It appears that legal counsel are copied for informational purposes notwithstanding John Bauman's (OGC) belief that by copying him in on the e-mail his legal assistance was being sought. It has not been shown that this document is subject to the attorney client privilege. It is recommended that it be produced.

Documents 1235, 1236 and 1237 are an exchange of e-mails. The initial e-mail (Document 1235) seeks comment on a monetary change and a proposed language change. to an engagement letter. The response is from a KPMG member (Document 1236). Legal counsel's response is found in Document 1237. The initial e-mail seeks advice on a matter which is both business and legal. Legal counsel provided legal assistance. The documents have been shown to be subject to the attorney client privilege. It is recommended that they need not be produced.

Document 1238 is an e-mail inquiry from a KPMG member to other members with a copy to legal counsel. The e-mail concerns a business matter inquiry. There is no showing that legal advice or opinion has been requested or provided. KPMG has failed to show that this document is subject to the protection of the attorney client privilege. It is recommended that it be produced.

Document 1239 is an exchange of e-mails which report a KPMG member's reaction to a meeting with a representative of a state taxing authority. It neither seeks nor provides any legal advice. It is in the nature of an informational memorandum. It has not been shown to be subject to the protection of the attorney client privilege. It is recommended that it be produced.

Document 1240 is an exchange of e-mails in which an attorney from the Office of General Counsel merely conveys to a KPMG member facts acquired from a source other than his client. The document contains no legal advice or opinion. See: In Re Sealed Case. 737 F2d 94, 98-99, (D.C. Cir. 1984), KPMG has not shown this document to be. protected by the attorney client privilege. It is recommended that it be produced.

Document 1241 is an e-mail from a KPMG member to others, including associate general counsel, conveying facts learned from a third party source. The e-mail seeks no legal advice or opinion on a legal matter. It discusses one aspect of the contents of a third party's engagement letter. It has not been shown to be subject to the attorney client privilege. It is recommended that this document be produced.

Document 1242 is another e-mail exchange between KPMG members in which factual information is transmitted. Although one of the e-mails refers to the attached draft document that draft. is not attached to Document 1242. Moreover, the draft being discussed was prepared by the in house counsel of a third party, not KPMG's counsel. Although legal counsel is copied in on this e-mail, it appears that this is for informational purposes since no legal advice or opinion on a legal matter is either sought or given. It has not been shown to be subject to the attorney client privilege. It is recommended that it be produced.

Document 1245 and 1248 are similar in that each contains the same c-mails. Document 1248 contains one additional e-mail in incorporating the e-mails contained in Document 1245. These documents consist of an e-mail to legal counsel requesting legal advice or opinion on a legal matter. The reply e-mail of counsel specifically responds to the original inquiry. These documents have been shown to be subject to the attorney client privilege. It is recommended that they need not be produced.

Document 1246 is an a-mail to which is attached a proposed agreement. The email specifically asks legal counsel for a legal opinion regarding the attached draft agreement. It has been shown to be subject to the attorney client privilege. It is recommended that it need not be produced.

Document 1247 is an exchange of e-mails in which legal counsel is asked for opinion or advice regarding a legal matter. Although counsel's response is not part of this document, the e-mails themselves make reference to certain factual matters upon which legal advice is sought. This document has been shown to be subject to the attorney client privilege. It is recommenced that it need not be produced.

Document 1258 consists of six e-mail messages. Although an attached draft document is referred to, the draft is not part of Document 1258. Two sentences, one in each of two e-mails make reference to a discussion with legal counsel about a legal matter - the e-mail dated August 20 at 10:10 AM and the penultimate paragraph of an email dated 8/20 at 9:35 AM beginning with the name "Baumann". The remainder of the. document discusses business matters and has not been shown to be privileged from disclosure under the attorney client privilege. It is recommended that this document be produced subject to the two redactions

Document 1259 is similar to Document 1258. It too refers to attachments not part of the document and contains two short e-mails not found in Document 1258 and omits two e-mails contained in Document 1258. Except for the penultimate paragraph of the email dated 8/20 at 9:36 AM, the document has not been shown to be protected from disclosure by the attorney-client privilege. The discussions are of business matters. It is recommended that the document be produced subject to the redaction of the paragraph of the 8/20 e-mail which starts with the name "Baumann".

Document 1260 is similar to Document 1258 except that it excludes two short emails found in Document 1258 but includes a draft of one of the attachments made reference to in the e-mails contained in this document as well as Document 1258. The draft attachment is an agreement which was sent to legal counsel for legal comment. Although this document does not disclose the comment, if any, counsel may have made with respect to the attached draft agreement, it is a legal document sent to counsel for legal advice or opinion and, hence, is protected from disclosure by the attorney-client privilege. However, one of the e-mails does make reference to counsel's comment with reference to the second attachment which is. not part of this document. That comment is. the same one referred to in the discussion of Document 1258 and found in the penultimate paragraph of the e-mail dated 8/20 at 9:35 AM. Another e-mail dated August 20 at 7:11 AM also discusses legal counsel's opinion on a legal matter. It is recommended that this document. be produced subject to the redaction of the attached draft agreement, the redaction of the penultimate paragraph of the 8/20 e-mail which begins with the name "Baumann" and the redaction of the August 20 at 7:11 AM e-mail.

Documents 1261 and Document 1262 are similar to Document 1260. Document 1261 contains two e-mails which serve as covering letters for an attached draft agreement, the, same agreement attached to Document 1260. Document 12,52 contains only one of the e-mails. The e-mails contain nothing protected by the attorney-client privilege. Therefore, it is recommended that they be produced. However, the draft agreement attached to both documents is the same one referred in the discussion of Document 1260. That draft agreement was referred to counsel for legal comment. It is recommended that the e-mails be produced subject to the redaction of the attached draft agreement.

Documents 1263, 1264 and 1265 are similar and consist of an e-mail exchange between KPMG members regarding information received from legal counsel. No legal advice or opinion was given. Legal counsel's transmission consisted solely of factual information obtained from a source other than a client. The communication has not been shown to be subject to the attorney client privilege. It is recommended that the documents be produced.

Documents Claimed to Be Subject To The 26 U.S.C. § 7525 Confidentiality Privilege

The Special Master has examined the documents for which the § 7525 confidentiality privilege is claimed and, under the applicable law, makes the following findings and recommendations.

Document 11 missing

Document 46. This document is a memorandum from a KPMG member memorializing a conversation with a client discussing the effect of proposed tax legislation. This document has been shown to be subject to the statutory privilege against disclosure since it provides tax advice to a taxpayer client. It is recommended that the document need not be produced.

Document 60A is similar to Documents 22 and 45. Judge Hogan has ruled that these documents have not been shown to have been protected from disclosure by § 7525 because they were prepared in conjunction with the preparation of a tax return. The respondent has not shown that Document 60A should be treated any differently. It is recommended that Document 60A shall be produced

Documents 76, 82, 92, 234, 302, 388, 417, 440, 441, 445, 499, 530, 631, 633, 652, 655, 686, 692, 693, 694, 695, 698, 699, 700, 703, 705, 712, 722, 730; 743, 789, 816, 818, 845, 873, 889, 931, 947, 952, 957, 962, 1056,1072,1088, 1088A and 1119. These similar, if not identical documents, are memorandum from a KPMG member to another KPMG member or the file memorializing a conversation with tax payer clients and in some instances, their attorney, in which KPMG furnished tax advice to investor/clients about a tax matter. (Doe 76, 82, 150,160, 440, 652, 722, and 743, attorney or attorney and client), (Doc. 46, 92,125,146 198, 234, 302, 388, 417, 441, 445, 499, 530, 631, 633, 655, 686, 692, 693, 694, 695, 698, 699, 700, 703, 705, 712, 730, 789, 816, 818, 845, 873, 889, 931, 947, 952, 957, 962, 1056, 1072, 1088, 1088A and 1119, taxpayer client). These documents have been shown to be fall within the scope of § 7525 protecting as confidential tax advice furnished a taxpayer by a federally authorized tax practitioner. It is recommended that they need not be produced.

Document 164 is a multi-paged document from KPMG to a client providing tax advice and opinion on an investment strategy. However, only a portion of this document has been shown to contain tax advice and opinion (FOP 007565 through FOP 007570) so as to subject it to the statutory privilege. The remainder of the document consists of fax cover sheets and investment transaction summaries (FOP 007571 through FOP 007577 and FOP 007583 through FOP 007590), fax instructions regarding bank transfers ( FOP 007578 through FOP 007581) and an e-mail regarding the respective interest of Evergreen partners in an OPIS transaction (FOP 007582) which have not been shown to be privileged under § 7525. Therefore, it is recommended that only pages FOP 007565 through FOP 007570 which contain tax advice and opinion need not be produced, the remainder of the document has not been shown to fall within the statutory privilege. It is recommended that Pages FOP 007571 through FOP 007590 be produced.

Document 171. This document is an intra-KPMG e-mail which discusses changes needed to a client opinion letter based on a KPMG template (Document 1005). The underlying opinion letter for this client is Document 1005. In my Initial, Report and Recommendation. this underlying opinion letter was found to be identical to Documents 45 and 159 except for names, dates, amounts invested and the name of the investment advisor. Judge Hogan ruled that Documents 45 and 159 have not been shown to be subject to the § 7525 privilege because it was prepared to be used in conjunction with the preparation of a tax return. The changes to that opinion letter are in no better position than the template letter itself. The changes were undertaken in order to further the documentation prepared for use with or in support of a tax return. KPMG has not shown that this document provided tax advice to a taxpayer so as to subject it to the § 7525 privilege It is recommended that Document 171 be produced.

