The Common Interest Rule: May Parties Whose Interests Are Aligned Protect Their Coordinated Legal Strategy From Adversaries?
Armstrong Teasdale, LLP
|Brian E. Kaveney
Armstrong Teasdale, LLP
In most circumstances, the disclosure of privileged information by a party or a party’s counsel to a third person destroys the attorney-client privilege. However, there is a narrow but important exception to this rule. Under certain circumstances, if a party or counsel discloses privileged information to an actual or potential co-party or their counsel in the course of representation, the attorney-client privilege is not waived. This exception to waiver is known as the common interest or joint defense privilege. This privilege “softens the ordinary requirement that lawyer-client communications must be made in confidence in order to be protected by the privilege.”2 If the parties claiming the privilege produce evidence that the parties were pursuing a common interest in the litigation and had agreed to do so, the parties may claim a privilege for the duration of the common interest.
First, this article provides an overview of the common interest privilege and discusses the elements required to claim the privilege. Next, it discusses if and when oral common interest agreements are sufficient. Finally, this article explains the duration and potential waiver of the privilege.
II. Claiming the Common Interest Privilege
When a party claiming the attorney-client privilege voluntarily discloses confidential information to a third party, the disclosing party generally waives any attorney-client privilege that may attach to the information.3 The common interest rule, however, provides that the attorney-client privilege is not waived when communications are made to a third party who is not a co-party or his counsel when they are “part of an on-going and joint effort to set up a common defense strategy.” 4 This common interest rule applies when “all [of the] parties who share the privilege” have not consented to a waiver of the privilege.5 Courts have extended the common interest rule to various co-parties, including civil co-defendants, potential co-parties to prospective litigation, and civil parties in separate actions.6 No matter the type of action or actions involved, “the rationale for the [common interest privilege] remains unchanged: persons who share a common interest in litigation should be able to communicate with their respective attorneys and with each other to more effectively prosecute or defend their claims.”7
Although the 8th U.S. Circuit Court of Appeals has recognized the common interest privilege, no 8th Circuit cases expressly state the elements of a common interest agreement. The 1st and 3rd Circuits, however, have stated that “to establish the existence of a [common interest] privilege, the party asserting the privilege must show that (1) the communications were made in the course of a [common] effort, (2) the statements were designed to further the effort, and (3) the privilege has not been waived.”8 According to the 8th Circuit, “[t]he common interest may be ‘either legal, factual, or strategic in character. . . .’”9
The “common interest rule presupposes the existence of an otherwise valid privilege, and the rule applies … to communications subject to the attorney-client privilege” and “communications protected by the work-product doctrine.”10 However, those communications must be “communications that would have been” protected without the presence of a third party.11 In other words, a communication “will not be privileged simply because the defendants discussed it together” and a valid privilege must exist before the common interest privilege will protect it.12 The 8th Circuit has recognized that the joint defense privilege protects many communications between co-parties and their counsel because such exchanges of information are made for the limited purpose of assisting their common strategy and are not intended for publication and unlimited use.13 However, the privilege does not attach to all information that is shared between parties who share common interests. Only that information which is exchanged for the limited purpose of assisting the common cause of the joint agreement is privileged.14
“Communications to an attorney to establish a common strategy are privileged even though the attorney represents another client with some adverse interests.”15 This “communication must [be] made in confidence … [t]o qualify for the privilege.”16 The “key question” courts ask when “addressing whether a … communication was meant to be confidential [is] what ‘the client reasonably understood.’”17 The 1st “[C]ircuit also looks to the intent of the client.”18
III. Oral Joint Defense Agreements
No written agreement formalizing the joint representation effort is necessary. However, there are some limitations on the privilege. A common business interest is not enough to create a privilege between parties.19
“[T]hose invoking the privilege must have a ‘manifested common interest in the litigation. …’”20 “[T]here must [also] be evidence of a ‘coordinated legal strategy’ between” or among the parties.21 “A written agreement is the most effective method of establishing the existence of a common interest agreement, although an oral agreement whose existence, terms, and scope are proved by the party asserting it, may provide a basis for the requisite showing.”22 “While a written agreement is not necessary, those invoking the privilege must ‘show an expressed intent to cooperate in the litigation.’”23 For example, in Trading Technologies International, Inc. v. eSpeed, Inc., the plaintiff sought “the identity of all participants in the joint defense group.”24 The court stated that if “the joint defense agreement [was] memorialized in writing, [then the] defendants should produce a copy of the agreement to [the] plaintiff.”25 But “[i]f the agreement was made orally or informally, [the] defendants need only produce … a list of participating members.”26
