22 Sep To Share or Not to Share, That is the Question: Can Pre-Litigation Privileged Documents Be Shared Post-Litigation Under the Common Interest Exception to the Waiver of The Attorney-Client Privilege?
By Michael A.H. Schoenberg, Esq.
The attorney-client privilege, the oldest among the now codified common-law evidentiary privileges, shields from disclosure any confidential communications between an attorney and his or her client made for the purpose of obtaining or facilitating legal advice in the course of a professional relationship. This privilege, forming the backbone of the attorney-client relationship, fosters and protects the open dialogue between lawyer and client that is essential to the lawyer’s effective representation of his or her client. With few other exceptions, this privilege can only be violated when the client willingly discloses the protected information to a third-party, destroying the privilege.
Commercial litigation, whether in the form of a breach of contract claim or a shareholder dispute, rarely involves just two parties; one as the plaintiff and one as the defendant. More often than not, a plaintiff will sue multiple defendants because either they seemingly hold some level of liability or they are necessary parties for the plaintiff to obtain complete relief.
It goes without saying that each party defendant, when represented by his or her own attorney, receives the benefits and protections of the attorney-client privilege, so long as they do not share the privileged information with third-parties. The same is generally true when two or more of the defendants are represented by the same attorney. Each defendant represented by the same attorney typically can communicate with each other and their attorney without fear of waiving the privilege.
But, what about multiple defendants who, for whatever reason, decide to retain their own separate attorneys? Can those defendants coordinate their efforts and share otherwise privileged documents and information without fear of waiving the privilege?
The answer to that question is: Yes, thanks to the New Your Court of Appeals decision in People v Osorio (75 NY2d 80 ) in which the Court acknowledged that the attorney-client privilege would, ordinarily, protect communications between codefendants that are shared for the purpose of “mounting a common defense.” Since Osorio, the New York courts have refined the narrow exception such that it can only be applied when the communications are about pending or reasonably anticipated litigation, and concern the joint defense of the multiple defendants.
Which brings us to the August 30, 2018 decision of Justice Schecter of the New York County Commercial Division in PMC Aviation 2012-1 LLC v. Jet Midwest Group LLC, 2018 NY Slip Op. 32142(U), holding that the common interest doctrine protects the exchange of privileged documents created before the common interest existed but that were exchanged after the litigation was brought.
In PMC Aviation, the plaintiffs moved to compel one of the defendants, Amur, to produce documents that Amur contended were protected by attorney-client privilege or as work product. The plaintiffs argued that Amur had waived any such privileges because it disclosed the documents to the co-defendant company that was represented by independent counsel. Amur countered that it shared the documents with the Company’s counsel during the case only to further their joint legal interest against the plaintiffs and that no waiver occurred.
The Court agreed with Amur, finding that:
The Court of Appeals recently addressed the scope of the common interest exception in Ambac Assur. Corp. v Countrywide Home loans, Inc. (27 NY3d 616, 623-27 ). Where two or more clients separately retain counsel to advise them on matters of common legal interest, the common interest exception allows them to shield from disclosure certain attorney-client communications that are revealed to one another for the purpose of furthering a common legal interest. The key holding of Ambac was that, unlike in other jurisdictions, application of the common interest exception requires that the communications were shared in connection with pending or anticipated litigation.
Here, Amur shared the subject documents with the Company during this litigation while united in interest against the JMG Parties. This litigation posture is obvious from the court’s prior decisions. The only wrinkle here is that the communications that were shared with the Company predate the litigation, and arguably, not all of them were made when litigation was anticipated. The parties agree that this is not the ordinary situation in which the common interest exception is invoked, as the exception usually implicates communications between co-litigants, not disclosure of one side’s pre-litigation privileged communications to a co-litigant. Nonetheless, it makes sense that co-litigants in an active litigation who share a common interest should be able to share their own prelitigation privileged communications if that disclosure furthers their common interest in the litigation without any fear of waiver. The JMG Parties have not cited any authority to the contrary. The court, therefore, finds that no waiver occurred.
Since its inception, courts have limited the common interest doctrine in an effort to avoid having the exception overtake the narrowly-limited privilege against disclosure. Justice Schecter’s well-reasoned decision expanding the doctrine is refreshing and provides additional comfort to clients and attorneys alike who want to combine efforts with their co-defendants.