Document 218. This document is similar to Document 22 in most respects. Judge Hogan found that Document 22 was not shown to fall within the protection of § 7525. The same holds true for Document 218. It is recommended that this document be produced.

Document 316. This document is a memorandum from the NY office of KPMG to personnel in other offices with instructions regarding the deletion of certain representations in a client's opinion letter. Nothing in this document appears to fall within the protection of the § 7525 privilege. It merely contains the factual representations of a third party. It contains no factual information from a tax client so as to render the document privileged under § 7525. It is recommended that this document be produced.

Document 337 is claimed to be outside the scope of the summons. I believe it does fall within the summons request. However, the document appears to fall within the § 7525 privilege since it is a response by a tax preparer to a taxpayer's inquiry for tax advice regarding the treatment of certain funds. It is recommended that this document need not be produced..

Document 373 (1157A), 374 (1159A) and 473 (1160A) are related and therefore treated together. These documents appear to fall within the summons request. Document 373 also referred to as Document 1157A is described as a letter from KPMG to a client. They are claimed to be privileged since they allegedly contain tax advice. An examination of the documents supports their exemption under § 7525. They do provide the client with tax information as well as opinions and conclusions. It is recommended that these documents need not be produced.

Document 374 also designated as Document 1159A is undated and contains no. identifying information. The privilege log states that it came from the files of a named client. It does provide a detailed discussion as well as conclusions with respect to a portion of the Internal Revenue Code and when read in conjunction with Document 473 also referred to as Document 1160A it appears that it came from the same file as Document 473. These documents appear to fall within the exemption of § 7525 since 3.3 they provide tax advice or opinion with respect to a tax issue following inquiry by a tax payer client. It is recommended that they need not be produced.

Document 473 also referred to as Document 1160A is a letter from a KPMG partner to a tax client in response to a request for tax advice. The letter does contain detailed tax advice and falls within the exemption of § 7527. It is recommended that these documents need not be produced.

Document 375. This document is described in the log as an e-mail from one KPMG member to another discussing tax advice for a client. The document contains no tax advice to a client taxpayer but rather instructional information from one KPMG office to another office. There is no showing that this document is subject to protection under § 7525. It is recommended that this document be produced.

Document 377, 379 and 384. These documents are described in the log as confidential letters to a client concerning tax advice. Examination discloses that they are cover letters to clients transmitting invoices from a law firm with advice on how to treat the bill on the tax return. The letters contain information regarding the preparation of a tax return. The Respondent has not shown that they contain information rendering them privileged under § 7525. It is recommended that they be produced.

Document 392. This document is an e-mail exchange between KPMG members concerning a minor change to an opinion. letter (Document 45) previously determined not to have been shown to be privileged. This document contains no tax advice so as to render it privileged under §7525. It is recommended that this document be produced.

Document 393 is an e-mail exchange between KPMG members. The e-mail merely provides some factual information and requests answers to some policy issues. It contains no tax advice and has not been shown to be subject to the § 7525 privilege. It is recommended that the document be produced.

Document 492. This document is alleged to contain tax planning advice. A review discloses that it is merely a covering letter for a billing invoice. The so called tax advice relates to the preparation of a tax return. It is recommended that it be produced.

Documents 542 and 543 relate to editorial changes requested by a client to a KPMG opinion letter (Document 544). The Special Master has previously determined that Document 544 is very similar to Documents 45 and 159 which were claimed to be privileged under § 7525.( Initial Report and Recommendation p. 5). Judge Hogan has ruled that Documents 45 and 159 have not been shown to be subject to the §7525 privilege ( Memorandum Opinion, Dec. 20, 2002, p.15). Since Documents 542 and 543 merely relate to editorial changes to Document 544 they stand in no better position than Document 544 except for the second paragraph of Document 543 which discusses language contained in an attorney opinion letter (Document 442) found by Judge Hogan to be subject to the attorney-client privilege (Memorandum Opinion, Dec. 20, 2002, p.16). It is recommended that Document 542 be produced and that Document 543 be produced subject to the redaction of the second paragraph in the text of that email beginning with the word "Also" and ending with a telephone number.

Document 546 is a cover letter enclosing a revision of two pages of a document almost identical to Document 45 found by Judge Hogan not to be protected by § 7525 from disclosure ( Memorandum Opinion, Dec. 20, 2002, p 15).. Since a document similar to Document 546 has been found not to be subject to the § 7525 privilege, revisions to Document 546 are likewise not privileged under § 7525. It is recommended that this document be produced.

Document 547 is a letter from KPMG to a client discussing tax advice and planning. It appears to fall within the privilege of non-disclosure accorded by § 7525. Therefore, it is recommended that this document need not be produced.

Documents 549 and 550 are letters to a tax client offering tax information and advice on a tax matter by a tax advisor. Accordingly, they are protected from disclosure pursuant to § 7525. It is recommended that they need not be produced.

Documents 551 and 556 are memoranda between KPMG personnel concerning minimal tax advice provided a client. Therefore, they arguably fall within the protection of § 7525. It is recommended that they need not be produced.

Document 555 is a letter from a tax client to a tax preparer regarding a tax matter. It falls within the protection of § 7525. It is recommended that it need not be produced.

Document 558 is a hand written memo to the file memorializing a conversation with a tax client regarding a tax matter. It is protected from disclosure under § 7525. It is recommended that it need not be produced.

Documents 568, 569 and 571 are duplicate letters from a tax advisor to a tax payer regarding a tax matter. They discuss certain financial transactions and provide tax advice. They are protected from disclosure under § 7525. It is recommended that they need not be produced.

Document 573 are hand written notes of a tax advisor regarding a conversation with a tax payer client about a tax matter. This document has been shown to be privileged under § 7525. It is recommended that it need not be produced.

Documents 574 and 578 are duplicate copies of a memo memorializing a conversation between a tax advisor and a tax payer client regarding a tax matter. They are similar to numerous other memoranda memorializing conversations with tax payer clients which have been found to be subject to protection from disclosure Under § 7525. It is recommended that documents 574 and 578 need not be produced.

Document 576 is a memo said to have been found in the files of a tax payer client. It contains tax advice from a tax advisor regarding a tax matter. It has been shown to fall within the § 7525 privilege. It is recommended that it need not be produced.

Document 577 is a memo of a conversation by KPMG personnel with a lawyer regarding a legal and tax issue in which the lawyer furnished advice regarding their mutual client. Since it contains tax advice about a tax matter it has been shown to fall within the scope of the privilege accorded under §7525. It is recommended that it need not be produced.

Documents 584 and 585 are duplicate copies of a letter similar to Documents 568 and 569 and Documents 586 and. 587 are duplicate copies of Documents 584 and 585. It is recommended that they need not be produced for the reason stated with respect to Documents 568 and 569.

Document 597 is a letter to a tax payer from a tax advisor providing tax advice relating to a financial transaction. It has been shown to be protected under § 7525. It is recommended that it need not be produced.

Document 632 is a memorandum of a discussion of a tax matter by a tax advisor with a tax payer client. The memo is signed by the tax payer. This document falls within the scope of § 7525. It is recommended that it need not be produced.

Document 647 is an intra-office email between KPMG. It contains no tax advice and therefore is outside the scope of § 7525. It is recommended that this document be produced.

Document 670 is a letter from a tax advisor to a tax payer client responding to a question raised by the tax payer about a tax matter. The tax advisor provides the tax payer with his opinion on a tax matter. The document falls within the scope of § 7525. It is recommended that this document need not be produced.

Documents 679, 680, 681, 687 and 702 are duplicate or similar fax memos and invoices. They provide instructions with respect to the payment of the invoice but no substantive tax advice. This is information for help in the preparation of a tax return. These documents have not been shown to be within the scope of the § 7525 privilege. It is recommended that they be produced.

Document 733 and 734. This duplicate one page memo (the memo itself indicates that it is 1 of 2 pages) from one KPMG member to another is claimed to be privileged under § 7525. However, the memo provides no tax advice to a taxpayer client. It is. merely a cover sheet accompanying a "schedule" to be submitted to the Franchise Tax Board to support a claimed deduction on a tax return. It has not been shown to fall within the scope of the protection accorded by § 7525. It is recommended that this document be produced.

Document 779A contains a fax cover sheet from KPMG to a lawyer for a mutual client. The document also contains a portion of Document 45. Judge Hogan has determined that document 45 has not been shown to be protected by § 7525 from disclosure (Memorandum Opinion, Dec. 20, 2002, p.15). The fax cover sheet has not been shown to contain any substantive tax advice so as to bring it within the § 7525 privilege. It is recommended that this document be produced.

Document 848 is an intra-office memo discussing tax advise provided a tax payer client on a tax matter by a tax advisor. It has been shown to fall within the claimed § 7525 privileged. It is recommended that this document need not be produced.

Documents 849, 850, 851, 852, 853, 854, 855, 856, and 857 are duplicate copies of an exchange of emails between an investment advisor for a KPMG tax payer client and a tax advisor providing tax advice regarding a tax matter. This exchange of emails has been shown to fall within the scope of § 7525. It is recommended that these documents need not be produced.

Document 872 is similar to Document 44 in form and substance. Judge Hogan ruled that Document 44 has not been shown to fall within the scope of the § 7525 privilege (Memorandum Opinion, Dec. 20, 2002, pp. 13 15). This document should be treated similarly. It is recommended that it be produced.