Additionally, once a party has proved the existence of a common interest agreement, that party “must still demonstrate that the specific communications at issue were designed to facilitate a common legal interest” to invoke the privilege.27 No other interest, business or commercial, will suffice.28 The party seeking to rely on the doctrine must, therefore, provide evidence of a “coordinated legal strategy” between itself and another party or parties; i.e., the party asserting the privilege should expressly raise the privilege and explain why such communication is privileged.29
IV. Duration and Waiver of the Privilege
The privilege endures as long as the common interest that created the privilege endures.30 A common interest privilege “cannot be waived without the consent of all parties who share the privilege.”31 In particular, the 8th Circuit Court of Appeals has recognized that “[i]t is fundamental that ‘the [common interest] privilege cannot be waived without the consent of all parties to the defense.’”32 For example, in John Morrell & Co. v. Local Union 304A, a company owner and an employee class entered into a joint defense agreement to combat a cross-claim filed by the international union. The owner gave the employee class access to 17 documents.33 The owner “waived … privilege as to four of [the] documents for use at trial.” However, five more documents inadvertently came into the union’s possession during the deposition of the employees’ expert witness.34 The 8th Circuit did not allow the union to present the five documents at trial because the owner had not waived privilege, and neither the employees nor their counsel could waive the privilege on the owner’s behalf.35
The 1st Circuit, however, has suggested that an express waiver of the privilege by one party can defeat an existing oral agreement.36 For example, in In re Grand Jury Subpoena, the federal grand jury sought to compel a parent corporation to produce records pertaining to its subsidiary’s affairs. However, the subsidiary’s former counsel and two former officers intervened to quash the subpoena, claiming the records sought were individually privileged under a joint defense agreement.37 The 1st Circuit upheld the parent corporation’s express waiver of privilege because the records sought fell within the corporation’s general affairs.38 Communications may be individually privileged only when they fall outside the scope of the corporation’s general affairs; otherwise, any disclosure of corporate matters eviscerates a claim of individual privilege.39 Furthermore, as a matter of law, a corporation’s current management may unilaterally waive privilege of protected communications regarding any corporate matter.40 The court concluded, in the context of an oral agreement, that an oral joint agreement “does not increase the number of parties whose consent is needed to waive the attorney-client privilege; it merely prevents disclosure of a communication made in the course of preparing a joint defense by the third party to whom it was made.”41 There may also be limited instances where the eventual waiver of a common interest agreement forces the disclosure of communications that took place when the common interest agreement was in effect.42 For example, in United States v. Almeida, the court overturned a ruling that prevented the defendant from using any information obtained during the existence of a joint defense agreement with a co-defendant.43 When the parties to a joint defense agreement obtain separate counsel and one party decides to testify on behalf of the government in exchange for a reduced sentence, any information communicated to the parties’ counsel during the existence of a joint defense agreement does not receive the benefit of the attorney-client privilege.44 The court found the testimony in exchange for a reduced sentence constituted a waiver of the privilege; therefore, the defendant was erroneously prevented from using such communications as evidence during trial.45
A common interest agreement, whether oral or written, protects against the automatic waiver of privilege when one party, in the course of joint representation, discloses privileged information to actual or potential co-parties or their counsel. Protections attach from the point that it can be demonstrated that a coordinated legal strategy existed and extend only to communications that would otherwise have been privileged if they had not been disclosed to a third party. Additionally, only those communications that are shared for the limited purpose of assisting the common cause are privileged. Communications establishing the common interest effort itself are usually protected, but the written agreement evidencing such an effort is not protected. Oral agreements are likely sufficient, provided the party wishing to invoke the privilege can prove the agreement’s existence, terms, and scope. Protections may be extinguished when the common interest that produces the privilege ceases or when a party waives the privilege. While the 8th Circuit has held that the common interest privilege cannot be waived without consent of all the parties, other circuits have found otherwise. In sum, counsel should be aware of the requirements of the common interest privilege and the consequences of asserting the privilege even before a party prepares a lawsuit or a party is served with the petition or complaint.