Document 877 is a letter from a KPMG partner to a tax payer client providing tax advice on a tax matter. It has been shown to fall within the scope of the § 7525 privilege. It is recommended that this document need not be produced.

Document 878 is a draft of the first and last pages of an opinion letter to a tax client. Judge Hogan found that a similar complete letter (Document 22) was not shown to fall within the privilege contained in § 7525. This draft falls in the same category. It is recommended that the document be produced.

Document 879 is a memorandum from a KPMG partner to a tax payer client providing tax advice on a tax matter. It has been shown to fall within the scope of the § 7525 privilege. It is recommended that this document need not be produced.

Document 881 also referred to as Document B469 is similar to Documents 22. and 44. Both of these documents have been found by Judge Hogan to be outside the scope of § 7525 because they were "prepared in conjunction with the preparation of a tax return" (Memorandum Opinion, Dec. 20, 2002, pp. 13-15). Document 881, (B 469) should be treated similarly. It is recommended that this document be produced.

Document 890. This email exchange between KPMG personnel allegedly contains tax advice. In reality the document discusses the marketing of an investment product. Even the subject matter caption of the email states that the email relates to "Investment in 'Backend' Call Options". The e-mails have nothing to do with tax advice to a tax client about a tax matter. It is recommended that this document be produced.

Document 891 is an email from a tax payer client to a KPMG member seeking tax advice on a tax matter. It has been shown to fall within the scope of the § 7525 privilege It is recommended that this document need not be produced.

Document 893 consists of an email and letter. Both communications are by and between KPMG personnel. They discuss a draft opinion relating to a transaction "using as general partner" It is not clear from that this relates to tax advice to a tax payer client so as to bring it within the scope of § 7525. In the absence of such a showing it cannot be found that this document is protected from production under § 7525. It is recommended that this document be produced.

Document 902 is an email from a taxpayer client to a tax advisor seeking an opinion on a tax matter. It has been shown to fall within the scope of § 7525. It is recommended that this document need not be produced.

Documents 908, 909,910 and 911. Documents 908, 909,910 and 911 are part of a series of e-mail exchanges between KPMG personnel about a business matter. They contain no tax advice to a taxpayer client. They involve the preparation of a marketing proposal. They have not been shown to fall within the protection of § 7525. It is recommended that these documents be produced.

Document 916. This one sentence e-mail from and to KPMG members provides no tax advice to a taxpayer client. It concerns a business matter and has not been shown to fall within the scope of the claimed § 7525 privilege. It is recommended that it be produced.

Document 917 is an exchange of e-mails between KPMG members regarding a change in language in a document similar to Documents 22, 44 and 45. Judge Hogan has found that these documents have not been shown to be privileged under § 7525. If the underlying documents are not privileged, correspondence suggesting changes in those documents is not privileged. It is recommended that this document be produced.

Documents 922, 924 and 925 are an exchange of e-mails regarding the editorial review of a-document similar to Documents 22, 44 and 45. The § 7525 privilege has not been shown to be applicable to these documents for the reasons stated with respect to Document 917. Moreover, these documents contain no tax advice. It is recommended that these documents be produced.

Documents 934, 935, 939 940 and 941. The privilege log states that Documents 934, 935 and 939 are handwritten notes "memorializing a conversation with clients". These notes are claimed to be privileged under § 7525. These documents are of poor copy quality and for the most part are unreadable. Moreover, they are cryptic so as to render them difficult to understand. However, when read, to the extent that they are readable, in conjunction with Document 940 and its duplicate 941( a letter from this same client to a KPMG tax advisor enclosing financial materials "as a follow-up to our discussions"), it appears that the handwritten notes memorialize the client's responses to a series of inquiries made by the tax advisor and disclosed by the taxpayer client. It appears, therefore, that all four of these documents have been shown to fall within the scope of § 7525 so as to render them privileged from disclosure since they concern tax advice by a tax advisor to a taxpayer client about a tax matter. It is recommended that these documents need not be produced.

Documents 936, 938, 950, 951, 958 and 959. According to the privilege log these duplicate documents are a memorandum of tax advice to a taxpayer client. From a review of the documents it appears that they are marketing memoranda rather than specific tax advice to a taxpayer client. They have not been shown to fall within the scope of § 7525 so as to render them privileged from disclosure. It is recommended that these documents be produced.

Document 937. The privilege log says that these handwritten notes memorialize a tax advice conversation with a taxpayer client regarding a tax matter and are privileged under § 7525. The memo discusses a review of 1996 and 1997 tax returns. It is difficult to determine if the memo was created in anticipation of the preparation of the taxpayer's 1998 tax return since it is dated October 14, 1998 or was created in order to provide tax advise for the remainder of the calendar year 1998. The respondent has provided no other information to explain this document. In and of itself, the document has not been shown to fall within the scope of § 7525. Accordingly, it is recommended that the document be produced.

Document 955 is a letter from a tax advisor to a taxpayer client furnishing tax advice. It has been shown to fall within the scope of § 7525. It is recommended that this document need not be produced.

Document 956. These handwritten notes are similar to Documents 934, 935, 937 and 939. For the reasons stated with respect to those documents it is recommended that this document need not be produced since it appears to be fall within the § 7525 privilege.

Document 1002. This one sentence e-mail from and to KPMG members does not contain tax advice to a taxpayer but instead involves a marketing or business matter. It has not been shown to fall within the scope of § 7525. It is recommended that this document be produced.

Document 1003. This e-mail exchange discusses client specific changes to a template opinion letter. Judge Hogan found that the underlying opinion letters (Documents 22, 44, 45, 159) have not been shown to fall within the scope of § 7525. There has been no additional showing why a discussion of changes to an opinion letter found not to be within the § 7525 privilege should be treated any differently that the underlying document. Therefore, it is recommended that this exchange of e-mails be produced.

Document 1004 is an e-mail cover sheet. It discloses no tax advice to a taxpayer client required by § 7525 so as to protect it from production. It is recommended that this document be produced.

Document 1014 consists of a series of e-mails by and between KPMG personnel regarding proposed legislation. The document is alleged to be privileged by reason of § 7525. The document in substance discusses business related matters and related decisions rather than client specific tax advice to a. taxpayer client. It has not been shown to fall within the scope of § 7525. It is recommended that this document be produced.

Document 1015 is a series of e-mails by and between KPMG personnel about a KPMG opinion letter and how certain IRS actions may affect that letter. There is nothing in these e-mails that gives specific tax advice to a taxpayer client. This is a business related discussion. There is no showing that these e-mails fall within the protection of § 7525. It is recommended that this document be produced.

Documents 1016, 1017 and 1018 are a series of e-mails by and between KPMG personnel about a client business matter It relates to Documents 896, 900 and 901. There is no showing that these documents are protected from production by § 7525. It is recommended that these documents be produced.

Document 1034. The privilege log states that this document is a draft letter claimed to be subject to § 7525 protection. The document is really a template not addressed to any specific taxpayer. Indeed the salutation refers to "investor" and not a named taxpayer. It is a business related document which does not provide tax advice to a taxpayer client. It is similar to the other form opinion letters which Judge Hogan found were not entitled to protection under § 7525. It is recommended that this document be produced.

Document 1066. The privilege log states that this document is a confidential fax communication from a client privileged under § 7525. The document submitted is page 2 of a fax transmission. It does not identify any party. Moreover, it appears to request a response to questions relating to the preparation of a tax return or tax schedule. There is no showing that it seeks tax advice as distinguished from information to be used in the preparation of a tax return. It is recommended that this document be produced.

Document 1069. This series of e-mails together with an attachment are said to be a discussion of the application of a strategic analysis for a named client. Although the emails and attachment discuss a strategic marketing devise, there is no discussion of tax advice to any client, much less a named client. This appears to be a notification from one section of KPMG to another advising of a service that is available to help evaluate client investments and protect market share from slippage to competitors who offer a similar service. There has been no showing that this document falls within the scope of § 7525. It is recommended that this document be produced.

Document 1073 is an e-mail from a KPMG member to other members regarding an inquiry from a lawyer who represents a KPMG taxpayer client about a tax matter. The question from the lawyer seeks tax advice for the benefit of their mutual client . It appears to fall within the claimed protection of § 7525. It is recommended that this document need not be produced.

Documents 1089, 1090, 1091,1096, 1097, 1105, 1108, 1110, 1111, 1112, 1116, and 1117 are duplicates of a memorandum memorializing a conversation between KPMG members and clients regarding the preparation of a tax return. The memo is claimed to be privileged from production by reason of § 7525. The memo discusses various alternatives in the preparation of a client's tax return. Judge Hogan ruled in his Memorandum Opinion of December 20, 2002 that a document prepared in connection with or in support of a tax return is not subject to the confidentiality privilege accorded by § 7525 (pp 12-13) These documents clearly and unmistakenly discuss the various alternatives to be considered in the preparation of a tax return schedule. KPMG has not shown that these documents fall within the protection accorded by § 7525. Accordingly, it is recommended that these documents be produced.

Document 1093 and 1109. This letter is sought to be protected from production under § 7525. The privilege log states the letter discusses the retention of tax records. A review of this document confirms that it indeed does discuss this topic and that it is specific in its advice to a taxpayer client. The document has been shown to fall within the protection of § 7525. It is recommended that this document need not be produced.

Documents 1095,1098, 1099 and 1101. These duplicate copies of e-mails between KPMG members discuss tax form filings. They are sought to be protected from production by virtue of § 7525. The discussion regarding Documents 1089, 1090 and 1091 is equally applicable here. The statutory privilege has not been shown to apply. It is recommended that these documents be produced.

Document 1106 is an e-mail from a KPMG member to others regarding the manner of filing a tax return schedule. The document is claimed to be protected from production by reason of § 7525. A review of the document discloses that the author seeks information regarding the preparation of a 1040 tax form. The substance of the e-mail discusses the preparation of a tax form and accompanying schedules. For the reasons stated with respect to Documents 1089, 1090 and 1091 this document does not fall within the scope of the § 7525 privilege. It is recommended that this document be produced.

Document 1180 is an e-mail from a KPMG member to others. It is claimed to be subject to the § 7525 privilege. The e-mail contains no tax advise to a taxpayer or inquiry on behalf of a taxpayer. Rather, it inquires about the opinions to be expressed in an opinion letter, the same letter that Judge Hogan ruled had not been shown to be subject to the § 7525 privilege because it was to be used in conjunction with the preparation and filing of a tax return. This document contains no tax advice, instead seeks advice as to the contents of an opinion letter. This document has not been shown to fall within the scope of the § 7525 privilege. It is recommended that this document be produced.

Document 1190. This document consists of an incomplete exchange of e-mails between KPMG members. The e-mails contain no tax advice to a taxpayer client but instead raise a business matter issue. The respondent has not shown that this document falls within the scope and protection of § 7525. It is recommended that this document be produced.

Document 1196 consists of an exchange of e-mails between KPMG members. The document does not contain tax advice to a taxpayer client on a tax matter. The emails discuss a policy issue and its formulation so as to meet potential challenges to clients' tax returns. The respondent has not shown that this document is entitled to protection from production by reason of § 7525. It is recommended that the document be produced.

Documents 1266, 1267 and 1268 are a series of e-mail communications informing KPMG members of the progress being made in the development or modification of a product already marketed or intended to be marketed. These e-mails discuss a business related matter and do not provide a taxpayer with tax advice on a tax matter so as to fall within the protection of § 7525. By way of illustration, one of the emails concludes, " I know it has been very frustrating waiting for this strategy to come together, but we are very close now....". It is recommended that these documents be produced.

Documents 1273 and 1274. The privilege log states that these documents are a portion of an "undated confidential opinion from KPMG concerning tax advice relating to the transaction" and therefore privileged under § 7525. There is nothing in these documents to support the claimed privilege. The documents appear to be a page from Documents 22 and 44. Judge Hogan has found that these documents have not been shown to be protected from disclosure under § 7525. It is recommended that these documents be produced.

Documents Claimed To Be Subject To The Work Product Privilege

The Special Master has examined the documents for which the work product privilege is claimed and, under the applicable law, makes the following findings and recommendations.

Document 1132. The privilege log identifies this document as a draft of a confidentiality agreement. It can not fairly be said in the light of all the circumstances that a lawyer prepared this document on a subjective belief that litigation was a reasonable possibility. It is nothing other that a draft agreement prepared and used in the ordinary course of business in which the parties agree not to disclose to third parties information given in confidence to cement a business relationship. It is recommended that this document be produced.

Document 1272. This document consists of a memorandum and an e-mail neither of which has been shown to have been prepared by a lawyer. The work product privilege protects written materials lawyers prepare in the subjective belief that litigation is a reasonable possibility. No such showing has been made. The memorandum discuss the findings following a review of tax files by the Tax Controversy Services Group of KPMG. The e-mail explains the reason for the memorandum and a minimal disclosure of advice from the OGC with respect to ordinary business practices. It is recommended that this document be produced.

Documents Claimed To Be Subject To All Three Privileges.

The Special Master has examined the documents claimed to be protected from discovery under all three privileges and, in accordance with the applicable law, makes the following recommendations.

Document 93 and 446 are partially duplicates. Document 93 consists of a cover letter and an invoice for legal services from a law firm. Document 446 is solely the cover letter. The log states that the non-privileged invoice will voluntarily be produced. The cover letter provides legal advice with respect to the tax deductibility of certain of the billed items. As such it falls under the protection of the attorney client privilege and § 7525. There is no showing that it falls under the work product privilege since there is no showing of prospective litigation.

It is recommended that these documents need not be produced.

Document 351 is now claimed not to fall within the scope of the summons. I believe it does and accordingly will be evaluated with respect to the claimed privileges. - The document consists of a fax cover sheet and a draft letter. The fax cover sheet merely contains the name of the person to whom the fax and attachment were sent. It contains no legal or tax advice on a legal or tax matter so as to render it privileged under the attorney client privilege or § 7525; moreover, there is no showing that it was prepared in reasonable anticipation of litigation under all the circumstances as they then existed. Therefore, it is recommended that the fax cover sheet be produced. However, the attached letter does make reference to tax advice and a request for a legal opinion. There is a sufficient showing that the letter is protected from disclosure under both the attorney client and § 7525 privileges. There is no showing that a lawyer prepared this letter under a subjective belief that litigation was a real possibility. In other words it was not prepared with a view toward litigation but rather for the sole purpose of providing legal advice in response to a specific request. Therefore, the work product privilege has not been shown to be applicable. It is recommended that the fax cover sheet be produced but that the attached letter need not be produced.

Document 354. The log identifies this document as a letter from a lawyer to another lawyer regarding the transfer of certain partnership interests of a mutual client. It appears to be subject to both the attorney client and § 7525 privileges since it has been shown that the purpose of the letter was to secure and provide assistance in a legal proceeding. However, there is no showing in the light of the nature of the document and the facts that have been disclosed that it was prepared or obtained because of the prospect of litigation Therefore, there is no showing that the work product privilege is applicable. It is recommended that this document need not be produced.

Document 355 This document is described in the log as a letter from a lawyer to another lawyer with copies to KPMG and a mutual client. An examination of the document confirms that it is the first page of a letter from a lawyer to another lawyer enclosing draft amendments to a partnership agreement. It clearly has been shown to be a communication from a lawyer providing legal assistance in a tax matter and not for the purpose of committing a crime or tort so as to bring it within the protection of the attorney client privilege and § 7525. There has been no showing, however, that it was prepared on a subject belief that litigation was reasonably anticipated so as to successfully invoke the work product privilege. It is recommended that this document need not be produced.

Document 356 is a letter from a law firm to a client with respect to a legal matter. It has been shown to fall within the protection of the attorney client privilege but not § 7525 since there is no showing that it contains advice regarding a tax matter. Nor has it been shown to be protected from disclosure by the work product privilege because there has been no showing in the document or in supplemental documents to reasonably conclude that it was prepared because of the prospect of litigation. It is recommended that this document need not be produced.

Document 357. This document is a duplicate of Document 355 except it contains the complete letter accompanying the draft amendments to a partnership agreement rather than just the front page. The same reasons apply to this document as to Document 355. It is recommended that this document need not be produced.

Document 386 is similar to, if not identical to Documents 442, 822 and 839 except for the client's name. Judge Hogan found the respondent has not shown that either the work product privilege or the § 7525 applies to Documents 442, 822 and 839 but that they were found to be subject to the attorney client privilege and therefore need not be produced. (Memorandum Opinion, Dec. 20, 2002, p 16). The same reasoning holds true with respect to Document 386.

Document 463 is a letter from a law firm to a client regarding legal representation. Although it provides no legal or tax advice it does discuss matters of legal representation and therefore can be said to fall within the scope of the attorney client privilege. However, since it contains no tax advice nor has there been any showing that it was prepared with a view toward prospective litigation, it is not protected from production by reason of § 7525 or the work product privilege. It is recommended that this document need not be produced.

Document 541 is similar to Documents 422, 539, 540, 542 and 543. All these documents relate to correspondence to and from a law firm and KPMG regarding editorial changes in an opinion letter their mutual client received from another law firm relating to a tax matter. The underlying letter which is sought to be changed was found by Judge Hogan (Documents 442, 539 and 540) to be privileged from disclosure under the attorney client privilege. Therefore, the correspondence with respect to changes to the underlying letter (Document 442) fall within the protection of the attorney client privilege for the same reasons stated by Judge Hogan. As with Document 442, this document has not been shown to have been prepared with a view toward prospective litigation nor have they been shown to fall within the scope of § 7525. Only the attorney client privilege applies, -therefore, it is recommended that this document need not be produced.

Documents 653, 654 are duplicate letters and Documents 644 and 646 are similar letters from a law firm to a client regarding certain tax matters and providing tax advice. Judge Hogan has ruled that similar, if not identical letters, except for names and addresses, have been shown to be subject to the attorney client privilege but not the work product privilege or § 7525 privilege. (See Documents 422, 822 and 839 also Memorandum Opinion, Dec. 20, 2002, p. 16). It is recommended that these documents be subject to the same ruling and that they need not be produced.

Document 682 and 683 are letters from a lawyer to his clients providing advice in a legal matter. They have been shown to fall within the scope of the attorney client privilege. However, they contain no tax advice nor have they been shown to have been prepared with a reasonable view toward prospective litigation. Therefore, neither § 7525 nor the work product doctrine have been shown to be applicable. It is recommended that these documents need not be produced by reason of the attorney client privilege only.

Document 713 is a memo from a lawyer to KPMG concerning a mutual client. It discusses tax matters relating to the client. It has been shown to fall within the protection of the attorney client privilege and § 7525 since it seeks tax advice. There is no showing, however, that the prospect of litigation was reasonably anticipated so the work product privilege has not been shown to be applicable. It is recommended that this document need not be produced.