1 Jeffery McPherson is a partner at the law firm of Armstrong Teasdale LLP. He is a member of the Appellate Practice Group as well as the Public Law & Finance Group. He has represented clients in scores of appeals in the appellate courts of Missouri and Illinois. Brian E. Kaveney is also an attorney at the law firm of Armstrong Teasdale LLP, where he focuses his practice on risk assessment, business litigation, and tort litigation, including covenants not to compete and trade secrets.
2 In re Grand Jury Subpoena Duces Tecum, 112 F.3d 910, 922 (8th Cir. 1997).
3 See Hanson v. U.S. Agency for Int’l Dev., 372 F.3d 286, 293-94 (4th Cir. 2004).
4 In re Bevill, Bresler & Schulman Asset Mgmt. Corp., 805 F.2d 120, 126 (3rd Cir. 1986); United States v. Bay State Ambulance & Hosp. Rental Serv., 874 F.2d 20, 28 (1st Cir. 1989); see also In re Grand Jury Subpoena, 274 F.3d 563, 575 (1st Cir. 2001).
5 In re Grand Jury Subpoenas, 89-3 & 89-4, John Doe 89-129, 902 F.2d 244, 248 (4th Cir. 1990).
6 Id. at 249.
7 See id.
8 In re Bevill, 805 F.2d at 126; Bay State Ambulance, 874 F.2d at 28.
9 In re Grand Jury Subpoena Duces Tecum, 112 F.3d at 922.
10 In re Grand Jury Subpoenas, 902 F.2d at 249.
11 Trading Techs. Int’l, Inc. v. eSpeed, Inc., Nos. 04 C 5312, 05 C 1079, 05 C 4088, 05 C 4120, 0 5C 4811, 05 C 5164, 2007 WL 1302765, at *1 (N.D. Ill. May 1, 2007).
13 John Morrell & Co. v. Local Union 304A, 913 F.2d 544, 556 (8th Cir. 1990).
15 Bay State Ambulance, 874 F.2d at 28.
17 Id. (citing Kevlik v. Goldstein, 724 F.2d 844, 849 (1st Cir. 1984)).
18 Bay State Ambulance, 874 F.2d at 28.
19 Trading Techs. Int’l, Inc., 2007 WL 1302765, at *1.
21 Minebea Co. v. Papst, 228 F.R.D. 13, 17 (D. D.C. 2005).
22 Intex Recreation Corp. v. Team Worldwide Corp., 471 F. Supp. 2d 11, 16 (D.D.C. 2007); see United States v. Hsai, 81 F. Supp. 2d 7, 15 (D. D.C. 2000).
23 Trading Techs. Int’l, Inc., 2007 WL 1302765, at *1 (quoting Ludwig v. Pilkington N. Am., Inc., No. 03 C 1086, 2004 WL 1898238, at *3 (N.D. Ill. Aug. 13, 2004)).
24 Trading Techs. Int’l, Inc., 2007 WL 1302765, at *2.
27 Intex Recreation Corp., 471 F. Supp. 2d at 16 (finding that a common legal interest was established not at the inception of the exclusive distribution relationship, as urged by the parties seeking the common legal interest privilege, but rather on the date where the parties seeking to rely on the doctrine sent nearly identical cease and desist letters to the plaintiff, which demonstrated the first “coordinated legal strategy” between the two defendants and triggered the common interest); Minebea Co., 228 F.R.D. at 16 (citing Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437, 447 (S.D. N.Y. 1995)).
28 Intex Recreation Corp., 471 F. Supp. 2d at 16.
29 Mineba Co., 228 F.R.D. at 16.
30 See e.g., United States v. McPartlin, 595 F.2d 1321, 1337 (7th Cir. 1979).
31 In re Grand Jury Subpoenas, 902 F.2d at 248.
32 John Morrell & Co., 913 F.2d at 556.
33 Id. at 555.
35 Id. at 556.
36 In re Grand Jury Subpoena, 274 F.3d at 572-73.
37 Id. at 567, 570.
38 Id. at 571-72.
39 Id. at 573.
40 Id. at 571-72.
41 Id. at 572-73.
42 United States. v. Almeida, 341 F.3d 1318, 1325-26 (11th Cir. 2003) (holding the joint defense agreement did not protect attorney-client privilege when the defendant testified on behalf of the state against a co-defendant).