Documents 802 and 804 are duplicate copies of a fax from a lawyer to KPMG regarding a mutual client. (Document 804 is sought to be privileged from production by reason of the attorney client privilege and § 7525 only. The work product doctrine is not asserted with respect to document 804 although it is with respect to document 802). The fax discloses legal and business matters concerning their client. Therefore, it has been shown to fall within the scope of the attorney client privilege. However, it contains no tax advice nor is there any showing that it was created with a reasonable expectation of prospective litigation. Accordingly only the attorney client privilege has been shown to be applicable. It is recommended that these documents need not be produced.

Document 815 is a draft of a letter to a tax payer by a tax advisor. However, it contains no tax advice nor does it disclose any legal advice to a client. Therefore, neither the attorney client privilege nor the § 7525 privilege have been shown to be applicable. In addition, there has been no showing that it was created by a lawyer in reasonable anticipation of future litigation. Accordingly, 'none of the claimed privileges have been shown to apply. It is recommended that this document be produced.

Document 846 is a file memorandum of an oral conversation with a tax payer and his attorney. The document discusses facts conveyed to an attorney and his client (the tax payer) which had legal implications and also provided tax advice. There is no showing it was prepared by an attorney in reasonable anticipation of litigation. It has been shown to fall within the scope of the attorney client privilege and § 7525 privileges but not the work product privilege. It is recommended that this document need not be produced. Documents 847 and 858 are duplicate copies of an e-mail exchange between KPMG and an investment advisor regarding tax advice to be furnished their mutual client. Therefore, § 7525 has been shown to be applicable. There is no showing of any legal advice provided the client nor is there any showing that the exchange involved any writing by a lawyer that would bring the exchange within the scope of the 'work product doctrine. Accordingly, only the privilege created by § 7525 has been shown to be applicable. It is recommended that these documents need not be produced.

Document 888 is an e-mail from outside counsel to a KPMG member. This two sentence email has not been shown to be subject to the attorney client or § 7525 privileges nor has it been shown to have been created with a view toward prospective litigation so as to fall within the scope of the work product privilege. It is recommended that it be produced.

Document 892 is an e-mail from a KPMG member to another KPMG member referencing an earlier discussion with outside counsel about a KPMG opinion letter. Outside counsel represented KPMG clients in a tax matter. Therefore the discussion involving a mutual client falls within the, scope of the attorney client privilege and, since it involved a tax matter, it also fell within the scope of the § 7525 privilege.. There is no showing, however, to bring the e-mail within the scope of the work product privilege since the e-mail was not prepared by a lawyer in reasonable anticipation of prospective litigation. It is recommended that this document need not be produced. .

Document 896 is a series of e-mails about 'a fee alleged to be due outside counsel by a client of both the outside counsel and KPMG. The last email in this series copied in associate general counsel of KPMG. However, the e-mail requested no legal opinion, assistance or advice and none was given. This is strictly a business related document concerning a legal fee. It has not been shown to fall within the scope of the attorney client privilege or the § 7525 privilege. And since the document was not prepared by a lawyer, although it expressed concern about possible legal action, it has not been shown to fall within the parameters of the work product privilege. It is recommended that this document be produced.

Document 897. This exchange of e-mails builds on Document 896. The additions include responses from associate general counsel providing legal advice in a potentially litigious matter as well as tax advice. The document has been shown to fall within the scope of the attorney client privilege, the § 7525 privilege and the work product privilege. It is recommended that it need not be produced.

Document 898. This document is similar to Document 897. It differs from document 897 in that one email from the Office of General Counsel has been deleted while another email, sent about a half hour later, containing legal advice has been added. This document containing legal advice, about a tax matter has also been shown to fall within the protection of the attorney client and § 7525 privileges. It also discusses matters involving the potential for prospective litigation and therefore has been shown to fall -within the scope of the work product privilege. It is recommended that this document need not be produced.

Document 899. This document, an exchange of e-mails, is similar to Documents 897 and 898. It is recommended that it need not be produced for the reasons stated with respect to those documents.

Document 900. This exchange, of a-mails is similar to document 896 in that it contains no request for a legal opinion nor does it contain any legal opinion. It merely discusses a business issue. Moreover, it was not prepared by a lawyer nor does it contain any tax advice. Accordingly, it has not been shown to fall within any of the claimed privileges. It is recommended that it be produced.

Document 901 and 1070. These duplicate documents contain essentially the same e-mails discussed with respect to Document 896 etc. There is no e-mail to or from legal counsel regarding any legal issues or seeking any tax advice although general counsel is copied in. The emails discuss a business problem and have not been shown to fall within the scope of any of the three privileges claimed. It is recommended that these documents be produced.

Document 907 is part of a series of e-mail exchanges between KPMG members about a business matter. This series includes Documents 908 and 909. There is nothing in this document which seeks or contains legal advice or assistance or tax advice to a tax payer so as to implicate the attorney client privilege or § 7525 privilege. It is strictly a business related document. Moreover, there is no showing that it was prepared by a lawyer in anticipation of prospective litigation so as to be protected under the work product privilege. It is recommended that it be produced.

Document 914 and 915. Document 914 is a series of a-mails among various KPMG members discussing a request by an attorney for a mutual tax client for a change in the wording of an. opinion letter (Document 44 found by Judge Hogan not to be privileged under § 7525). Document 915 is the e-mail from a KPMG member to others initiating the inquiry and attaching the opinion letter. The opinion letter is similar to Document 44. It does not fall within the scope of § 7525 . Nor does it fall within the attorney client privilege since it was not prepared by an attorney but instead by a tax advisor. It was not prepared by a lawyer and there is no showing it was prepared in reasonable anticipation of prospective litigation but instead was prepared as a supplement in support of a tax return (as found by Judge Hogan). Therefore, it has not been shown to fall within the ambit of the work product privilege.

The e-mail accompanying the opinion letter which together constitute Document 915 is also a part of the email exchange of Document 914. Those e-mails discuss a requested by a lawyer for a minor change in the verbiage of the opinion letter. The e-mails disclose no request for legal or tax advice or assistance nor is there any showing that prospective litigation maybe in the offering. In short, there has been no showing that either document is protected from production by any of the three claimed privileges. It is recommended that these documents be produced.

Document 928. This exchange of e-mails concerns changes in documents similar to Document 442 which Judge Hogan determined was privileged. However the e-mails merely discuss cosmetic typo changes to the Document 442 prototype. The e-mails do not discuss or reveal any substantive tax or legal advice so as to protect them from disclosure under the attorney client or § 7525 privileges. Nor has there been any showing that this document was prepared by a lawyer in reasonable contemplation of prospective litigation so as to invoke the work product privilege. It is recommended that it be produced.

Document 929 is an e-mail to KPMG members which discusses minor editorial changes requested by a taxpayer to an opinion letter furnished him by KPMG. The opinion letter is similar to Documents 22, 44 and 45 which Judge Hogan found not to be subject to the § 7525 privilege. The e-mail discussion adds nothing to the underlying opinion letter from KPMG. The second paragraph of the e-mail also discusses a requested change by the taxpayer to the law firm opinion letter. Judge Hogan found that a similar-opinion letter (Document 442) was protected from disclosure by the attorney client privilege but not the § 7525 privilege or the work product privilege. Therefore, it is recommended that Document 929 be produced but that the second paragraph be redacted. No other portion of the e-mail has been shown to contain information subject to any of the claimed privileges since it contains no legal or tax advice or request for legal or tax advice (except the second paragraph) nor has it been shown to have been prepared by a lawyer in reasonable anticipation of litigation.

Document 933 is a cover letter from a lawyer to a client involving a legal proceeding. It contains legal advice and collateral tax advice, therefore, has been shown to be protected by the attorney client privilege and § 7525. It has not been shown to have been prepared in reasonable anticipation of litigation. Therefore, the work product doctrine has not been shown to be applicable. It is recommended that it need not be produced.

Document 944 consists of a half page of cryptic handwritten notes. It is claimed to be subject to the attorney client, § 7525 and work product privileges. Although it appears to reflect a summary of a conversation with a lawyer, there is no showing of an attorney client relationship. From other documents it is clear that this document reflects a conversation with a lawyer with whom KPMG had a marketing arrangement and not the traditional lawyer client relationship. As such it has not been shown to be protected from disclosure by the attorney client privilege. Nor is there any showing that it contains tax advice to a taxpayer or that it was prepared by a lawyer in reasonable anticipation of future litigation. Absent such a showing neither the statutory privilege nor the work product privilege have been shown to be applicable. It is recommended that this document be produced.

Documents 948, 949, 953, and 954 are duplicates. They appear to be templates used to memorialize oral tax advice furnished a taxpayer client. They are not specific or individualized as to any one client. They are merely a form or guide to be followed to memorialize a discussion with a client. They have not been shown to be subject to the attorney client privilege since there is no showing of an attorney involvement. Nor do they contain individualized tax advice contemplated by the statue. Lastly, there is no showing they were prepared by a lawyer in contemplation of prospective litigation. Rather, they appear to be forms used to document a file. There has been no showing that these documents are protected from disclosure under any of the three claimed privileges. It is recommended that they be produced.

Document 1001. This exchange of e-mails is claimed to be subject to all three privileges. The lawyer referred to in the e-mails is one with whom KPMG had a business or marketing arrangement and not a true attorney client relationship. Moreover nothing in the exchange discloses any facts or opinion from or to a lawyer. The attorney client privilege has not been shown to exist. Furthermore, the document has not been shown to have been prepared by a lawyer much less to have been prepared in reasonable anticipation of litigation so as to be protected by the work product privilege. Lastly, the document does not contain tax advice or opinion to a tax payer client. The exchange merely discusses the contents of a template opinion (Doc. 1142) which has been found by Judge Hogan not to be protected from disclosure by § 7525. It is recommended that this document be produced.

Documents 1009 and 1010. These similar documents consists of on e-mail and reply between KPMG members regarding a request by a lawyer on behalf of a client who is also a client of KPMG regarding a tax matter. The documents are claimed to be subject to all three privileges. They have been shown to involve a discussion of a legal/tax matter between a lawyer and KPMG concerning their mutual client. Therefore, they have been shown to be protected from production under the attorney client and § 7525 privileges. There is no showing that these documents were created by a lawyer in reasonable anticipation of litigation so as to render them privileged under the work product privilege. It is recommended that they need not be produced.

Document 1013. This memorandum among KPMG members is claimed to contain a draft of an opinion relating to a tax transaction. It is claimed to be subject to all three privileges. The document contains nothing other than a discussion of a recent court opinion. There is no showing that it was prepared by a lawyer nor does it contain any client specific tax advice. It is merely an educational memorandum regarding a recent decision of a Circuit Court regarding a tax matter. It has not been shown to be protected from production by reason of any of the three privileges. It is recommended that it be produced.

Document 1045. This document is a letter from KPMG to a client with a copy to the client's lawyer. The log claims it provides tax advice regarding a transaction and is privileged under all three privileges. The letter merely seeks to set up a meeting to discuss trends that may impact on tax related matters. The letter does not contain any facts upon which a legal opinion is sought nor does it contain facts for use in a legal proceeding. Therefore, the attorney client privilege has not been shown to be applicable. Nor does it seek or provide tax advice so as to implicate § 7525. Moreover, there is no showing that it was written by a lawyer in reasonable anticipation of litigation so as to make the document subject to the work product privilege. It is recommended that this document be produced.

Document 1046 is a KPMG memorandum to the file memorializing a meeting with a tax client, his lawyer and business associate during which certain tax issues were discussed and advice provided. This document is similar to the many other file memoranda found to be subject to the § 7525 privilege. It too has been shown to be within the scope of the § 7525 privilege. However it is also claimed to be subject to the attorney client and work product privileges. It discloses no facts upon which legal advice is sought nor facts intended to be used in litigation so as to protect it under the attorney client privilege. Nor was it created by a lawyer in reasonable anticipation of litigation so as to render it privileged under the work product privilege. It has only been shown to be privileged under § 7525. It is recommended that it need not be produced.

Documents 1068, 1071 and 1075 are similar documents sought to be privileged under all three privileges. They consist of an e-mail from a KPMG member to another member with a copy to KPMG's associate general counsel to which is attached a template of a memorandum of oral advice. The e-mail directs the recipient to follow the form in conversations with tax clients. The transmission to legal counsel appears to be solely for informational purposes only. No legal advice or opinion is requested or provided nor is there any showing that it was prepared by a lawyer in reasonable contemplation of litigation so as to bring it within the scope of either the attorney client or work product privileges. However, the form does provide specific advice on tax matters so as to bring it within the scope of § 7525. It is recommended that the e-mail be produced since there is no showing that it is privileged under any of the three privileges but the attached form need not be produced since it falls within the scope of § 7525.

Document 1074 is merely a follow up e-mail to the e-mail contained in Documents 1068, 1071 and 1075. The attachment referred to in this e-mail is not attached to this document. Although a copy of this document was sent to associate general counsel it neither seeks legal advice nor does it contain any facts upon which legal advice is sought or which may be used in a legal proceeding. Nor does this document provide any tax advice to a client so as to subject it to the § 7525 privilege. Lastly, it was not created by a lawyer in reasonable anticipation of litigation so as to implicate the work product privilege. It is recommended that it be produced.

Document 1078 and 1082 are duplicate memoranda memorializing a conversation between KPMG and attorneys for a mutual client. They discuss tax advice which had previously been given, events that subsequently developed and current tax advice and recommendations. This memo is similar in nature to Document 631. It has been shown to be protected from production by § 7525. Although this document is also claimed to be subject to the attorney client and work product privileges, there has been no showing that these privileges are applicable. The discussion with the attorney by the KPMG members did not disclose any facts provided by the client for the purpose of obtaining a legal opinion or advice so as to implicate the attorney client privilege. Nor has there been any showing that the document was created by a lawyer memorializing his thoughts and views in reasonable anticipation of litigation so as to trigger the work product privilege. It is recommended that the document need not be produced.

Document 1079 consists of an e-mail cover sheet from one KPMG member to another enclosing a draft of a letter to a tax client. It appears to be a supplement to document 1078. The draft letter contains tax advice to a tax payer and has been shown to fall within the parameters of § 7525. However the e-mail cover sheet has not been shown to be subject to § 7525. Nor has there been any showing to bring either the e-mail or the draft letter within the protection of the attorney client privilege or the work product privilege. It is recommended that the e-mail cover sheet be produced but that the draft letter need not be produced.

Document 1080 is an informational e-mail among KPMG members There is nothing in the e-mail that brings the e-mail itself within any of the three claimed privileges. It is recommended that the document be produced.

Document 1081 is a duplicate of Document 1079 accept it does not contain the email cover sheet contained in. Document 1079. It is recommended that it need not be produced for the reasons stated with respect to Document 1079.

Document 1084 and 1085 memorializes a conversation between KPMG and a client's lawyer and chief financial advisor during which they discussed certain tax events, advice and recommendations. They are similar to Document 631 and have been shown to be subject to the § 7525 privilege in that they memorializes a conversation between a tax advisor and, a client's legal representatives for the purpose of providing tax advice. They have not been shown to be subject to the attorney client privilege because KPMG provided no facts to a lawyer for the purpose of seeking a legal opinion or legal advice in a legal proceeding. Nor have they been shown to fall within the work product privilege because it was not prepared by a lawyer in reasonable anticipation of litigation. It is recommended that they need not be produced.

Document 1103 is an exchange of e-mails between KPMG members regarding a law firm opinion letter issued to mutual clients. The only portion of the e-mails which discusses facts related to a legal opinion sufficient to bring it within the scope of the attorney client privilege is found in the last two sentences of the first paragraph of the email of April 12, 1999 at 12:00PM. There is no showing that the document is privileged under either the work product or § 7525 privileges nor have the remaining portions of the document been shown to be protected from production by the attorney client privilege. It is recommended that the document be produced subject to the redaction of the last two sentences of the first paragraph of the April 12, 1999 at 12:00PM e-mail.

Document 1104 is similar to Document 1103 except that it contains one more email response which has not been shown to be privileged under any of the three claimed. privileges. It is recommended that it be produced subject to the redaction of the material referred to with respect to Document 1103.

Document 1115 is now claimed not to be responsive to the IRS summonses. A review of the document supports that conclusion. It appears to have been inadvertently included since it does not appear to relate to the category of documents under discussion. It is recommended that it need not be produced.

Document 1156, 1158 and 1159 are duplicate memorandum memorializing a conversation with a lawyer concerning the audit of a mutual client's tax return. The documents are claimed to be privileged under the attorney client privilege, the work product privilege and the § 7525 privilege. The attorney client privilege does not apply because there is no showing that KPMG sought to become a client of the lawyer or seek any legal advice from the lawyer. On the contrary, the memos disclose that certain tax advice was given the lawyer. Nor does the work product privilege apply because there is no showing that they were prepared by a lawyer in reasonable anticipation of litigation. However, since the documents memorializes tax advice given a lawyer on behalf of their mutual client by a tax preparer, the documents have been shown to be subject to the § 7525 privilege. It is recommended that these documents need not be produced.

Documents 1157 and 1161. are duplicates. They memorializes a conversation between the same KPMG personnel and the same lawyer involved in the Document 1156 memo. However these documents contains no tax advice. They merely inform the lawyer of certain past events. Since they contain no tax advice they have not been shown to be subject to the § 7525 privilege. Moreover, they are not protected under the attorney client or work product privilege for the same reasons stated with respect to Document 1156. It is recommended that these documents be produced.

Document 1160 memorializes a conversation between KPMG and a tax client. It merely informs him of certain past events and contains no tax advice. Since it contains no tax advice, it is not protected by § 7525. Moreover there is no showing that KPMG disclosed any factual information to a lawyer so as to obtain legal advice or to be used in a legal proceeding, therefore the attorney client privilege has not been shown to be applicable. Lastly, there is no showing that the document was prepared by a lawyer in anticipation of litigation so the work product privilege is not applicable. It is recommended that the document be produced.

Document 1164 is an exchange of e-mails among KPMG personnel including associate general counsel. The document is claimed to be subject to the attorney client, work product and § 7525 privileges. The e-mails discuss procedures involving opinion letters. There is no showing that they seek any legal opinion or advice from legal counsel; nor is there a showing that specific tax advice is being provided to a tax payer/client. Moreover, there is no showing any portion was created by a lawyer to memorializing his thoughts in reasonable anticipation of litigation. Rather the e-mails appear to discuss a firm policy regarding the development and promulgation of opinion letters. These are business related discussions in an attempt to establish a business policy. There is no showing that any of the three privileges are applicable. It is recommended that this document be produced.

Document 1166 and 1167 are an exchange of e-snails between KPMG personnel including associate general counsel regarding a registration issue. Although one of the emails refers to attached correspondence from legal counsel, that attachment is not a part of this document nor is there any disclosure in any of the e-mails of the contents or summary of the contents of that correspondence. The e-mails merely discuss a business issue with tax related ramifications. The documents have not been shown to be privileged from disclosure by reason of the attorney client, work product or § 7525 privileges. They contain no tax advice to a tax payer, have not been created by a lawyer in reasonable anticipation of litigation and reveal no facts to a lawyer for the purpose of obtaining a legal opinion or advice. They discuss a business matter. It is recommended that these documents be produced.

Document 1269 and 1293 are similar and consist of an exchange of e-mails regarding proposed changes to documents used in connection with the marketing of a business product. There is no showing that any facts were disclosed to legal counsel for the purpose of obtaining legal advice or opinion; nor is there any showing that specific tax advice was provided a tax payer and there is no showing that these e-mails were created by a lawyer. This is solely a discussion between KPMG members regarding a business matter and marketing documents. It is recommended that these documents be produced.

Documents 1270 and 1271 are similar e-mails exchanges between KPMG personnel with attachments. The attachment to the e-mail is an engagement letter intended to be used to create a business relationship with firm clients. The e-mails specifically require that the attachment be used in all future deals with clients. No legal advice is solicited or given. Although created with the help of legal counsel the attached form was not intended to be a confidential communication but rather a KPMG template for the creation of a contractual relationship with third parties. Neither the e-mails or attachments provide tax advice to a tax payer nor have they been shown to memorialize a lawyer's thought process for use in reasonable anticipation of litigation. Therefore, none of the three claimed privileges has been shown to be applicable. It is recommended that these documents be produced.

The Attorney Client and Work Product Privileges

The Special Master has examined the following documents for which the attorney client and work product privileges have been claimed and, under the applicable law, makes the following findinds and recommendations.

Documents 280 and 284. These duplicate documents consist of a letter from a client to a law firm seeking advice on a legal matter. These clearly fall within the attorney client privilege. The work product privilege has not been shown to be applicable since there is no showing that these documents were created by a lawyer in reasonable objective anticipation of litigation. It is recommended that these documents need not be produced

Document 282 is the same as Document 1142, a 25 page template legal opinion from a law firm. The log states that it was taken from the file of a named client. Although the spaces for a client's name and address are blank which support the conclusion that it. is a template, the top of the first page of the document indicates it was found in a named client's file. Judge Hogan ruled that Document 1142 did "not fall under the attorney work product privilege, since there is no indication that it was prepared in anticipation of litigation". This was the only privilege asserted for Document 1142. Privilege Log, p 15 and Memorandum Opinion, Dec. 20, 2002, p.21.The same ruling applies to this document. However, unlike Document 1142, this document is also claimed to be subject to the attorney client privilege. There has been a sufficient showing to conclude that legal advice is being furnished a named client by a lawyer on a legal matter. Although the opinion was prepared for ultimate disclosure to IRS in the event of an audit of the client's tax return, there is no showing that this occurred or that the attorney client privilege has been otherwise waived. It is recommended that this document need not be produced.

Documents 305 and 328 are missing

Document 336 is merely a transmittal letter. It contains nothing to bring it within the attorney client or work product privileges. It is recommended that it be produced.

Document 522 is a letter from a client to a lawyer seeking a legal opinion on a legal matter. It has been shown to fall within the attorney client privilege. The work product privilege has not been shown to be applicable since there is no showing that it was created by a lawyer in reasonable anticipation of litigation. It is recommended that it need not be produced.

Documents 523 and 524 are duplicate letters from a client to an attorney seeking legal advice on a legal matter. They have been shown to fall within the scope of the attorney client privilege. The work product privilege has not been shown to, be applicable since there is no showing they were prepared by a lawyer in reasonable anticipation of litigation. It is recommended that they need not be produced.

Document 527 is a retainer agreement between a client and a lawyer. It does not contain any confidential information nor does it seek or render any legal advice or opinion. Moreover, it has not been shown to be subject to the work product privilege. It is recommended that it be produced.

Document 563 is a letter from KPMG to a law firm regarding the contents of an opinion letter prepared by the latter. The underlying opinion letter (Document 442) was found by Judge Hogan to be subject to the attorney client privilege. This document is subject to the same privilege since it request a legal opinion regarding a tax matter concerning their mutual client. The work product privilege has not been shown to be applicable. It is recommended that it need not be produced.

Document 565 is as the document itself states, a "model opinion address(ing) certain income tax issues..." although the privilege log states it came from the files of a named client, there is no showing in the document itself or in any of the initial or supplementary affidavits of various KPMG personnel that corroborates this allegation. In the absence of such an affirmation there is no showing that this form is privileged under the attorney client privilege. Nor has it been shown that this document was prepared in reasonable anticipation of litigation. Instead, it appears that it served as a model furnishing documentation or support of a tax return in the event of audit. It is recommended that it be produced.

Document 607 described in the privilege log as a letter from legal counsel to KPMG regarding a mutual client's tax matter. In a supplemental filing KPMG seeks to withdraw this document as non responsive to the summons. A review of the document supports this assertion. It is recommended that it need not be produced.

Document 821 is a copy of a letter from a lawyer to, a client providing legal advice in a legal proceeding. It has been shown to fall within the scope of the attorney client privilege. However, there is no showing that it was prepared in reasonable anticipation of litigation. Therefore, it has not been shown to be subject to the work product privilege. It is recommended that it need not be produced.

Documents 1012 and 1.137 are a series of e-mail exchanges. The privilege log describes these documents as involving communications with legal counsel regarding an engagement letter. While a KPMG member sought legal advice from house counsel regarding a legal matter, and was admonished for doing so, that communication is not part of these documents. However, counsel's. response is a part of the documentation. It is dated 9/1/ 1998 at 1:06PM. This e-mail from counsel has been shown to fall within the attorney client privilege. However; the remainder of the documents discuss business matters and not attorney client privileged matters with the exception of the first sentence found in the penultimate paragraph of the e-mail dated 9/2/1998 at 2:04PM. The work product privilege has not been shown to apply to any of these documents since only one of the. a-mails was created by counsel and that has not been shown to have been made in reasonable anticipation of litigation. It is recommended that these documents be produced subject to the redaction of the 9/1/1998 e-mail from house counsel and the redaction of the first sentence of the penultimate paragraph of the e-mail of 9/2/1998 at 2:04PM.

Document 1048 is an e-mail from and to KPMG. The author, a non lawyer, discusses his views of a legal decision which he recently discussed with outside counsel. It is claimed to be privileged from production under the attorney client and work product privileges. There is no showing of an attorney client relationship between KPMG and the lawyer referred to in the e-mail. From a review of the many other documents it is clear that KPMG only had a business relationship with this lawyer and his firm in the marketing of a product. There is no showing that KPMG ever sought, as a client of the law firm, an opinion on law on its own behalf The law firm furnished legal opinions to mutual clients of the firm and KPMG but not to KPMG itself as a client of the law firm. In short there has been no showing of an attorney client relationship between the law firm and KPMG. Therefore, the attorney client privilege has not been shown to be applicable. Nor has there been any showing that this document was created by a lawyer in reasonable anticipation of litigation. It has only been shown to have been created by a KPMG member, a non lawyer. It is recommended that this document be produced.

Document 10.49. This document is claimed to be a memorandum with an attached diagram- memorializing a conversation with a, lawyer. As with Document 1048 this document has not been shown to have arisen by reason of an attorney client relationship between the lawyer and KPMG. The discussion and diagram merely memorialize a business plan that has tax ramifications for their mutual clients. The document has not been shown to fall within the scope of the attorney client privilege. Nor has it been shown to be subject to the work product privilege since it was has not been shown to have been created by a lawyer in reasonable anticipation of litigation. It is recommended that it be produced.

Document 1124 is a duplicate of Document 1136 found by Judge Hogan to be subject to the attorney client privilege but not the work product privilege. It is recommended that this document need not be produced.

Documents 1125 and 1138 These e-mails and attachments are claimed to be protected from production under the attorney client and work product privileges. The e-mail. is a communication from legal counsel in response to a request for legal advice or assistance in a legal proceeding. The attachment is a document prepared by legal counsel in response to the request. This is more than business advice. It directly involves legal issues and matters. It has been shown to be privileged under both the attorney client and work product privileges. It is recommended that they need not be produced.

Document 1133, 1149 and 1150 are essentially duplicate documents and sought to be privileged from production under the attorney client and work product privileges. Document 1133 consists of the draft of a client engagement letter and e-mails; Documents 1149 and 1150 only contain the e-mails. Associate general counsel were copied in on the e-mails and attached draft and their comments as well as opinion were specifically requested. The documents have been shown to be subject to the attorney client privilege. They have not been shown to be subject to the work product privilege. Document 1133 contains a draft of a proposed contract. There is no showing that litigation is anticipated. Contracts are written to preclude litigation, not in contemplation of litigation. There is nothing in the e-mails which shows they were written by a lawyer in anticipation of litigation so as to successfully invoke the work product privilege. It is recommended that the documents need not be produced.

Documents 1139 and 1206 are duplicate e-mail exchanges between a KPMG member and in house legal counsel. There is a showing that these documents are subject to the attorney client and work product privileges. The e-mails provide legal advice or assistance in a legal matter and document counsel's thoughts in anticipation of future litigation.. It is recommended that these documents need not be produced.

Document 1168 contains the same e-mails found in Document 1150 as well as the draft client engagement letter found in Document 1133 plus six additional e-mails Five of the additional a-mails are between the same two KPMG members. The sixth e-mail copies in additional KPMG members including legal counsel. These six additional a-mails discuss business related matters. They contain no additional request for legal advice or assistance. Therefore, neither the attorney client privilege or work product privilege has been shown to be applicable to these six additional e-mails. (Pages FOP 036977 through the first half of FOP 036980). It is recommended that this document be produced subject, however, to the redaction of the e-mail material duplicate of Document 1150 and the draft engagement letter. (Pages bottom half of FOP 036980 through FOP 036986).

Document-1192 is a series of a-mails some of which are duplicates of Document 1168 plus an additional six new e-mails The new c-mails have not been shown to be subject to the attorney client privilege or the work product privilege. It is recommended that this document be produced subject to the redaction of the bottom half of pages FOP 0367223 through FOP 037225. These are the same as pages, FOP 036980 through FOP 036986, found in Document 1168.

Document 1193 contains most of the emails found in Document 1168 plus one new one. Nothing in the new e-mail makes it subject to either the attorney client or work product privileges. The remainder of page FOP 0337227 and pages FOP 037228 through FOP 037231 are the same pages recommended for redaction in Document 1168 (FOP 036980 through FOP 036986). It is recommended that this document be produced subject to the redaction of the bottom half of page FOP 037227 through FOP 037231.

Document 1200 contains many of the same e-mails found in Document 1168. Only pages FOP 037285 through FOP 037286 which are duplicate of pages FOP 036980 through FOP 036982 of Document 1168 have been shown to be subject to the attorney client privilege. None have been shown to be subject to the work product privilege. It is recommended that this document be produced subject to the page redactions.

Document 1206 is an exchange of e-mails between legal counsel and a KPMG member regarding a proposed agreement, The e-mails neither seek or contain legal advice or opinion. They deal solely with business matters and, in a generalized way, with legal norms including the need to be specific and the need to define the relationship between the various parties. There is an insufficient showing that this document is protected by the attorney-client privilege. Nor is there a showing that it was created by a lawyer in objectively reasonable anticipation of litigation so as to fall within the scope of the work product privilege. It is recommended that it be produced.

Document 1208 is a further exchange of c-mails. The attachments referred to in the e-mails are not a part of this document and nothing in the e-mails themselves bring . this document within the protection of either the attorney client privilege or the work product privilege. It is recommended that it be produced.

Document 1210 is an exchange of e-mails to and from KPMG and in-house legal counsel. Specific facts are disclosed with a request for legal advice or opinion. In-house counsel provided a detailed response to an inquiry regarding a legal matter. There is no showing that the advice was sought for the purpose of committing a tort or crime. There has been a showing that this document is protected from. disclosure by the attorney-client privilege. However, the only portion shown to have been created by a lawyer in reasonable anticipation of litigation is the e-mail of August 6, 1998 at 2:47PM (FOP 037358, 037354 and 037755). Those pages. have been shown to fall within the scope of the work product privilege. The remainder of the document has not been shown to be subject to the work product privilege. It is recommended that this document need not be produced.

Documents 1174,1175,1176,1176A,1176B,1177,1250,1.251,1252,1253, 1254, 1255, 1256, 1257 and 1292 all deal with the same subject matter - the draft of an analysis of a tax issue. These document all consist of an exchange of emails and faxes between KPMG personnel to which are attached drafts and portions of a draft of an analysis of a tax issue. The exchange culminates with the transmission of the final version of the draft analysis to legal counsel in the Office of General Counsel for the purpose of . assisting in rendering legal advice. Viewed collectively, the respondent has shown that these documents are subject to the attorney client privilege. However, as the e-mails themselves disclose, they and the draft analysis were created by non lawyers.

Therefore, it has not been shown that the documents fall within the scope of the work product privilege. It is recommended that these documents need not be produced.

Document 1189. This document consists of an exchange of e-mails between a KPMG member and the Office of General Counsel. In response to a specific request for legal advice on a legal matter, associate general counsel provided a legal opinion as well as the reasons for his opinion. KPMG has shown that this document is subject to the attorney client privilege. The document also reflects legal counsel's thought process; however, there is no indication that reasonably objective litigation was to by anticipated. Therefore, the work product privilege has not been shown to be applicable. It is recommended that the document need not be produced.

Document 1243 is an exchange of e-mails claimed to be subject to the attorney client and work product privileges. It consists of three e-mails between KPMG members regarding a tax matter. The e-mail of Sept. 21, 1998 at 6:11 AM contains one sentence which memorializes legal advice from legal counsel regarding a tax matter. It is found in the fourth sentence of the first paragraph beginning with the phrase "(w)e held in our position...". This sentence may be redacted since it contains legal advice. The remainder of the document has not been shown to fall within the attorney client nor the work product doctrine. It is recommended that it be produced in redacted form.

Document 1244 is an e-mail from legal counsel to a KPMG member. The e-mail reports certain facts learned by counsel from another representative of KPMG. This e-mail provides no legal advice or assistance. It merely narrates a past happening. The affidavit of Larry DeLap contends that the "communications reflected in this document were had in anticipation of a dispute with IRS.. ". There is no showing that the dispute is reasonably likely to rise to the level of litigation. But more importantly, the e-mail does not reflect counsel's thought process or ideas. It merely reports a past event, therefore, it has not been shown to be protected by the work product privilege nor the attorney client privilege. It is recommended that it be produced.

Document 1249 consists of a series of e-mails among KPMG members including the Office of General Counsel. Legal counsel provided legal advice on a legal issue (Does 1189, 1203) in response to specific inquiries. This advice was transmitted to other KPMG members in response to their inquires. KPMG has shown that this documents are subject to the attorney client privilege. However, there is no- showing that counsel's email was created in reasonable anticipation of litigation so as to be protected from disclosure under the work product privilege. It is recommended that these document need not be produced.

Documents Claimed To Be Subject To The Work Product And § 7525 Privileges

The Special Master has examined the following documents for which the work product and § 7525 privileges are claimed and, under the applicable law, makes the following findings and recommendations.

Document 1077 is described in the privilege log as an exchange of e-mails between KPMG members discussing potential causes of action accompanied by a form memorandum discussing tax advice. It is claimed to be privileged from production under the work product and § 7525 privileges. There is no showing of attorney involvement in the creation of the emails. Therefore, there is no showing that the work product privilege is applicable to them. Nor do the e-mails contain any tax advice to a tax payer client. They merely discuss a series of past events. The e-mails have not been shown to be protected from production by either the work product or § 7525 privileges. However, as stated in the log, a form memorandum is attached to the e-mails. Although a form, the affidavit of Jeffrey A. Eischeid says the form was prepared by house counsel as well as outside counsel. It does provide a format for advice to tax clients on tax matters and has been shown to be privileged under § 7525. It is recommended that the email portion of this document be produced but that the attached form need not be produced.

Document 1086 and 1087 are duplicates and consist of a draft letter memorializing a conversation between KPMG and its tax client. It contains certain tax advice by a tax preparer and has been shown to fall within the scope of § 7525. There is no showing that it was prepared by a lawyer in anticipation of litigation. Therefore, it has not been shown to be subject to the work product privilege. It is recommended that these documents need not be produced.

Document 1165 is an exchange of e-mails among KPMG members together with an attachment. The attachment consists of a paragraph to be added as a footnote to all existing OPIS opinion letters. Judge Hogan ruled that the opinion letter itself (Document 45) was not privileged because it was prepared "in conjunction with (the) preparation of a tax return" Memorandum Opinion, Dec. 20, 2002, p. 14. There is nothing in this footnote or any of the affidavits that have been submitted that makes it subject to any different ruling under the claimed §7525 privilege. Nor do the e-mails themselves disclose any tax advice to a tax payer. Therefore, there has been no showing that this document falls within the protection of § 7525. Moreover, there has been no showing that this document was created in whole or part by a lawyer in reasonable anticipation of litigation. Therefore, there is no showing that the work product privilege is applicable. It is recommended that this document be produced.

Documents Claimed To Be Subject To The Attorney Client and § 7525 Privileges

The Special Master has examined the following documents for which the attorney client and § 7525 privileges are claimed and, under the applicable law, makes the following findings and recommendations.

Documents 370 and 3731 are duplicate copies of a retainer agreement between a client and a lawyer. The document contains no legal or tax advice, assistance or opinion. It merely lists the costs associated with the preparation of a document. There has been no showing that either the attorney client or § 7525 privileges are applicable. It is recommended they be produced.

Document 871 is a covering letter from a lawyer to KPMG regarding a mutual client. The letter contains no legal or tax advice or opinion. It is apparent another document was enclosed but the enclosure is not a part of this document. This document as it exists has not been shown to be subject to either the attorney client or § 7525 privileges. It is recommended that this document be produced.

Document 1197 is an exchange of e-mails between KPMG members regarding the terms of an engagement letter. Although house counsel is copied in on the-response e-mail, no legal advice or opinion appears to have been sought or provided. The issue presented in the e-mails concerned a business decision and was resolved in the response e-mail. John S. Bauman, formerly with the KPMG Office of General Counsel, states in his affidavit that he "understood" that by copying him in on the response e-mail, the sender was requesting his legal opinion on the views he was expressing so as to make this document privileged. However, a fair reading of the e-mail does not support that conclusion. The copying-in appears to be for informational purposes only. The business decision disclosed in the response e-mail is definitive, not contingent. Nor can the e-mail reasonably be said to contain tax advice to a tax client. The first e-mail states "(A) prospective client" not an existing client "asks two questions". The questions had to do with the terms of the engagement letter, not tax advice. Attempts were made to negotiate the terms and conditions of a contract and the reply e-mail resolved those issues. Neither the attorney client nor the § 7525 privileges have been shown to be applicable. It is recommended that the document be produced.

October 8, 2003

20031010

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